Have you ever wondered what makes people buy one product over another? Why they are compelled to act on some special offers but not others?

Let’s face it – we’re complex beings. Even when we think we’re being spontaneous, or not being swayed by marketing messages, the reality is there’s a lot going on that influences every decision we make.  That’s where marketing psychology comes in.  Marketing psychology delves into why people do the things they do.

Why does this matter? If you want to sell more, you need to know what makes your audience tick and how to adapt your marketing campaigns to compel them to act. There are lots of key principles of psychology, but we’ve narrowed down the top principles you can start using today.

Let’s dive in:

5 commonly used psychology principles in marketing 

1.     Loss Aversion. The theory that most people would prefer to avoid losses over acquiring gains.

2.     Decoy Effect. The idea that adding a third, less attractive option makes people spend more.

3.     Reciprocity. The idea that if a company does something good for you, you are more likely to return the favour.

4.     Social Proof. The theory that humans trust a brand or product more when they can see other people validating its value.

5.     Scarcity. The idea that people place more value on things they believe to be rare or exclusive.  

Key marketing psychology principles explained

1.   Loss Aversion

Ever noticed how you are more upset over losing $20 than you are happy about finding $20?

This is the loss aversion principle. Once we have something, we really don't like to lose it.

“Researchers have even quantified this feeling, finding we are roughly 2.5 times more sensitive to losses than we are to gains of a similar size.” 

The theory goes, it comes down in part to the strong anxiety and fear associated with loss. And negative emotions are shown to have a stronger, more lasting impact on people than positive ones. 

Put it to work: Make customers believe they might lose something they already have. Think about free trials. The customer has access to the service for free, and as the trial comes to an end, they don’t want to lose all the benefits.

Remind customers what they’ll lose, and they’ll sign up faster than you can say “loss aversion”!

2.     Decoy Effect

It’s time to get sneaky. Really sneaky.

Let’s say you’re buying a cup of coffee and the café gives you three size options – small, medium and large. The medium cup costs almost as much as the large, which makes the large seem like a bargain.

So, what do you do?

You buy the large coffee – even though you really only wanted a medium – and spend more than you were planning to spend.

That’s the decoy effect.

You deliberately present an additional, slightly less attractive option, which changes the customer’s mental picture of the available products and pushes them to pay out more money than they would have otherwise.

Get this – in his book, Predictably Irrational, Dan Ariely found the decoy effect might be present in dating. His research revealed we tend to fancy someone more if they appear alongside a “decoy” who looks similar, but is slightly less attractive.

Put it to work: Group items into sets of three instead of two, with one option serving as the decoy. 

3.   Reciprocity

Think back a few years to when you used to get mints when the waiter brought you the bill. That’s the reciprocity principle at its finest.

Introduced in Dr. Robert Cialdini’s book, Influence: The Psychology of Persuasion, the concept simply means that if someone does something for you, natural instinct kicks in and you will want to return the favour.

Cialdini’s research showed that when servers bring a bill without a mint, diners tip according to their perceptions of the service given.

With one mint, the tip jumps up 3.3%.

With two mints, the tip soars roughly 20%.

You get the gist!

Put it to work: Offer free content, such as eBooks or articles, to oblige customers to give something in return.  

4.     Social Proof

Social proof is arguably one of the top psychology principles driving marketing campaigns in 2022. The concept is simple: people make decisions based on the behaviour of others.  

Think about all the times you have been swayed by a product review or when you see an Instagram post where other people are using and enjoying a particular brand.   

Put it to work: Ask for customer reviews and spotlight positive reviews on your website and social media.

5.   Scarcity

Ever gone to buy airline tickets and seen a tagline that says, “Only 3 seats left at this price!” Or how about when you’re looking on Airbnb for a room and spot a listing with the “Rare Find” tag?

Yup, that’s scarcity.

The rarer the opportunity, the more valuable it is perceived to be.

Back in 1975, researchers asked people to rate choc chip cookies. They put 10 cookies in one jar, and two cookies in another jar.

Cookies from the two-cookie jar received ratings twice as high as the 10-cookie jar even though the cookies were exactly the same.

The perceived scarcity of the cookies made people value them more.

Put it to work: Use scarcity on product pages or in email promotions by telling people that products are about to run out. Be super specific about how many are left e.g. “Only 5 left at this price!”

Over to you

Test out these marketing psychology principles in your next marketing campaigns and see what triggers a response with your audience.  

Not sure where to start? The team at AJ Marketing are experts in designing the right marketing messages to compel people to action.