Marketing is one of the pillars of a successful startup. From the moment the idea of a product or service is conceived, entrepreneurs find themselves in a position where they constantly have to sell this idea to others. Most companies focus their entire resources on acquiring customers. Of course, this is great for the end goal which is to make profits.  

However, an entrepreneur needs to be all-rounded in marketing because he will not only need to acquire customers but also; convince investors to invest in the startup, persuade individuals to become business partners or cofounders and hire employees who are driven and committed to the cause. 

I could go on and on about the importance of marketing but most of this is already common knowledge. In this article, I will cover one aspect of marketing that many people would find intriguing despite being used by many elite marketers. This is known as marketing psychology. 

What is marketing psychology?

The word marketing psychology is a compound word that simply means that it is a combination of two words; marketing and psychology. To understand what marketing psychology is, let’s look at the definitions of each of the words that form it. 

The American Marketing Association defines marketing as “an activity, sets of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have values for customers, clients, partners, and society at large.”

This is a mouthful, so let me take it down a notch. Marketing is simply a process of exchanging one thing of value for another. This could be an idea, a product, or services rendered for money. Simple right? Maybe, but I choose the definition by AMA because it outlines the different steps and processes involved in marketing. These are; 

Creating - before you talk of marketing, you must have something of value. This could be an idea, product, or service.

Communication - after the creation process, you talk to people about the product which you have created. This is a core aspect of marketing but it is not the only one you should focus on.

Delivering - if there is anything we have learned about how consumers shop these days, it is that convenience is a strong criterion when deciding on who to patronize. This is why how you deliver the product says a lot about your business and could decide if a customer returns to do business with you or not.

Finally, Exchange - marketing is not complete if there is no exchange of value. These could take the form of payment, contract signed, subscription earned, etc. 

Psychology on the other hand is the study of human behavior. Regulating human behavior is the function of the mind which has two parts, the conscious and the subconscious mind, which is where marketing psychology comes in. 

Marketing psychology (also known as neuromarketing) is simply a marketing strategy that exploits the psychological disposition of a consumer. Although it may seem that most of our thoughts and decisions are consciously made, researchers have found out that most of our decisions come from the subconscious mind. 

In his book, “How Customers Think..”, Harvard Business School Marketing Professor Gerald Zaltman stated that “95% of our purchase decisions take place in the subconscious mind”. Therefore, knowing how and why customers behave in a certain way can help entrepreneurs to adopt marketing strategies that take advantage of the psychological disposition of the consumer's mind. 

To do this, you must know the principles that govern consumer behavior. Before I get into these principles, here is a real-life example of marketing psychology. 

Example of marketing psychology

Airbnb is one of many companies that have used the principles of marketing psychology effectively. Being a startup in the hospitality industry, the company faced a lot of resistance from hotels and other established forms of businesses in this niche. In response to this, Airbnb released a video titled “Meet Carol”. 

In the video, the company talked about how Carol, who had just lost her husband and was facing financial difficulties, was able to survive with the help of Airbnb. The story instantly connected with a lot of people and gathered so many views on YouTube. What Airbnb had done was create an emotional connection in the minds of its users towards the brand. 

Speaking on this matter, an article published by Harvard Business Review summarised the point quite nicely saying,

“the most effective way to maximize customer value is to move beyond mere customer satisfaction and connect with customers at an emotional level – tapping into their fundamental motivations and fulfilling their deep, often unspoken emotional needs”

Creating an emotional connection towards your brand is no doubt an effective marketing strategy. However, it isn’t the only principle that works. Here are 10 other market psychology principles you can easily apply to become a top-tier marketer. 

Also Read: Everything You Need To Know About AI Marketing

10 Marketing Psychology Principles that will instantly make you a better marketer

#1. The Principle of Reciprocity

Have you ever received a gift from a friend and suddenly feel the need to reciprocate this good gesture? If yes, then you should know that it is the principle of reciprocity in effect. Essentially, this principle works because as humans, we naturally feel indebted to people who are kind to us and to demonstrate our gratitude, we find a way to reciprocate this gesture. 

This happens even if it wasn't the intention of the giver for you to reciprocate. An everyday example is if a friend was to surprise you with a gift on your birthday. You are likely going to think of a way to give them something on their birthday as well. This principle works the same way in marketing. Here is one way elite marketers trigger the feeling of gratitude and reciprocation in their prospects and get them to take action. 

By being nice - as simple as it sounds, being nice to a prospect can make them feel like reciprocating the gesture. It’s simple but works most of the time. A nice gesture can come in the form of a simple thank you message after a prospect visits your store or website (whether a purchase was made or not). Special offers like Christmas bonuses and coupons, free gifts, rewards, and well-wishes, work as well.

While you do this, there are two things you must note. First, make sure you are genuine. Pretending to be nice or interested in your prospects just to get them to make purchases can have a serious backlash on your brand’s reputation. Secondly, provide other ways your prospects can show appreciation. A visitor might not make a purchase but because they had a good experience, they won’t hesitate to refer your business to a friend or give it a good rating. Either of these is a win for your business.

#2. The Principle of Urgency

Many prospects spend an inordinate amount of time browsing through different sites and comparing products. Yes, this is inevitably the paradox of choice playing out where the more choices we have the harder it is to make a decision. But if something were to be urgent, we are more likely to make up our minds faster due to the fear of missing out ( FOMO). 

Marketers can avoid this long-tailed purchasing behavior by giving the prospects a notch to help them make up their minds quickly. This notch can be a countdown clock on a special order or promo price slash, alert words such as “act now!!!” or another marketing principle that is often used alongside the principle of urgency. This principle is - scarcity.

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#3. The Principle of Scarcity

A third principle that elite marketers use to convert prospects to customers is the principle of scarcity. This principle was coined by Dr. Robert Cialdini and while you may not know who he was, I am certain you have been persuaded into making a quick decision more times than you can remember, thanks to this one principle. 

According to the principle, the value of a product increases spontaneously when we believe it is scarce or difficult to get. This principle is very common in the luxury goods industry where a limited number of a product is manufactured and despite the outrageous price tag, many people still clamber to get it. However, it is not peculiar to luxury goods only. The aviation industry, travel agencies, retail stores, Cinemas, and even hotels all apply this principle. 

Think back to the last time you made a purchase, booked a flight, or paid upfront to secure a seat at the cinema because the advert read “limited seats available” or “only 2 slots left”. Yes, that was the principle of scarcity in action. Scarcity and urgency are often used together to persuade prospects into making quick decisions.

Also Read: Start-up Pricing - A Simple Guide On How To Set The Right Price

#4. Paradox of choice

The founder and CEO of Meta, Mark Zuckerberg was asked why he is often seen wearing a grey T-shirt every day. The billionaire explained that he did that to reduce the number of decisions he had to make, thereby saving time and energy. He further clarified that he had several of the same shirts - so NO, he doesn’t wear one particular shirt. One might wonder how deciding on what to wear can be so difficult. 

The truth is, decision-making takes its toll on our mental energy and when running the affairs of a billion-dollar company, you bet Zuckerberg has more important things to decide on than what color of tie or shirt to wear in the morning. But you don’t have to run a billion-dollar company before you feel the impact of having to make so many decisions. At first, it might seem as if having so many choices gives you the freedom to choose what you want. The fact is, it can have the opposite effect. 

This is known as the paradox of choice. The more options you are given, the more difficult it is to make up your mind. Marketers who know this avoid the paradox of choice by presenting their prospects with as few choices as possible. Although there is no specific number, anything between 3 - 5 is ideal. This principle is often applied at the pricing stage but can also be used where a prospect has to choose between several available options. 

#5. Law of least effort

When setting up a website, there is one piece of advice you are likely to get and that is, to keep things simple. What they mean to say is there should be some elements of familiarity. This is not bad advice and neither are these people against change. The reason is that our brains function by making connections. When we get used to a certain way of doing things, it becomes very difficult to adjust to a new system. Our brains always try to save as much energy as possible and if it is presented with two choices, they will always go for the one that seems familiar. This principle is referred to as the law of least effort. 

As an entrepreneur who is driven to bring about change and disrupt the industry, you should watch out for this principle. If certain processes seem too complicated or new to your prospects, they may likely not put in the effort to understand them. So you have a better product but keep losing customers to a competitor that offers something your prospects are familiar with. This principle is also the reason why products that are instantly successful in most niches often have some semblance to what had already existed, perhaps with little modifications.

#6. Color psychology

If you walk up to a person and ask them what their favorite color is, you are likely going to get a response. It might sound trifle but most people do have a favorite color and there is no better stage where this comes into play than when shopping. Whether it's a car, clothes, or a choice of finishes for your home, there is a high chance the color of the item will play a role in your decision. Color psychology looks at how colors influence our behaviors and decisions. 

As individuals, our color preferences vary and could be determined by factors such as culture, personal associations or preferences, and even our identity. However, certain colors have a common association. For instance, red is typically used to signify danger. But this association can be used to draw the attention of prospects to a particular piece of information. Like an ongoing sales promo displayed in a  big red splash background. 

White can be perceived as minimalistic, clean, and simple. Other colors like green, black, and yellow have been used in different scenarios to connect with the target audience. Before applying color psychology in your marketing strategy, make sure you find out which colors align perfectly with your brand and target audience. 

#7. The Principle of Anchoring

The first impression that matters is a factual statement. This is because humans tend to cling to the first information they get and make a snap judgment with the information, not minding if it is accurate or not. This is a cognitive process that can take place in a split second. Therefore as an entrepreneur, you only have a small window to make a good first impression on your prospects. 

A common example where the anchoring principle can be effectively applied is in pricing your products. If only one price is displayed, prospective customers may feel the price is too high and decide to check out your competitor’s prices. But if you display two prices, say a sale price (displayed first) and the initial price (like when running a sales promo). Your prospects may be persuaded to take the offer because the deal will look too good to pass. 

This strategy is not only applicable to pricing alone but can equally be used when picking a brand name and logo. Make sure it is easy to remember and the logo shouldn’t be too common that it gets lost among thousands of other brand logos. Uniqueness is a very powerful anchor which you can wield to your advantage in situations like this. 

You can also use the principle of anchoring together with urgency and scarcity for more effective marketing. 

Also Read: 10 Low Budget Marketing Strategies That Can Make Your Startup A Raging Success

#8. Decoy Effect

The decoy effect is a technique used by marketers to influence consumers’ preference between two products by introducing a third product. Here’s an example of the decoy effect. If you’ve ever walked into an Apple Store to get a gadget then perhaps you’ve encountered the decoy effect in real time even if you didn’t know it then. 

So here it is, you have a baseline iPhone that cost say $600 and you have a more expensive but feature-packed version of the same iPhone that cost $800. If these were your only choices, I bet you would go for the cheaper option. But then Apple introduces a third option, which is much better than the baseline product but slightly better than the $800 iPhone. Now let’s assume this third iPhone is priced at $1000. 

Wait a minute, suddenly $800 doesn’t seem too bad considering it has nearly identical features as the high-end iPhone. Most people won’t mind settling for the mid-priced iPhone. So they swipe their cards, thank the attendant and happily return home with their new Apple iPhone. Patting themselves on the back for making a good decision. 

Although this is just an example, it illustrates how the decoy effect can be used in real-time to influence the buyer’s decision. Entrepreneurs can apply this principle in any number of ways to push their consumers' attention toward a product that is most profitable for the company. 

#9. Social proof

This is a psychological phenomenon where consumers look at the actions and opinions of others to help them decide on what action to take. Social proof is very powerful and can work for or against you if you are not aware of how to properly apply it. It is one of the most common marketing strategies today and it can be used to market just about anything. Social proof comes in the form of reviews and ratings similar to the ones you see when downloading an app or shopping online.

If you were to buy something you haven't used before or do not know if it will serve the purpose you need it to. The first thing you will look for is social proof. Most people scroll down to read the reviews of others who had purchased the same item and learn of their experience. After reading, then they will decide if to buy the item or not. Although reviews are great, social proof can also come in the form of a demo video, and testimonials from a trusted individual (such as an influencer).

#10. The Principle of Loss Aversion

This principle is based on a psychological bias whereby we tend to experience or associate more emotional response to losing than gaining. Let me explain. If you happen to invest a certain sum of money say $10,000 in a business that generates a profit of about $1,000 a month. You will probably be happy because you are making gains. Now assume that you have made $5,000 in profit over 5 months and then something happens and you lose $1,000. 

You would feel terrible for the $1,000 loss not minding the fact that you still have about $4,000 in profits or that you are going to make another $1,000. How is this applied in marketing? Well, it works in the same way as the principle of urgency and scarcity. You do not have to physically lose money to experience the emotional pain that is associated with a loss. Missing out on opportunities that you believe are great can be equally very painful. 

To avoid this, prospects are more likely to take action when they see a deal that they believe to be a one-time opportunity. As an entrepreneur, you can stir up these feelings in your prospects by using the techniques of urgency and scarcity. 

Here is what I am trying to say

The key to becoming a better marketer is not so much about throwing millions of dollars into ads as it is about understanding the underlining psychological principles behind the behavior and actions of your prospects. With these psychological principles, you will convert more prospects into loyal customers faster than any technical marketing strategy. 

But while applying these principles, remember to always be authentic. Trying to manipulate your target audience in any way (e.g by paying for fake reviews, or testimonials) will tarnish your brand’s image such that it will be very difficult if not impossible to recover. Did you enjoy this article? Then I suggest you read our next article on the 7 Pillars of a successful startup.