How Marketing Promotion Affects Product Performance
Is brand marketing dying? Are we entering a golden age of “pull marketing.”
Many people think that while promotion can be effective in getting people to try a brand, once a purchase is made it is only the intrinsic qualities of the product that matter. Therefore as technology enables consumers, broadcasting brand messages is increasingly a waste of time and money.
Recent research, however, debunks this notion. Marketing actions like brand promotions and discounting can actually affect how consumers experience products. Moreover, follow-up fMRI studies show that this is a verifiable physiological process that we can see working inside our brains.
The Placebo Effect in Marketing
A series of studies at Stanford University aimed to see if the placebo effect long familiar in medical circles also held for marketing actions. In other words, they sought to find out if what consumers were told about a product would influence its effectiveness.
In the first set of studies, they gave an energy drink to people before their workout. The researchers told one group that they got the product at the regular price and told a second group that it was purchased at a heavily discounted rate. The first group reported great workouts while the group that thought the product was discounted got less satisfaction.
In follow-up studies, done by the same research team, participants were given a drink designed to aid concentration and then given puzzles to solve. Again, they tested the effect of price promotions, but they also added some marketing literature to the study. They found while price promotions decreased performance, brand promotion increased it.
Shortcuts and Cues
How can this be? We are used to thinking that product performance is intrinsic and has nothing to do with price or advertising, but it does. Our preferences are not as independent as we think they are.
In an earlier post on advertising’s effects on the brain, I explained how advertising links into how our brains evolved to promote survival. We aren’t programed to think about whether we should run from a lion, those of us that took the time to do that died out long before they were able to pass genes onto us.
We depend on shortcuts and cues to guide us because it’s fast and efficient. Advertising, in effect, plays the same role as a faint rustle in the grass did in prehistoric times. It prompts us to expect a certain experience (which will hopefully be more pleasant than escaping from a lion).
Pricing and Enjoyment
The powerful effect of price cues was observed during another study at Stanford, which used fMRI to monitor subjects’ brain activity while they drank wines they were told had different prices (in actuality they were the same wine).
While there was no difference in the sensory parts of the brain (i.e. the wine had the same effect), the decision making part of the brain differed with price (i.e. they liked pricier wines more).
In truth, we often decide whether to enjoy something or not before we even try it.
The Anchoring Effect
In the first example, Dan Ariely set up an experiment at MIT where students were asked to bid on bottles of wine, but first had to write down the last two numbers of their social security number. Sure enough, those with higher numbers were willing to pay more money. Even that small amount of prompting was enough to have a measurable effect.
In a previous exercise, Nobel prizewinner Daniel Kahneman asked subjects to guess what percentage of African countries are in the United Nations. Before they guessed, they were shown a spinning roulette wheel. Those who saw higher results on the roulette wheel gave higher answers.
While we like to think we make up our own minds, we are usually swayed by previous information, even if it is irrelevant. Effective marketing takes advantage of this tendency and can affect not only our purchases, but how we experience the product itself!
All those goofy ads, it seems, aren’t so foolish after all.
Push vs Pull Marketing
As the semantic web brings us closer to a frictionless marketplace, many believe that the days of broadcasting and “push marketing” are over. Rather, they submit that marketers should focus exclusively on “pull marketing”, which relies on value promotions and inbound marketing rather than branding.
I have always suspected this to be wrong. Marketers spend the bulk of their budgets on broadcasting brand messages because it works. It is unreasonable to believe that profit driven companies would commit billions of dollars a year on a hunch. Moreover, in my own experience, TV and other mass media have been highly effective.
Now the latest neurological research tells us why. Branding campaigns can not only increase sales, but consumer enjoyment and therefore loyalty as well. Furthermore, discounting, it seems, can actually hurt sales in the long run by decreasing satisfaction and perceived product performance.
For me it’s comforting to know that in an increasingly digitized, social media-ized marketing landscape, we still have human brains, irrational as they may be.