The New Psychology of Marketing
Clearly, psychology and marketing are deeply related. What we buy is a function of how we think and what we think is a product of the way our minds work.
Yet, what doesn’t seem to be clear is that our scientific understanding of how people think and how they make decisions has changed drastically over the last decade or so. Unfortunately, marketing practice has not kept pace.
While it was once believed that people could be expected to behave rationally, the truth has been found to be far different. In both neurological studies and behavior experiments people have been shown to act, to borrow a phrase, in ways that are predictably irrational. It’s time we start applying what science already knows.
For a long time, it was taken on faith that people made decisions that based on their utility. As Jeremy Bentham wrote over two hundred years ago:
Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do, as well as to determine what we shall do.
The concept is simple enough, maximize pleasure while reducing pain. Get the best value for money. Do, in other words, what will benefit you most. The principle has been widely accepted in domains ranging from legislation to the efficient market hypothesis in economics.
In marketing, the idea manifested itself in the belief that “rational benefits” are essential to good selling. However, as this video shows, there is something wrong with that idea.
Clearly, there is something more to marketing than rational benefits. Yet, not all of us have the intuitive instincts of Steve Jobs. If we’re to make any progress, we need new principles to guide us.
Share of Synapse
As I have written before, neuroscientists have discovered that our emotions have a lot more to do with how we make decisions than was previously thought. Antonio Damasio found that clinical patients who lost the ability to emote also had difficulty making choices. They knew the facts, but couldn’t weigh them.
Even more interesting is the work of Joseph Ledoux, who found that emotions promote learning through releasing chemicals that build connections in our brains, called synapses. Furthermore, once we establish those connections, they regularly bypass the rational part of our brain, like when we jump out of the way of a moving car and only later realize what happened.
So when we talk about brand associations (i.e. archetypes, cultural memes and brand experiences), we are really referring to synapses that have been established in consumers brains. Strong brands have built up strong synapses that relate to a variety of positive things, while weak brands have weak synapses that conjure up little.
In order to build market share, we first need to build share of synapse.
A Tale of Two Systems
The first, is automatic and highly emotional. It relies on rules of thumb, called heuristics, that it enables it to act quickly. It is, in other words, fast and frugal. The second is highly rational and weighs facts, makes difficult calculations and takes more time and effort. We only engage our second system when the first one falls short.
Our reliance on system 1 leads to some interesting quirks in our behavior. For instance,, research shows that consumers who receive a discount enjoy a product less than those who are exposed to brand marketing. We will pay more to avoid a risk than to have a chance to gain an identical amount. We give more weight to information we see first and so on.
For a more complete list of cognitive biases that effect buying habits, see this excellent article.
When the consumer Internet first emerged, many thought it would make purchase decisions more rational. Shopping in a more information rich environment would allow consumers to research purchases and compare products effectively. To some extent, that’s been true.
However, e-commerce has also flattened the path to purchase, making it easier to buy on a whim. That favors the fast and frugal system 1 over the slow and lazy system 2. Consumers, in actuality, are more likely to rely on brand associations built up before they intended to make a purchase than on information provided at the point of sale.
In other words, brands will become more powerful in the digital age, not less. Purchases will be more emotive and less rational. To compete, marketers will have to become experts on not only HTML5 and the mobile web, but also on the archetypal software of the human mind.