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The Psychology of Marketing

Intelligence / 3.4.21 / By Julia Lowe

Human Psychology & Advertising

The idea that human psychology plays a part in how consumers interact with advertising is nothing new. For example, we know the research says folks tend to view prices ending in “$0.99” as a bargain, while prices ending in round numbers have a more high-end connotation. When it comes to advertising, there is perhaps a sense that psychology is often put to use to subtly manipulate consumers to views products a certain way.

For storytellers though, psychology can be useful beyond manipulation: it can help us understand the minds and motivations of not only our audiences, but ourselves. There’s a wide body of research in psychology that can help marketers with things like content creation and communicating with purpose. In this three-part series, we’ll go over some of the psychological principles that can help us craft stories to fit our needs by understanding our audience, understanding how to construct content, and finally, understanding the predispositions we may encounter in our own work.

First, let’s look at some of the effects that we can keep in mind to help us understand our audience.

Loss Aversion

The human mind is an incredibly powerful computer, but it commonly falls victim to cognitive biases that color our perceptions of reality and make us behave irrationally. You may already be familiar with the concept of loss aversion, which is our tendency to prefer not to lose something than to gain something of equivalent value.

For example, we tend to take greater precautions to not lose $5,000 than we would take steps to gain $5,000—the idea of the loss hurts more than the idea of the gain motivates. This is perhaps why performance models that dole out penalties can be more effective than those that offer rewards (think of accountability apps that penalize you for not reaching your goals such as stickK and Beeminder).

The Endowment Effect

The endowment effect makes us place a higher value on things we own than we would be willing to pay for them. For example, in an experiment by psychologists including Nobel prize winner Richard Thaler, participants were divided into two groups: buyers and sellers. The sellers were given mugs. The researchers then asked the sellers how much they would be willing to sell their mugs for, and asked the buyers how much they would be willing to pay for a mug. The results? Buyers were willing to pay, on average, $2.87 for a mug, while sellers requested, on average, $7.12 to part with theirs.

This, along with the status quo bias (the tendency to want things to stay the way they are rather than make a change) may help to explain potential customers’ reluctance to switch providers in any number of service industries.

The Belief Bias

The belief bias is the tendency to judge an argument by determining whether you think the conclusion is plausible as opposed to whether you believe the argument supports the conclusion. When combined with confirmation bias—our tendency to selectively choose data that reinforces what we already believe—the result can be particularly difficult to overcome.

The Backfire Effect

The backfire effect may help to explain what feels like a rise in misinformation lately: it says that when presented with evidence that conflicts with their opinions, people are more likely to double down on their original, misinformed beliefs than they are to change them.

The Dunning-Kruger Effect

The Dunning-Kruger effect—the tendency of people who actually know very little about a topic to feel as though they are knowledgeable (because the less you know, the less you know, you know?)—is another possible explanation.

Appeal to the Heart

Knowing all this, how are we supposed to reach our audience? So much of marketing involves asking people to change their minds about something, and since our audiences are thinking using their biased and irrational human brains, this can be a huge challenge to overcome. Well, we need to remember that at the end of the day, humans aren’t computers. We might feel like we’re great, objective problem solvers, but as we’ve seen (and will continue to see over the next two posts), we’re not. Great storytelling isn’t always about coming up with the soundest arguments. It’s about appealing to the heart, the human spirit.

Often, data won’t change minds. But stories can. And this bears out in the research: in 2016, Science published a study that showed voters’ minds could be changed after having heart-to-heart conversations with door-to-door canvassers. The volunteers in the study abandoned the typical talking-points approach to canvassing and focused instead on relating to the voters on a personal level by sharing their stories and listening as the voters shared their own. Results showed a measurable change in the voters’ perceptions and subsequent decisions.

At the risk of sounding corny, the best way to get around human cognitive bias may be to avoid trying to reach the brain and instead go straight to the heart.

In the next post, we’ll look at how to create content that appeals to our audiences, given what we know about human perception. In the meantime, if you’re interested in learning more about the biases and effects mentioned in this post, check out the embedded links.


Julia Lowe

Julia Lowe is DS+CO’s proofreader with a psychology background and an understanding of intentional communications.