8 Principles of Psychology for Marketing

By Madison Taylor
October 1, 2023
Two heads face to face with an orange line connecting their eyes

People are not perfectly rational, but they might be irrational in a predictable way to some extent. In fact, there’s a book about it! Dan Ariely’s book, aptly titled Predictably Irrational, is all about the kinds of decisions that, while they might not be entirely logical, people tend to make over and over again. Here are eight principles marketers can leverage derived from studying the psychology of decision-making.

1. Priming

The idea of priming is that being exposed to a particular stimulus (often a visual one) can influence the way you react to a marketing message. If you were in a room with yellow walls and I asked you to name a fruit, you’d probably say banana. If the walls of the room were red, you might say apple instead.

In practical terms, the colors on a website, the images at the top of a blog post, and even the decorations inside a restaurant or store have the same effect, and marketers can use this phenomenon to call attention to their brand’s strengths. Customers who are primed on the idea of money will be more concerned about price, for example, while customers primed on safety will be willing to spend more for a safer product.

2. Social Proof

We’ve all heard some variation of the idea that millions of people can’t be wrong, right? It’s hard for us to process the idea that a really popular item might not actually be very good. In fact, popularity does not mean that something is high quality, just that a lot of people thought it would be. Nevertheless, you see the idea of social proof being used in marketing all the time.

Books like to brag about how long they’ve been on the bestseller list. Cell phone companies talk up the number of subscribers they have. McDonald’s signs boast about “billions served.” It may not be purely rational to buy something just because other people bought it, but people do so anyway.

If you’ve got numbers that show how popular your product is, use them.

3. Decoys

Decoys are one of the biggest takeaways from Dan Ariely’s book (and TED talk). It’s a powerful idea based on the fact that people tend to compare similar items. If you know that your customer is going to compare one option to the option right next to it, you can add in extra “decoy” options to make the others look more appealing.

Ariely shows this concept through the pricing options to read The Economist. Subscribers have three choices:

Online subscription: $59 per year

Print subscription: $125 per year

Online and print subscriptions: $125 per year

This must be a mistake, right? If the online subscription carries a $59 value, why would they give it away in the third option? Ariely presented these options to 100 of his Harvard students and asked them which subscription they’d prefer. Most of them went for option 3, the combination print/online subscription. When he removed the print subscription option from the list, the majority of students opted for the first option.

Why? Because the print subscription is a decoy. When given the choice between the exact same content in print form or a more convenient online subscription for half the price, obviously, the online one sounds better. But if it looks like you’re receiving a $59 online subscription for free, you’ll go for the bigger price tag.

4. Scarcity

Scarcity is one of the oldest tricks in the book. Have you ever noticed how the mattress store down the street always seems to be having a liquidation sale for 50 percent off? That’s the whole idea behind scarcity. If you can make people believe that there’s less of something or that it will run out soon, they’ll want it more. It’s basic supply and demand.

The problem with scarcity tactics is that people start to see through them. Customers have started to notice that some retailers will lie about scarcity just to drum up business, so they’re skeptical. They’ll also notice if your scarcity claims don’t make sense. If you put a limited-time offer on a product that you’re still making or a digital download, you’ll just come off as greedy instead.

Instead, use scarcity when there used to be a lot of something, but now they’re running out. It’s genuine and authentic, plus you’re leveraging social proof by pointing out that a lot of people have already bought what you’re selling, so it must be good.

5. Loss Aversion

Imagine a simple game of chance. I’ll flip a coin, which will either come up heads or tails. If it comes up heads, I’ll give you $100. If it comes up tails, you owe me $100. Would you take that bet?

Statistically, it’s even money, but most people would say no to the bet. The fact is, they’re much more afraid of losing the $100 they already have than they are enticed by the $100 they haven’t earned yet. When researchers have done surveys on this game, most people want the prize money to be at least $150 before they’ll take the chance.

This is what we mean by loss aversion. People are more scared of losing the things they have than gaining the things they don’t have, even when they’re the same thing.

It’s a powerful phenomenon in marketing, but it has to be used carefully. You certainly don’t want to threaten to take something away from people.

The best way to leverage loss aversion is probably the freemium model. Offer an introductory price that’s lower than your usual subscription, or you can even offer a trial for free. At the end of the trial, remind your customers that the features they’ve been using will go away if they don’t renew. If you phrase it as a friendly reminder rather than a demand, loss aversion can drive a lot of people to sign up.

6. Reciprocity

The idea of reciprocity is that if you give someone something, they’ll be more likely to want to give something back. Obviously, any kind of commerce is a form of reciprocity since money can be exchanged for goods and services, but there are things you might want from your customers that aren’t money.

Specifically, it’s hard to overstate the value of word-of-mouth marketing. A positive review on a review site, a testimonial you can use on your website, a shoutout on their social media accounts, or a referral to a new customer can all be powerful tools for expanding your business, but people are hesitant to give you that recommendation if you just ask them outright.

Instead, give them something for free to improve their impression of you. Make sure you give them the free thing first — you don’t want it to sound like you’re holding back the free thing conditionally unless they help you out. But if you offer your existing customers a gift and then, a few days later, ask them to write you a review, they’ll be more inclined to do so.

7. The Baader-Meinhof Phenomenon

You may not have heard the name before, but this is a phenomenon we’ve all experienced. you buy a new car, a new backpack, or a new phone, and suddenly it seems like everyone else has it too. It even applies to things that you don’t own. Once you actively take notice of something, you’ll start to notice it more and more.

What’s more, you’ll start thinking more positively about the things you keep seeing. Unless it’s actively irritating, repeat impressions of the same product or brand will subtly improve your impression of that thing.

The opportunity for marketers is enormous. Digital ad placement technology allows you to retarget your ads to people who have already visited your website, reminding them that you exist on site after site, all over the web. Again, there’s a limit to this — a customer who watches a lot of YouTube videos is not going to enjoy seeing the same pre-roll ad every ten minutes — but the potential for increased conversions is huge.

For a simpler approach, send emails to anyone who demos your product, reaches out to you, downloads a PDF from your website, etc. One or two follow-up emails will give you the repeat impressions you need without becoming aggravating or annoying.

8. Foot in the Door

The last idea we want to talk about here is the foot-in-the-door phenomenon. It’s a microcosm of the buyer’s journey, the idea that there are certain steps between the first time your customer hears about you and the moment they make a purchase. You can’t just walk up to someone on the street and say, “Want to buy a car for $30,000,” you have to walk them toward that decision slowly.

On a smaller scale, the foot-in-the-door idea is that a small yes can turn into a big yes. Don’t ask too much of your customers right away. Don’t ask them to fill out a huge, complicated form with their business goals and ambitions and a lot of personal information. Don’t ask them to sit through an hour-long webinar demonstration just to learn how your product works.

Instead, use a simple form that only asks for their name and email address. When they give you their email address, ask them to jump on the phone for 15 minutes to talk about their needs at a time that’s convenient for them. If the phone conversation goes well, then you can ramp up to asking for more information and pitching the longer demo. By ramping up your interaction with your customers slowly, it doesn’t seem like such an aggressive sell.

Unlocking the Potential of Psychology in Marketing

Understanding the subtle intricacies of human behavior can be the key to unlocking a more profound connection with your audience. These eight psychological principles offer a blueprint for navigating the complex landscape of consumer decision-making.

From the subtle influence of priming to the compelling force of social proof, each principle provides a unique lens through which we can view the art of persuasion. Yet, in wielding these psychological insights, a delicate balance is required. Authenticity and genuine scarcity must underpin our efforts, while reciprocity and gradual engagement can pave the way for deeper customer relationships.

Moreover, the ever-evolving digital realm allows us to apply these principles with precision, whether through targeted ad retargeting or strategic email follow-ups. As we navigate the intricate dance of marketing, let’s remember that beneath the science lies an art — the art of understanding and harnessing the predictably unpredictable human mind.