And That’s Not Necessarily a Bad Thing
For a good portion of my career, I fell into the trap of thinking that good marketing was driven by great advertising, so I would spend all of my time focusing on how to create a good ad. I’d carefully try and choose an image with stopping power, a clever headline, compelling ad copy, and a call to action. I’d do this over and over with mixed results, never thinking about the psychology of consumer behavior and how to use it to make my job easier.
Although I was also really interested in psychology, I had never tried to understand the psychology of why we buy what we buy. It wasn’t until I started getting interested in consumer behavior that I really started to understand the key elements of how the brain works. Having an understanding of consumer behavior allows you to apply an understanding of why customers choose certain products to the building blocks of marketing: product, price, place, and promotion. Fully understanding these concepts can give you an edge to be a better marketer, or just help you grasp why you do what you do.
Low-Effort Consumer Behavior
Consumer behavior is a fascinating topic. There are two main ways that your brain processes purchasing decisions, central-route processing, and peripheral-route processing. In central-route processing, you engage in what’s known as high-effort behavior. This is just a fancy way of saying that you think deeply about your purchases. Peripheral-route processing, however, considers little thought (Petty & Cacioppo 1986: 191).[1] It’s the reason that you only buy name-brand peanut butter. It’s the reason you’d never overpay for milk or butter. Ironically, it’s the same reason you’d never be caught buying cheap wine.
You have very little control over how your brain manages peripheral-route processing, so the best that you can do is to try and understand how it works. Typically, low-effort consumer behavior products are everyday items (think groceries, toothpaste, toilet paper — if you can find it), although they don’t have to be. These are purchases that you make every week, if not every day.
Heuristics — The Things You Do That You Don’t Realize
Low-effort purchases rely heavily on heuristics, which is just a pretentious way of saying shortcuts but hey, it makes you sound smart…so we’re going to use it! Heuristics are so subtle that you probably don’t even realize that you are using them. Although they can lead to bad habits and are prone to errors, the fact that you use heuristics isn’t necessarily a bad thing. Think about it, you’d be living a pretty miserable life you agonized over what kind of butter you should buy or spent an hour comparing toothpaste. Consumers just don’t have time to worry about trivial items and although they can be prone to error, heuristics help us manage our time without us having to do much thinking.
Types of Heuristics
Price
Price-related heuristics are incredibly common. If you’re a cheapskate like me, for many low-effort items you buy the cheapest item available. This type of purchasing is commonplace for grocery staples like cans of vegetables, bread, and milk. However, if you again are like me this can translate beyond low-effort items and you end up buying the cheapest (vacuum, cooler, lawnmower, coffee maker) every year for the rest of your life. Earlier I mentioned that heuristics are prone to errors and this is exactly why they don’t always work.
How Marketers Use This
A strategy based on being the low-price leader is one that rarely allows your brand to ever increase your prices in comparison to the market or to gain any value. Committing to being a price leader in a category can be a dangerous strategy that should be based on favorable volumes and variable cost structures. Many companies will attempt to temporarily interrupt lower-priced competitors by offering coupons or sales. This allows them to potentially disrupt a customer’s brand loyalty or purchasing habits. It’s sort of like saying to the consumer, “Hey, you know that brand you always buy sucks, so try ours. It’s better and worth a higher price.”
Brand Loyalty
Brand loyalty is another low-effort purchasing heuristic. Brand loyalty often occurs when we have tried a certain brand and had a great experience. Until that brand lets us down, or we have a better experience with a different brand, we will likely maintain that brand loyalty. It’s the reason that you buy Oreo’s and not “chocolate sandwich cookies” because, well Oreos are great, and chocolate sandwich cookies are trash.
How Marketers Use This
The only reason to have a brand is to build market power and that market power is directly tied to the loyalty that you create with your customers. Your brand should represent something. It should give your customers a reason to not only choose your products but to return to your brand. Building loyalty ultimately strengthens your customer lifetime value and can decrease your customer acquisition cost. That’s fancy marketing speak for “your customers will pay you more money and you will spend less getting new ones”. In addition, the intangible asset of a strong brand can help financial analysts determine the future value of a company. A strong brand commands a higher price over a longer period of time. Another thing to note, a brand has a target audience. It’s not for everyone. If you build a strong enough brand, you may have people that hate your brand, and that’s okay as long as you have people that love your brand. A watered-down brand that tries to appeal to everyone appeals to no one.
Habits
Habits are different than brand loyalty. Although they involve continual purchases, sometimes of the same brand, they don’t necessarily involve loyalty to that brand. A habitual purchase can be the corporate coffee that you drink every day or the junk food from the vending machine that you buy in between meals. It can even be the really bad morning radio show that you listen to every morning. The main difference is that a habit doesn’t require a strong preference for the brand that is being purchased. Habits also involve little evaluation of other options and little information seeking for other alternatives. Habits make decisions easier because it reduces our risk when we have purchased the item several times in the past and it has satisfied our needs (Hoyer, MacInnis, & Pieters 2018).[2]
How Marketers Use This
Marketers of low-effort products spend a lot of time either trying to create or break a habit. Companies that have habitual buyers are always trying to maintain a cycle of perpetuating a customer’s habits. Grocery stores may attempt to maintain a habit of a customer returning to their store by honoring coupons from other stores or matching their prices. If a marketer is trying to break a customer’s habit to get them to purchase their product, they may offer a lower price than a competitive product or offer free samples. If you’re a tobacco company, you might try to do evil things like advertise to children or say that more doctors smoke your cigarette than any other cigarette.
Emotions
Your emotions also have a profound impact on the way you make your purchases. When you are emotionally connected to a brand, you are buying it because it makes you feel good. One example might involve purchasing a Tom’s of Maine product because of their corporate commitment to sustainability. Another example might be buying a local brand as even though the product might be similar to other brands, we might feel better about supporting local members of their community. Your emotions can also cause you to make altruistic choices like donating to charities. Your emotions can also drive you to eat a pint of Ben and Jerry’s you eat when you are having a bad day, or if it’s just a Wednesday.
How Marketers Use This
Companies can attempt to appeal to emotions by adopting a cause that aligns with their product. They may also position their advertising with certain imagery and advertising copy that focuses on how the product makes you feel instead of simply listing the features and benefits. For instance, a pizza restaurant may run a commercial that represents togetherness with images of a family watching a movie. One thing to keep in mind, however, is that several studies have shown that different emotions mean different things to different people (Mogilner & Kamvar, 2012). [3] The challenge for marketers is to determine the temperament of their customers and to understand how emotions impact their purchases.
Unfortunately, consumer’s emotions can also be manipulated by strategies that are purposefully made to misinform the customer. One of the most popular types of this type of manipulation is misleading packaging. A common example is labeling unhealthy foods as fat-free. While this may be true, this label often shows up on foods that are loaded with sugar or sodium. A marketer may believe that a consumer has a negative association with the word fat, and by labeling their product fat free, they are implying that the food is a healthy option. This makes you feel better about your decision.
Normative Influences
Normative influences occur when other people guide our choices. This can be a direct influence, like purchasing something that your kids want. This could also be an indirect influence, like buying a brand because a friend or a group you belong to tend to buy that brand (Hoyer, MacInnis, & Pieters 2018). An example of an indirect influence might be buying an overpriced luxury car because everyone you know, or at least the Jones’s, have one.
How Marketers Use This
Since the person making a purchase isn’t always the decision maker, marketers need to consider advertising to all appropriate audiences. This is why there are so many commercials for cereals and toys during kid’s shows. Even though they are not making the purchase, they are a direct influence on the purchaser. To reinforce an indirect influence, a brand could institute a referral program.
Representativeness
The representativeness heuristic is a way that our brains try to link things that are similar together (Tversky & Kahneman, 1974). [4] This is the heuristic that is the reason that hilarious knock offs and intellectual property lawsuits exist. In marketing and branding, this often occurs when a consumer compares a brand to a prototype, or category leader (think Coca Cola for all colas, Kleenex for tissues, and Band-Aid for bandages).
How Marketers Use This
The most common way that marketers use the representativeness heuristic to their advantage is to mimic the prototype brand. Private-label brands often try to make knock offs, like Dr. Thunder, Panburger Partner, Mountain Lightning, and Butter It’s Not. Although these brands are pretty hilarious, they do a great job capitalizing on imitating the prototype and take advantage of a representativeness heuristic.
Availability
The availability heuristic happens when a consumer views the probability of having a good experience with a product on how easy information about the product is to recall (Tversky & Kahneman, 1974). For instance, you could have a friend that told you that every time they order from a certain pizza place, they get her order wrong, the pizza was cold, and it took two hours. Would that make you want to place an order with that restaurant? Probably not. This story may influence your future decisions.
How Marketers Use This
To address the availability heuristic, a marketer can try and reinforce the information if it is positive or reframe the information if it is negative. In 2010, Domino’s pizza took extreme steps to address the availability heuristic that their pizza was garbage. To regain credibility, they completely changed their recipes, focusing on their ingredients and flavors (Brandau, 2010).[5]
Humans Are Variety Seeking
For low-effort purchases, unless you are the type of person that has an entire closet full of plain white shirts, you probably seek variety in your purchases. This is the reason there are so many flavors of yogurt, ice cream, soft drinks, and even bread. One study showed that this is particularly true when repetitive purchases are viewed as negative. The boredom of repetition triggers the need to seek variety (Fishbach, 2011).[6]
How Marketers Use This
Coupled with a strong brand, a company can take advantage of a consumer’s need for variety by introducing new items. This could be something like new flavors or seasonal items.
Wrapping Up
Heuristics are a way for consumers to make quick decisions about items that don’t require a lot of thought. They’re almost like a built-in time management system for our brain. They’re not necessarily good, but they’re not inherently bad. At best, they can save you a lot of time and opportunity cost making decisions that would not have a negative impact on your life. At worst, they could lead to habits that turn into harmful addictions. One thing is certain. Your low-effort purchases, which make up most of what you buy, are governed by heuristics. These short cuts are something that are generally out of your control. By understanding the way consumers think about these low-effort decisions, marketers can create more demand for their products.
[1] Cacioppo, J. T., Petty, R. E., Kao, C. F., & Rodriguez, R. (1986). Central and peripheral routes to persuasion: An individual difference perspective. Journal of Personality and Social Psychology, 51(5), 1032–1043. https://doi-org.prox.lib.ncsu.edu/10.1037/0022-3514.51.5.1032
[2] Hoyer, W., MacInnis, D., & Pieters, R. (2018). Consumer Behavior (Seventh Edition). Cengage Learning: 180–199.
[3] Mogilner, C., Aaker, J., & Kamvar, S. (2012). How Happiness Affects Choice. Journal of Consumer Research, 39(2), 429–443. doi:10.1086/663774
[4] Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124–1131. Retrieved August 2, 2020, from www.jstor.org/stable/1738360
[5] Brandau, M. (2010). Domino’s do-over. Nation’s Restaurant News, 44(5), 44. Retrieved from https://proxying.lib.ncsu.edu/index.php/login?url=https://search-proquest-com.prox.lib.ncsu.edu/docview/229384734?accountid=12725
[6] Fishbach, A., Ratner, R.K. and Zhang, Y. (2011), Inherently loyal or easily bored?: Nonconscious activation of consistency versus variety‐seeking behavior. Journal of Consumer Psychology, 21: 38–48. doi:10.1016/j.jcps.2010.09.006