Consumer Psychology – making you feel a million dollars

Consumer Psychology in Marketing – real psychology – is at last being recognised as a force for good, as the natural next step in using data over guesswork, and the holy grail in moving away from those poorly-targeted ads that track us around the web.

However recently we’ve seen controversy where some applications of psychological data and micro-targeting are being used in electoral voting – such as with Trump or Brexit.

Essentially this is because if a potential governing party is found to be saying ‘We’re for dogs’ to half the electorate, but quietly switching to ‘We’re for cats’ to the other, that looks mendacious.

Why is this? Well for one, it’s reckoned that government is pretty much a ‘zero sum game’ – i.e. one where you cannot overall both spend more and tax less. Competing bidders must therefore present a joined-up narrative where the numbers also add up, or risk criticism that they are not being realistic or truthful. Plus it then becomes an impossibility anyone could ever actually deliver all that they are suggesting (not that this might be any surprise). In short, people are concerned this approach might not be entirely good for democracy.

How is Consumer Psychology, used by marketers, different?

I’d suggest firstly that consumer psychology has a very different intent.

“When you know Pete chooses new trainers because they look cool on the street, as marketers please don’t go on about how great they are at mountain climbing..”.

It is neither relevant nor beneficial to try and present why other different people might also like them, if it confuses how Pete sees them. Brand choices are not a zero sum game – everyone can get what they want without detriment to another consumer. People are diverse and choose for different reasons, and psychology tells us ramming every feature into a message will confuse otherwise willing buyers.

Marketing is about promoting and selling. Consumer Psychology is to study and capture actual data on consumers decision-making and what influences their purchases, as opposed to just using instincts and guesswork. Good instincts are usually down to having a good understanding of people from common sense and personal experience. Good psychology will also look at data on cognitive factors, context and themes.

This means that using psychology in marketing is nothing more than the obvious next step to gain advantage over than the competition – i.e. you are using data to be better at what ad-men and creatives have been doing forever.

Is Consumer Psychology truthful?

In finding out what a consumer needs from a brand, it is uniquely truthful. Often what is identified is the real need not even realised by the consumer themselves, who post rationalise their decisions. It is notable that people want to be more self-aware, seeking out personality quizzes and sharing the results with their friends.

So – what if I get a marketing message saying this new movie is ‘a story of war and the impact on a group of friends’, yet my wife is told it’s essentially ‘about a love story between 2 people growing up’? What’s happening?

Assuming both themes are present in the movie, we can see this is inherently not a lie, it’s simply about understanding what thread or narrative appeals most to a person, and hopefully showing what they’ll likely get out of it. (This is essentially what we typically call empathy – understanding another’s world and then communicating to them in their own terms).

How many adults have been to watch Toy Story with their children, to find they were entertained, in parallel, at a totally different level to their offspring?

How is Consumer Psychology used?

At a brand level, consumer psychology tells a marketer to simplify and not present all the features in one message*. So it’s is logical that you should focus on finding single themes per set of consumers, when grouped psychologically.

For example, psychology shows that ‘high quality’ and ‘low cost’ are difficult concepts to combine together rationally for most consumers. Recognising this, we know we must pull out the single theme for each audience. For a new entrant German retailer, we might then decide to target the messages to different groups as below.

But are we not again falling into the trap of guessing these themes? If we base these only on our professional and environmental instincts, then they fit our view of the world, rather than that of the real target audience. Using a proper Cognitive Psychology study however would give us the data to show exactly whether these would work, or what themes might work better.

Alongside this, Personality profiles – scaled up to the size of the customer base – will identify which people are in which audience set. Remember that these themes and sets of consumers are not static. They vary depending on the particular brand, time and context of that consumer decision.

Why Consumer Psychology is a force for good

Importantly, telling one group that your lawnmower is ‘the best design for healthy grass’, while another are focused on ‘how envious your neighbours will be’, is not conflicting. Instead it is focusing on what is most important for a consumer from a myriad of potential feature-sets. It doesn’t mean either is a lie, nor is anyone hurt.

Much of consumer psychology is helping people get clarity on what a product offers them, the backdrop being so many ads confuse (the message is ‘incoherent’ in psychology-speak), because brands haven’t understood a consumer’s way of thinking.

When a message is coherent psychologically we feel positive, comfortable and satisfied with such a clear proposition. This enlightened approach translates as happiness with our choices. Happiness is a great outcome for a consumer, when compared with confusion and stasis.

The Value of Life Happiness

Happiness, specifically Life Happiness (i.e. Cognitive Happiness – the United Nations definition) is gaining equivalence to, or even actually replacing, success measures such as Gross Domestic Product (GDP) as the top aim for entire countries and governments worldwide.

 

Figure 1 – Map of World Happiness Index 2012

David Cameron – when UK prime minister – spent £2M on a national happiness index, saying in 2010 he said: “We’ll continue to measure GDP as we’ve always done, but it is high time we admitted that, taken on its own, GDP is an incomplete way of measuring a country’s progress.”

We (the UK) rated ourselves 7.4 out of 10, since you ask.

While GDP is a mainly economic measure, happiness encompasses the wider goals that reflect trends such as stepping off the work treadmill and seeking lifestyles more balanced between work and other aspirations. Bhutan had the original idea – this tiny nation Himalayan country has since the 1970’s been renowned for its focus not on GDP but GNH (gross national happiness).

Psychology drives Happiness

Rory Sutherland (Vice Chair of agency Ogilvy, and a supporter of CrowdCat) recently predicted that the next revolution will be a psychological one.

He cites the example of the relative cost and benefit of two approaches to improving London to North of England rail connections. The technological solution called HS2 is expected to cost over £50 billion and make the journey perhaps an hour faster. The psychological solution doesn’t change the journey time, but makes it feel quicker, better and the time well-spent.

If a passenger is happy and values the experience, the 60 minutes potentially ‘saved’ by the £50bn spent becomes irrelevant if, despite the technological advancement, it still feels longer. In fact, without the psychological advances, the faster journey will still likely leave commuters unhappy, only for slightly less long.

This is why Consumer Psychology has a high ROI.

Importantly, the suggested psychological changes are usually innately much less expensive, as they are simply and accurately targeted at people’s real requirements. These, if uncovered using valid psychological approaches, will solve a range of factors across the various consumer profiles. In this example, we can expect that perhaps good WiFi, good food and a few freebies would make a great start. Note though we should not presume these, but do the required research to find out.

There is also opportunity to use good psychology to identify new and class-redefining services. Virgin Airways turn of the millennium offer of a chauffeur to the airport and a massage inflight, visibly distinguished their business class from their competitors, at an insignificant cost compared to the ticket price, or to indeed to the material cost of upgrading aircraft to newer, faster models.

You have been successful when each consumer just believes in and feels positive about their decision to choose your service, i.e. that the journey was truly productive, or social, or relaxing – according to their specific needs.

The Next Revolution will be Psychological

So what of this new age of Psychology? The first revolution was of course Agricultural, then came the Industrial, Technological and the current ‘Information’ Revolution. As scope for improvements reach a tipping point, and diminishing returns mean they become less impactful on human lives, it seems that our ability to improve how we feel about our lives will become increasingly relevant and beneficial.

Already we are recognising that further internet connectivity or mobile phone capability is having limited additional utility, and that dramatic commuting time reductions are not only harder to achieve, but are becoming less relevant given marginal gains, and lifestyle changes such as increased homeworking.

Ignoring the human part in the technological and information ages has been an issue. At last however some attention is again being paid to design that is centred around the person. We are getting better at good, low-user-barrier interface designs, and importantly feel better in how we  work with systems, both flexibly and in ways that keep us in control. Devices are increasingly more intuitive, and our sessions flow seamlessly from one device to another.

Elsewhere too, purely financial, rational, or objective (rather than subjective) strategies are now also being reconsidered – often from the human experience viewpoint. These range from the unwelcome outsourcing of call centres overseas, to the culture of creating barriers between staff and customers – for example in banks or transport hubs. Is the human interface are starting to become king again.

What are the lessons for marketing?

Peter Drucker – the intellectual, and founder of modern management consultancy – said: “There are only two things in a business that make money – innovation and marketing, everything else is cost.”

The alchemy is that while Innovation has long gestation periods, is hard to predict, uncertain of success, and usually expensive, Marketing (i.e. changing perceptions) can be quickly implemented, gives predictable outcomes (when it is data-driven), and with predictability comes high ROI.

“If Mass Consumer Psychology means that the drink you bought tastes better, the coat feels a million dollars, and the car you hired makes you feel extra special, then that’s good value for brand and consumer”.

With happiness comes higher brand value and loyalty, low buyers’ remorse (known in psychology as ‘cognitive dissonance’), meaning a real win-win for brand and consumer. On top of the brand realising higher return-on-investment, the consumer too is evidencing real benefits from a higher perceived ‘ROI’ on their investment.

In short, everyone feels the benefits of marketing based on psychological data.

Conclusion

Before now, the missing link has not been lack of data, but lack of actionable data. But change is afoot. We’ve seen the ‘Gordon Gekko’ trading floors become an anachronism as software quants and high-frequency trading algorithms took over stockbroking, and now the Mad Men of advertising are expected to turn into Math Men.

Matching your marketing messages with your consumers, such that they resonate with each individual and ‘just feel right’, is what marketers have always been trying to achieve.

Now, more than ever, removing the guesswork by acquiring meaningful, actionable data is the reason brands and marketing teams are flocking to find good sources of psychological expertise and data.

Marketers at last have the right tools to understand how to please their consumers – predictably and repeatedly – in long-term, win-win relationships. If they can do so before their competitors do, they will indeed reap the rewards.