Why the Future of Marketing is Behavioral Psychology
To successfully market products and services, it's never been more important to apply the science of how people make decisions, behavioral psychology, to marketing strategies to ensure they're effective.
Our experience in the modern world provides more stimulation than we were designed to handle. As a result, we exhaust our limited mental resources and are forced to change how we think.
Constant access to information and communication increases the amount of stimuli we are exposed to by increasing the number of choices we have and the complexity of decisions we make at every level of significance.
Whether the choices are important (where we live, what we do for work, who we date) or trivial (where we eat, what we watch), we have more options than ever and more information to process to decide how we make these choices.
As the amount of stimuli and complexity of decisions has risen, our ability to deal with it hasn't kept pace.
To ensure we have enough mental resources to perform necessary mental functions, we become more likely to make decisions using less resource-intensive forms of thinking that help us conserve energy.
Since the goal of marketing is influencing decision making and how people make decisions is changing, how marketing works has changed as well.
What is behavioral psychology?
Behavioral psychology is the study of how people act when they're limited in the ability to interpret the world around them.
By performing research experiments that test human decision-making, researchers have learned the brain interprets complex surroundings by creating and using efficient intellectual shortcuts.
This process of the brain rewiring itself to learn new skills and reduce the mental energy these skills require to perform enables people to stay aware of threats and adapt to complex environments without neglecting pursuit of their goals.
Why do companies need to apply behavioral psychology in marketing now?
In the previous section, we explained how behavioral pyschology is the science behind decision making.
To understand why companies need to apply behavioral psychology in marketing now, we need to explain two fundamental changes caused by the rise of technology:
- how technology creates more competition in marketing
- how technology changes people's relationship with decision making
Technology creates more competition in marketing
Technology evens the playing field and creates more competition against you.
The marginal advantages that were beneficial before are now necessary.
Access to marketing technologies is now global
People who were once unable to compete for opportunities because they lacked access to learn skills, connect with experts, or effectively communicate can now easily do so.
This new access has greatly increased people's financial opportunities, but has also dramatically increased competition.
The winners in a globally even playing field are more often “winner take all”
Globalization increases the strength of network effects and enables winners to grow quickly, while an increase in the number of competitors results in consumers having trouble choosing between alternatives and choosing the most popular options as a result.
Technology changes people's relationship with decision making
To understand how technology changes people's relationship with decision making, you need to understand that people have limited mental resources, technology increases the amount of stimuli we experience, and technology increases choice without facilitating it.
These three factors combine to overwhelm our mental resources and change how we make decisions.
People have limited mental resources
We have physical limits to the mental resources we can use to make decisions.
When making decisions, we use energy and have less available to use towards future decision making soon afterwards.
The more uncertainty we experience while making decisions, the more energy we use making them. The result of this increased ambiguity in decision making is that with less energy left and our need to remain aware of threats our body must conserve energy.
We lower the energy we use making decisions by switching from using more energy-intensive types of thinking to those requiring less energy to make decisions.
As stimuli and choice overwhelm us, our attention becomes saturated and how we make decisions changes. We can no longer process all the information we see and we struggle to make complex decisions.
Technology overstimulates us
By providing more choice, technology hurts our ability to make decisions by overwhelming us.
And through technology companies' work to keep us engaged, social platforms keep us stimulated, but unsatisfied.
Social media feeds provide continuous stimulation from unlimited content and the special methods they use to deliver it.
Tech companies learned that by applying a psychology concept called intermittent variable rewards and varying the placement of higher-quality content, people wouldn't be able to predict its location and would continuously search for it by triggering our instinct to value positive stimuli when it is perceived to be scarce.
The result is social media users become addicted to swiping and scrolling through feeds like a gambler does spinning the wheel of a slot machine.
Video platforms discovered they could perform a similar feat to keep users engaged by enabling continuous video play where the optimal follow-up video balances similarity and contrast to keep us engaged.
Technology enables, but doesn't facilitate choice
As the number of available choices rises, people's ability to make decisions becomes more difficult instead of easier.
That's because when our options expand, we struggle to make decisions.
Think of all the types of choices we have that have expanded.
Today the number of available options for our careers, where we live, who we date, and many much smaller decisions like where we eat dinner and what content we consume take much of our time and attention.
Technology companies have grown by promising us more choice, but instead of helping us make meaningful choices, they've often led us to make more expedient ones or prevented us from making them at all.
The 4 types of thinking people use to make decisions
- rational thought
- efficient choice
Decision making changes when people exhaust their mental resources
Instead of using rational thought, we make efficient choices by substituting difficult questions with easier questions to answer to guide our decisions.
Instead of making efficient choices that are accessible to us, we simply do what we have done before and rely on habit.
When we are at our weakest moments, instead of following our habits, instincts guide our behavior.
This process of down-regulating the form of thinking we use to make decisions is both constant and adaptive.
We rarely mentally shut off, but we often decide using simpler forms of thinking without noticing this change in our behavior.
What impaired customer decision making means for marketing
Marketing strategies need to adapt to changes in customer decision making to stay relevant and profitable.
Marketing efforts must still resonate with their customer’s core needs and wants, but traditional marketing methods that don't take into account how customer decision making changes increasingly fail.
Strictly promoting features and competing on ad spends no longer works.
To successfully persuade customers to buy, businesses must market their products and services in line with how customers make purchasing decisions. That means applying marketing strategies that incorporate customers' efficient choices, habits, and instincts and understanding how their decision making changes depending on circumstance.
The most effective marketing strategies use marketing and persuasion methods proven and validated by behavioral psychology.
How companies use behavioral psychology in their marketing today
To show behavioral psychology's effectiveness in marketing, we don’t have to look far. The four most valuable brands in the world, Amazon, Google, Apple, and Facebook, all use behavioral psychology in their marketing strategies.
To provide a relatable example of how behavioral psychology is used in marketing, let’s walk through the customer experience of an Amazon shopper.
How Amazon uses behavioral psychology in its marketing
When we aren’t able to easily answer questions, we often answer easier questions instead. By substituting difficult questions with easier ones, we save ourselves time and mental energy. We make efficient choices instead of rational ones. When companies facilitate this process by orienting our choices, we become more confident in our purchasing decisions and buy more easily.
Amazon created Amazon’s Choice to help users make easier purchasing decisions and increase sales. Researching and buying products online can be incredibly taxing, so instead of letting users spend their energy researching and risk losing sales if they can’t decide what to buy, Amazon helps website users make efficient choices while shopping whenever they can.
As we increase the complexity of our daily routines, habits become the cornerstones of our behavior and guide our remaining actions. Enduring habits influence us to make choices that fit with our current behavior. When products we use every day facilitate purchasing on our behalf, these products make buying more accessible and we buy more frequently.
Amazon takes advantage of our reliance on habits with its virtual assistant Alexa. She can play your favorite music, control the lights in your house, and answer any number of questions from a list that expands every day. As modern consumers find virtual assistants more and more useful, Amazon enables Alexa to serve as the one-stop-shop for your every need. Alexa's goal: replace local stores by making shopping constantly accessible, but not intrusive.
When we mentally exhaust ourselves and are at our weakest, we abandon even our habits and instead act by instinct. Instincts unlock the direct pursuit of our wants. People experience this type of decision making as emotional impulse decisions. These are the times we buy and do without conscious thinking at all.
Amazon takes advantage of instinctual decision making with its trademark 1-click ordering. By making it easier to buy than cancel our shopping orders, Amazon fully enables impulse decision-making and rationalization.