Learn how the psychological reasons we buy impacts your business.

The study of why we make decisions is fascinating. Everyday we are faced with thousands of decisions — some big, but most little, inconsequential day to day choices that we make virtually unconsciously. I just finished “The Choice Factory” by Richard Shotton, and it was super enlightening. I highly recommend this book especially if you’re considering how to price or position your product or service.

According to Shotton, we develop these “short-cuts” to help guide us quickly through these decisions, understanding these biases can really help us understand why people react the way they do.

“Consumers don’t think how they feel, say what they think or do what they say.” ~ David Ogilvy

Asking customers or prospects what they think is always an important step, but as David Ogilvy pointed out, sometimes they just don’t know — they act based on biases that may be so ingrained or subtle that they can’t even articulate why they precisely prefer one thing over another.

I’ve shortlisted 8 behavior biases that Shotten discusses, ones that everyone who’s bringing something to market should consider.

Social Proof — Humans are social creatures and the validation of others is huge for a majority of people. Clearly showing the popularity of your product through testimonials, reviews or even aligning with the right partner, can instantly make your product more appealing.

Distinctiveness — Believe it or not we are wired to notice what’s different, it’s a survival instinct. So, following what everyone else is doing, while it may seem logical, is actually not the best approach. As Shotten says, “identify the formulaic rules of behaviour in the category you work in and subvert them.” Yup, “think different”. If you want to find inspiration for your brand, try looking outside of your market.

Habit — Apparently, 45% of our behavior is habitual and we generally only switch allegiances during major life events when we take stock of our lives (hint; that often occurs when our age ends in 9). So carefully consider people’s habits, understand when, where and why they would be open to making a switch and position yourself accordingly.

Pain of Payment — Ya, no surprise there, forking over the cash makes us uncomfortable. So, marketers need to consider how they can reduce, “price sensitivity”. Using .99 cents is a common tool to align consumer’s minds with a lower price point, as is just omitting the dollar sign.

Relativity — Here Shotton describes how critical it is to make sure your comparison set (for both comparison and pricing purposes) positions your product or service in the best possible light. For example if you have a bright, shiny new red apple to bring to market, do you compare it with all the other red apples on the market? Or do you position against all the other green, yellow and pink apples out there? Go for the later and your red apple will look distinct and different from anything else on the market.

Primacy Effect — The basis for this concept is this simple fact; our brains are overloaded. We can only take in so much information and have, “limited cognitive recall”. So, it’s imperative that you; a) get your product to market first, b) get your marketing message spot-on at launch, or c) keep your messaging simple, concise, and to the point. Our capacity to internalize nuances or rework an existing impression is minimal.

Expectancy — Not the best name for a pretty important concept. How we present our products or services sets up expectations in the eyes of the consumer. Yup, package designers celebrate, this validates that the packaging (or presentation) is as import as the product itself. Think about how you would perceive the same gift if it was given to you in a crumpled paper bag versus a beautifully wrapped gift.

Scarcity — This one is pretty obvious and the catalyst for many luxury and flash sale brands today. Perceived scarcity propels people to buy on impulse and pay more. It’s that simple. There’s a reason Zappos says, “there’s only 1 left in stock”.

Science is just beginning to understand human cognition and how we process and perceive the world around us — it’s fascinating stuff that marketers should carefully consider when positioning products. And, a good reminder that thinking outside the box can often pay off. These were just a few of the concepts presented in the book, I highly recommend it for a summer read!