25 Vital Consumer Behavior Concepts

1.Dual-System Theory – This theory claims that we have two systems of thought. One is very quick and pulling the trigger on decisions almost instantly with minimal thought using heuristics (mental shortcuts). The Second system is slower and more calculating. There is different jargon in the field of marketing to describe this phenomenon, but the important thing to remember is that we think in those two systems and are triggered to think with one or the other based on the cognitively simplistic or tedious design we choose to present with. These factors influence the level of thinking perceived to be necessary in order to understand the information being presented. If it’s important for your potential clients to think consciously about a particular decision you can make that happen and vise versa.

2. Priming & Anchoring – Anchoring is something often done by real estate agents. They show you the house that is out of your price range, then they show you the house they intend for you to buy. They hope you’ll say something like, “Wow! This place is much cheaper and nearly just as good, must be a steal! We’ll take it.” Their intention is to make you think of one number that bothers you initially, then see a number that comforts you a bit. Although some real estate agents might be using it unethically, others can use this principal as a way to give perspective to a potential client.

3. Availability Heuristic – The heuristic (mental shortcut) here is the thought that, if a product is running out of stock, it must be good. You could argue this heuristic has a close relationship with herd mentality. While in most cases the availability heuristic holds true, your local farmers market will proclaim the opposite of this one. They will tell you shoppers are intrigued by the full basket of apples and skeptical of a few left in the bottom of the basket.

4. Choice Architecture – This is the idea that there is an ideal selection set for a customer to look at. If there are not enough choices, they may not be getting exactly what they want. If they have too many choices they may abandon the decision altogether. There are many ways to design choices and it plays closely with the concept of framing listed below.

5. Certainty/Possibility Effects – This is the idea that probability is not read in a linear fashion. For example, a move from 40% to 50% chance of winning something is less powerful to us than a change of 95% to 100%. This brings up something I’d like to address. Too often as marketers, we put faith in some set of numbers, some ratio, or metrics. It’s not until we understand the reason for the decisions behind the numbers that we can really make rational decisions about them. In this concept, we illustrate that the reason for the smaller number change causing a larger change is the difference between the human feelings of complete confidence and uncertainty.

6. Confirmation Bias – This is the bias towards seeking out information which supports what you already believe. For example, your phone contract is up and you’re a huge fan of Apple. You do your research, however, it is tainted by your desire for an iPhone to be the best choice. You may only search on parameters that you know Apple to be the strongest in rather than look for weak spots.

7. Herd Mentality – This one is simple. Everyone is buying Ford’s. Therefore I should buy a Ford. This mentality is dangerous. If everyone runs this way screaming, what do you do? Run that same way most likely. Was everyone in Hitler’s military supportive of his ideas or did they look around and see that the others were following?

8. Diversification Bias – In the future, we want to know that we have options. It is comforting to know all the capabilities, regardless of whether or not they will be used. For example, a software you consider purchasing is pricey compared to alternatives. You will be stuck with it for years, but it also does x, y, and z which the others don’t, making you consider it potentially worth the purchase.

9. Framing – Highlighting the good over the bad or vise versa can have a drastic impact on the way information is interpreted. However, this isn’t as straightforward as it sounds. I’m not just talking about highlighting this features and hiding the lack of some other features, I’m talking about exactly the way the information is presented. There is a concept called risk choice framing (e.g. risk of losing 10 out of 100 lives vs. the opportunity to save 90 out of 100 lives), attribute framing (e.g. beef that is described as 95% lean vs. 5% fat), and goal framing (e.g. motivating people by offering a $5 reward vs. imposing a $5 penalty)”. Levin, Schneider, & Gaeth, 1998

10. Elimination-by-Aspects – Much like a director might eliminate the purchase of camera’s lacking a certain frame rate capability, this is the idea that a buyer can simply reduce the choice set with a few major criteria. This is at its root a heuristic that blocks the buyer from weighing and considering all details of all options in a choice set with the notion that they are lesser alternatives.

11. Hot-Cold Empathy Gap – This concept refers to the differences in behavior or buying preferences under strenuous situations such as hunger or anger. Knowing whether a client or even a whole category of clients is under these types of circumstances may lead you to present differently.

12. Endowment Effect – Have you ever parted ways with a favorite possession, be it a car or guitar, only to find you had to sell it for drastically less than what you had imagined? The endowment effect is the principle that we tend to overvalue possession that we have an emotional or experiential connection to. That connection is part of the value in our eyes, but the buyer does not actually receive that value.

13. Gambler’s Fallacy – “I’ve been playing Craps for an hour now and have lost every round! I’m bound to win! I should put even more money on the table!” Don’t do this, it is statistically unsound.

14. Licensing Effect – Have you ever thought, “I did so much for my company today, I earned the right to slack off tomorrow.” This is the action of licensing yourself to do something perceived as bad after doing something perceived as good. While more applicable outside of the buyer’s world, it is still a relevant concept worth understanding.

15. Loss Aversion – Many people in marketing and sales abide by an old phrase, “It’s easier to sell the pain than the gain.” As humans, we are hard-wired to avoid danger, which makes this important to understand. At the same time it’s important to realize that this can be (and often is) taken too far. Don’t scare people into buying your products or services.

16. Optimism Bias – The underestimation of negative events and the overestimation of positive events. Many things contribute to this mentality. Being in a good state of mind on a sunny day may cause you to think more optimistically than on a cloudy day that you break your leg…

17. Over-Justification Effect – The ruining of intrinsic interests by rewarding previously unrewarded activities. For example, if you start paying charity workers a small wage, they may defect.

18. Pain of Paying – Naturally, humans avoid pain just as most living creatures do. However, humans understand how money effects them directly, and thus, understand that paying has some amount of pain associated with it. If the pain of payment is more than the gain of the purchase, there will be no transaction!

19. Partitioning – To make someone stop and think and re-evaluate what they are doing, break it into small chunks. If you’re trying to walk someone through an E-commerce purchase, you might not want a lot of partitions. On the contrary, snack companies often put excessive packaging to slow the rate of consumption and make it appear more long-lasting and valuable. To me, I still eat everything and just wind up with an excessive pile of candy wrappers… nice try Reese’s family pack.

20. Precommitment – Humans need to be consistent. When proclaiming a goal, there is a level of expectation instilled in others that you will reach it. In certain circumstances, that expectation can become your real driving force to try and reach it rather than your own intention, which usually results in a lesser performance.

21. Reciprocity – In marketing, this is the feeling a customer gets when the are given something of value for free. The unbalance of the gift can be set right by an exchange of contact information or money. Outside of marketing, this might be the following case. One guy says, “Hey, I like your shirt!” The other guy will now have a hard time just continuing to walk past the first guy without saying “Thanks!” or “I like your hat!” Reciprocity can also be a negative, such as an Hammurabi’s eye for an eye!

22. Social Proof ( Normative & Informative) – A normative influence is the implication that fitting in will make one liked. A normative social proof is the one used in most commonly in marketing. An informational influence is where we are confused as to how to fit in and look to others around us for clues about how to act. Have you ever walked into a room and felt completely lost? The first thing most people will do is look to others around them as to how to act.

23. Sunk Cost Fallacy – When you poor a ton of effort into something and realize it was a bad idea, you should stop. However, because of the Sunk Cost Fallacy, you may rationalize, “Well, I’ve come this far, let’s just keeping rolling with it”. This is a very bizarre human behavior, it may even be the reason that a large number of marriages hold together. It’s the reason we often stick to one phone service provider AND the reason these providers are now offering to buy you out of a competitors contract AND the reason those competitors are fighting back by making the phone more of a lease than a contract!

24. Take-the-Best Heuristic – A quick decision between alternatives is often made on the basis of the first, most prominent differentiation. “They look the same, but this one also has feature X, that one doesn’t, so I’ll take this one.” From a sales perspective, it may be important to remind a potentially lost prospect that they would benefit from considering all the factors (you’ll need product knowledge to do this) instead of letting them weigh in on the one feature that you don’t possess. Oftentimes, that feature or whatever isn’t really as important as they may think.

25. Present Bias – This is simply the weighting of now as more valuable than later. More weight would be associated with two different immediate pay-off opportunities than those same two as seen in the future. If you want marshmallows, and are given a marshmallow, and told if you didn’t eat it for 30 minutes, you’d get a second marshmallow, would you eat it right away.

Sources cited: www.behavioraleconomics.com – The  authors of this website pull from academic studies done in a variety of consumer-based and psychologically-based fields and reduce them down to something more easily interpreted. I’ve simply selected my favorite 25 concepts from their guide and opened up on them in a way that is more directed towards marketing. I encourage any serious reader to check out the direct source as there are many interesting case studies for you to ponder!

Heck, a few others I like (that may overlap) derived from Robert Cialdini. 26. The similarity bias. This tells you to trust and like those who appear similar to yourself. 27. The authority bias. This tells you to trust those who appear to both deserve and be in the position of authority. 28. The contrast bias. When you experience two things in succession, the first influences the second. This correlates to the principle above about anchoring.

Why We Love Pluto (it’s a planet damnit!)

You are at an adoption center for dogs and cats. You walk the isles and pet the animals through the cages with your fingers as you walk by. The owner of the store sees you take a liking to an older cat in particular and she says, “That’s Rhody, he’s been here for years.” You continue strolling until you stumble on a kitten that can barely meow. “That’s 2 month old Sarah, someone just adopted her this morning.” 

The story is my own experience, perhaps you disagree. However, internet search traffic doesn’t lie. We love kittens, puppies, baby sea turtles, and the same can be said for a baby-sized planet. This hard-wired instinct carries with it the tendency to associate our caretaking feelings with anything that resembles an infant, whether a kitten or an icy rock floating 3 billion miles away.

Many of us grew up considering Pluto as a planet. When a international agency announces that it is pulling Pluto from its position in the Solar System, it gives us a sense of loss, almost as if something was stolen from us.

We as humans are obsessed with personification. We look at the headlights of a car and carve out a face. Think back to how we humanized the famous Pixar lamp in the opening of the Toy Story movies. This is the same reason we depict the white spot on Pluto as a heart. 

As a marketer, it’s important to note the virility of Pluto a couple weeks ago. If you could put a fun angle on Pluto that could relate to your business, you might have drawn in fans in a fun way.


Verizon Billboard in Los Angeles

“Is that a new yoga pose or are you trying to find your signal?”

A great advertisement by Verizon…why?

It’s Cheap – I’m all for crazy over the top advertising, but sometimes the return-on-investment is hard to gauge when implementing such a project. Writing some text for a billboard should cost only the invested thinking time and the space of the billboard itself.

It’s Easily Re-Purposed -. A strictly text based advertisement also allows for easy re-purposing of content across multiple channels, which over time can help save time and keep advertising costs down.

It’s on an L.A. Freeway – L.A. county is home to 10 million pairs of eyeballs, the 405 freeway is one of the most frequented paths in the world and it moves slower than snails. So you know this advertisement will be read. Good thinking Verizon marketers.

It’s Short and Bargain-less – If this Verizon billboard were cluttered with colors and filled to the brim with “20% off!” and “save this!” or “only that much?! wow!”, it would be subconsciously avoided by the masses. We see over 2000 advertisements in a day on average, so we’re naturally learned to tune most of them out. Keeping it simple will help ensure your message gets read.

It’s Humorous where it Counts – This is what I would consider the most important piece of the advertisement. Most people get this wrong. You’ll see funny ad’s and forget who said it because it was irrelevant to the product or service. Tying the humor to the subject at hand is important. It’s important to not offend your target audience, however, as this advertisement is arguably close to doing. It’s also important that the humor is highlighting something that matters to your prospects and is something you excel at. Verizon marketers know how funny it can be to see people trying to get there text or image to send from their iPhone by stretching there phone up high over there head in a cat like yoga stance. Doing this almost never works, and it’s usually not Verizon’s service crapping out. Nail on the head with this advertisement.

 ♠ Verizon Billboard in Los Angeles ♣

Why We Watched Floyd Mayweather vs. Manny Pacquiao

Why did you watch boxing?

You don’t even like boxing.

How did the fight net $400,000,000? This fight was about as entertaining as dirt… Yet, nearly everyone you bumped into days prior to the “rumble” had already taken a side in the fight. Without really digging too deep, we can uncover a few prominent underlying causes.

1. Celebrities – When every American celebrity is taking part in a single event, it’s going to turn heads. HBO/Showtime likely had some power in getting their celebrity clients to generate some buzz for the event. The posts across social media platforms was one thing, but the massive list of celebrity attendees and the entourage following Manny Pacquiao out the ring was fantastic.

2. Promotional Money – Floyd Mayweather has a history as a promoter. Throw a pile of money into the mix and watch what happens. Remember “Gangnam Style?” Sure, it went viral… not that the $50 million in promotions had anything to do with it.

3. Herd Mentality – Once people start seeing ads, articles, and extensive promo videos for the event, the seed is planted. Then they begin seeing their favorite celebrities talking about the event and hearing their own friends discussing the event. Now it’s a matter of time before the hop on the band-wagon.

4. Competition – This is nothing new, as humans we naturally love competition. As Americans, we’re even more compelled. However, this wasn’t some city vs. some other city. This was two boldly different characters. Floyd, being the primary instigator and promoter for the event knew that the best thing he could do is be a cocky character. I’m not saying that’s necessarily an act he put on, but when you hear half the country arguing about his riches and unethical influence in boxing vs. Manny Pacquiao’s dedication to the sport”… you know he’s doing something right from a marketing standpoint.

♣ Why We Watched Floyd Mayweather vs. Manny Pacquiao ♠

Consumer Behavior – My Laptop Purchase

If you were marketing or selling laptops to me, how effective would you have been?

Let’s look at my decision making criteria and find out…

  1. If you couldn’t be found with a google search, you were in trouble. It’s absolutely no secret that many purchases such as this begin with an internet search. I’m only bringing this up to emphasize that I couldn’t be found with a drip marketing campaign or across the display network simply because my purchase was one of urgency. My previous laptop had just broke and I needed a replacement immediately.
  2. If you weren’t under $450 dollars, you were finished. My intention for this laptop is to hold me over for about 6 months and give it to my girlfriend (who also needs a new laptop) at which time I would buy the more sophisticated laptop I ultimately need. This initial purchase didn’t need all the bells and whistles. Note, at this next purchase, I may be seen in forums or downloading reviews over a longer course of time, thus, a display or drip campaign may be suiting? If you can find a way to separate those two types of buyers, you may want to market to them differently.
  3. If you weren’t a local store, you were already at a disadvantage. In fact, if you weren’t selling your laptop at Fry’s Electronics, you were behind. I live right next to Fry’s Electronics and trust them with most of my consumer electronics purchases. For me to branch beyond that would likely mean I’d have to be dissatisfied with everything they had before looking any further. Furthermore, the time necessity of this purchase would prohibit me from wasting any more browsing the web or other stores. This is the type of product I like to see in person and feel in hand before actually coughing up the dough.
  4. If your specifications weren’t easily found, you dropped from my search. The Processer, RAM, and Hard Drive / SSD specs were the three main bits of technical criteria in my purchase. Interestingly enough, the screen size, display quality, and even operating system were so unimportant at the time of purchase that I could have disregarded them almost entirely. This brings up an interesting point. How could a laptop manufacturer/reseller know which specifications are the most important to their audience? Can this be refined based on some sort of user data collection to better serve each customer? As a marketer, uncovering this information might guide you’re prospect towards what they want.
  5. Brand and friend influence did matter in the end. When I had narrowed it down to two laptops, the price difference between them was a mere negligible $10. One was a Dell, the other an Asus. The final decision was made off the association between my geekier friend’s preference for Asus and my own interest in the brand.

This is a good exercise to get into the mindset of your customers.