Inside the Consumer’s Mind: 10 Marketing Psychology Principles for Growing a Business
According to a 2018 Forbes survey of 1,628 millennials and 906 Gen Xers, about 60% of millennials prefer to purchase products that represent an expression of their personalities. When advertising products and services, marketers with a psychology background are better able to engage with customers across multiple generations to grow their brands. What appeals to millennials won’t necessarily appeal to gen Z.
Before marketers can apply psychological principles and tactics to connect with consumers, it’s important to understand who they are, what they value, and where they’re headed.
American consumers today
Gen X makes up 65 million people in the U.S. population in 2020. They spend 11% more than boomers and 33% more than millennials. They’re also positioned to be the wealthiest generation within a few years.
Millennials represent 82 million people in the U.S. population, and they spend $600 billion annually. On average, they have a net worth of $8,000.
Gen Z is slightly bigger than Millennials, with 86 million in the U.S. as of 2020. They have $44 billion in spending power, and they prioritize making money and having a successful career.
What marketers should know about consumer preferences
Gen Xers appreciate value, are more likely to exhibit brand loyalty, and are more likely to purchase products that benefit society or the environment. They also prefer email communication with brands. Gen Xers use coupons received in the mail, and they actively participate in rewards programs.
Millennials are 13% more likely than Gen Xers to share their purchases on social media. They also prefer to spend money on experiences instead of material things and enjoy trying new brands. Millennials place more trust in word-of-mouth and product reviews, and they appreciate personalization in company advertisements.
Members of Gen Z closely follow social media influencers for recommendations, enjoy in-store experiences, and prefer to pay with their phones or wearable tech. They’re also financially conservative, risk averse, and less willing to take on major debt. Additionally, Gen Z members prefer rewards programs offering free delivery.
10 marketing psychology principles
Marketing psychology is the practice of incorporating psychological principles in marketing campaigns. Marketers with a psychology background have a deeper understanding of the human mind and can create content and strategies that resonate with consumers.
Priming occurs when exposure to one stimulus affects an individual’s response to another stimulus.
Reciprocity happens when receiving something creates a desire to give something in return.
Social proof occurs when individuals adopt the beliefs or actions of trusted people.
The decoy effect
The decoy effect uses one price point to entice customers to select the more expensive option.
With anchoring, a price is set for a product or service, and then a lower sale price is offered to create a sense of value.
Scarcity occurs when offering a rare product or opportunity increases its value.
The Baader-Meinhof phenomenon
With the Baader-Meinhof phenomenon, a product gets introduced and seems to be appearing in various contexts and environments, thus creating the illusion that it’s everywhere.
The verbatim effect
The verbatim effect occurs when individuals remember themes and simple messages as opposed to specific details.
Clustering occurs when individuals group related information together to help them retain information in their short-term memory.
Loss aversion is a tactic that appeals to an individual’s sensibility of not liking to lose something they already have.
Inside market research analysis as a career
Market research analysts work closely with marketers to guide marketing campaigns and strategies. A psychology background is a great advantage for those in this role.
Career Profile: Market Research Analyst
A market research analyst’s job responsibilities include tracking and predicting marketing and sales trends; measuring the ROI of marketing campaigns; creating and evaluating methods for collecting data about customers and prospects; and gathering data on competitors, consumers, and market conditions. They also include using software to analyze data; creating tables, graphs, and written reports; and presenting findings to clients and management. The job enjoys a projected 20% job growth from 2018 to 2028, which is much faster than the average job projection. The 2019 median salary for market research analyst was $63,790.
The benefits of a psychology background
Marketers with a psychology background have a unique understanding of the “why” behind the data. This includes understanding how advertising influences consumer behavior, how to optimize an advertising campaign, and how to present campaigns across different formats and media. Marketers with a psychology background also possess a singular understanding of the principles of designing a study or survey, advanced research methodology, and applied statistics.
Understanding the outreach
As consumers across generations develop their shopping preferences, brands will need to adapt their messaging. Market research analysts will play a key role in communicating consumer preferences and helping marketers to craft a personalized message.