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Psychology and Marketing: 8 Concepts to Understand

January 11 2021 by Ron Stefanski

This article is part of our content contributor series. 

As a marketer, it's important for you to understand what drives your customers’ behavior, why they choose one product over another, and how can you convince them to buy from you instead of your competitors? 

By understanding the principles of marketing psychology that drive consumer behavior, you will have the power to influence their purchasing decisions and generate more sales for your business.

Read the rest of this article to discover the 8 psychological concepts that will help you become a better marketer. 

Why Understanding Psychology Is Important For Marketing

When making purchasing decisions, people are influenced by a broad range of factors. Information and objective facts do play a role, but it's often outweighed by psychological or emotional factors. 

This is something good marketers understand and they leverage this information to help them improve their strategies and achieve their marketing objectives.

Every marketer needs to study basic psychology so they can understand the emotional triggers in buying behavior

Here is a great example of psychological principles at play in marketing: 

An aspiring entrepreneur signs up for an online course on how to start a business, partly because of the merits of the course, but mainly because he believes it will help him achieve his dream of quitting his job and traveling the world.

The product meets a real need, but it also speaks to an emotional need that the individual has. 

This is true for all products, even the most practical ones people buy. 

For instance, a car is used for traveling, and its features can include things such as improved safety and fuel efficiency. However, a car is also seen as an expression of social status, which means an advertiser might encourage more sales by highlighting the latter.

This is yet another great example of how you can influence a customer’s buying behavior by understanding the emotional triggers that compel them to take a particular action. 

It's also the reason why understanding psychology is so important for marketers.

Psychological Principles That Will Improve Your Marketing

Below are 8 psychological principles you can use in your marketing to help you attract, convince, and convert your audience. 

1. Reciprocity

The principle of reciprocity is one that you see at work all the time. It simply means that if a person does something for you, it's natural to want to return the favor in some way. A simple example is when you smile at someone, it's natural for them to smile back. 

Used in marketing, this principle can be leveraged in a number of ways to make your audience more cooperative and help you generate new customers

Reciprocity can also help you enhance customer retention and boost customer loyalty, among other benefits.

For instance, when your business gives away exclusive content, branded T-shirts, free consultations, etc., customers usually feel somewhat indebted to your company and will likely take the action you ask of them, such as subscribing to your newsletter, downloading a content upgrade, or signing up for a free trial. 

This is the norm of reciprocity, and it works particularly well when it’s also a surprise. 

Keep in mind that whatever you give away doesn't have to be costly. It can even be as simple as a handwritten thank you note, but it'll go a long way in helping you to establish reciprocity. 

For most people, it’s not about the value of what they are given, but rather that something positive happened to them. This creates a feeling of satisfaction and a sense of obligation in the consumer. 

So, you can see how, by giving away something free first, you make it a lot more likely that your prospects will want to oblige you when you do ask for something in return. 

An example of a brand that uses the principle of reciprocity effectively is Helpscout

The company offers free guides on customer acquisition and support and gives you access without even asking you for your email. 



2. Scarcity

The use of scarcity or urgency is yet another powerful persuasion technique used by successful marketers to influence purchasing decisions. 

The principle of scarcity has a basis in the simple supply and demand formula. 

That is, the perceived value of a product, opportunity, or content is directly proportional to how rare it is. Think of things such as rubies, emeralds, and other precious gems. They are worth more because of their scarcity. 

Used in marketing, this concept taps into people's fear of missing out, or FOMO, to influence purchasing decisions. 

When people think that there are limited products or services (where there used to be plenty), they’re likely to want to jump on it right away so they don't get left out. In fact, not only are they more likely to buy, but they will also happily pay more if they believe the product is in short supply. 

We see this all the time on ecommerce platforms like Amazon when the platform says “Only x left in stock - order soon.”  


In fact, this scarcity can be one of the reasons that someone who builds a retail arbitrage business has so much success.  It’s the simple concept of supply and demand, but marketers can take it a step further.  

For instance, marketers can use time-based scarcity, such as a limited time offer to encourage impulse buying from people who don't want to miss out on a great opportunity that may soon be gone.

The image below depicts how one of the most popular shoe brands, Jimmy Choo, uses the scarcity concept to make shoes fly off the shelves:


Another example of the scarcity principle at work is a conference with an offer that says "70% off discount ending soon!" They offer a limited number of discounted tickets for a specific period of time prior to returning them to full price. This induces a sense of time-bound urgency that compels customers to purchase early bird tickets before they run out.

3. Priming

If you have ever played the word association game where someone says a word, and the other person responds immediately with whatever comes to mind, then you’ve seen the priming principle in action. 

In marketing, priming exposes consumers to one stimulus to affect how they respond to a different stimulus. 

The use of subtle priming techniques on your website, like animated banners that alert visitors when someone else buys a product, can influence their buying behavior. 

Having a deep understanding of this psychology concept can help to boost your conversions, and it could be the difference between a customer buying your product or bouncing from your webpage. 

An example of a brand that uses the priming principle well is Smarter Travel, a travel website that primes its visitors with the color blue so that they are more receptive to the idea of planning a vacation to a tropical destination. 


4. Social Proof

The majority of people tend to adopt the actions or beliefs of others that they like or trust. It's the “me too” effect or the desire to conform that makes others want to do whatever everyone else is doing.

In marketing, you can use this principle to your advantage to get people to take actions that will generate leads or result in a sale by including social proof and trust signals, such as:

  • Video or text testimonials
  • Social shares
  • Follower counts
  • Email subscriber count
  • Media coverage
  • Memberships
  • Product reviews
  • Ratings
  • Awards

You can use social proof to boost conversions on your website or blog by adding social sharing and follow buttons displaying the follower count, as well as the number of shares the content has. 

This makes it more likely that visitors who land on your posts will also want to share your content if they see that many others shared it too.  This concept goes beyond blogs too.  

Some of the most profitable YouTubers use Social Proof at the core of their business due to their public subscriber counts.  

An example of a brand that uses the social proof principle is Ahrefs.

Their company uses social proof in the form of media coverage on its home page as a trust signal to build credibility. In addition to prominently displaying the logos of some of their clients, they also include ratings from a variety of authority websites, such as Trust Radius, G2, and Capterra. 


But this concept goes beyond medium-large brands.  For instance, Alex from Problemio is a business coach that uses this concept directly on his website.  


You can see how in very large text he writes “Coached 1000+ Entrepreneur, Helped Millions”.  This is a very strong statement and for someone considering his services, it’ll get their attention enough to look further into his offering.

5. Decoy Effect 

Also known as the "attraction effect" or "asymmetrical dominance effect", the decoy effect includes optimizing your pricing by including one or more unattractive options. 

For instance, a real-estate entrepreneur may build online courses educating others how to be successful.  In doing so, his website may offer two price points where the first option is the course price is $297 which includes a year's access to the course, or $347 for lifetime access and unlimited updates.  Nearly every potential student would choose the second option as it’s a much better deal.   

Similar to Richard Thaler's "Nudge Theory", the decoy effect allows you to shift the preferences of your potential buyers and entice them to make the desired choice. 

The Economist is an example of a brand that used the decoy effect successfully. In the past, they had an ad that outlined their subscription packages, which were as followed:

  • Online subscription for $59
  • Print subscription for $125
  • Online and print subscription for $125


As it turns out, the middle option was a genius way to give their customers a frame of reference to see how great the combo deal was so as to entice them to pay more for it.

6. Color Psychology

As humans, our moods and feelings are influenced by color. Studies show that 93% of consumers focus mostly on visual appearance and that when the majority of people make up their minds about purchasing a product, up to 90% of that decision is based on the color. 

Color, as it applies to marketing, can set your brand apart from your competitors and have a huge impact on customer behavior, which is why it's important for marketers to understand color psychology. 

An example of a brand that has used the psychology of colors to its advantage is Nike.

Black is a color that is associated with power, authority, stability, and confidence. Although tricky to use in marketing, Nike has used it successfully to evoke strength, power, and stability.



7. Anchoring Bias

Anchoring bias is when decisions are heavily influenced by the first piece of information received pertaining to that decision. 

In the context of marketing, it means that customers evaluate products and prices based on information they received first. 

For instance, say a customer browsing items in the store sees a winter jacket with a price tag of $200. She sees the same jacket at another clothing store for $100. The second jacket will seem like a great deal - even if that person wouldn't normally pay $100 for a jacket. 

One way to leverage this psychological principle in your own business is by displaying the original prices of items next to the discounted rate during sales. 

Customers will use the original price as a reference point or anchor, making the product seem like a much better deal than if you'd shown the low price by itself.



8. Loss Aversion

The loss aversion principle is based on the fact that no one likes to lose something they've already gained. 

In marketing, you can use it to boost your conversions by offering a free version of your product for a specific period of time. Once the time has elapsed, the feature can be removed, unless the customer upgrades to the paid product. 

Based on the psychological need to avert loss, most people will opt to sign up for your paid product to avoid losing out when the time period for the free trial is up. 

This psychological concept plays a significant role in increased product adoption for freemium products.

GetResponse is an example of a brand that uses loss aversion as part of its strategy to increase sales. 

The email marketing software offers a 14-day free trial where you get full access to the features of the platform before you have to commit to a paid service. 

Once the free trial is over, customers must then upgrade to a paid account in order to continue using the email marketing software.




And there you have it. 8 powerful psychological concepts that you need to understand for better marketing. 

Implementing each of these in your campaigns will help you set your brand apart, influence customer behavior, and boost your sales.

Over to you. Have you used any of these psychological concepts in your marketing? Share your experience in the comments below!

About Author
Ron Stefanski

Ron Stefanski is an internet business expert and marketing professor who has a passion for helping people create and market online businesses. You can learn more from him by visiting OneHourProfessor.com You can also connect with him on YouTube or Linkedin.

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