<ul><li>The less there is, the more you want it.</li><li>Limit the number of products that consumers can buy.</li><li>Emphasising the potential for loss makes a proposition more motivating.</li><li>Stress there is a limited time to buy your product A simple way to apply the bias is to announce that if consumers don’t purchase soon they’ll miss out on the opportunity to do so.</li></ul>

Scarcity 

<ul><li>The psychologists’ hypothesis was that paying by card dulls the pain of payment.</li><li>When consumers pay with cash the cost of the good is far more salient, paying by card masks that sensation.</li><li>It’s one of the reasons why casinos use chips rather than cash. The little plastic discs don’t feel like real money so gamblers become that little bit more frivolous with them.</li></ul>

Pain of payment

<ul><li>YOU’RE BEING INFLUENCED by social proof, becoming interested in an event because others are.</li><li>The audience does not trust itself, it trusts someone else. If they hear someone applauding very aggressively and intensively, they think that something extraordinary is going on.</li><li>Tapping into social proof doesn’t even require facts. Your task is to create the illusion of popularity.</li></ul>

Social Proof

<ul><li>Price perception is affected by how the number is displayed.</li><li>Just as cards reduce the tangibility of the price, so does removing the dollar sign.</li><li>A complementary approach to the removal of pound signs is charm pricing, that is setting prices to end in a nine, whether that is £3.99 or £39.</li><li>Shoppers tend to think goods sold for these amounts are better value than those with rounded prices.</li></ul>

But why are charm prices so effective?

<ul><li>“Flaunt your flaws”</li><li>The best application is to admit that your brand has a flaw.</li><li>The pratfall effect has a multiplicative effect rather than a purely positive one. It makes strong brands stronger, but weak brands weaker.</li><li>The pratfall effect works particularly well when the competitors are braggards.</li><li>Counter-intuitive as it may seem, but negative reviews may have a positive impact because they help establish trust and authenticity.</li><li>Consumers understand that a product can’t be all things to all people.</li></ul>

The Pratfall Effect

<ul><li>Adapt your own product range.</li><li>Introducing a higher-end offering establishes a new comparison benchmark and, therefore, makes your other lines seem better value.</li><li>Buyers are often uncertain about what makes for a good product–they worry that the expensive option will be overpriced and the cheapest will be shoddy. The middle option offers protection from these extremes.</li></ul>

Price Relativity

<ul><li>You’re hard-wired to notice what’s distinctive.</li><li>Being distinctive makes brands memorable. This might sound like an obvious point but it is one that is studiously ignored by the advertising industry.</li><li>Advertising that feels safe or familiar is actually quite risky–there’s no “safety in numbers” when it comes to advertising. If someone else is doing something similar to what you’re doing, or looks or sounds like you, you’re both in trouble.</li></ul>

Distinctiveness

<ul><li>The serving method affected taste: the better the serve, the better the taste.</li><li>On a basic level, this provides justification for the millions of pounds invested in glassware.</li><li>Presentation is as important as product.</li><li>The most literal is to invest as much time and effort on your brand’s physical presentation as your product.</li></ul>

Expectancy Theory

<ul><li>Consumers who were in a relaxed frame of mind or a good mood were much more likely to notice the ads.</li><li> When we are in a good mood it signifies an absence of danger and, therefore, mitigates against the need to think critically. We’re therefore far more likely to absorb ad messages when we’re happy.</li><li>People are most likely to be in a good mood between Friday and Sunday.</li></ul>

Mood

<ul><li>Anchoring occurs when exposure to a number serves as a reference point for subsequent decisions.</li><li>First impressions shape the subsequent experiences.</li><li>The serial position effect to describe how the first items that we encounter in a list are more likely to be recalled than the ones in the middle.</li></ul>

Anchoring 

” The human mind is a lot like the human egg, in that the human egg has a shut-off device. One sperm gets in, and it shuts down so that the next one can’t get in. The human mind has a big tendency of the same sort. “

We assume we are rational decision makers, but in fact there are many biases and heuristics that our mind uses to influence most of our decision making. These heuristics can be leveraged by brands and marketers to achieve their objectives, whether that is for the benefit of the environment or selling goods and services.

Before you can influence decisions, you need to understand what drives them. In The Choice Factory, Richard Shotton sets out to help you learn.  By observing a typical day of decision-making, from trivial food choices to significant work-place moves, he investigates how our behaviour is shaped by psychological shortcuts. With a clear focus on the marketing potential of knowing what makes us tick, Shotton has drawn on evidence from academia, real-life ad campaigns and his own original research. The Choice Factory is written in an entertaining and highly-accessible format, with 25 short chapters, each addressing a cognitive bias and outlining simple ways to apply it to your own marketing challenges. Supporting his discussion, Shotton adds insights from new interviews with some of the smartest thinkers in advertising, including Rory Sutherland, Lucy Jameson and Mark Earls. From priming to the pratfall effect, charm pricing to the curse of knowledge, the science of behavioural economics has never been easier to apply to marketing. The Choice Factory is the new advertising essential.

CHARLIE MUNGER

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