Why our brains don't like to think...and how good marketers take advantage of it.
As humans, we are constantly bombarded with information and decisions to make, which can be mentally exhausting. Our brains have evolved to conserve energy and minimize mental effort, which means that we often rely on shortcuts, or heuristics, to make quick and effortless decisions.
These heuristics, also known as cognitive biases, are a fundamental part of how our brains process information. However, while they can be helpful in many situations, they can also lead to mistakes and poor decision-making.
In this week's newsletter, we will delve into the reasons why our brains don't like to think and how this affects our daily lives. From the psychology behind cognitive biases to the ways in which heuristics impact our decision-making, we will explore the fascinating world of why our brains take the easy way out.
At its core, heuristics are a form of unconscious bias. Our brains are wired to prioritize certain information and ignore other information, based on our past experiences and current context. This helps us make decisions more quickly and effectively, but it also means that we may be missing important information or making decisions that are not in our best interests.
For example, heuristics can play a significant role in informing a pricing strategy. Understanding how people make decisions about what they are willing to pay for something can help businesses set prices that are both competitive and profitable. Here are a few ways that heuristics can inform a pricing strategy:
Anchoring: By understanding the anchoring heuristic, businesses can use the power of first impressions to set prices that are perceived as fair and reasonable. For example, if a business wants to position itself as a premium brand, they may start with a higher price point and then offer discounts to create a perception of value.
Framing: The framing effect can also play a role in determining pricing strategy. For example, a business may choose to present their prices in a way that emphasizes the benefits of the product or service, rather than the cost. This can help create a positive perception of value, even if the prices are higher than competitors.
Reference pricing: People often use comparison shopping as a way to make decisions about what they are willing to pay for a product or service. By understanding the representativeness heuristic, businesses can use reference pricing to their advantage. For example, if a business wants to position itself as a premium brand, they may choose to highlight the higher quality of their products, rather than comparing their prices to competitors.
Decoy pricing: The decoy effect is a form of heuristic in which people make decisions based on the presence or absence of a third option. Businesses can use decoy pricing to influence customer behavior by presenting a third option that is unattractive, but helps make the other options appear more appealing.
By understanding these heuristics, and by using them to our advantage, we can create marketing messages and experiences that are more likely to be successful. However, it's important to remember that heuristics can also work against us, if we're not careful. For example, if our messages are too simple or too formulaic, they may not be perceived as being relevant or trustworthy, and people may ignore them.
Ultimately, the key to using heuristics effectively in marketing is to strike a balance between taking advantage of their power, and avoiding the pitfalls that can come with relying too heavily on them. By staying mindful of the heuristics that are most likely to influence our target audience, and by testing our messages and experiences to see how they are received, we can ensure that we're making the most of this powerful tool.
Have you seen heuristics in action? Comment with a good example, and I'll share some of my favorite responses in a future newsletter!
If you're looking for support, please consider reaching out to me.
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Jason Paddock