Everywhere you go, you get surrounded by ads. Many of them are irritating and irrelevant. Still, marketers manage to trick consumers into buying more expensive things or something you don’t need. How can they do it? And most importantly, how can you resist the power of ads?
It's not so much that we dislike advertising as we dislike scams.
In this video interview, Dr. Michael Barbera, a Chief Behavioral Officer at Clicksuasion Labs, reveals the marketing tricks and how they impact consumer behavior. The consumer behavior expert educates us about why we buy certain things and shares tips on making informed decisions during shopping.
Here are the points discussed with our consumer psychology expert:
- The consumer buying decision process
- Impact of advertising on consumer buying behavior
- How to avoid the power of ads
- Marketing tricks to make consumers buy more
- Online store tricks to make you buy things you don't need
- Reviews impact on consumer buying behavior
- Tips on impulse shopping
What Is the Consumer Buying Decision Process?
Michael: Today we’ll talk with Dr. Michael Barbera, the chief behavioral officer at Clicksuasion Labs, who is a consultant, consumer psychologist, and business strategy consultant. Michael, please introduce yourself and tell more about consumer psychology.
Dr. Barbera: Consumer psychology is the name that we use. There are consumer psychologists. The technical name is behavioral economics. In academia, it's behavioral economics and behavioral finance. However, most children don't wake up in the morning and say, "I want to be a behavioral economist when I grow up," it's not a very attractive title.
My journey into behavioral economics or consumer psychology started when I was a teenage entrepreneur. I would observe how customers made decisions, and how they would choose one item over an alternative. Then in my academic life found behavioral economics, studied, and went into independent consulting.
Years later I had to make a decision where it's like, "Well, should I hire employees or just stay myself?" I made the right decision to hire employees and add stress to my life. I kid, they're all amazing. Then continue to consult on behavioral economics and consumer psychology.
Michael: Can you describe the consumer buying decision process?
Dr. Barbera: Yes and no. I say no because every consumer makes a different decision for every product or service. I'll give you some examples. Some items you and I, as consumers, will purchase, and others as well, based upon convenience, cost, and availability.
Think about early in the pandemic when Amazon said, "Well, it's not going to be two-day shipping for Prime, it's now three days." And consumers are freaking out, "Oh my goodness, it’s three days. I can't wait that long." Now we're looking for alternate sources to buy that same product or service. So the convenience isn't there.
But if we were to ask consumers, "What is it that you really want in the product? What do you want out of this item?" The most common answer we going to hear from consumers is free or low cost. That's the utilitarian side is the low cost, no cost.
If you look at the engagement between consumer and brand, we would know that cost really isn't a factor.
I'll give you a story. Let's say, you're shopping for a brand new TV. You've done your Google overviews, you've talked to your friend, and you find this perfect 4K, 16-inch television set. You go to your local store and you say, "I'd like that TV on the wall." The salesperson says, "Michael, you've made an excellent choice." Now I'm a smart customer. I made an excellent choice today.
Then the salesperson says, “Michael, I gotta be honest with you. If you go to our sister store that's five miles away, you can get that same $1,000 TV for $20 less, for $980.” How likely are you to drive five miles to save $20 on a $1,000 item? Most people will say no, and a few would say yes.
Let's continue that journey. Two weeks go by and you love your television set. Now you're thinking, “Okay, I need a DVD player to augment my new TV.” You do your Google reviews, you talk to your friends, and you find the perfect DVD player. You go back to the store.
The customer service agent says, "Michael, welcome back. How can I help you?" "I like that DVD player." "Michael, you made an excellent choice." I'm a smart customer again. "But Michael, I gotta be honest with you, if you go to our sister store that's five miles away you can get that same $40 DVD player for half off, for $20."
How likely are you to drive five miles to save $20 on a $40 item? You're probably going to drive. Most people would drive for the DVD player, and not drive for the TV. At the end of the day, it's still a $20 discount, but compared to what it's anchored to, it changes our decision-making process.
Think about when we are buying a brand new car and the salesperson says, "Michael, this car is $35,000, but you can get the super-duper cool stereo system for $500 extra." Then we do consumer math, "Okay, $500 on a 72-month loan at 2% interest… Absolutely throw it in there. It's practically free at this point.”
So you get this $500 stereo. But if we ask most people, who own a $500 stereo, outside of their car, most people would say, "No, that's too expensive." If you love music, awesome. But when it's anchored compared to a $35,000 vehicle, it's like practically free at that point.
Michael: It's how the thing is marketed, right?
Dr. Barbera: The example I gave with the TV is showing that price is not always the primary concern for consumers. Potentially convenience matters as well, or anchoring. So let's look at anchoring again, one price compared to another.
When looking at anchoring, if I was to say, "All right, you go to your neighborhood, grocery store, and there are two bottles of wine on the shelf. One costs $19 and one costs $9. Which one would you buy for yourself?" Most people would say "The $9. Oh, it's just me. No big deal. The $9 bottle of wine will do just fine."
But then if it's the same products and we change the question and say, "Which one of these bottles of wine would you buy to take to a friend's house for dinner?" Most people would change their answer and say the $19 bottle of wine, to avoid looking like that cheap friend who shows up with a lower-cost bottle of wine.
Here's where anchoring comes in. Let's say, there are three bottles on the shelf, $9, $19, and $99. The $99 bottle of wine is not meant to be sold. It's an anchor. It's there to make the $19 bottle of wine look more reasonable. In that micro-moment, when you see the three bottles at three prices, your brain processes, “That's ridiculous too much money, $19's fine.”
When it's $9 and $19, the $9 looks reasonable. When it's $9, $19, and $99, the $19 bottle of wine looks reasonable. Therefore, by having the anchor of the $99 bottle of wine, and the consumer buying the $19 bottle of wine, the store potentially increase its revenue by $10 per bottle or a little over 100%.
How Does Advertising Impact Consumer Buying Behavior?
Michael: Those examples are just perfect, Michael, thank you. In the past 20 years, marketing has changed. 25 years ago, the internet was starting. We've had a lot of TV ads that were the most expensive, and big brands were budgeting for the TV. Then there were radio ads and billboards.
Now we have internet marketing. How is the split happening right now? Where is it attention of consumers could be gathered? Is it online, TV, or radio ads? How do determine where the company will advertise to gain its popularity?
Dr. Barbera: That's a great question. I would focus on going back to the avatars. Let's say, we're targeting Joyful Jane or Boisterous Bob. Focus on their behaviors. In the example I gave earlier, Boisterous Bob lives within 100 miles of a major metropolitan area.
Targeting Boisterous Bob in Cheyenne, Wyoming might not be the best location. Let's focus on the behaviors of that avatar and then match our measurable objectives and marketing campaigns to the individual consumer.
For example, you and I are the managers of restaurants that are along Interstate 95 on the east side of the US. If it's non-digital, maybe our best marketing might be billboards on the interstate, nearby where the restaurants are located. Maybe 20 miles out. "Getting hungry soon? Here's the next restaurant."
Also, we can geofence rest stops, or certain areas along the interstate as well so people will receive digital ads while they're traveling. People shouldn't be using their mobile devices while they're driving, but we both know that people do anyway.
How to Avoid the Power of Ads?
Michael: Yes, understood. Like those ads in the Waze application that do pop up and recommend restaurants as you drive through.
Consumers hate advertisements. Are there easy ways to get rid of advertisements in your life?
Dr. Barbera: That's a great topic. At a marketing conference, about a year ago we conducted a survey. We asked people on a scale of one through nine on a liquid scale, how much they dislike marketing or ads. The conference was full of marketers. And even the marketers said, "Oh, ads, dislike them, hate them." You work in marketing, how can you dislike ads?
It's not that we dislike ads as consumers. We dislike being sold to. We dislike being pitched to.
Someone recently said a quote that I really enjoyed, and it was, "America is a web of scams." I'm a proud American. I live in America, and I enjoy my country, but I would agree that everywhere you turn, someone's trying to scam you. It's not so much that we dislike advertising as we dislike scams.
However, if the advertising doesn't appear to be advertising, it's maybe a little more enjoyable, like Super Bowl ads. We don't like commercials or ads, but we sit in front of the TV during the Super Bowl to capture those best moments with those commercials.
As long as it's fun, memorable, and remarkable, it's not really advertising.
The moment someone says, "Here's what I could do for you," or, "Here's what our brand could do for you," that becomes a sales pitch. If we leave the sales pitch out of the conversation, it's one barrier removed to make it a little more experiential.
More so, you and I, and a lot of consumers receive targeted ads. You might think, "Oh, I need a new mattress." Now you receive mattress ads for the next three weeks. In studies to compare how people engage with targeted ads compared to non-targeted ads, consumers experienced and displayed more emotions of happiness with the targeted ads, than the non-targeted ads.
They feel like with the non-targeted ads, brands are just shooting, pitching in sales pitches, the things that are not relevant to their life. Even though we can say that, or I'm going to quote the other person saying, "America is a web of scams, everywhere we turn is some marketing."
Once the marketing turns non-relevant or non-targeted, it begins to feel a little more salesy, spammy, and we enjoy it a lot less. Based on the research, as long as it's targeted, relevant, fun, and not a sales pitch, most consumers are not only willing to tolerate it, but they enjoy it as well.
When I studied in business school, they taught us special marketing tricks on how to place bubble gum next to the cash register. Why? Well, binge shopping happens there. Consumers buy it, just because they see it while they're waiting in line.
I believe, it is the most profitable area of the entire store, right before the cash register. Because people are standing and waiting in line. That's in-store shopping. Online shopping is a bit different.
How Do Grocery Stores Trick You Into Buying More?
Michael: There's a lot, so I'm going to build on the examples that you provided. Let's start with the grocery store, and then let's go to the online cart version.
Dr. Barbera: First off, the grocery store is one of the most persuasive environments in sales and marketing. Everywhere you turn in the grocery store you're being persuaded too. Let's start by walking into the grocery store. When you walk into the grocery store, more than likely the first thing you're going to see are fresh flowers.
When you walk through those doors and you see flowers, the brand is priming the consumer's brain to assume that they see flowers, the freshest thing on this planet. Therefore, everything beyond that front door is also equally as fresh. So you're primed to think everything is fresh when you walk in that front door.
As you're journeying through the grocery store, you make it to the checkout. If you were to go to the checkout line about 20, or 25 years ago, you might have that refrigerator that has the sodas and water, which are still there today. But 20 years ago the top of that refrigerator is flat with nothing on it.
The point in the grocery store when the consumer says, "You know what, I really don't need this box of cereal" is when you're at the point of sale, the checkout. The point of purchase is when you take it off the shelf, and the point of sale is when you pay for it.
At the point of sale, when you're ready to pay for it, you're like, "Ah, the cereal, I don't need it." So you're likely to take it out of your cart and put it on that flat top of that refrigerator.
If you go to most grocery stores today, you're not going to see that flat top. You're going to see an A-frame with bubble gum, Snickers, candy, etc. going up because you can't put something down on an A-frame. There's no flat surface.
It's not socially acceptable to take your gallon of milk and put it on the floor and say, "I don't want this anymore." Out of social pressure, you're more likely to buy it.
Let's do some basic math. Let's say, milk costs $3 a gallon. There is one decision point every hour to purchase that milk, or to where you would not buy it. $3 per hour times eight hours a day per lane is $24 a day per lane. There are five lanes open in that grocery market. Times that by five, times that by 365 days. That's how much revenue the A-frame potentially saves an organization, just by redesigning the top of the grocery cart.
How Do Online Stores Make You Buy Things You Don’t Need?
Dr. Barbera: On the online version, as you're putting stuff into your shopping cart, here's where really gets good. How likely are you to buy something if you have to pay for shipping? "Oh, shipping, no way, that's horrible. I don't want to pay for shipping. You've lost your mind."
You're on your favorite website and you put $91 of product into your cart. Then you receive a prompt that says, "Free shipping at $99." You go, "Okay, I'll go back, I'll put more stuff in my cart." You go back shopping.
The average cost of an item on that website costs $20, shipping costs $6. You can check out $91 plus $6 for $97. But no, you want free shipping. So you go back to the website and pick an item that costs $20. Now your cart costs $111 for free shipping. You're actually spending more money to feel good over free shipping than you would if you were to just pay for the shipping. Gamification is included in the checkout process.
More so, before you get to that point, you might have a prompt that says, "Here's what others also purchase with your item." That's social proof that is phenomenally persuasive. The most persuasive thing you can do as a marketer is to show that other people are doing it too.
Michael, if you and I were driving over a bridge and people on the left-hand side were jumping off the bridge. I know that you're smart enough not to jump off the bridge as well. But you're curious enough to pull over and say, "Why are people jumping off of this bridge?"
How Do Online Reviews Impact Consumer Buying Behavior?
Michael: What do you think about the PissedConsuner site?
Dr. Barbera: Reviews are important, it goes back to that social proof aspect. Let's go back to that quote, "America is a web of scams." I didn't quote that. I don't recall the name of a quoter, but I like the quote because it's got some saliency to it.
When we go to a website where we’ve never shopped here before we're like, “I really want to buy that new case for my phone.” The MasterCard and the American Express logos are a little blurry, and some of the fonts are a little off. My spam radar is high. So I'm like, "Is this real?" So the next place I go is to the reviews to see what they say.
If there are 3,000 people who are reviewing and they're all five stars, my spidey sense is still up, it seems too good to be true. I'm probably not going to listen to it. If there are 3,000 reviews and the average star is 4.7, I'm going to look at a few of the good reviews. Then we'll go right to the one-star reviews. Those are all the bad things people say.
We like to know what other people say. This is extremely important for younger generations, those who are about 36 years of age or younger. Younger generations are likely to look at the reviews. Whereas those who are 37 years of age or older are likely to ask their friends for recommendations, whereas those 36 or younger are more likely to take recommendations from people they don't know, i.e reviews. Those reviews give us some context.
In that younger group, consumers like to make informed decisions, based on what other people have said. “Well, it looks like John gave it four stars because the postal employee left it on the bottom step of their front stoop. Okay. Is that really relatable to the product? Probably not. Let me go to the next one. Okay. Arrived damaged and the packaging was broken. Did not work, returned it. Okay, now I'm concerned. I'm gonna look for other reviews that match that same description, to see if it's true or not.”
I'm playing the role of the majority of consumers. This is how consumers behave and engage. As soon as they feel, "Okay, I'm willing to take that leap and trust this company," then I'll swipe my credit card.
The reviews are a significant decision point for consumer decision-making.
It provides that social proof, and potentially some closure and clarity for what they're buying, especially if it's from a brand they've never purchased from previously.
How to Avoid Impulse Shopping?
Michael: Thank you very much, Michael. Is there any message you want to send to PissedConsumers?
Dr. Barbera: If you don't have a need for the product or service, I would ask yourself, why are you purchasing this product or service? We can always define needs in different ways. I play baseball, I need to have the newest, latest, greatest baseball bat, but I don't need it to survive. But if I was to play basketball once a year with my friends, I don't need to have the latest, greatest basketball shoes, I can get by on what I wear every day.
Not only as a consumer psychologist, but I'm also an entrepreneur. I lead a brand in research and consulting, and reviews are important. I appreciate them. If a review comes in for my organization, whether positive, neutral, or negative, I read it and I respond. Because it's essential, it means that consumers took time out of their day to engage with us.
Although not every brand is going to respond to you, most brands are listening. If you have a challenge or concern with product design, customer service, or a fill-in-the-blank challenge, let them know.
If you had a great experience, let them know as well, because brands more than likely are reading or listening, if not responding. They are then advocating or using that information to enhance their processes and build a better experience for you, the consumer.
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