To an outside observer, advertising in the world of retail looks so simple. But as simple as the act of selling a product may seem, the truth is that there is a lot of planning and strategy involved in getting potential customers excited about a certain product or a particular sale. There is much more to it than simply providing customers with something they want and making sure that they can buy it in large quantities. Advertisers, salespeople, and others who make a living in the world of retail employ several strategies that may seem simple but rely heavily on consumer psychology to be successful.
What is Consumer Psychology?
Consumer psychology is a specialized area that is concerned with how an individual’s feelings, beliefs, and perceptions influence how they relate to certain goods and services and determine how they spend their money. This involves studying things such as decision making, motivation, and even social persuasion to determine what products customers are likely to buy and what kinds of advertising methods are the most effective. It’s also a long and complex process. Consumer psychologists have to determine the target audience of a particular product or service and then develop a marketing campaign that appeals to this audience. Studies will need to take into account age, gender, socioeconomic status, and several other factors that may influence the decisions that customers might make. They may also focus on social marketing, or the way certain ideas and marketing messages spread through certain populations. There’s certainly a science to all of it, and consumer psychologists can study it for years and still never completely understand what makes consumers tick.
The Rule of 100
There are countless marketing tactics that are related to consumer psychology, but one that has proven effective for many retailers is known as the rule of 100. The rule of 100 refers to how discounts attract would-be customers, something that is much more complicated than simply selling merchandise at a lower price and hoping it will encourage people to buy it. Basically, people are more likely to make a purchase if it looks like they’ll be getting a larger discount. For example, if a $20 item is being marked as $5 off, people will be less likely to buy it than if it was marked at 25 percent off. Yes, 25 percent of $20 is $5, but saying something was purchased for 25 percent off the sticker price sounds much more impressive and more satisfying for the buyer. On the other hand, a 25 percent discount on an item that normally sells for $2,000 sounds a lot less impressive and will be less likely to attract would-be buyers than if it were advertised as being $500 cheaper than its normal sticker price. Again, $500 is just 25 percent of $2,000, but since 500 is a much larger number than 25, it tends to grab people’s attention a lot more.
The rule of 100 is just one of many strategies used by retailers to get into the heads of their shoppers and create demand for a product. While it is easy to write off consumer psychology as a simple concept, it’s clear that it is a precise science. It involves plenty of research and observation. The spending habits of shoppers can be difficult to predict, but consumer psychologists have obviously had plenty of success in learning how shoppers spend their money.
This article was written together with Richard Craft, an MBA student who looks forward to helping you and your business succeed. He recommends taking a look at Mood Media, music for business providers who can help you tap into more consumer psychology methods to help your business. Take a look at their website today and see how they can help you!