Hey there! Happy Tuesday!

I saw this post on LinkedIn (sorry I forgot to save it and now it’s lost in the interwebs!) that said that marketing is basically psychology and I couldn’t agree more. You really have to understand human behavior to convince said humans to buy into what you are selling.

That said, I wanted to share a behavioral psychology principle that we use in marketing…so perk up, psychology 101 - class is in session!

Anchoring effect:

Here is a Chatgpt definition because machines do it better:

The anchoring effect is a cognitive bias that influences our decision-making process when we rely heavily on the first piece of information (the "anchor") we receive when making judgments or estimates. This initial information serves as a reference point against which subsequent judgments are made. In marketing and pricing strategies, understanding and leveraging the anchoring effect can significantly influence consumer perceptions and behaviors.

You got that, right? We don’t make decisions from a vacuum - we are biased and this bias comes from initial information that we have. This, I find, is the thing that can make marketing challenging but can also be used to your advantage.

Let’s take pricing as an example. The majority of the population is price-conscious and how you position your product will affect sales. There are around 7 tactics that use the anchoring effect to influence product uptake.

1. Set a High Anchor:
   • Premium Option: Introduce a high-priced version of your product first to establish a high anchor. This makes subsequent options seem more affordable.
   • Reference Price: Display the original price or a higher MSRP (Manufacturer's Suggested Retail Price) next to a discounted price to highlight savings.
2. Bundle Pricing:
   • Offer a bundle that includes a higher-priced item alongside lower-priced items. Consumers will anchor on the overall perceived value of the bundle, making it more likely they'll perceive it as a good deal.
3. Tiered Pricing:
   • Present multiple pricing tiers, starting from a high-end option and gradually decreasing. This approach makes the middle-tier option appear more attractive and affordable.
4. Use Comparative Pricing:
   • Compare your product's price against a higher-priced competitor to highlight cost savings or better value.
5. Limited-Time Offers:
   • This one is the most common. Create urgency by offering limited-time discounts or promotions based on an anchor price. For example, "50% off the original price for the next 24 hours."
6. Psychological Pricing:
   • Set prices just below round numbers (e.g., kes999 instead of kes1000) to anchor consumers on the lower left digit, making the price seem more affordable.
7. Adjusting the Context:
   • Change the context in which the price is presented. For example, if a product was previously perceived as expensive, introducing a slightly higher-priced option can make the original product seem more reasonably priced.

What pricing tactics are you currently using? Which one caught your eye and would like to test out? I’d love to hear from you.

Also, I must add this disclaimer - there is a thin line between ethical and non-ethical practices when leveraging behavioral psychology. Please stay on the ethical side of the fence. I have seen brands slapping discount badges on products that are actually not discounted and this kind of deception can damage brand trust and reputation - it always finds a way of coming out so don’t do it. Repairing a reputation is a difficult job!

My favorite things this week:

I discovered this Irish writer Colm Toibin - He has some easy-read-but-captivating fiction books and non-fiction books about Ireland if you are curious about Irish History.

I now have a book I love to hate - Kafka on the Shore by Haruki Murakami it’s such a weird story! If you are into bizarre storylines, no one does it better than the Japanese!

Series: Loot omg this series was so good! It’s funny and so millennial! The music they used, the references, the storyline - ah brilliant. If you are looking for your next watch, I highly recommend

P.S: Great satisfaction comes from sharing with others 💜

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