Psychology Mains Paper 2 Consumer behaviour

Consumer Psychology

The use of psychology and emotions for enticing consumers, keeping them satisfied is something you would come across every day.

Few things you have noticed daily would be

1.       Flash sale at heavy discount by Amazon or flipkart etc

2.       Free free free – take one get two free!

3.       Limited edition available – booking started

4.       Natural ingredients from flower to neem in soap!

The above all involve application of consumer psychology principles.

The base psychological principle is

“ Pricing is based on value to the customer ” .

Flash sale and heavy discounts (Psychological principle used is Anchoring)

The favourite mobile with MRP 70,000 being available to you at 30,000 for one hour and 40,000 for next one hour. Here, the customer mind gets anchored at 70,000 irrespective of its merit. Now when he/she sees the “offer”, the mind drags customer to get the offer. The thought process revolves around the anchor set by initial pricing. The customer will start discussion on how he got big offer in the portal because he was on time. Thus, a rat race is set up where turnover increases and sales raises.

Free Free Free

The diwali and other festival times are filled with offers of “free free free”. The branded shirt near your store would be putting, buy one shirt get one free.

The customer feels that he should not “miss” the opportunity as offer is short as festival days. Customers expectation and calculation revolves around the bundling. The customer is prompted to think of “what he gets and not think about any negatives – quality or model etc”.

 

source: wikimedia

Limited edition

The need to be unique, different, able or esteem is underlying principle behind the limited edition. By just adding a sticker or an accessories, the seller is able to increase the price of all products. The most important addition in limited edition is limited.

Natural

Currently you can see visualization of neem, rose, jasmine and hell lot of things going into products from shampoo to soap to bathroom cleaner. The advertisement create a visualization (which is written in smallest possible font at bottom of advertisement) to imbibe the feeling of closeness to nature. All the emotions, moods, feelings of humans are developed from the nature. The easiest emotional connect it is able to make in countries where nature is close to heart is to show that wonders of nature are in the product they buy. Next time you wonder how much quantity of “real natural products” are added, please check the contents of the bottle. The perception of humans is utilized heavily in marketing of many health, cosmetic and lot of other products. See tv for a few hours, find some cool examples to quote for consumer behavior in case question comes in UPSC exams.

Bundling of Products

Have you seen two mobile phones with exactly same configuration? Have you seen mobile plans with exact same configuration?

Eg: Telecom ARTL plan : 330 sms free + Roaming free+ 1.7 GB per day free

       Telecom RLNC : 700 sms free + roaming free + 1.5 GB per day free

It is not difficult for RLNC to match brand RLNC plan, but the difference ensures that the two do to fight to compete to lowest value for their product. Also it appears to loyal customers that one is doing better than other in giving them value (offers). The “fight” creates enthusiasm among followers of a plan. It would be designed in a way that at the end you feel “yeh sahi hai” even if it may or may not be.

The technique is to couple many things of multiple value and then it becomes difficult to calculate individual value. The personal preferences of sending msgs or downloading would affect the plan customer, but overall value and pricing is difficult to compare with the bundling. It creates competitive equilibrium.

Asymmetric dominance (customer finds the price ) –

The popular “healthy” muesli would be having many flavours. The company at the same time would add nuts&raisins or apples&oranges or fruit kick or chocolate or anything in world to the healthy drink. Now there will be plain muesli which might be rock bottom priced and many with additional components (nuts&raisins or apples&oranges or fruit kick or chocolate or blah blah) . Here the price can be hiked sky high with additives as it possible to create a feeling that value is created through presence of additives. The value also comes from time saving factor, where the customer would have tedious job of adding the ‘tutti frutti’ to make it rich in apples , grape etc. Here, the customers value of product is set by the base price and then mind builds value to the next range of products. Also, in a customer centric world, it may become fashion to buy the healthy muesli combined with tutti frutti than ‘just plain’ since it is cheap and may come in not so attractive packet.

There are endless principles of psychology related to consumer behavior. I will write about more in later articles.