Marketing Psychology and Consumer Behaviour
The Anchoring Effect is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions. During decision making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments. Once an anchor is set, other judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor.
Harvard Business Review Article
Have you ever wondered why does a small pizza cost 2/3rd of large pizza but weigh only half of large pizza?
Why is a Grande looks more compelling as an offer to Large and Small cups?
Why Happy Meal is pocket friendly than two burgers and a fry?
On what basis do consumer give product ratings?
As the stated above, we humans our wired as such that we surround our buying decision on the first piece of information our senses pick up, the Cognitive Bias. Cognitive bias is a strong, preconceived notion of someone or something, based on information we have, perceive to have, or lack. These preconceptions are mental shortcuts the human brain produces to expedite information processing—to quickly help it make sense of what it is seeing.
The new brands which we come across, we rate our satisfaction and experience for it, based on the quality and price of the competitor and similar brands and product. Let’s understand this with an example, at a supermarket the similar brand products are all kept on selves next to each other. There are generally price tags with discounted offer like, Rs 999, Now at Rs 699, this is actually a marketing gimmick where the trick is to convince the Customer that the product is premium but it is offered to them at the lower price. You may end up buying that brand, while there might be products at similar price range or might even cost cheaper, but then they would be perceived of lower quality than the heavily discounted product.
The comparison doesn’t only exist between the brands, but it is present between the different variants of the same brand itself. Starbucks, has an interesting pricing, it sells coffee in three cup sizes Small, Tall and Grande, where Tall costs Rs25 to Rs30 more than the Small and similarly Grande costs more than the Tall. The Customer perceives the Tall size as bigger but still value for money, when compared to other two variants, thus it is the most sold variant. Similar trends can be seen across the electronic gadgets, specially Mobile Phones, where there are multiple products and variants across the brands.
This also brings us to the Perception Effect, which plays an important role in our decision making. The price and quality at times doesn’t really matter but what matter is how we perceive the Brand. Here the Advertising and Brand Promotion do play a key role, in framing the perception of the Brand in our mind. That the reason why Brands spent large chunk of their annual expenditure on Ads and Promotion each, because its the Brand Perception which matter’s the most.
Which brings me to my favorite brands Apple and Nike. Apple never denied giving off expensive products in the market, but it has successfully positioned itself as the premium brand, known for its reliable and latest innovative technology, as put in its headlines, Think Different; The Power to be Your Best. Nike’s panache is well reflected from its comfortable yet chic designed sportswear, with its tagline and logo; Just Do It, makes you feel you are the unstoppable champ.
So next time whether you are buying online or in a supermarket, think why you buy that specific brand always, why have you not given a try to other brands, were you being anchored aka enslaved by your favorite brand!!
Marketing Psychology and Consumer Behaviour
Murtaza Choolawala
Geologist, Marketer
Hi, I am Murtaza, an enthusiastic researcher. Always curious to learn new things and to connect with people. Tech and Marketing are my obsession, and Research and Analysis are my Passion.
Marketing Psych 