Richard Shotton: Some Very Important Effects In Advertising – Modern Wisdom

Watch the interview here

Key Takeaways (Psychological Effects)

  • The Pratfall Effect – a psychological phenomenon that says that competent people appear more likable and attractive when they make a mistake 
    • If a company admits a flaw, they show the world that they’re honest and gain trusts from sonsumers
  • The IKEA Effect – The more effort you put into something, the more you appreciate it`
    • Travel websites take 3-5 seconds to ‘compare prices’ but in reality, they can do so in less than a second
  • The further people move away from cash, the less price-sensitive they become
    • Casinos separate people from their cash by giving them poker chips
    • Banks separate people from their cash by giving them a plastic card
    • Amazon does this by allowing one-click ordering
  • Psychological tricks used by clubs and bars:
    • They don’t let people in right away – instead, they create a long line so the place looks busy and high in demand
    • They label VIP areas for people who are willing to spend tons of money – this demonstrates social proof of wealth to others
  • Nine-enders: People whose age ends in 9 are particularly likely to make big lifestyle changes (19, 29, 39, etc)
  • Dunning-Kruger Effect: A cognitive bias in which people mistakenly assess their cognitive ability as greater than it is
    • Experts usually think they are less knowledgeable/skilled in an area than most people while novices tend to believe they are more knowledgeable/skilled in an area

Intro

  • Host – Chris Williamson (@Chriswillx)
  • Richard Shotton (@rshotton) is an author, consultant, conference speaker, and trainer
    • His work focuses on applying findings from psychology and behavioral science to marketing. 

Books Mentioned

Richard’s Company Astroten

  • Richard runs Astroten, a consultancy that applies findings from behavioral science to marketing
    • The company name comes from a psychological experiment where a doctor asked nurses to give patients a fatal dosage of the drug Astrogen
      • Although the nurses in the control group said they wouldn’t give patients a fatal dosage if the doctor told them to, in reality, 21 out of 22 nurses followed the doctor’s orders to overdose the patients
        • The moral of the story? – People place authority over instinct

Psychological Effects

  • Richard accidentally misspelled his company’s name (it should be Astrogen), but says people who make little mistakes are actually more likable
    • This is called the Pratfall Effect: a psychological phenomenon that states competent people appear more likable and attractive when they make a mistake 
    • Many of the greatest advertisements used the Pratfall Effect:
      • Volkswagen: Ugly is only skin-deep
      • Avis: We are #2 so we try harder
      • Stella: Reassuringly expensive
        • If everyone else is bragging, you’re much more likely to be noticed if you’re doing the opposite
          • If a company admits a flaw, they show the world they’re honest and gain trust from consumers
            • Flaws and strengths are often two sides of the same coin
              • Stella may admit they’re expensive, but they do so on purpose because they know consumers associate expensive with higher quality
  • The IKEA Effect – The more effort you put into something, the more you appreciate it
    • When Tim Hortons launched their cake mix, sales didn’t take off as they expected because it seemed to easy to make a cake
      • So the company added an extra step – crack an egg and add it to the mix
        • Even though this made the cooking process more difficult, sales actually increased
    • Similarly, travel websites take 3-5 seconds to ‘compare prices’ but in reality, they can do so in less than a second
      • This makes consumers believe that they’re getting the best deal because the website is putting in more effort into the comparison feature
  • People like knowing how much time they have to wait
    • Uber tells riders how long they have to wait until their car arrives
    • Disney puts up signs that tell people how long they have to wait in line for a roller coaster ride
  • The further people move away from cash, the less price-sensitive they become
    • Casinos separate people from their cash by giving them poker chips
    • Banks separate people from their cash by giving them a plastic card
    • Amazon does this by allowing one-click ordering
  • Psychological tricks used by clubs and bars:
    • They don’t let people in right away – instead, they create a long line so the place looks busy and high in demand
    • They label VIP areas for people who are willing to spend tons of money – this demonstrates social proof of wealth to others

More Psychological Effects

  • Price Relatively – People’s conception of value is not an absolute trait, it’s a relative one
    • The amount someone is willing to pay depends on the comparison price
      • You can change a person’s willingness to pay by several magnitudes if you can get the person to compare your product to an expensive one that makes your item look like a better deal 
  • Nine-enders: People whose age ends in 9 are particularly likely to make big lifestyle changes (19, 29, 39, etc.)
    • Why? – Before people enter into a new decade of their life, they reflect, and if they are unhappy they decide to make a major change
      • First-time marathon runners are 40% more likely to run a marathon when their age ends with 9
      • Men are 18% more likely to join AshelyMadison.com when their age ends with 9
      • Suicide rates go up when a person’s age ends with 9
  • Dunning-Kruger Effect: A cognitive bias in which people mistakenly assess their cognitive ability as greater than it is
    • Experts usually think they are less knowledgeable/skilled in an area than most people while novices tend to believe they are more knowledgeable/skilled in a certain domain

Additional Notes

  • If you’re a company that’s going to admit a flaw in an advertisement, pick a flaw that’s actually a strength
    • Stella doesn’t mind if people think their beer is expensive because they know high prices are associated with high quality
  • People become less price-sensitive when the menu doesn’t have dollar signs on it
    • $16.95 seems expensive, 16.95 seems less so
  • In one study, when a store played French music, 77% of wine sales were French
    • When the store played German music, 73% of wine sales were German
      • Only 2% of people admitted that the music affected their decision-making
      • A staggering 98% of people denied flat out that the music had any effect on them when it clearly did 
        • The takeaway? – You can’t always trust customer feedback or focus groups (look at what people do, not what they say)
  • It’s easier to change the size of your product than it is to reduce the price
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