Podcasts > Modern Wisdom > #1053 - Richard Shotton - 11 Psychology Tricks From the World’s Best Brands

#1053 - Richard Shotton - 11 Psychology Tricks From the World’s Best Brands

By Chris Williamson

In this Modern Wisdom episode, Richard Shotton examines how major brands use behavioral science principles to influence consumer decisions. He explores marketing strategies like Five Guys' focused menu approach, Red Bull's pricing tactics, and KFC's use of scarcity to increase perceived value. Through these and other examples, Shotton demonstrates how understanding human psychology helps companies build stronger brands and create more effective marketing campaigns.

The discussion delves into how context and timing affect purchasing choices, from online shopping habits to supermarket layouts. Shotton also addresses the challenges of implementing new ideas in established systems, using historical examples to illustrate how even clearly beneficial innovations can face resistance. The episode provides insights into consumer behavior and shows how companies can apply psychological principles to their advantage.

#1053 - Richard Shotton - 11 Psychology Tricks From the World’s Best Brands

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#1053 - Richard Shotton - 11 Psychology Tricks From the World’s Best Brands

1-Page Summary

Behavioral Science Principles That Influence Consumer Behavior

Richard Shotton explores how behavioral science principles can guide effective marketing strategies. He illustrates how focusing on a single product, like Five Guys' streamlined burger menu, can enhance brand credibility. Shotton also discusses how Red Bull successfully leveraged price relativity by using unique packaging to avoid direct comparisons with sodas, allowing for premium pricing. Using Guinness's "Good Things Come To Those Who Wait" campaign, he demonstrates how admitting a product's flaw can actually increase its appeal. The discussion extends to how sharing the effort behind product creation, such as Dyson's prototyping process, can elevate perceived value.

Brand Strategies to Leverage Insights

Shotton reveals how brands can influence consumer decisions through various psychological principles. He discusses KFC's successful use of scarcity in Australia, where limiting fries to four bags per person increased their perceived value. The conversation turns to framing, where Shotton references Kahneman and Tversky's work on loss aversion, showing how presenting benefits as potential losses rather than gains can be more effective. The importance of credible messengers in marketing is highlighted, with examples ranging from traditional endorsements to modern influencer partnerships.

Context and Time's Impact on Purchases

The discussion explores how timing affects consumer choices. Shotton describes the "Give More Tomorrow" pension scheme, which leverages people's tendency to make better decisions about future events. He explains how online shopping can lead to healthier choices but may also result in less varied purchasing patterns. The concept of moral licensing is introduced, where Shotton describes how performing virtuous acts (like buying healthy foods) can lead to subsequent indulgent behavior, a principle some supermarkets use in their store layouts.

Overcoming Resistance to New Ideas and Innovations

Shotton illustrates the challenge of implementing new ideas through the historical example of Ignaz Semmelweis, who faced significant resistance when introducing hand-washing protocols in the 1840s. Despite dramatically reducing maternal death rates, Semmelweis's innovation was initially rejected by his peers. This case study demonstrates the broader challenge of introducing beneficial changes in the face of established practices and beliefs.

1-Page Summary

Additional Materials

Counterarguments

  • Focusing on a single product may enhance brand credibility, but it can also limit market reach and fail to meet diverse consumer needs.
  • Unique packaging, like Red Bull's, may allow for premium pricing, but it could also alienate price-sensitive consumers and be perceived as environmentally unfriendly.
  • Admitting a product's flaw can increase appeal, but if not handled correctly, it could reinforce negative perceptions and deter potential customers.
  • Sharing the effort behind product creation can elevate perceived value, but it might also increase the product's cost, making it less competitive in price-sensitive markets.
  • Scarcity, such as KFC's fry limitation, can increase perceived value, but it may frustrate consumers and push them towards competitors with more availability.
  • Framing benefits as potential losses can be effective, but overuse of negative framing could create a pessimistic brand image and reduce consumer engagement.
  • Credible messengers can enhance marketing, but reliance on endorsements and influencers can backfire if the spokesperson's credibility is later questioned.
  • Timing strategies like the "Give More Tomorrow" scheme can be beneficial, but they may also be seen as manipulative or paternalistic by consumers.
  • Online shopping leading to healthier choices could be true, but it may also reduce impulse purchases that are important for retail profitability.
  • Moral licensing might lead to indulgent behavior, but emphasizing this could encourage unhealthy consumption patterns and be seen as unethical marketing.
  • Resistance to new ideas, as with Semmelweis's hand-washing protocols, is common, but sometimes skepticism can protect against the adoption of ideas that are not well-vetted or truly beneficial.

Actionables

  • You can enhance your personal brand by specializing in a skill or hobby and sharing your progress on social media. Just as Five Guys focuses on burgers to build brand credibility, you can become known for a particular talent or interest by consistently posting about your experiences, improvements, and insights, which can lead to opportunities such as collaborations, speaking engagements, or even job offers.
  • Create a unique resume or portfolio design to stand out in job applications. Taking inspiration from Red Bull's packaging strategy, design your resume or portfolio in a way that distinguishes you from other candidates, making it difficult for employers to make direct comparisons based on standard criteria alone. This could involve using a unique layout, personalized graphics, or an interactive digital format that showcases your creativity and skills in a memorable way.
  • When negotiating or making decisions, frame the benefits of your preferred option in terms of what others stand to lose if they don't agree. Drawing on the concept of loss aversion, you can make your proposals more persuasive by highlighting the negative consequences of not taking action, such as missing out on potential savings or opportunities, rather than just the positive outcomes of following your suggestion.

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#1053 - Richard Shotton - 11 Psychology Tricks From the World’s Best Brands

Behavioral Science Principles That Influence Consumer Behavior

Behavioral science offers insightful principles into how consumers perceive and interact with products and services. Richard Shotton delves into these principles to clarify how brands can craft marketing strategies that resonate with their audiences.

Principles Shaping Consumer Perception and Behavior

These core principles act as guiding posts for understanding consumer behavior, with real-world applications provided through brands that have successfully applied these techniques.

Mastering one Core Focus Boosts Credibility, Like Five Guys

Richard Shotton emphasizes the value of specializing in a single product or service. Five Guys, for instance, concentrated on a straightforward offering of burgers and chips, which set them apart from other fast-food chains that extended their menus. This focus can build greater credibility with consumers—they are likely to trust that you can master one thing much more readily than many.

Value Is Perceived Relatively: Red Bull's Pricing Strategy

Price relativity is another principle Richard Shotton discusses, noting that consumers assess value by comparing similar purchases. When Red Bull entered the market, they avoided direct pricing comparisons with other sodas by opting for taller, thinner cans, thus altering the mental comparison set consumers used. This differentiator allowed Red Bull to command a higher price point, as consumers perceived it as offering unique value.

Chris Williamson brings a modern example to the table with their energy drink, priced as the most expensive option in Morrison's local meal deal, exploring whether consumers will see it as offering greater value due to its cost.

Admitting Flaws Boosts Product Appeal, Shown by Guinness' "Good Things Come To Those Who Wait" Campaign

The pratfall effect is a concept Richard Shotton discusses, using Guinness's campaign as an example. This principle suggests that admitting a flaw—a longer wait time for the perfect pour, in Guinness's ...

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Behavioral Science Principles That Influence Consumer Behavior

Additional Materials

Clarifications

  • Richard Shotton is a well-known behavioral science expert specializing in marketing. He has authored books and articles that apply psychology to advertising strategies. His work is respected for bridging academic research and practical marketing applications. This makes his insights valuable for brands aiming to influence consumer behavior.
  • The pratfall effect is a psychological phenomenon where showing a small flaw or mistake makes a person or product seem more relatable and likable. It reduces the perception of perfection, which can make consumers feel more connected and trusting. In marketing, admitting minor flaws can humanize a brand and increase its appeal. This effect works because people often prefer authenticity over flawless perfection.
  • The "Good Things Come To Those Who Wait" campaign highlighted the longer pouring time required for a perfect Guinness pint. This delay was framed as a positive, signaling quality and craftsmanship rather than a flaw. Admitting this "flaw" made the brand appear more authentic and trustworthy. This approach leverages the pratfall effect, where showing vulnerability can increase consumer liking.
  • A "mental comparison set" is the group of products a consumer naturally compares when evaluating a purchase. It shapes how they perceive value and price by setting a reference point. If a product is placed outside the usual set, it can justify a higher price. Marketers manipulate this to influence willingness to pay.
  • Red Bull's taller, thinner cans create a unique visual identity that sets them apart from traditional soda cans. This shape changes the consumer's mental comparison group from regular sodas to premium or specialty drinks. As a result, consumers perceive Red Bull as a distinct, higher-value product rather than a direct soda competitor. This perception allows Red Bull to justify a higher price point.
  • Chris Williamson's energy drink example illustrates how pricing can influence perceived value in a real-world setting. By positioning the drink as the most expensive option in a local meal deal, it tests whether higher cost leads consumers to assume better quality or benefits. This reflects the behavioral principle that consumers often use price as a shortcut to judge value. The example shows how brands can strategically set prices to shape consu ...

Counterarguments

  • Specializing in a single product or service might limit a brand's market reach and could be risky if consumer preferences shift away from the specialized offering.
  • Consumers might perceive value in diversity and variety, which could lead them to favor brands with a broader range of products or services.
  • Premium pricing strategies, like the one used by Red Bull, may not work for all products or in all markets, especially if consumers are price-sensitive or if there are strong competitors.
  • Admitting flaws or limitations might not always be beneficial; it could backfire if the flaw is deemed too significant or if the competition offers a similar product without such flaws.
  • Emphasizing the time and effort put into product creation could be less effective if consumers are more concerned with the end result or functionality rather than the creation process.
  • The effectiveness of marketing campaigns that highlight product imperfections or the creation process may vary depending on ...

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#1053 - Richard Shotton - 11 Psychology Tricks From the World’s Best Brands

Brand Strategies to Leverage Insights

Experts discuss how brands can influence consumer decisions by utilizing behavioral science concepts such as scarcity, framing, and the messenger effect.

Brands Influence Consumer Decisions With Scarcity, Framing, and the Messenger Effect

Scarcity Boost: Kfc's "Max Fries per Person" Promotion Increases Value

Richard Shotton introduces the concept of scarcity in marketing, citing KFC's promotional strategy in Australia as an example. KFC advertised $1 chips (fries) with a marketing campaign condition that customers were limited to purchasing just four bags per person. Highlighting this limit suggested that the chips may sell out or the deal was so disadvantageous to KFC that they needed to impose limits, thus creating a perception of value. A test showed that indicating a purchasing limit on beer enhanced its perceived value among respondents significantly, illustrating scarcity's effectiveness.

Chris Williamson notes the irony of creating scarcity with KFC fries, considered the worst, emphasizing how scarcity can make even a non-unique product appear more desirable. Shotton acknowledges customer suspicions over potential quality compromises during promotions but argues that the physical restriction of the counter staff not serving more than four portions per person substantiates the scarcity claim.

Framing Product Benefits As Gains vs. Losses Impacts Intent

Chris Williamson speaks to the importance of focusing on outcomes, not products, to influence consumer decisions. He illustrates this point with the success of Grenade bars, which are priced higher than regular chocolate bars and marketed as a healthier option with additional protein, leveraging the framing of product benefits as a health gain.

Richard Shotton supports the idea of selling outcomes, like the benefits of loft insulation framed as a loss rather than savings, a concept discussed by Kahneman and Tversky, which leads to a higher response rate due to loss aversion. He references Elliot Aronson's study where homeowners were significantly more responsive to the insulation pitch when presented as a loss rather than a gain. Furthermore, Shotton elaborates on the messenger effect, emphasizing the importance of neutrality, credibility, and relatability in influencing consumer decisions.

Wil ...

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Brand Strategies to Leverage Insights

Additional Materials

Clarifications

  • Framing in behavioral science refers to presenting the same information in different ways to influence decisions. People tend to react differently depending on whether outcomes are framed as gains or losses, often showing loss aversion. This means losses typically feel more impactful than equivalent gains, affecting choices and preferences. Marketers use framing to highlight benefits or risks to steer consumer behavior effectively.
  • The messenger effect refers to how the person delivering a message influences how the message is received. Neutrality ensures the messenger is seen as unbiased, increasing trust. Credibility means the messenger is knowledgeable or authoritative, making the message more convincing. Relatability allows the audience to connect with the messenger, enhancing engagement and acceptance.
  • Kahneman and Tversky developed Prospect Theory, which shows people feel losses more intensely than equivalent gains. This means individuals are more motivated to avoid losing something than to acquire something of equal value. Loss aversion explains why framing outcomes as losses can be more persuasive than framing them as gains. It highlights a key bias in human decision-making under risk.
  • Elliot Aronson's study demonstrated that people respond more strongly to messages framed as avoiding losses rather than achieving gains, a concept known as loss aversion. In the study, homeowners were more motivated to install loft insulation when the benefits were presented as preventing energy loss (a loss) rather than saving money (a gain). This finding supports behavioral economics theories by Kahneman and Tversky about how framing affects decision-making. It highlights the power of framing in marketing to increase consumer engagement and action.
  • "Splitting the G" refers to a specific technique in pouring Guinness beer where the pour is paused to create a distinct separation in the foam, resembling the letter "G." This ritual enhances the drinking experience by emphasizing the beer's unique texture and quality. It also serves as a memorable, shareable moment that builds brand identity and customer engagement. The tradition adds a sense of craftsmanship and authenticity to Guinness.
  • Scarcity triggers a psychological principle called "loss aversion," where people fear missing out on limited items. This fear increases desire, making even low-quality products seem more valuable. Scarcity also signals popularity or exc ...

Counterarguments

  • Scarcity can sometimes backfire if consumers perceive it as a manipulative tactic, leading to distrust and damage to the brand's reputation.
  • The effectiveness of scarcity might not be sustainable in the long term as consumers may become desensitized to such marketing tactics.
  • Framing product benefits as gains or losses may not have a uniform effect across different cultures or consumer segments, as individual differences can affect how people respond to these strategies.
  • The messenger effect relies heavily on the credibility of the influencer or endorser, which can be volatile if the messenger's reputation changes negatively.
  • Influencers transitioning into company roles may not always be beneficial if their personal brand does not align with the company's values or if their influence wanes over time.
  • The success of the Guinness "pint-pouring" tradition may not be replicable for all brands, as it relies on a unique aspect of the product that may not e ...

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#1053 - Richard Shotton - 11 Psychology Tricks From the World’s Best Brands

Context and Time's Impact on Purchases

The hosts and guests discuss various ways that the context and timing of product availability impact consumer behavior, demonstrating the psychological underpinnings of purchasing decisions.

Timing and Availability Influence Consumer Perception and Behavior

Immediate vs. Delayed Consumption Choices in the "Give More Tomorrow" Pension Program

Richard Shotton discusses how immediate versus delayed consumption choices impact consumer behavior, specifically citing the "Give More Tomorrow" pension scheme. This plan employs the present bias principle, where people are more willing to commit to future pension contributions coinciding with a pay raise. This is because people prefer not to sacrifice immediate resources, associating more value with the present than the future.

Online Shopping Eases Repeating Past Purchases

The conversation then turns towards the benefits of online shopping for consumer habits. Online shopping facilitates healthier choices because people are making decisions for future consumption, which tends to be healthier compared to immediate consumption choices. However, it also leads to consumer behavior becoming less varied, as the ease of reordering past purchases can result in a narrower range of foods in shopping baskets over time.

Indulgent Items Leverage "Moral Licensing" and Boost Sales

Shotton introduces the concept of moral licensing, where individuals who have performed a virtuous act may feel licensed to engage in less virtuous behavior. He refers to a study conducted by someone believed to be named Chiu, where smokers were given sugar pills but s ...

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Context and Time's Impact on Purchases

Additional Materials

Clarifications

  • Present bias is a cognitive tendency where people disproportionately prefer immediate rewards over future benefits, even if waiting would yield a better outcome. This leads to decisions that favor short-term gratification at the expense of long-term goals. It occurs because the brain values present experiences more strongly than future ones. This bias can cause procrastination or underinvestment in future needs like savings or health.
  • The "Give More Tomorrow" pension program allows employees to commit in advance to increase their pension contributions when they receive future pay raises. This approach leverages people's tendency to avoid reducing their current income while encouraging higher savings over time. Contributions automatically rise with salary increases, making the process effortless and less painful. It helps overcome present bias by shifting the sacrifice to the future rather than the present.
  • Moral licensing is a cognitive bias where past good behavior makes people feel justified in doing something bad or indulgent afterward. It creates a mental "license" to relax self-control because the prior virtuous act is seen as balancing out the negative behavior. This effect can influence decisions in various contexts, including health, ethics, and consumer choices. Marketers exploit this by encouraging small virtuous acts to increase the likelihood of subsequent indulgent purchases.
  • The study by Chiu et al. investigated how perceived virtuous actions influence subsequent behavior. Smokers given sugar pills were told some were vitamins, creating a false sense of healthiness. Those who believed they took vitamins felt licensed to take more health risks afterward. This demonstrated moral licensing, where a good deed justifies indulgent actions.
  • Placing fresh fruits and vegetables at store entrances signals healthy choices to shoppers immediately. This primes customers to feel they are making good, virtuous decisions. The initial sense of virtue can reduce guilt later when buying indulgent or less healthy items. This psychological effect is a form of moral licensing.
  • The ban on treat items at checkout counters in Britain aims to reduce impulse buying of unhealthy snacks. These items are often placed strategically to exploit moral licensing, where customers feel justifie ...

Counterarguments

  • Present bias is not the only factor influencing immediate versus delayed consumption; factors such as financial literacy, long-term planning, and individual differences in impulsivity also play significant roles.
  • The success of the "Give More Tomorrow" program may not solely be due to present bias exploitation; it could also be attributed to increased financial security at the time of the pay raise, making it easier to commit to future contributions.
  • Online shopping might not always facilitate healthier choices; it can also lead to impulse purchases due to targeted advertising and the ease of adding items to a virtual cart.
  • The claim that online shopping leads to less varied consumer behavior could be challenged by the vast array of options available online, which might encourage exploration and diversification of purchases.
  • Moral licensing is a complex phenomenon, and not all individuals may experience it in the same way; some may not feel licensed to indulge after a virtuous act, depending on their personal values and self-control.
  • The study involving smokers and sugar pills might not be generalizable to all forms of indulgent behavior or to al ...

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#1053 - Richard Shotton - 11 Psychology Tricks From the World’s Best Brands

Overcoming Resistance to New Ideas and Innovations

In the podcast, Richard Shotton discusses the natural tendency to dismiss unfamiliar concepts, illustrating his points with the historical case of Ignaz Semmelweis and his hand-washing protocol.

Beneficial Innovations Face Resistance: The Semmelweis Story

The "Semmelweis reflex" describes people's inclination to reject new information that contravenes established norms or beliefs. This reflex signifies the difficulty people face in accepting that their current understanding, especially of their professional work, might be fundamentally flawed.

Semmelweis' Hand-Washing Protocol Faced Skepticism

Shotton uses Semmelweis as a powerful example. In the 1840s in Vienna, doctor Ignaz Semmelweis observed disturbingly high maternal death rates during childbirth in hospital wards supervised by doctors, which were remarkably higher than those managed by midwives. Upon investigating, he theorized that doctors were inadvertently transferring "cadaverous particles" from autopsies to the women they were attending in labor.

To combat this, Semmelweis instituted a rigorous hand-washing regimen using a chlorine solution. His initiative drastically slashed the death rate from about 10-12% to 3%. Despite the success clearly demonstrated by the data, many of his medical peers resisted the hand-washing practice. Shotton connects these historical events to the broader challenge of instituting new, beneficial practices in the face of entrenched skepticis ...

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Overcoming Resistance to New Ideas and Innovations

Additional Materials

Clarifications

  • The term "Semmelweis reflex" is named after Ignaz Semmelweis, who faced rejection for his hand-washing discovery. It describes the automatic rejection of new ideas that challenge established beliefs. The phrase highlights a cognitive bias where people resist change to protect their existing worldview. This reflex often hinders progress despite evidence supporting innovation.
  • Ignaz Semmelweis was a Hungarian physician known as the "father of infection control." He discovered that hand-washing with chlorinated lime solutions drastically reduced puerperal fever deaths in maternity wards. His work laid the foundation for antiseptic procedures in medicine. Despite initial rejection, his findings eventually transformed hospital hygiene practices worldwide.
  • In the 1840s, medical knowledge about infection and germs was very limited. Doctors often moved between autopsies and patient care without washing hands. Hospitals were crowded and hygiene standards were poor, leading to high infection rates. This lack of understanding made Semmelweis' hand-washing idea revolutionary but hard to accept.
  • "Cadaverous particles" referred to microscopic organic matter from dead bodies that Semmelweis believed doctors carried on their hands after performing autopsies. At the time, germ theory was not yet established, so these particles were thought to cause disease and infection. They were considered harmful because they transmitted deadly infections to patients during childbirth. This idea was a precursor to understanding how germs spread infections.
  • Doctors' wards had higher maternal death rates because doctors often performed autopsies before attending childbirth without washing their hands. This practice transferred infectious "cadaverous particles" to mothers, causing puerperal fever. Midwives did not perform autopsies and thus did not carry these infections. The lack of hygiene knowledge and hand-washing protocols led to the higher death rates in doctors' wards.
  • Chlorine solution was used by Semmelweis because it effectively killed the bacteria and organic matter causing infections. At the time, germ theory was not yet established, so the solution's disinfectant properties were crucial in preventing disease transmission. This was a novel approach compared to simple water washing, which did not eliminate harmful particles. The use of chlorine significantly reduced infection rates by sterilizing doctors' hands.
  • The medical community resisted Semmelweis' protocol because it challenged their professional pride and implied they were causing patient deaths. Germ theory was not yet established, so the idea of invisible "particles" causing disease was hard to accept. Many doctors rejected the notion that they could be responsible for infections, seeing it as an affront to their competence. Additionally, Semmelweis struggled to effectively communicate and convince his peers, which hindered acceptance.
  • Behavioral ...

Actionables

  • You can challenge your own Semmelweis reflex by keeping a journal where you note instances when you feel resistant to new information. Reflect on these moments weekly to identify patterns in your resistance and consider alternative perspectives that might be more accurate or helpful.
  • Create a "Change Advocate" group with friends or colleagues where you share and discuss innovative ideas in your respective fields. Use this as a practice ground to refine your approach to presenting new concepts, focusing on understanding the concerns and values of others to tailor your communication effectively.
  • Develop a habit of conducting "idea experiments" in yo ...

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