Introduction
A cognitive bias is a systematic pattern of deviation from norm or rationality in judgment, but probably a systematic error in thinking that happens when people process information, which affects the decisions they make. An individual's construction of reality, not the objective input, may dictate their behaviour in the world.
Our brain attempts to simplify what is around us, and one result is cognitive bias. If you think about these biases for your audience and your buyer, they influence how they think, and ultimately on their decision to buy
Understanding how cognitive biases can influence the way customers perceive and make decisions about products is table stakes for any marketing professional.
Lets go through 15 cognitive biases relevant to
- Anchoring
- Confirmation bias
- Loss aversion
- Peak-end rule
- Sunk cost fallacy
- Cocktail party effect
- Choice supportive bias
- Framing effect
- Bandwagon effect
- Zero-risk bias
- Mere exposure effect
- The halo effect
- Suggestibility bias
- Recency bias
- Scarcity bias
1. Anchoring
With anchoring bias, people are tend to rely too heavily on the first piece of information they receive when making decisions, and hence likely to purchase a product that was first presented to them. Marketers can use this bias by providing an initial price or offer that will anchor the customer's perception of subsequent offers.
Example: Rolls Royce’s favourite exhibition spot is yacht and aircraft shows.
“If you’ve been looking at jets all morning, a £300,000 car is an impulse buy. It's like putting sweets next to the counter”
2. Confirmation bias
Confirmation bias is a cognitive bias that refers to people's tendency to give more weight to information that supports their existing beliefs, while downplaying information that contradicts their beliefs. Us humans tend to stick to our beliefs, and look around for confirmation of our beliefs.
It's important to seek out and consider a variety of perspectives and evidence, and to be open to the possibility that one's beliefs may be incorrect.
In marketing, confirmation bias can lead to poor decision-making, such as investing in a product or service that is unlikely to be successful, because people only seek out and pay attention to information that confirms their beliefs about the product.
*note: example youtube video to embed to test out functionality
3. Loss aversion
Loss aversion is a cognitive bias that refers to people's tendency to strongly prefer avoiding losses to acquiring equivalent gains. It is one you will see most days — a lot of brands create a fallacy of a potential loss.
In marketing, loss aversion can be used to influence consumer behavior by highlighting the potential losses associated with not purchasing a product or service. For example, a marketer might use fear-based messaging, such as "don't miss out on this limited-time offer" or "act now before it's too late", to create a sense of urgency and to prevent potential losses.
4. Peak-end rule
The peak-end rule is a cognitive bias that refers to the way people tend to remember and evaluate the overall experience of an event based on two factors: the peak of the experience (the most intense or extreme part) and the end of the experience. The peak-end rule suggests that people tend to judge an experience based on these two points rather than the overall duration or intensity of the experience.
In marketing, the peak-end rule can be used to influence customer satisfaction and loyalty by creating positive peaks and ends in the customer experience. For example, a business might try to create a positive peak by offering an exceptional product or service, or by providing exceptional customer service at the end of a transaction.
The peak-end rule highlights the importance of creating positive and memorable experiences for customers, and how the most intense or extreme moments and how the experience ends can have a disproportionate impact on how the overall experience is remembered and evaluated.
Example: Swedish Blood Banks and The Peak End Rule
When you donate blood in Sweden you get sent a follow up text when your blood’s been used. The happy ending makes us want to do it again.
5. Sunk cost fallacy
The sunk cost fallacy is a cognitive bias that occurs when people persist with a course of action because they have already invested resources into it, even if continuing is no longer rational. This bias is based on the idea that people feel a sense of loss aversion, meaning that they are reluctant to let go of something they have invested in, such as time, money, or effort.
Example 1: Peloton and The Sunk Cost Fallacy (Money)
A peloton costs $2000. The subscription costs $39/mo. So, either, you're locked in, or you admit to your spouse you've thrown away $2000.
6. Cocktail party effect
The cocktail party effect is a phenomenon in which a person is able to selectively attend to one conversation or source of information while filtering out others. In marketing, the cocktail party effect can be used to grab the attention of potential customers by making a message stand out from the background noise. For example, an advertisement that is louder or more visually striking than the surrounding ads is more likely to be noticed by a person.
Example: The sweetest sound in any language is our name. So Starbucks stopped calling out the drink and started using the customer's name instead.
7. Choice supportive bias
Choice supportive bias refers to the tendency for people to evaluate their past choices more positively than they would have before making the decision. This bias is rooted in the idea that after making a choice, people tend to justify their decision by focusing on the positive aspects of the chosen option and disregarding or downplaying the negative aspects.
In marketing, choice supportive bias can be used to influence consumer behavior by making it easy for people to justify their purchase decisions — buy something desirable first and justify it later
8. Framing effect
The framing effect is a cognitive bias that refers to the way people can be influenced to make decisions based on how a choice is presented or "framed".
In marketing, the framing effect can be used to influence consumer behavior by presenting a product or service in a way that highlights its positive aspects. For example, a marketer might frame a product as a solution to a problem, rather than just a product.
9. Bandwagon effect
The bandwagon effect is a cognitive bias where a consumer is more likely to purchase a product that is being purchased by others. There is a tendency for people to conform to the actions and opinions of a group, especially when they are uncertain about what to do.
In marketing, the bandwagon effect can be used to influence consumer behavior by creating the perception that a product or service is popular or widely accepted. For example, a marketer might use social proof, such as customer testimonials or endorsements, to create the perception that a product is popular and widely accepted.
10. Zero-risk bias
Zero-risk bias is a cognitive bias that refers to the tendency for people to prefer a complete absence of risk, even if that means forgoing potential benefits or opportunities.
A consumer is more likely to purchase a product if they feel it is low on risk, even if this is not entirely true.
11. Mere exposure effect
As the name suggests, mere exposure to a product can help in swaying the purchase decision of the consumers. If a product has high in-store visibility, a consumer is more likely to believe that the product is a popular one, hence creating a trigger for a purchase decision. Such a bias is commonly exploited by the consumer goods industry. Store shelves are packed with goods that have better margins so that the consumer goes for that particular product, resulting in better sales.
12. The halo effect
The halo effect is a cognitive bias that occurs when people perceive a person or product favourably based on one positive trait or feature. This bias can lead people to make judgments or evaluations based on a single characteristic, rather than considering all relevant information. Marketers can use this bias by highlighting the most positive feature of the product or service.
13. Suggestibility bias
The suggestibility bias, also known as the "suggestion effect" or the "ideomotor effect", refers to the phenomenon in which people can be influenced to respond or behave in a certain way based on subtle cues or suggestions.
In marketing, for example, a subtle cue such as a smiley face next to a product can make people more likely to perceive the product as positive.
14. Recency bias
People tend to remember the most recent information they received better than the information they received earlier. Marketers can use this bias by making sure their message is the last thing a customer sees or hears before making a purchase.
15. Scarcity bias
Scarcity bias is a cognitive bias that occurs when people tend to assign more value to something that is scarce or in limited supply. This bias is based on the idea that people perceive things to be more valuable when they are rare or hard to obtain. Scarcity bias is related to other cognitive biases such as loss aversion and the sunk cost fallacy
Marketers can use this bias by creating a sense of urgency or scarcity around a product or service.
Last words
As marketers, it is imperative to be aware of these cognitive biases in our word — as simple as knowing about them will make you more in tune with you audience and make your marketing strategy more effective.