Whitbread: ‘Psychology is teeming with potential for marketers’

Festival of Marketing 2013: Costa Coffee and Premier Inn owner Whitbread’s head of CRM and loyalty, David Oliver, has advised marketers to make use of behavioural psychology to predict the customer behaviour that affects their actions and decisions.

costa

Speaking at Jump, part of the Marketing Week and Econsultancy Festival of Marketing in London, Oliver said: “Psychology is teeming with potential for us in marketing if we can work out how to apply it and understand how consumers make decisions.”

He used the example of “social proof”, a behavioural psychology where a person’s actions and decisions are influenced by those around them. He claimed that humans are very vulnerable to making automatic instinctive decisions based on what others around them are doing.

“Humans are configured to be lazy and make the quick, easy decision. We are all open to influence and one of the key sources of that is how people around us behave. We can play to that as marketers,” he added.

A number of businesses are already taking advantage of this type of human behaviour. For example, nightclubs will leave people queuing outside even if it is not very busy inside to make a venue seem popular and drum up demand. Similarly, cafes and restaurants with a tip jar will never leave it empty, knowing that customers are more likely to throw their change in if it looks like someone else has already done so.

There are also a number of brands successfully tapping into this, the most obvious example being Apple. It has been so successful because it “harnessed the enthusiasm of early adopters” to convince the masses to buy its products, Oliver said.

He added: “A few years ago Apple was stuck with the early adopter niche and couldn’t jump into the mainstream. But it harnessed the enthusiasm of early adopters, creating hype around product launches and using current customers’ reactions to convince new customers they should make a purchase.”

Online retailers such as Amazon are similarly good at convincing consumers to make purchases based on what others are doing, according to Oliver. Showing users products that are “frequently bought together” and “what other items customers buy after viewing a product” makes them feel like they might be missing out if they don’t take look.

“We are hugely vulnerable to other people’s opinions. Retailers like Amazon are using this to influence buying decisions,” says Oliver.

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