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By Pamela Cooke

6 core marketing principles and how they are used on you

Human behavioral patterns are fascinating and downright intriguing. In no area is this more apparent than in making purchase decisions. Many people admit to buying things they neither need nor can afford repeatedly. Sheltered by some privacy, some even report that often, they are aware when they are about to make such choices yet they still go ahead and make them anyway!

The consumerism culture

It is common knowledge that scientists and multinationals have sunk significant resources to uncover and implement marketing principles that encourage consumerism, and some of these laws could be the reason behind your poor financial choices. Read about them below with a retrospective frame of mind, and you will recognize the various times they were used on you to encourage spending.

1. The give-and-take principle

A while back, members of the controversial Hare Krishna society used to source for donations in airport hallways. They would forcefully offer roses to travelers only to ambush their victims later with requests for donations. The strategy worked like a charm, and they collected millions!

As humans, we feel indebted once we are offered something for free or as a favor. If a repayment channel is availed, then, we almost always make use of it. Trading favors is universally accepted, and anyone flouting this unwritten code is seen as distasteful and uncouth.

Companies and salespersons use this same rule to rope in customers. They offer free samples, crazy discounts and gifts. In return, people feel obliged to buy whatever it is being sold – often, regardless of its usefulness. This strategy is also extensively used to foster customer loyalty.

2. The rapidly diminishing supply principle

A beef dealer involved in imported meats from Australia genuinely notified his clients that there was a forthcoming supply dip due to the weather. He received over twice the usual orders. A while later, he informed his customers that this information was courtesy of exclusive contacts in the Australian weather department. His orders increased six-fold!

People get into a purchasing frenzy when scarcity is implied – truthfully or otherwise. This frenzy is more pronounced if people learn that the scarcity is founded on exclusive data from reliable sources. This principle is the reason behind sales phrases such as "Hurry while stocks last." It is also why most offers are time-limited so as to introduce an element of scarcity and cash in on the inherent fear people have of losing out.

3. The concession principle

Best observed in haggling; the seller makes a ridiculous offer on something you are interested in, and you protest profusely, threatening to walk away. The merchant immediately makes a concession and quotes a slightly reasonable offer, to which you may again protest. The process goes on until you feel comfortable with the terms and make a purchase.

Often, however, the seller starts off with a grossly inflated value of the item which gives him/her the flexibility to make several concessions. Assuming you settle on the second or third concession, the vendor makes good money, and you feel like you have gotten a good deal.

The best way to avoid falling for this marketing strategy is to research and know the real value of what you intend to purchase. Situationally appropriate versions of this principle are heavily used in negotiations, closing business deals, legal settlements, etc.

4. The commitment principle

A restaurant owner faced the difficulty of individuals who made reservations yet failed to show up without giving notice. Interested in finding a solution, when clients were making reservations, he directed his receptionists to say "Will you give us a call in case you change your plans?" which prompted a commitment as opposed to saying "Please call us in case you change your plans." The effect was profound and immediate; the percentage of no-shows reduced by 20 percent.

Little commitments have the power to alter self-image and make you act contrary to your desires. Exploitative individuals and marketers are in the habit of making people commit by asking a harmless "How are you?" or, "this product is good, isn't it?" If you say fine, he/she asks for a handout, or pushes the product down your throat and you find it hard to object since you agreed you were fine or the product was good a moment ago. The only way to beat this strategy is to learn to say no when you feel cornered.

5. The social proof principle

People are more likely to do something if those before them have done the same. Beggars and bartenders put a few "seed" dollars in their jars to promote the perception that people are in the habit of giving, or tipping them. When someone approaches you with a donation list where all entries exceed $50, even if you intended to give only $20, you will feel pressured to give $50 or more since it is what others have given.

Research on comedies has proved that "canned laughter," the scenario where comedy show makers inject fake laughter into scenes perceived as funny, results in the audience laughing harder and longer. The only way to beat this principle is by avoiding making decisions based on what others are doing.

6. The authority principle

Luxury vehicles, due to perceived authority, are honked at less often and get more leeway, according to research. People respect authority, whether real or subtly suggested, without giving a second thought. In social gatherings, people listen more intently to speakers introduced with titles such as professor, doctor, engineer, etc., as opposed to those introduced without a title.

This principle is the reason why almost all toothpaste brands are "recommended by dentists." It is also why most online advisers paint themselves as experts in a particular field. It is one of the harder principles to beat unless you take the effort to substantiate whether the authority in question is legitimate.

Final thoughts

The principles above are so ingrained that without due effort, you will still easily fall victim. Though they are used positively often enough, most times, they are used in an exploitative manner by firms and unscrupulous individuals. If you consistently make regrettable financial decisions, knowing the above marketing precepts by heart will help protect you from exploitation.

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