Sunday, February 22, 2015

Why Human Psychology Remains Critical to Successful Marketing

Three themes have dominated much of the conversation about marketing over the past few years - technology, data, and content. The explosive proliferation of marketing technologies has been frequently documented. For example, Scott Brinker's latest graphic of the marketing technology landscape includes almost 1,000 solution providers. "Big data" has become one of the hottest buzzwords in marketing circles, and many companies are investing heavily in analytics technologies to gain the benefits that big data appears to offer.

Meanwhile, the popularity of content marketing continues to grow According to the latest content marketing survey by the Content Marketing Institute and MarketingProfs, over 75% of companies are now using content marketing, and about 70% of marketers say they are producing more content now than they were a year ago.

Technology, data, and content are all critical components of successful marketing in a world of abundant information and empowered buyers. However, it's equally important to remember that buying decisions are still made by human beings, and therefore it's never been more important for marketers to understand how people make economic decisions and to incorporate psychological principles of human decision-making into marketing strategy and marketing content.

For decades, most economists have assumed that humans make economic decisions rationally. According to standard economic theory, they weigh the economic costs and benefits of their decisions, have relatively stable preferences, and they usually act to maximize their economic self interest. In the late 1970's, psychologists Daniel Kahneman (who later won the Nobel Prize for economics) and Amos Tversky began publishing a number of scientific papers that contradicted the rational view of human nature held by mainstream economists.

Kahneman and Tversky's work pioneered a new discipline that later came to be called behavioral economics. In 2008, two books - Predictably Irrational by Dan Ariely and Nudge by Richard Thaler and Cass Sunstein - raised popular awareness of behavioral economics and put it on the radar screens of business and marketing leaders.

The truth is, marketers have been using some principles of behavioral economics for years, albeit largely unwittingly. A 2010 article in McKinsey Quarterly put it this way:  "Long before behavioral economics had a name, marketers were using it. 'Three for the price of two' offers and extended-payment layaway plans became widespread because they worked - not because marketers had run scientific studies showing that people prefer a supposedly free incentive to an equivalent price discount or that people often behave irrationally when thinking about future consequences. Yet despite marketing's inadvertent leadership in using principles of behavioral economics, few companies use them in a systematic way."

If behavioral economics were nothing more than an interesting academic topic, marketers might be justified in giving it only passing attention. In reality, however, behavioral economics is important for virtually all aspects of marketing. For example, in all five of the annual content marketing surveys by CMI/MarketingProfs, producing engaging content has been one of the top three challenges identified by survey respondents. Behavioral economics provides many insights that can help marketers make their content more engaging and effective.

My main objective of this post is to introduce the topic of behavioral economics to those who may not have heard of it. I also want to make the point that, despite the growing importance of technology and data in marketing, an understanding of human decision-making remains critical to marketing success. In coming weeks, I'll be publishing several posts that will describe some of the major principles of behavioral economics and explain how marketers can apply those principles to improve the effectiveness of marketing content.

Sunday, February 15, 2015

Why You Need Marketing Content That Builds Certainty

Some time ago, I published a post that explained why you need marketing content that specifically addresses the fear, uncertainty, and doubt that potential buyers inevitably experience as they move through the buying process. It's equally important to have marketing content that's specifically designed to foster certainty in the minds of potential buyers.

As I'm using the term, certainty refers to the subjective sense of confidence or conviction that one has about an attitude or belief. Recent research has revealed the important role that attitude certainty plays in buying decisions. A high level of certainty regarding the positive attributes of a proposed purchase will make potential buyers:

  • More likely to buy, more likely to buy sooner, and more willing to spend more
  • More likely to recommend going forward with a proposed purchase and more likely to recommend a product, service, or company to friends or colleagues
  • Less likely to change their attitudes or yield to persuasion
Attitude certainty is what causes potential buyers to be willing to act on their attitudes or beliefs. Research has also shown that feelings of certainty about an attitude are independent of the attitude itself. This means that certainty is a distinct, viable, and important target of influence for marketers. In other words, marketers should focus on creating the right attitudes in the minds of potential buyers and on increasing buyers' feelings of certainty about those attitudes.

In a recent presentation, Dr. Zakary Tormala, an associate professor of marketing at the Stanford Graduate School of Business, identified six factors that drive increased feelings of certainty in the minds of potential buyers.
  • Complete information - Buyers feel more certain when they believe they have complete information about a proposed solution (or at least sufficient information to make a sound purchase decision).
  • Consistent information - Buyers feel more certain when the information they have regarding the benefits, costs, and risks of a proposed solution is consistent.
  • Consensus - Buyers feel more certain when they believe their attitudes or beliefs are widely shared. Consensus is a heuristic that makes us believe an attitude is correct.
  • Repetition - Buyers feel more certain about their attitudes when they express them repeatedly.
  • Ease - Buyers feel more certain of beliefs and attitudes that come to mind easily.
  • Defending an attitude - Buyers feel more certain about their attitudes after they defend those attitudes to others.
The first two factors listed above are obviously essential for both engendering the right attitudes and increasing attitude certainty. Of the remaining four factors, two are particularly important for marketers.

First, marketers should take every opportunity to emphasize that desirable attitudes and opinions are widely shared. So for example, you should use research data in your content to support your benefit claims whenever possible. Second, make desirable attitudes easy to understand and recall. Providing three compelling, easy-to-remember reasons to support a desired attitude can be more powerful than providing six reasons that will be more difficult to recall.

The role of attitude certainty in the buying process is a example of the continuing importance of human psychology in marketing. In future posts, I'll be discussing other aspects of human psychology that marketers can use to make their marketing messages and content more effective.

Sunday, February 8, 2015

For Effective Marketing, You Need Both the 4A's and the 4P's

One of the most well-known concepts in marketing is the marketing mix, also known as the 4P's of marketing. The 4P's model of the marketing mix was introduced in the 1960's, and it quickly became a bedrock concept of modern marketing.

Despite its popularity and longevity, the 4P's model has been criticized for a variety of reasons. One frequent criticism is that the 4P's focus on the selling organization rather than on the customer. This description is factually accurate, but that doesn't mean the 4P's model is flawed. It simply means that the 4P's were never designed to describe what is needed to be successful from the customer's perspective.

To understand what is required to achieve success with customers, marketers need other tools to complement the 4P's model. One of these important complementary tools is known as the 4A model of marketing.

The 4A model was developed by Jagdish Sheth, a marketing professor at Emory University, and Dr. Rajendra Sisodia, a marketing professor at Bentley University. Professors Sheth and Sisodia acknowledge that their 4A model was inspired by a similar marketing framework that Coca-Cola used successfully for many years.

The diagram below depicts the structure of the 4A model. As this diagram shows, the major components of the 4A framework are Acceptability, Affordability, Accessibility, and Awareness, and each of these elements has two dimensions. The components of the 4A model are a set of conditions that must be fulfilled to achieve success with any given product or service offering. To use a food analogy, the 4P's describe the raw ingredients available to the chef, and the 4A's describe the attributes of meals that will delight a given set of diners.

Components of the 4A Model

The Acceptability component of the 4A model says that a product or service offering must meet or exceed the needs and expectations of customers in a given target market. Acceptability has two dimensions - functional acceptability and psychological acceptability. Functional acceptability refers to the "objective" performance attributes of a product or service. Does the product have the features that customers in the target market expect? Is is reliable? Does it perform as expected?

Psychological acceptability refers to the more "subjective" attributes of a product or service. We often see psychological acceptability associated with so-called "luxury" brands. So for example, a mid-priced automobile may be as objectively functional as a vehicle of comparable size made by Mercedes or BMW. But those brands are more psychologically acceptable to a certain segment of buyers.

Affordability refers to whether customers in the target market are economically able and psychologically willing to pay a product's price. As this definition indicates, affordability also has two dimensions - economic affordability and psychological affordability.

Economic affordability refers to whether the potential customers in the target market have sufficient economic resources to pay a product's price. Psychological affordability refers to a customer's willingness to pay, which is primarily determined by a customer's perception of the value he or she will obtain from a product or service relative to the cost of the product or service.

The third component of the 4A model is Accessibility, which describes whether customers can easily acquire and use a product or service. The two dimensions of Accessibility are availability and convenience.

Availability measures whether a selling company has enough of a product to match customer demand. Convenience refers to how easy it is for potential customers to acquire a product or service. Robert Woodruff, the former chairman of Coca-Cola, captured the essence of Accessibility when he said in 1923 that Coca-Cola should always be "within an arm's length of desire."

The final component of the 4A model is Awareness, which refers to whether customers are adequately informed about a product's attributes and benefits in a way that persuades potential buyers to give the product a try and reminds existing users why they should continue to purchase a product. The two dimensions of Awareness are product knowledge and brand awareness. The basic idea here is that most potential customers will not buy unless they have a positive perception of the brand and adequate information regarding the specific product or service.

Like the 4P's, the 4A model is not a comprehensive model of the marketing function. There are obviously many specific marketing issues that neither the 4P's nor the 4A's address. However, the combination of the 4P's and the 4A's provides a powerful foundation for shaping marketing strategy.

Sunday, February 1, 2015

In Content Marketing, Substance Matters More Than Format

Eccolo Media recently released some of the results from its latest annual B2B Technology Content Survey. The 2015 survey was fielded in October of 2014 and received more than 100 responses. Volume One of the survey report focuses on what types of content formats B2B technology buyers find most helpful in each phase of the buying process. Eccolo Media identifies four buying process stages:

  • Pre-Sales Phase - the potential buyer is unaware of the problem
  • Initial Sales Phase - the potential buyer is seeking to understand the problem
  • Mid-Sales Phase - the potential buyer is identifying possible solutions and evaluating potential vendors
  • Final Sales Phase - the potential buyer is finalizing vendor selection and purchasing a solution
Respondents to the survey rated the helpfulness of ten types of content during each phase of the buying process. The two types of content rated most helpful for each buying stage were:
  • Pre-Sales Phase - blogs and e-newsletters
  • Initial Sales Phase - white papers and case studies
  • Mid-Sales Phase - detailed tech guides and videos
  • Final Sales Phase - detailed tech guides and eBooks
The Eccolo Media surveys provide important insights about the content preferences of B2B technology buyers, and many of these insights apply to all types of business buyers. Other firms, such as DemandGen Report, have also published research regarding the popularity and usefulness of various content formats.

To build an effective content marketing program, you obviously need content resources in appropriate formats. However, format is not the most important factor that determines the effectiveness of marketing content.

Any content resource can be described using three attributes - the substance of the message embodied in the resource, the length of the resource (how long it takes a potential buyer to consume the resource), and the format of the resource. To be effective, a content resource must satisfy three requirements in the following order of importance.
Right Message
First, the substance of your message must match where the potential buyer is in the buying process and fill appropriate information needs. For example, when a potential buyer is in what Eccolo Media calls the Pre-Sales Phase of the buying process, he or she is unaware of the problem or challenge that your product or service can address. Therefore the substance of your message should focus on educating the potential buyer about the nature and importance of the problem or challenge.
Right Length
The second requirement is that the length of the resource must be appropriate for the potential buyer's level of interest in the message substance. For example, when a potential buyer is unaware of a problem, your educational content is more likely to create engagement if it's delivered in "bite-sized" chunks that the buyer can consume without making a big investment of time. As the Eccolo Media survey indicates, blog posts and short e-newsletter articles can work well for this purpose, but so can short videos or podcasts and infographics. As the buyer's level of interest increases, he or she will be more willing to invest the time needed to consume longer content resources.
Right Format
The third requirement is to present your message in the right format. When it comes to format, the key to success is to package your message in multiple formats, so that it will appeal to potential buyers who prefer to consume information and learn in different ways.
The important point is that all three of these attributes - message substance, length, and format - play a role in content effectiveness, but message substance should be your starting point.