Understanding the 4 cognitive biases that make branded merchandising so successful
Updated: Sep 3, 2020
Human beings do not always act rationally. In fact, according to many psychologists, we seldom act rationally. Our behaviour is dictated by a smorgasbord of competing emotions.
As we grow and learn, our maturing minds begin to interpret the world differently. The adult mind, furnished with the memories of mistakes it has made and successes it has witnessed, interprets what it encounters through a lens of this past. Certain psychologists have begun to call this concept the model of ‘predictive coding’.
The model suggests that instead of processing our everyday experiences literally we, with enough data from our past, generate predictions of our sensory input. Our brain does this, psychologists suggest, because it saves us time. Instead of taking the time to interpret every new scenario as if it were an entirely novel event, we take what we have learnt in the past and use it to cut corners.
Given the famous peg and hole toy for the first time, for example, children will likely experiment until they find the right fit. Adults, on the other hand, will use what they already know in order to surmise that a square peg does not, in fact, fit into a round hole.
Predictive coding is obviously useful. However, that does not mean it is a perfect way of interpreting the world around us. Adults, because of the comfort of their pattern-based behaviour, find it more difficult to learn new languages than children. Furthermore, thinking in terms of patterns means we sometimes fail to consider what is right in front of us accurately.
Because of our penchant for patterns, we develop certain behavioural ticks, or cognitive biases, that aren’t rational but definitely exist. Marketing professionals spend a great deal of their time trying to understand these biases and certain of them explain why the promotional product is such a successful tool in advertising.
The exposure effect
We’ll start with one of the easy ones.
As we build familiarity with something, anything really, we become more attached to it. Have you ever heard a song and, on the first listen, you didn’t think much of it but, after you’d heard it a couple more times, you found yourself humming or singing along?
This is the exposure effect and you’ll have noticed how merchandising professionals are taking note of it. Instead of producing cheap, single-use items you’ll see companies in the industry, ourselves included, now use better-produced, long-lasting products. They’re better for the environment as well as better at building your brand.
The Premium of Price: Free means more (sometimes)
The pricing of a product is as much about strategy as it is about accurate and deserved remuneration for the goods rendered. Take Apple products for example, the latest iPhone doesn’t cost over a thousand pounds to make. Its specs don’t necessarily dictate that it deserves to be that much more costly than its competitors. And yet the Apple iPhone 11 could cost you 1,400 GBP.
Part of the reason, Apple charges so much for its products is because that price indicates quality, exclusivity, superiority. When we see that number, with its comma and, arguably, too many zeroes, we believe in the product more.
In the case of Apple’s expensive products, the price is part of the reason we, as consumers, hold their goods in such high regard.
In the case of free promotional merchandise, the lack thereof does something similar despite the drastic difference in size of dent to your wallet.
When we get something for free, we feel as if we’ve taken something back, that we’ve cheated the system. Its part of the reason why coupons and half-price vouchers are still so successfully used. We love to feel as if we’re getting the upper hand in an interaction with the capitalist world.
Take this study done by students at MIT. On two separate afternoons, they offered other students small Hershey’s chocolate kisses. On one day the kisses cost 1 cent. The next, they were free. On the first day, 58 students dropped by and the next it was 207.
Free stuff is exciting, whether its a pair of socks, a mug or a t-shirt, even a sandwich. These products will become more valuable than something that costs only a cent or a penny. That excitement gets attached to the product and works incredibly well in the world of promotional merchandise. Especially when its coupled with the next cognitive bias …
The endowment effect
The endowment effect, sometimes understood as loss aversion, is the phenomena of placing undue value on something that you already own. Once something is in your possession, it seems more valuable.
The economists Daniel Kahneman, Jack Knetsch and Richard Thaler conducted an experiment in 1991 which explains this principle well. They gave a randomly chosen group of people a free mug. They gave another group nothing.
They asked both groups to give value to the mugs. The first group - those that were given the free mug, we’ll call them the sellers - were giving a value based on how much they would be willing to take in order to part with their belonging. The second group – those without a mug: the buyers - decided how much they’d pay for what they didn’t have.
An average was then taken of the two groups numbers. Interestingly, while the sellers wouldn’t part with their mugs for less than $7.12, the buyers wouldn’t shell out anymore than $2.87 for exactly the same mugs.
When the endowment effect applies to the promotional product, given freely and made more valuable to the owner, the brand attached to that product is advanced.
When we are given something, we feel as if we owe the giver something else in return. This behavioural tick makes sense and benefits us in everyday social interaction. It plays a part in community building and can be seen in ape communities with regards to grooming.
With promotional merchandising, despite that we know the company has given us their product to further their own ends, the consumer feels a little beholden to the company.
According to a PPAI (Promotional Products Association International) study, 85% of consumers who have been given a promotional product go on to then do business with the advertised company.
All of these biases help make promotional merchandise a very helpful tool for brand-builders. However, it is more than preying on our mind’s overcorrections. A good merchandising strategy doesn’t take advantage of the consumer, it gives your potential customer exactly what they want.
If you truly want to further your brand, understand the above listed cognitive biases but also know that doing things well – with quality, with the consumer’s desires in mind – will benefit you as well as them.