Solid info! 7 marketing tactics that small and medium-sized businesses must know

Sale! Price reduction! The annual “Double Eleven” consumption feast is coming soon.

Why do promotions always make consumers pay? How do businesses use promotions to maximize profits?

Let’s analyze the secrets behind those commonly used promotional methods today.

1. Focus on price

Looking at the essence of all kinds of promotions, they actually hope to create a feeling of "getting a bargain" for consumers as much as possible.

1. Full discount (voucher) and mental account

The same product, priced at "20% off for purchases over 1,000 yuan" and "200 yuan off for purchases over 1,000 yuan", may seem to cost the same amount, but the impressions it leaves on consumers are completely different.

Behind this is actually the influence of "mental accounting", a term proposed by Nobel scholar Richard Thaler. According to this theory: most people will divide their expenses and income into different accounts in their minds, and most of these accounts are not interconnected.

Therefore, people view their money subjectively, and consumers' perception of prices is generated by comparing them with their inner accounts.

Specifically, “I can buy clothes worth 1,000 yuan, but I can’t pay an extra 8 yuan for shipping (shipping is not included in consumption expectations)”, “I am upset when I check out at the supermarket and I have to pay 20 cents for shopping bags (shopping bags are not included in consumption expectations)”, “I don’t feel bad when I eat out with friends but I can’t get a discount if I don’t order takeout (social media account for eating, daily life account for takeout)”…

Using this theory, we can understand the popularity of promotions with discounts on purchases over a certain amount: "coupons for purchases over a certain amount" and "discounts for purchases over a certain amount" are ways of transforming discounts, which are originally discounts, into giving consumers a sense of "windfall", thereby breaking the inherent psychological account.

For example, if a product worth 1,000 yuan is discounted by 20%, it does not actually break the consumer's psychological account, and it is still a comparison within the same category. But if the discount is 200 yuan for purchases over 1,000 yuan, it will give people the feeling that they paid 1,000 yuan to buy the product and got an "unexpected windfall" of 200 yuan.

There are usually two ways to get discounts: (1) use coupons after meeting the discount limit; (2) get instant discounts after meeting the discount limit. If you need to use a coupon to get an instant discount, you can limit the channels or quantity for distributing coupons.

Compared with direct discounts, purchase discounts not only attract customers to place orders, but the clear purchase discount amount also gives users a reason to buy: "You will lose money if you don't buy it now." At the same time, it can also arouse users' desire to add to the order, spending money that is not in their mental account to add to the order and increase sales.

2. Pre-order, flash sale, group purchase and anchoring effect

In addition to mental accounts, there is also the "anchoring effect" in psychology: before making a decision or judgment, people are more easily influenced by previous information. This is reflected in sales promotions, where prices, products, packages, etc. are actually “anchors” that can be manipulated and sunk into the minds of consumers.

The most typical "anchor" is the "original price". In promotional activities, the original price serves as an anchor that makes people feel they are getting a good deal through comparison.

Time can also be an "anchor". For example, as Double Eleven approaches, there will be a wave of price increases for commodities. In addition to leaving an original price "anchor" in the minds of consumers, there will also be time "anchors" such as "wait a year if you miss it" and "only on that day".

It can be seen from the psychological accounting and anchoring effect that for any commodity, consumers' perception of its value actually comes from comparison. Relative cheapness is more important than absolute cheapness. It can be said that there is no harm without comparison.

Common operations using this principle include "pre-order": pre-order at 99 yuan in advance, and the price will be restored to 199 yuan after N days online. “Flash Sale”: Limited time flash sale at 99 yuan, the original price of 199 yuan will be restored after N hours. "Group purchase": 199 yuan for one person, 99 yuan for a group of three. All three sets leave contrasting “anchors” to boost sales.

Compare the tiered discounts such as "20% off sitewide" with "20% off two items, 30% off three items, 40% off four items". The cheapest discount is actually an "anchor" for consumers to compare, attracting them to ignore the total price and place orders in order to achieve the lowest discount.

3. Trade-in, pricing and ratio bias

A consumer is now deeply trapped in mental accounting and anchoring effects, but the story is not over yet. People also have "proportional bias" in subjective comparisons: people are more sensitive to changes in proportions or ratios.

For example, when I go to the vegetable market to buy vegetables, I spend a hundred yuan after picking and choosing, and then I bargain with the lady for 10 yuan, and I am very happy on the way. If you spend 2,000 yuan on clothes and the store gives you a 100 yuan discount, many people will feel that the discount is too small and not very happy.

There is a tenfold difference between 100 and 10 yuan, but the perception is completely different. The reason lies in the proportion. The former is reduced by 10% and the latter by 5%. We are more likely to focus on the proportion and ignore the difference in the actual price quantity.

The common doubling of deposits on Double Eleven is based on this principle.

For example, a direct reduction of 50 yuan: "Do I look like someone who is short of 50 yuan?" Pay 50 yuan in advance and get 100 yuan off: "I have doubled my 50 yuan! I will lose money if I don't pay." At the same time, in the atmosphere of Double Eleven, a small deposit can allow consumers to spend money while shopping without pressure, and can also avoid regretting the purchase later - the deposit has been paid and the discount has been received.

Proportional bias also plays a role in pricing. Low-priced items are discounted, and high-priced items are marked down.

A 3,000 yuan product is discounted by 200 yuan, which means it’s actually 9.3% off - a 9.3% discount on a single label looks ugly, but a direct discount of 200 yuan looks much more decent. For example, a 20% discount on a fast food dish worth 100 yuan may seem like a big deal, but if it is announced that the price will be reduced by 20 yuan, it will not be so attractive.

Exchange and matching are also ways to take advantage of this psychology, making consumers focus on small commodities whose prices vary dozens or hundreds of times. For example, during checkout, a few cents or dollars will be displayed to exchange for commodities originally priced at 50 or 100, thus creating a feeling of spending a small amount of money to get a big bargain.

Ordinary merchants can also use bundling to sell a cheap product together with a relatively expensive product. For example, if you spend over 1,000 yuan, you can add 1 yuan to exchange for a pair of socks worth 50 yuan, or if you buy a 400 yuan jacket, you can add 1 yuan to exchange for socks. This not only boosts the sales of socks, but also makes consumers focus on the exchange ratio rather than the original price.

There is another benefit to combining sales and exchanges: "Buy 1,000 yuan of cosmetics and get a 100 yuan facial mask for free" and "Spend 1,000 yuan and exchange for a 100 yuan facial mask for 1 yuan" give completely different impressions. More importantly, it does not lower the psychological price of the free product.

2. Emotional Promotion

If price war is the basis and cannot be easily changed, then merchants have many options for using emotional promotions, such as common holiday marketing, or even more elaborate cross-border and celebrity marketing.

But the most common means are still based on the principle of reciprocity, herd effect and scarcity psychology of consumers.

1. Reciprocity, gifts and bundling losses

A man who eats someone's food should be grateful, and a man who takes someone's favor should be merciful. Ordinary people will always return the behavior of others with similar behavior, which is the so-called "principle of reciprocity." This is mostly done in the form of giveaways in e-commerce promotions.

Gifts are a very effective promotional tool. A thoughtful gift brings extra surprise to consumers which is difficult to achieve by price reduction.

Usually, gifts are mainly based on these three aspects: practicality, relevance, and personalization.

Practical and relevant gifts are more direct. For example, Three Squirrels’ snack gifts are mostly directly related to snacks: sealing clips, fruit shell bags, wet wipes, brooches, etc., which not only give customers a sense of brand intimacy, but also improve the unpacking experience in the e-commerce era and bring the brand closer to consumers.

Of course, the most important thing is the quality of the gifts. You can’t just give them in vain. Although gifts are cost-effective, if they are used improperly, it is easy to make customers feel "hurt", so it is better not to give them.

In addition to conventional gift-style giving, there are still some psychological aspects to giving, namely the so-called "bundled loss" psychology.

People's perception of happiness or pain is not linear. When the total amount of money spent is the same, the more times the payment is made, the greater the pain. Conversely, if the benefits are divided into multiple times, the "benefits" perceived by users will also increase relatively.

Take buying a computer as an example to illustrate this principle. When you buy a 5,999 yuan computer, most merchants will give you headphones, a mouse, a mouse pad, door-to-door repairs, and cash back for positive reviews. This is bundling all costs together for a one-time payment, reducing the pain of multiple purchases for customers and making consumers feel like they are getting a bargain.

2. Limited quantity and scarcity effect

Everyone is more familiar with the "scarcity effect": things are valuable because they are rare. A typical case is Xiaomi. Although it claimed that it was due to production capacity reasons, it still caused consumers to rush to buy its products and was considered an example of the rise of hunger marketing. The limited editions, co-branded products, limited-time discounts, and limited purchases of major brands are also common applications of the scarcity effect in life.

Most apps’ scarcity marketing is nothing more than three directions: limited quantity, limited time, and limited identity (membership-based purchase). Like the Double Eleven Shopping Festival, its essence is to take the "limited time" part to the extreme - it is said that the lowest price of the year is only on this one day.

Why does the scarcity effect trigger shopping desire? There are two key factors behind this: compared to normal commodities, the extra scarcity attribute will cause anxiety, forcing consumers to have a sense of urgency that they will miss it if they miss it, and create the mentality that they will lose out if they don't buy it.

3. Group buying, herd mentality and herd effect

Humans are social animals. Especially at the consumer level, internet celebrities and big Vs promote products by taking advantage of the herd effect - people always act according to people they like or trust.

Even without internet celebrities or big Vs, you can still use data to create recognition: cumulative sales of XX pieces across the entire network, ranking first in sales for N consecutive years, etc. At the same time, using various red envelopes to guide buyers to post buyer shows and reviews is also a long-term marketing method.

The rise of the group-buying model in recent years provides the best example of the herd effect: when a friend recommends a product to you, your trust in your friend turns into trust in the product.

At the same time, the group buying model with multiple participants can easily make people develop a herd mentality psychologically: so many people make the same choice as me, so I have nothing to worry about. In this way, merchants do not need to engage in price wars and can sell more products, and consumers also feel that they are getting a good deal by getting the lowest price.

The model of bringing people together in group buying to get discounts, free orders, or even cash back also takes advantage of the natural human nature of wanting to get a bargain. By constantly sharing bargaining links, consumers are also solving the problems of product promotion and traffic for merchants.

4. Strong membership, weak membership system and refined operation

How can we make customers gained through promotions remember the business and encourage them to repurchase? The membership system is a magic weapon to cultivate loyal users, and the membership incentive system is the top priority. Usually the membership system can be divided into strong membership and weak membership.

The strong membership model focuses on the threshold. Users must pay directly in exchange for membership rights. Depending on the payment method, it can be divided into "paid membership" and "recharge". Recharges are very common in offline beauty salons, leisure and entertainment, restaurants, cinemas, etc. For example, a promotion of giving away 100 yuan for a recharge of 1,000 yuan allows consumers to lock in future consumption in advance by making a prepaid payment in exchange for corresponding discounts.

"Paid membership" is a common membership system on the Internet, providing a large number of rights and services that only members can enjoy. Although the weak membership price does not have a payment threshold, merchants will continue to incentivize users through points, tasks, etc., and ultimately allow users to unlock rights and interests like leveling up and fighting monsters.

Today, the membership system in the information age has become a window for businesses to face customers directly. After all, everyone wants to be different in the eyes of others, and the membership system provides an opportunity to segment customers and quickly establish connections with consumers. Whether it is regular marketing information or greetings for holidays or birthdays, the business can be kept as exposed as possible.

3. Final Thoughts

Of course, using consumers’ psychology to promote sales is just “knowing the reason”. Whether it is emotional promotion or playing with price, the promotion plan must ultimately be consistent with one’s own goals and products.

Author: Canva

Source: Canva