The underlying logic of advertising

Today, let’s analyze the underlying logic of advertising from the perspective of cognitive psychology.

Why advertise? What is the essence of advertising?

The essence of advertising is communication and conversion.

Generally speaking, advertising = communication + marketing. With the radical changes in the underlying infrastructure of information dissemination, advertising has also undergone a major reshuffle. It is obvious that simply integrating communication and marketing is not enough. We propose a new formula:

Advertising = Communication + Marketing + Cognitive Psychology

From the perspective of cognitive psychology, advertising is a dynamic process of customer cognitive management, and the ultimate goal is to establish a brand-preferred customer relationship with target customers. The saying "beauty is in the eyes of the beholder" refers exactly to this kind of brand preference.

In a word, advertising begins with cognitive management and ends with brand preference.

Today we will focus on introducing three advertising methodologies that we independently developed: Customer Awareness Dashboard, Five-Step Advertising Operations Method, and Nine Advertising Placement Strategies.

1. Customer Awareness Dashboard

According to the list of "Young People's Favorite Trendy Life: Top 10 Influential Pickled Fish Brands in March 2020", we studied 21 pickled fish brands, made an industry cognitive map, and found some rules:

Among the top 10 brands in terms of online influence, 4 brands have highly similar advertising selling points: the fish tastes good and the soup tastes even better, and the sauerkraut fish is so delicious that you can drink the soup.

Brands usually use main selling points for advertising. How do you evaluate the effectiveness of advertising?

Let’s use a tool: Customer Awareness Dashboard.

Before advertising, you must conduct customer insights.

One of the most important is: What is the relationship between our main product selling point and customer needs?

First, is this selling point a popular or niche concept?

Public perception: The advantage is that there is no need to do market education, saving marketing costs; the disadvantage is that product homogeneity may be more serious.

Niche perception: The advantage is that product differentiation is very obvious, the disadvantage is that the market may not recognize it and the education cost is relatively high.

Second, is this selling point what customers need? Or what the customer wants?

Customer need: The advantage is that customers are willing to buy right away, and the conversion rate is high. The disadvantage is that customers may not be willing to pay a higher price.

Customer wants: The advantage is that customers are willing to pay a higher price, but the disadvantage is that customers may not be willing to buy it right away.

Let's go back to the cognitive map of the sauerkraut fish industry and come to the following conclusions:

1. It has become a necessary requirement to make the fish delicious and the soup even more delicious. As many businesses are promoting this product as a selling point, it has gradually become a public awareness and customer need .

Essential needs are the industry’s selling point. The industry selling point is that customers won’t feel any differentiation even if the brand is changed to another one.

2. The brand has a strong tone and meets the need for charm. Tai Er Pickled Fish and Yao Pickled Fish, etc., have relatively strong brand characteristics, belonging to the category of "niche recognition + customer desire" .

Charming demand means that the target customers have no feeling when they have not seen it, but once they have experienced it, the experience is 10 times stronger than that of ordinary alternative products. This is a unique selling point.

3. Healthy oil, dishes that go well with rice, and live fish dishes are expected demands , which are all "public perception + customer wants".

Expected demand means that target customers have expectations and a sense of identity with the merchant. Even though the product differentiation is not that great and there are not that many exclusive selling points, the merchant is good at managing customer perception, allowing customers to form a certain consumption preference for the merchant's brand.

4. Unconscious demand is the merchant’s subjective perception of “niche cognition + customer needs”.

When the brand is relatively small, overly personalized brand tone is actually a meaningless demand.

There are also some business features, such as using specially designed bowls to hold pickled fish. If the customer experience is greatly improved, it is an attractive demand; if the customer does not feel any value, it is an insensitive demand.

Now it is easy for us to understand why many businesses’ advertising is not effective?

Either it is a self-congratulatory advertisement that is too niche and not appreciated by customers;

Either it is recognized by the public, but the selling points are homogeneous, and it is promoting the entire industry, or it is shouting the same selling points as a large group of competitors.

2. Five-step advertising operation method

From the perspective of cognitive psychology, we believe that advertising can be divided into five steps: encoding, communication, traffic, conversion, and relationship.

We searched for a few products randomly on Tmall:

1. Longjing Tea

Let’s break down the Longjing tea ad:

Niche perception : The brand sense and value differentiation are not obvious, and customers don’t know what is the difference between this brand and other Longjing brands?

Customer needs: Want to buy cost-effective Longjing tea;

What you buy is the product itself: the brand sense is designed, but the main selling point is still the price reduction and promotion;

Customers may come from search traffic: mainly one-time purchases, and the brand repurchase rate is unknown. For this type of customers, merchants mainly rely on dynamic sales, and the biggest selling point is price reduction promotion;

Small-scale operation: search traffic optimization + bidding ranking, all of which are weak relationships.

2. Vacuum cleaner

Advertisement of dismantling a vacuum cleaner:

Niche perception: Dyson is a high-end brand. Due to its high price, it has a very small customer base and is not familiar to the general public who prefer affordable brands.

Customers want: Target customers know Dyson and know that it is expensive, but they recognize the brand premium;

What you buy is the brand: the product is just a carrier, and the customer's perceived value is not a concrete product function, but an abstract business concept that has been refined and sublimated;

Dyson proposed a very cool business concept, “Airflow Multiplier Technology” as a reason to buy;

Dyson also gave a mnemonic symbol "V9 digital motor" to strengthen the advertising memorability;

Small-scale operation: Those who come here are those with strong relationships and who recognize the Dyson brand.

3. Retail Pickled Fish

Retail Pickled Fish Advertisement Analysis:

Public perception: Pickled fish is a major demand. As early as the end of 2017, the search index of pickled fish on Meituan exceeded that of braised chicken with rice, which shows that pickled fish is a product that is well known to the public and has a very good mass base.

Natural traffic: sales volume = traffic * conversion rate * average order value. For this kind of large demand, customers will come to us even if we don’t advertise. This is called natural traffic, which also means there will be a natural conversion rate. This is the dividend of public recognition;

This product uses dynamic sales in Tmall, providing three reasons for purchase, which are all customer needs and can make decisions, but cannot increase customer willingness to pay;

What you buy is the product itself: the three selling points are all concrete functions, there are no abstract selling points. Traffic may also be a weak relationship of single traffic. To intercept such traffic, a large-scale strategy is needed; small-scale operations are no longer effective.

Here are some important things to note:

The disadvantage of public perception is product homogeneity competition. Remove the brand and replace it with another brand, and you won't feel any difference at all.

Therefore, the key point of public awareness is to establish category differentiation, that is, what is the essential difference between me and other competitors in this category? This is very important.

If there is an essential difference, it is competition at the level that customers want , which is differentiation;

If there is no essential difference, it is just competition at the level of customer needs , which is a price war.

Let’s go back to the five-step advertising operation method for analysis. The main selling points of the above three companies are product-level selling points, brand-level selling points, and category-level selling points. The entire encoding, communication, traffic, conversion, and relationship are completely different.

The core is just one sentence: advertisements cannot be simply produced and then placed through channels; advertisements themselves require heavy operations.

Coding, communication, traffic, conversion, and relationships are the five dimensions of advertising operations .

3. Nine Strategies for Advertising

How should advertisements be placed? Here, we provide 9 independently developed delivery strategies .

Let's first establish a coordinate system:

Customers' consumption desire dimensions: high consumption desire, medium consumption desire, and low consumption desire;

Dimensions of merchants’ ability to build sales scenarios :

Strong sales scenario: customers have already entered the offline store or online store;

Medium sales scenario: customers are likely to conduct shopping activities in residential areas or offices.

Weak sales scenario: Customers are engaging in non-shopping activities such as leisure, entertainment, and socializing, and direct shopping demand is suppressed.

The theory of these 9 advertising strategies is a bit abstract. We will learn how to use them through 9 real business cases.

1. Make it known: Lao Niangjiu

Lao Niangjiu is a Chinese fast food brand. It changed its logo in 2019, which caused considerable controversy in the industry. Some designers complained that this sign is "ugly" and "low", with no design aesthetics and simply enlarging the font.

Let’s think about it from the perspective of customer cognition. What is the underlying logic of this design?

There is an empirical data on catering consumption: the 80/20 theorem.

About 80% of customers decide where to eat 30 minutes before the meal, and another 20% of customers decide about 5 minutes before the meal.

The paths for a 30-minute decision and a 5-minute decision are completely different.

In an open space, about 30% of customers see the store sign first and then enter the store to make a purchase.

In enclosed spaces such as large shopping malls, this ratio may be even higher.

Here are a few key points:

1. The customer has entered the stage of high desire consumption;

2. Customers have a large statistical pattern;

3There is a strong correlation between customers entering the store and the merchant’s sign.

On the other hand, when customers enter the high-desire consumption level and are very close to the merchant’s sales outlets, the merchant’s advertising strategy is to spread the word. This kind of publicity is mainly reflected in:

① Traffic interception. Offline, the signboard must have very strong visibility and exposure, and online, the business must be among the top lists when customers search.

② Brand refinement. There must be a clear selling point for the product. For example, when seeing XX Kitchen, people may not know what the signature dish is, so the conversion rate into the store is low; when seeing XX Pickled Fish, target customers will know at a glance whether this is what they want, so the conversion rate into the store is high.

③ Broad-spectrum interception. This kind of large traffic often has very discrete customers, usually ranging from 10-year-old children to 60-year-old elderly people. Therefore, the selling point of the sign should be based on public perception and be relatively popular and universal. Especially when the brand power is not strong, it is not advisable to promote selling points that are recognized by a niche audience, as the conversion rate will be very low.

Obviously, the visibility of Lao Niangjiu's new LOGO has been greatly improved, and the widely publicized traffic interception effect is successful.

2. Memory Enhancement: Guazi Used Cars

Guazi Used Cars is also a very controversial brand. Unconventional advertising costs are contrary to the healthy development of the entire industry and mature business models, and have always been a major topic of criticism in the industry.

Put aside the commercial value and just talk about advertising strategy. We still need to put ourselves in the customer's perspective and think about what the used car business is.

Used cars are a traditional business with large volume, ultra-low frequency, high transaction costs, and especially the fear of being cheated, so it is better to sell than to buy.

Because it is an ultra-low frequency, when a customer sees an advertisement for a used car brand today, it may be a year before he has the need to buy or sell a used car. Will he still remember the advertisement? That's hard to say.

Therefore, for sales scenarios where there is no consumer demand at present but there may be in the future, this type of advertising strategy is memory enhancement. When the time of high desire consumption comes, the brands recommended by the advertisements can be awakened in memory.

There are four main methods of memory enhancement:

① Semantic Memory Method

Semantic memory is conceptual memory. The goal can be achieved by condensing the business concept into catchy, easy-to-remember sentences, and then bombarding them with advertisements to increase exposure.

Obviously, "Guazi used car direct sales network, no middlemen to make a profit from the price difference" belongs to this type.

② Situational Memory Method

The situational memory method is scene memory.

There are so many directors, why do target customers have such a deep memory of Christopher Nolan that his latest film, Tenet, has attracted so much attention and expectations even before it was released?

This is because the great films directed by Nolan, such as "Inception" and "Interstellar", and the grand science fiction scenes in the films left a deep and indelible impression on the audience.

Therefore, such an uncommon name can still be remembered by many people.

Internet companies place special emphasis on scenes, behaviors, and experiences, which is the type of memory.

③ Experience heuristics

Experience heuristics is an emotional decision, which is essentially a cognitive bias.

For example, Chinese people always look up to coffee and believe that it represents a high-quality lifestyle. This is cognitive bias.

This cognitive bias comes from the fact that in the 1980s, air tickets in China required a letter of introduction and could not be purchased casually with money. On airplanes, in order to cater to foreigners, very low-end but easy-to-drink instant coffee was introduced.

Air tickets are so hard to buy, but you can still drink Moutai liquor for free on the plane at 8 yuan a bottle. Coffee is an alternative, and although it tastes bad, it must be as precious as Moutai liquor. This is how the cognitive bias of the Chinese people was formed.

The reason why fast-moving consumer goods like to use celebrities as their spokespeople is based on this underlying logic. Look, your favorite celebrities are endorsing our brand, so you should like us!

④ Logical reasoning method

Logical reasoning is a rational decision-making method, and there is no way to reach a conclusion in one step.

For example, buying a house is a heavy decision, and one must consider and compare the advantages and disadvantages in different dimensions. After a heated discussion, the final decision point often comes down to whether the child should go to school, which is a veto. So, parents turn their attention to housing in school districts. This is the rational reasoning process.

Education and training consumption is often of this type, with a particularly long decision-making cycle and high decision-making costs.

3. Brand preference: Mercedes-Benz

For high-desire consumption and weak sales scenarios, the product selling points are mismatched. At this time, the advertising strategy is to highlight the brand tone and customer identity.

For example, Mercedes-Benz’s sponsorship of the CEIBS New Year’s Concert is just about creating a scene. In this scenario, CEIBS, the National Centre for the Performing Arts, and performance organizations all have similar brand identities and are leading brands in their respective fields. Moreover, their audiences highly overlap with Mercedes-Benz’s target customers.

We have introduced before that the ultimate goal of advertising is to establish a brand-preferred customer relationship with target customers, just like the preference for beauty in the eyes of the beholder.

4. Demand matching: Flash delivery

In response to medium-term consumer desires and strong sales scenarios, our advertising strategy is to improve the efficiency and effectiveness of demand matching.

At the demand matching level, we need to focus on solving four problems:

First, refine the product selling points;

Second, customers buy points for refinement;

The third is to connect the product selling points with the customer buying points;

Fourth is coding efficiency.

Let’s take a look at the logic of Shansong Express from the perspective of customer cognition:

1. Product selling point level: Whether it is same-city express delivery or intra-city fast delivery, it is roughly concentrated on: big companies with good brands, good services, large transportation capacity, fast speed, extremely low error accident rate, etc.

2. Customer buying points: They are mainly concentrated on: security (anti-loss, anti-leakage), timeliness (timely), stable delivery (capacity when needed), low communication cost (easy operation), etc.

3. When connecting product selling points with customer buying points, Shunfeng Express is oriented towards differentiation and competition.

Shunfeng wants to emphasize that it is an upgraded version of the new generation of same-city express delivery. Its competitors can deliver the goods the next day, while we can deliver the goods within one hour.

4. The encoding efficiency of Flash Express is extremely high, and the customer recognition cost is very low.

Specifically, there are three numbers: 1, 10, and 60, which mean that it takes 1 minute to place an order, 10 minutes to pick up the item, and (on average) it will be delivered within 60 minutes.

This encoding has high compression ratio, high recognition and low cognitive cost. Moreover, it is very convenient for customers to recommend the product to their friends. They can explain the reason for purchase clearly by just saying three numbers in a few words.

5. Decision-making guidance: Herman Miller

Herman Miller is a well-known office furniture manufacturer in the United States. Office furniture is a typical B2B business.

First-class companies sell standards, and Herman Miller’s advertising strategy is a typical example of customer decision-making standard marketing.

For decades, Herman Miller has been creating a variety of office standards, including but not limited to: CSS integrated storage rack system, CPS integrated partition system, the first office furniture system, office furniture system 2.0, personal workstations, open office areas, honeycomb Resolves, space service providers, and so on.

Herman Miller not only has B-end customer decision-making standards, but also has advertising strategies for C-end customer decision-making standards.

They produced an ergonomic chair, Aeron, which was then widely spread: this is a special chair for awesome programmers, forcing Internet companies such as Facebook and Google to equip their excellent programmers with one.

When it comes to guiding customer decisions, Herman Miller is clearly one step ahead of its competitors.

6. Content penetration: Meituan Waimai

Targeting medium-consumption desire and weak sales scenarios, content is a long-term, high-value asset.

On the surface, the ad video above seems ridiculous. The brand value and product selling points of Meituan Takeout were not highlighted at all. Instead, the main concept was "Meituan Takeout can protect you from the sun." Compared with direct competitors, it seems that the advertising money was wasted.

Is this really the case? In fact, this is typical content marketing.

First, the fans of the two celebrity spokespersons highly overlap with Meituan Waimai’s target customers . From the perspective of customer contact, it is easy to form a ripple effect of fan communication;

Second, because of the nonsense in the content, the advertisement becomes soft , and the probability of consumers spreading the word themselves is increased;

Third, Meituan takeout can protect you from the sun. By adding a memory point that young people like (this is the experience-inspired memory method), when young people have consumption needs, their brains are prone to produce cognitive biases. There is a certain probability that Meituan Takeout will pop up in their minds earlier than their competitors, affecting their decisions.

7. Attract attention: Hisense

In response to low consumption desire and strong sales scenarios, we often use advertising strategies based on human nature. To put it more bluntly, most of those beautiful women who appear on big posters for no reason are of this type.

When everyone sees this set of pictures, which one will have a greater exposure?

One more question, since the exposure is greater, why isn’t the sales volume the highest?

Consumer electronics, including mobile phones, like to use this type of advertising strategy.

8. Interest stimulation: M&G stationery

For low consumption desire and medium sales scenarios, our first priority is to stimulate interest.

M&G Stationery is a manufacturer of student stationery. Some people may say that student stationery is a basic need, so how can it be a low consumption desire? Yes, student stationery is a basic need, but purchasing student stationery of the M&G brand is neither a basic need nor a high desire.

From the perspective of customer cognition, we found a very interesting phenomenon: primary school students don’t really care about the functionality and long-term quality of stationery. They care more about the appearance of stationery and conspicuous consumption among classmates (in the eyes of primary school students, stationery is still a low-value consumable item).

Therefore, M&G Stationery is essentially a student stationery manufacturer that focuses on aesthetic design. In addition to product functionality and quality, it also increased customer purchasing interest and promoted sales conversions.

9. Reconstructing cognition: QB House quick cut

Low desire for consumption and weak sales scenarios are the biggest challenges faced by startups in their cold start. Even Tencent and Alibaba encountered such embarrassing situations in their early days of entrepreneurship. Without customers’ willingness to pay, there is no way to commercialize and monetize.

In the 1990s in Japan, regular barbershops operated in a standardized manner, typically charging 6,000 yen for 60 minutes. The founder of QB House opened a quick-cut barber shop that charges only 1,000 yen for a 10-minute haircut. After being launched on the market, the results were not good.

Japanese customers have relatively high requirements for quality, and in the public's perception: you get what you pay for. A haircut that costs 1,000 yen must be made with shoddy materials. The customer recognition cost of this new thing is quite high.

How to open up the marketing situation?

How to introduce our product selling points to unfamiliar customers?

Why are customers unwilling to pay for the products and services we provide within 10 minutes?

We must reconstruct our cognition here.

Therefore, QB House creatively proposed a new advertising strategy. They said that they were not in the barber industry, but in the time industry. Why? Because the 50 minutes we save for our customers is much more valuable than the 5,000 yen saved.

After cognitive reconstruction, the target customers became clear at once, and they were not customers of traditional barber shops. Rather, who would be more sensitive to the value of saving 50 minutes? Of course, they are white-collar and gold-collar workers who have received or expect to receive an hourly wage of 10,000 yen.

The target customers were office workers who were short of time, and then students with limited spending power. Eventually, QB House emerged in Japan and became synonymous with "high quality, low price and good service".

4. AIDMA Model

Here is another advertising concept.

As early as 1898, American advertising scientist Lewis proposed an AIMDA model. Doesn't it feel particularly old? In fact, it can still be used in the Internet age.

A：Attention

I is for Interest

D is for Desire

M is for Memory

A：Action

The nine advertising strategies we developed are actually an upgraded version of the AIMDA model for the Internet era.

In the past, the emphasis was on single consumption , and the last A is based on the purchasing action .

What is emphasized now is customer lifetime value , and the last A is based on brand preference with stable interactive relationships .

This may be the biggest difference caused by the times.

V. Conclusion

To summarize, today we introduced our three original and very practical advertising methodologies from the perspective of cognitive psychology: customer cognitive dashboard, five-step advertising operation method, and nine advertising placement strategies .

When we decided to promote our product widely, the first thing we did was to conduct a product-demand comparison analysis. Find out what kind of customer needs my product’s selling point meets? Avoid inefficient advertising.

Advertising is not just a one-time investment, but requires intensive operations in five dimensions: coding, dissemination, traffic, conversion, and relationships . Only through continuous dynamic operation and iterative adjustment can the best input-output ratio of advertising be achieved.

It is difficult to come up with national-level products nowadays, so the situation where one advertisement conquers the world has also disappeared from the stage of history. We need to distinguish between two major dimensions: customer desire and sales scenarios, and propose different advertising strategies for 9 different combinations.

Finally, if we don’t truly focus on customers and conduct in-depth and effective customer insights, we may face a very extreme business situation:

There are no products that our competitors cannot sell, only the knowledge that we cannot sell.

Author: Grayscale Cognitive Society

Source: HDrenzhishe