In the mid-1940s, the diamond cartel De Beers had a challenge probably no other company ever had. They controlled almost all the diamond mines in the world. And they had an excessive supply after the discoveries of huge mines a few decades earlier. But they had a dilemma. If they reduced the price and made…
Category: Marketing Psychology
The Framing Effect: How To Give Customers a Good Reason to Choose You
You’ll remember the scene if you’ve watched Mad Men. In the 1960s, the FTC bans tobacco companies from making any health claims in their ads. Before that, it was normal to see ads with the “health benefits” of cigarettes. But public opinion was starting to change on tobacco. So Lucky Strike executives ask for help from Don Draper’s…
Cognitive Dissonance In Marketing: How To Make Sales Easy
On a winter day in 1971, McCann’s young copywriter Ilon Specht was frustrated. She was chosen to write the ad for an expensive hair color brand called L’Oréal. And her colleagues (mostly men) were after the same old ideas. Show a woman changing to a new hair color to be more attractive to a man.…
Buying Triggers: How to Create Growth From Non-Obvious Demand
In 1957, copywriter Donald Gilles got a challenge. “How can we position this chocolate brand called KitKat?” The UK economy was finally booming after World War II. So KitKat’s owner Rowntree’s knocked on advertising agency JWT’s door for a new campaign. And JWT assigned Gilles to the task. Now, the positioning challenge for a bar…
Halo Effect: Why Great Brands Are Built in Details (And How To Nail It)
In 1983, Horst Schulze took on a big challenge. He became a founding member and the president of The Ritz-Carlton Company. The co-founders’ goal was clear. Take the legacy of Ritz and Carlton names in the hotel industry. And turn it into a successful luxury hotel chain. But the hotel industry is one of those…
The Peak-End Effect: How To Make a Lasting Impression (Even After Failures)
The peak-end effect is when our minds use the peaks and ends of experiences to build a memory. Let’s see how it works with a story from Disneyland. And we’ll finish with other examples (a hotel chain and KFC) to understand how to use it in business. Joe was in Paris with his girlfriend. After…
The Priming Effect: How Expectations Become Reality
In 1999, a group of Asian-American women students stepped into a room for a math test. But before the test, they had to fill out a form. The first group had questions on gender-related issues. Like what’s their gender, opinions about co-ed dorms, etc. The second group’s questions were about ethnicity. Like what their ethnicity…
Bias For Action: Why Coca-Cola’s “New Coke” Failed (And How To Avoid It)
Bias for action is a mental error that causes us to act even when inaction is the best decision. First, let’s see how Coca-Cola executives made that mistake. And then how to avoid it to make better decisions. In the 80s, Pepsi started its famous ad campaign on TV. The Pepsi Challenge. Pepsi made consumers…
The Law Of Reciprocity: Vito Corleone’s Favorite Tool to Build Influence
In 1985, Ethiopia was in a humanitarian crisis. Civil war, poverty, famine… Ethiopians dealt with many calamities at the same time. The suffering was immense. As these disasters were ongoing, newspapers covered a story about a five thousand dollars aid between Mexico and Ethiopia. But one detail surprised everybody. The side that sent the aid…
Salience Bias: How to Become Unforgettable
In 2011, Patagonia made an unusual advertising campaign. They told people the opposite of what a clothing brand wants customers to do. “Don’t buy this jacket.” And you know the best part? They published it on Black Friday. So imagine this. You open a newspaper that day and see pages of ads from different brands.…