1+1 = 3 with Alchemy - Use Psychology to Increase Brand Value

Today, I’m going to walk you through some of the concepts discussed in one of my favorite marketing books, Alchemy by Rory Sutherland. This book taught me the importance of psychology in marketing. How marketing influences the mind of the consumer; how 1+1 does not always equal 2. 

What if I told you that I wanted to sell a carbonated drink that is sold in a smaller can than coke, costs more than twice as much, and tastes awful? Obviously, any investor (or person with half a brain) would say I was literally insane. 

But what I just described to you is Red Bull. 

The value in Red Bull was not based on the existing marketplace for sodas and how it compares. Red Bull purposefully created the value within the mind of the consumer. Alchemy.

First, (at the time) the product was new. New in design. New in flavor. New in function. In general, humans tend to be neophiles. Always looking for the latest and greatest. 

Second, a very convincing argument could be made that if the product tasted great, it would be perceived not to have the “medicinal” qualities or the strength that it does. By making it taste bad, it created the perception that it was more effective. 

Third, putting Red Bull in a smaller can made it seem as if the product was extremely potent. If it were sold in a 2 liter bottle, it would more likely be perceived as safe; something that could be consumed in large quantities without worry. By putting it in a smaller can, you suddenly had something that was highly effective, so much so it may even be dangerous in larger quantities. 

 

As you can see, Red Bull, intentionally by design, created certain values within the consumer’s mind. The strategy worked: Red Bull became the third most valuable soft drink brand in the world! 

Here’s another example, the advertising agency J Walter Thompson used to set up a test for copywriters. The question was simple: “Here are two identical 25 cent coins, sell me the one on the right.” 

One bright candidate who understood alchemy said: “I’ll take the coin on the right and dip it in Marilyn Monroe’s bag. Then I’ll sell you a genuine 25 cent coin owned by Marilyn Monroe.”

Value is a perception created in the mind. 

So, how can you apply this to your brand? 

1. Focus on Perception Rather than Reality

Technically speaking, an iPhone and Samsung phone offer similar technical specifications. However, market perception is very different than reality. An iPhone (and Apple products in general) also give off social signals: signals of wealth and disposable income. The price of the iPhone and the marketing associated with it have drastically changed the perception of this Apple product.

Marketing is about setting a perspective in the consumer’s mind and reinforcing it. 

But you don’t need to always be the premium brand. The important factor is to truly know where you stand in the marketplace and reinforce this perspective within the consumer’s mind, and often. 

2. Understand Customer Behavior 

Most consumers will say they prefer one thing, but end up doing something completely different. Especially when not being observed. Be sure to use as much data as possible to truly understand your consumer’s behavior when shopping on your store. Use this data to infer psychological factors that play a role in their purchase decision. 

The best way to start this is through truly understanding the consumer journey on your store. This includes new customers and how they end up making their first purchase and following them through their second and third purchase. But you also have to be sure to dive deep into  your repeat customers. What keeps them coming back for more? 

3. Remember the Importance of Packaging

You only get one chance at a first impression, and packaging plays a huge role in the perception of your brand. I always communicate to my clients the critical importance of putting thought behind packaging.

For example, we have all experienced the difference between the packaging of an Apple product and their competitors’ products. It is rumored that Apple goes so far as to clock the amount of time it takes for the lid of the box to release from the base in order to build excitement on the reveal! 

But keep in mind, packaging doesn’t just need to be a premium experience. For example, Five Guys Burgers and Fries provides you with a simple white bag overfilled with French fries. This white bag with grease stains all over it provides a perspective of value for the money. An honest and real experience. Nothing to hide.

For your own store, just keep in mind that the packaging of any products, especially those launched for the purpose of new customer acquisitions, need to be thoroughly considered. Such products and their packaging should be developed not only to provide ease of use, but to set a certain perspective within the mind of the consumer from the start. 

As you can see, psychology plays a huge role in marketing. After reading Rory’s book, I can now more confidently say that I am not only a marketer, but an alchemist. 

I highly recommend you check out Rory Sutherland’s book:

 

See you in a week.