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Tesla boldly asserts that it allocates $0 towards marketing and advertising. The notion of spending nothing on marketing prompts questions about its feasibility and effectiveness.
How does Tesla manage to be omnipresent in the market without investing in advertising?
The answer is surprisingly straightforward:
Tesla banks on its loyal customers to champion the brand and promote its electric vehicles. In essence, Tesla’s marketing strategy can be encapsulated in just two words: “capturing attention.”
Let’s delve into the intricacies of Tesla’s marketing approach and address some of the questions surrounding it.
Key Takeaways
In contrast to many players in the automotive sector, Tesla operates without a designated marketing budget and refrains from utilising paid advertising.
Tesla’s marketing strategy centres around building a dedicated customer community and depends on word-of-mouth promotion facilitated by compelling content or unconventional marketing stunts.
Does Tesla Do Marketing?
Tesla doesn’t do marketing and advertising in the traditional sense. And unlike all other major car manufacturers, Tesla does not have a marketing budget.
In 2020, Brand Total reported that Tesla has a $0 paid marketing budget, making the company an outlier in the automotive industry. Instead of “traditional advertising”, the electric car company has so far favoured the advocacy of the Tesla community—Tesla owners and fans.
This brings us to our next question:
What is Tesla’s Marketing Strategy Then?
Unlike other players in the automotive industry, paid marketing and traditional advertising have not been Tesla’s primary focus.
But if not on paid marketing, what does Tesla’s marketing strategy focus on?
From making the cars dance to accepting dogecoin as a payment method, everything Tesla does is about getting attention. And the attention, they get.
Elon Musk’s Influence on Tesla’s Marketing Strategy
You might have picked up on this one already if you’ve been following Tesla’s online presence: At the core of Tesla’s marketing strategy lies its CEO, Elon Musk.
Once a praised figure in the tech world, Elon Musk’s presence and demeanour were considered a positive element in Tesla’s marketing strategy and brand image. This, however, has changed over time.
We can’t deny that Musk is a magnet for media attention, but the said media attention does not always have a positive effect on Tesla.
It’s been reported that Tesla stock has lost more than 45% of its value following the 2 months after Musk’s acquisition of Twitter (now rebranded “X”) because investors were worried this would cause Musk to divide his attention and even offload Tesla stocks to support the social media platform.
Tesla’s YouTube Marketing Strategy
Just because Tesla’s marketing strategy doesn’t involve paid social ads doesn’t mean the company never uses social media.
Tesla’s social media strategy focuses on creating engaging and educational content as a way to connect with its target audience. You can find informational content about Tesla products or behind-the-scenes looks at Tesla operations on Tesla’s YouTube channel.
And sometimes those two things come together in a cheeky video like “Hot Single Robots In Your Area 💞”, Tesla’s version of a Valentine’s Day marketing campaign:
Was the Tesla Cybertruck Window Break a Marketing Stunt?
During the Cyberturck’s public demonstration in 2019, Elon Musk invited designer Franz von Holzhausen to the stage to demonstrate the armoured windows.
However, things went differently than expected.
Holzhausen threw a small steel ball at the Cybertruck’s window from a short distance. The steel ball, however, did not bounce off the window as expected. Instead, the window cracked. And as if this one “disaster” was not enough, they tried again with the rear window, only to get a similar result.
Was this a brilliant example of guerrilla marketing as part of a carefully planned marketing strategy or a good old-fashioned PR disaster?
We may never know, but it gave Tesla precisely what a brand always wants: People talking about it.
I guess it’s a good time to remember that The Wall Street Journal once called Tesla’s Cybertruck “more marketing than profit machine”, saying the pickup truck isn’t good for Tesla’s finances.
People tend to prefer familiar people, situations, or objects.
This psychological effect is used in marketing to enhance consumer attitudes toward particular brands and products.
The article will explore the mere exposure effect, how it is used in advertising to influence consumers’ decisions, and examples of the mere exposure effect in eCommerce marketing.
What is the Mere Exposure Effect?
The mere exposure effect is the continuous exposure to a stimulus (e.g., a name, sound, or picture) that leads to greater preference or enjoyment of that stimulus. It is, in other words, a person’s constant exposure to a subject or an event.
The effect is more significant if a negative attitude to the stimulus has not been developed or if the person is unaware of the presentation.
So, how exactly does the mere exposure effect influence the decision-making process?
Simply put, when people need to make a decision and choose something, they tend to prefer the situation or person they are most exposed to.
For example, babies smile primarily at people who smile more at them. The more you see a person, the more sympathetic you find them, and the more you enjoy their presence.
Robert Zajonc, a social psychologist, wrote a seminal work on the mere exposure effect in 1968. Zajonc believed that simply being exposed to something on a regular basis was sufficient to make people enjoy it.
They did not need to receive a reward or a positive consequence when around the object, according to Zajonc—just being exposed to it was enough to make people enjoy it.
Brands often utilise the mere exposure effect in their advertising campaigns and overall marketing strategies. Familiarity with a logo, a tagline or a company image may lead you to choose that specific product.
Mere Exposure Effect: How Familiarity Breeds Attraction
Falling in Love
The mere exposure effect explains an essential factor determining people’s attraction.
According to a study by Pew (2006), 38 % of married people or people in a long-term relationship meet at the same job, school, sports centre, or church. According to this study, as the number of interactions between people grows, so does their attraction.
This evidence shows that familiarity between people, especially seeing someone daily, affects people’s decision-making and, therefore, their feelings towards each other.
How Hit Songs Are Made
According to Charles Duhigg, the allure of Top 40 lies in catering to the audience’s desire for familiarity—whether it’s their favourite tunes or those resembling them. The introduction of something novel can often be met with resistance, as listeners may find it off-putting.
“People listen to Top 40 because they want to hear their favourite songs or songs that sound like their favourite songs. When something different comes on, they’re offended. They don’t want anything unfamiliar.”
Charles Duhigg, Author of The Power of Habit
Take the example of “Hey Ya!”, a global hit in 2003. Surprisingly, this track faced initial disapproval from many listeners, prompting them to switch stations mid-song. However, the radio station was determined to transform this unpopular tune into a chart-topper.
Their strategy involved strategically placing “Hey Ya!” between two well-known songs, preventing listeners from changing stations. This ingenious approach resulted in the song gaining familiarity with the audience, ultimately turning it into a massive hit.
A noteworthy revelation from radio stations was that individuals claiming to be tired of Celine Dion didn’t switch stations when her songs played. Leveraging this insight, “Hey Ya!” was strategically aired after a Celine Dion track.
Consequently, when introducing unfamiliar music, embedding it between familiar songs proved to be an effective method!
Examples of Mere Exposure Effect in Marketing and Advertising
How do marketers and advertisers use the mere exposure effect to influence consumer decisions? Let’s take a look at the examples:
1. Family in Advertising
Using family as a marketing tool has been prevalent since the Industrial Revolution.
Brands, particularly those targeting broad audiences, employ specific strategies to captivate their intended customer segments. Incorporating families into advertisements is a widespread practice, as the concept of family resonates with a vast majority of the global population. By featuring families in ads, brands aim to evoke an instant sense of familiarity among the audience.
Given that the notion of family is universally recognised, it continues to be a cornerstone in advertising. Leveraging the familiarity established through such advertisements not only engenders a connection but also cultivates a sense of intimacy between the audience and the brand.
2. Billboard Advertising
While some often perceive billboards and brochures as outdated marketing techniques, major brands persist in utilising them for product promotion.
The primary purpose of billboard advertisements is to swiftly engage individuals, leaving a lasting impression that lingers in the viewer’s mind even after passing by.
Since these ads are typically encountered at high speeds, they must convey their message at a glance. Consequently, they typically feature minimal amount of text in large fonts accompanied by a vibrant and captivating graphic.
And in recent years, the billboard advertising got a 3D makeover:
Brands strategically design billboard ads to capture consumer attention and imprint their products in the minds of the audience. The ultimate goal is to foster familiarity so that, when consumers are making purchasing decisions, they are more inclined to choose the product they recognise the most.
3. Colour Psychology in Marketing
Companies cannot control emotional responses towards their brand, but they can direct these perceptions through design, style, and colour.
Because our brains are programmed to absorb and memorise new shapes, the presentation of a logo can significantly impact its effectiveness.
Brands use colour theory while designing their logos and advertisements to catch the customers’ attention and make them remember the brand. Establishing familiarity through these visual elements increases the likelihood that customers will choose the brand’s product when making purchasing decisions, especially during supermarket visits.
4. Popular Music in Advertising
Brands strategically integrate elements of familiarity into their advertisements to connect with consumers. Despite the potentially high cost of music licences, particularly for top hits, the use of popular music remains a prevalent marketing strategy.
Research by Dr. Bradley Vines, employing neuroscience methods, indicates that pop music can enhance attention, emotion, and memory by 20%. Additionally, the neurological wear-in score demonstrates a notable increase in the effectiveness of a pop song across multiple viewings, suggesting heightened consumer engagement as exposure to the commercial grows.
3 Examples of Mere Exposure Effect in eCommerce Marketing
After discussing how the mere exposure effect is used in advertising, let’s look at how eCommerce can use it as part of their marketing strategy:
1. Showing Bestsellers on the Homepage
By prominently featuring bestsellers on the homepage, eCommerce platforms leverage the mere exposure effect.
Frequently viewed and popular products become familiar to visitors, increasing the likelihood of conversion. As users repeatedly encounter these items, they develop a sense of trust and recognition, influencing their purchasing decisions.
Pro tip ⚡: Employ personalisation to tailor the presentation of bestsellers on the homepage to each user, ensuring relevance and optimising the impact of the mere exposure effect.
2. Sending Cart Abandonment Emails
eCommerce businesses send cart abandonment emails to remind customers of items left in their shopping carts to utilise the mere exposure effect.
The repeated exposure to these products serves as a gentle nudge, keeping the items fresh in the customer’s mind. This timely reminder often prompts customers to return to their abandoned carts and complete the purchase.
Pro tip ⚡: Enhance the effectiveness of cart abandonment emails by consistently including images of the abandoned products.
3. Pinned Products on the Search Box
Image source: Segmentify
eCommerce platforms can strategically use the search box to showcase pinned or recommended products. By consistently exposing users to specific items as they search, the mere exposure effect comes into play.
Over time, users become familiar with these recommended products, potentially influencing their choices and increasing the likelihood of making a purchase.
Pro tip ⚡: It’s crucial to regularly monitor click-through rates and sales numbers for pinned items on the search box to ensure their effectiveness in converting visitors.
Beware the Pitfalls of Mere Exposure Effect
Strategically exposing a brand and its products to potential customers is a powerful marketing tactic.
However, caution must be exercised, as excessive exposure may not always yield positive outcomes. Customers might become fatigued from the relentless barrage of advertisements, potentially causing a decline in the company’s reputation.
As illustrated above, an optimal threshold exists for the number of exposures and the mean liking score. While increasing exposures tend to boost the liking score, there is a point where further increments may have diminishing returns.
Recognising and refraining from surpassing this threshold to avoid adverse consequences is crucial.
Harnessing and incorporating the mere exposure effect into your overall marketing strategy can significantly elevate sales rates and brand awareness. Careful calibration of exposure levels is critical to optimising the positive impact while avoiding the pitfalls associated with overexposure.
Editor’s Note: This article was originally published on January 5, 2022, and was updated for accuracy and comprehensiveness on January 18, 2024.
Among the various tools that enhance customer interaction, the search box stands out as a critical element.
Unlocking the potential of the search box as a dynamic space with personalised content has the transformative power to revolutionise and reshape the entire customer journey. This approach doesn’t just raise the bar; it sets an entirely new standard for user-centric engagement.
This article explores the concept of “Before Search” and how it can revolutionise the user experience by providing personalised content right from the moment a visitor engages with the search bar.
Anatomy of Search Box Personalisation: Explaining “Before Search”
“Before Search” refers to the moment a visitor activates the search box by clicking on the search bar.
Before Search is the preliminary phase where the search box transforms into an interactive gateway, offering users a glimpse of trending products, popular brands, categories, or frequently searched terms.
However, the uniqueness lies in the ability to customise the search box further, incorporating non-product elements such as blog posts or campaign banners to guide visitors through a multifaceted journey.
For first-time visitors, the search box presents a curated selection based on comprehensive data analysis, including geographical relevance, search analytics, website analytics, and insights from similar users. Including the first user source and medium refines this initial display, offering a sophisticated blend of contextual recommendations.
The initial interaction acts as a foundation for the algorithm, initiating a learning process from the user behaviour. Subsequently, whenever the search box is activated, the algorithm refines its suggestions, delivering a truly personalised experience.
2 Elements You Need for Website Personalisation Before Working on the Search Box
Before diving into the intricacies of perfecting the search box personalisation, laying the groundwork is imperative.
Understanding user behaviour and preferences through analytics provides the necessary insights, while segmentation allows for categorising users into distinct groups, enabling targeted personalisation strategies.
5 Search Box Must-Haves for a Functioning Before Search Experience
The success of the Before Search feature hinges on incorporating certain elements into the search box for personalisation and engagement. Here are five essential components that elevate the Before Search experience:
1. Search Analytics Connected to Website Analytics
A seamless personalised search experience relies on integrating search analytics with the entire website. This ensures that the recommendations provided align with the overall content and preferences of the users.
More often than not, the customer journey starts with the search box but doesn’t necessarily end in a sale. Even when they find the exact item they were looking for, visitors may need additional decision-making time.
Recognising this dynamic, advanced customer engagement platforms like Segmentify leverage the power of search analytics and browsing data for dynamic retargeting campaigns.
By linking search analytics directly to recommendation features and outreach channels, Segmentify empowers businesses to craft a nuanced and personalised experience.
This interconnected approach not only refines the search box experience but extends its influence across the entire user journey. It contributes to a cohesive and engaging customer experience beyond the initial search and resonates throughout the conversion funnel.
2. Popular Brands/Categories
Enriching the search box with information on popular brands and categories creates a well-rounded user experience. Users are not only guided by their preferences but also exposed to trending and sought-after items within the platform.
Image Source: Segmentify
What’s more is that with the right algorithm, you can empower the system to identify the sweet spot where the general popularity across all users intersects with the unique preferences of the individual user. This strategic fusion enables the search box to present a curated showcase of popular categories and brands tailored precisely to the user’s distinctive taste.
This intersection point serves as the nexus of user satisfaction, where the user is not merely exposed to what’s universally sought-after but is guided towards options that align with their preferences.
3. Different Personalised Recommendation Algorithms
Crafting a truly personalised search box experience necessitates using diverse recommendation algorithms, each tailored to cater to the unique preferences of users.
This multifaceted approach encompasses an array of recommendation algorithms, ranging from trending algorithms and popular item suggestions to frequently searched terms and category-based recommendations.
As previously highlighted, the integration of search analytics with website analytics further refines and elevates the search box personalisation in this regard.
Embracing an interconnected approach, you can seamlessly embed your chosen set of personalised recommendation algorithms into the search box. The result is an enriched and tailored user experience that transcends conventional search mechanisms, resonating with users profoundly.
4. Product/Content Badges
Visual cues such as badges help draw attention to specific products or content, increasing the likelihood of user engagement.
Take your product listings to the next level! Get your FREE Product Badges Guide to learn how to use product/content badges effectively.
While the most common product badges like Bestseller, Trending, New, and Free Shipping are undoubtedly an inseparable part of the eCommerce experience, there exists an opportunity to be creatively strategic:
Start by thinking about what you are and who your customers are.
Consider the cosmetics and beauty industry as a prime example. Within this niche, customers have distinct concerns and priorities. Consequently, the application of product badges in the search box should be tailored to address these specific considerations.
Going beyond the standard badges, introducing labels like Vegan, Cruelty-Free, SensitiveSkin, or Eco-Friendly becomes a game-changer.
By aligning the product badges with the core values and interests of the target audience, you elevate the user experience, fostering a sense of resonance and connection.
Image Source: Segmentify
This way, the search box becomes more than a functional tool; it becomes a personalised gateway that not only understands the users’ needs but also anticipates them, facilitating a more streamlined and satisfying journey from exploration to purchase.
5. Pin/Remove Chosen Elements
The Before Search feature is activated the moment a user engages with the search bar, unveiling a dynamic display of content curated through personalised recommendations and behavioural analytics. With each activation, the search box adapts to showcase personalised content based on user behaviour and recommendation algorithms at work.
However, you may need to alter the search box in a way that transcends the personalised recommendations. This need can be met by the pin/remove items feature.
Image Source: Segmentify
This feature becomes the linchpin for managing sponsorships, spotlighting special offers, and ensuring universal visibility for specific products or non-product content. Its versatility extends beyond the promotional realm, allowing you to pin campaign banners strategically.
Imagine ensuring every visitor is informed about your winter sale or has access to a crucial blog article detailing how to clean a coffee machine.
By incorporating the pin/remove chosen elements feature, you’ll gain a nuanced level of control over your search box experience.
Personalise the Search Box Before the Search Begins
Of course, search results personalisation is essential and should be an integral part of any website. But why wait until you get there?
Ensuring search box personalisation the moment it is activated is easy peasy lemon squeezy, really. Here’s all you need for a personalised search box before the search begins: Segmentify’ Search Box.
Native search box design: This makes the search box a natural part of your website/app.
Interconnected search and website analytics: You don’t have to deal with search and other behavioural data being stored in different data silos. All the data you have is centralised and interconnected.
Different personalised recommendation algorithms: Since all the data is centralised, you can place your chosen recommendation algorithms based on other behavioural analytics into the search box.
Detailed retargeting campaigns: You can use search analytics for retargeting campaigns with on-site recommendations, push notifications, or email marketing campaigns.
Considering that one-third of visitors will perform an internal search, upgrading your search box is paramount.
Let Segmentify be your partner in this mission—book a demo with one of our experts for more information.
It’s an email marketer’s worst nightmare—ending up in the spam box.
It destroys your engagement metrics and email sender reputation. And it only gets worse from there.
Because even if you take the necessary steps to correct a past mistake that got you in the spam folder in the first place, that is a red stain on your reputation. And it takes a lot of time and resources to mend the said reputation.
So you need to start caring about reducing your spam complaint rate long before it becomes a problem.
This article will discuss the new email sender requirements by Yahoo and Gmail, why the spam complaint rate is even more critical now, and a 10-step program on how to reduce your spam complaint rate.
New Email Sender Requirements from Yahoo and Google
One of the biggest digital marketing trends that will define 2024 will be, without a doubt, the new email deliverability rules by Yahoo and Gmail.
Starting February 2024, all email senders who send over 5,000 emails daily to Yahoo and Gmail users are required to comply with these new rules:
Authenticate your email domain using DKIM, SPF, and DMARC security protocols.
Enable one-click unsubscribe with a 2-day processing time.
Keep the spam complaint rate under 0.3%—max 3 spam complaints per 1,000 emails.
Gmail has been recommending these as email marketing best practices for a long time, and now, organisations are required to provide a safer inbox for consumers.
You can get more information on how to comply with these new email sender requirements on Gmail’s Help Center.
Let us move on to another pressing matter: How to keep your spam complaint rate as low as 0.3%
10 Steps on How to Reduce Your Spam Complaint Rate
You’ll see that those two of those new requirements being put into action by Yahoo and Google are not really new; you already needed to comply with them to keep your spam complaint rates low.
Keeping the maximum spam complaint rate under 0.3% will be the end result of following these best practices:
Buying email lists can create serious problems for your organisation:
It violates data privacy laws, which you must comply with to keep your spam complaint rates low, as you’ll see later.
Such email lists contain outdated and inaccurate information.
Sending unsolicited emails will severely damage your email sender’s reputation.
Building your email list, on the other hand, will get you an engaged audience and reduce spam complaints.
2. Provide Double Opt-In
A double opt-in process is essentially a two-stop verification to validate and confirm email subscriptions. It is a great way to ensure you’re complying with the Internet privacy laws and regulations.
Providing double opt-in:
Ensures that subscribers genuinely want to receive emails from you,
Reduces the spam complaint rates and unsubscribes, and
Improves your email sender reputation.
3. Authenticate Your Email Domain
Used to be a strong recommendation for digital marketers to reduce spam complaint rates, email domain authentication is now a requirement by Yahoo and Gmail.
DMARC (Domain-based Message Authentication, Reporting, and Conformance)
Authenticating your email domains through these security protocols will validate and verify the authenticity of your email campaigns.
Reminder: If you don’t have a Custom Sending Domain (CSD) set up, you must do that before the email authentication step. If your emails go from @yourdomain.com, they will look more professional, and the chances of them being marked as spam will be lower.
4. Comply with the Internet Privacy Laws
Various laws govern email marketing depending on the location of both the marketer and the recipients. However, the essential data privacy laws that every marketer should be familiar with are:
Failure to comply with data privacy regulations may result in substantial penalties.
In the UK, for example, breaching the GDPR may result in “a maximum fine of £17.5 million or 4% of annual global turnover — whichever is greater — for infringement of any of the data protection principles or rights of individuals.”
5. Keep a Clean Email List
A healthy and clean email list leads to better email deliverability rates, ensuring your emails reach their intended recipients.
Internet Service Providers (ISPs) use email engagement metrics, such as open rates and click-through rates, to assess the quality of your emails. Since a clean email list tends to have higher engagement, this practice directly and positively affects your email deliverability.
Regularly remove inactive or invalid email addresses and promptly address any bounces.
Another important way to ensure low spam complaint rates is to enable one-click unsubscribes—something that you are now obliged to do.
6. Enable One-Click Unsubscribe
As of February 2024, you are not only advised but required to allow one-click unsubscriptions with a 2-day processing time, according to the new email sender requirements by Yahoo and Gmail.
Adopting suppression list management as a regular practice will help you greatly in this regard.
Suppression lists guarantee that you do not send emails to individuals who have chosen to opt out, allowing you to communicate solely with an engaged and interested audience. This minimises the likelihood of your messages being marked as spam.
7. Send Relevant Content
Based on what was discussed so far, this one should be obvious.
> Send people the content they wish to see (a.k.a. the reason why they subscribed to your email list in the first place)
> Get higher engagement
> Improve your email sender reputation
> Unsubscriptions and spam complaints are minimised
Adopt email segmentation best practices to take advantage of personalisation’s power and increase your email campaigns’ relevancy.
8. Optimise Email Sending Frequency
There is no universally perfect frequency for sending emails. The optimal email sending frequency varies based on factors such as industry dynamics, brand identity, and target audience.
However, irrespective of these variables, sending emails with too little time in between each can result in subscriber fatigue, higher unsubscribe rates, increased spam complaints, and diminished engagement.
Define your goals clearly—whether it’s driving sales or directing traffic to your blog.
Understand your audience by recognising the stages of the buyer’s journey and tailor your messages accordingly.
Experiment with different frequencies and analyse results to discover the optimal frequency.
9. Monitor Your Email Engagement Metrics
Besides measuring the impact of your campaigns and understanding what your subscribers respond to, closely monitoring email marketing KPIs serves as an early warning system.
By vigilantly tracking these metrics, you can swiftly identify any emerging issues or patterns that could adversely affect your campaigns, such as the changes in spam complaint rates.
This proactive strategy empowers you to make timely modifications, mitigating the risk of harm to your sender reputation and ensuring the overall success of your campaigns.
10. Utilise Spam Checkers
Spam checkers are web-based utilities that enable you to assess your emails, indicating the probability of recipients marking them as spam. While ISPs ultimately determine message filtering, spam checkers frequently reassure marketers as they plan new campaigns.
Stay Compliant with Yahoo and Gmail Sender Requirements and Avoid Ending Up in the Spam Folder
Here’s what you need to do to reduce spam complaint rates:
Build your own email list: Never ever buy email lists, as they violate data privacy laws and will ruin your email sender’s reputation.
Provide double opt-ins: Ensure that your subscribers are interested in receiving your emails.
Email domain authentication: Authenticate your email domain using DKIM, SPF, and DMARC security protocols.
Comply with the data privacy laws and regulations: Failure to comply can result in severe monetary penalties.
Maintain a clean email list: Regularly deal with invalid email addresses and bounces.
Allow one-click unsubscribe: This one is pretty important as it is one of the new email sender requirements.
Send targeted and personalised emails: Apply email segmentation to increase relevancy and engagement.
Optimise email sending frequency: Experiment with different frequencies for different campaign types to find your ideal cadence.
Keep an eye on email marketing KPIs: Look for any changes in engagement metrics that might negatively affect your sender’s reputation.
Use spam checkers: While Yahoo and Gmail have the last word on what’s considered spam, utilise these tools to avoid any major mistakes.
Once you make these best practices a regular part of your routine, keeping spam complaint rates below 0.3% will be as easy as breathing!
The intersection between eCommerce psychology and marketing is intriguing as companies attempt to craft marketing strategies and apply concepts such as the decoy effect in their marketing agenda.
Building up from teachings in Dan Ariely’s bestseller Predictably Irrational, as well as online courses in the psychology of eCommerce, it is safe to say that overarching patterns exist in user’s buying behaviour and decision-making.
One such pattern can be discovered through the decoy effect. This article will, therefore, explore the psychological reasoning behind the decoy effect, how it is used in marketing, and some real-life examples from brands.
What is the Decoy Effect?
The decoy effect was first described by academics Joel Huber, John Payne, and Christopher Puto in a paper presented in 1981.
While defining the effect, the researchers asked the participants to choose from scenarios that included beer, cars, restaurants, lottery tickets, movies, and television sets.
In each product scenario, participants first choose between two options. Afterwards, the participants were offered a third option, which was a bait, and they were expected to choose again.
In every scenario except lottery tickets, the bait successfully increased the probability that the target was selected. These findings were revolutionary for marketing. Along with this work, scholars challenged established doctrines known as “similarity heuristics” and “regularity condition” that the probability of a customer choosing the original product cannot be increased.
The Psychology Behind the Decoy Effect: How It Works
When faced with a choice between small and large sizes, people often opt for the smaller one due to the absence of relativity in the selection. However, introduce a third option, such as medium, and the dynamics change.
Surprisingly, many individuals lean towards the larger option, regardless of price considerations or personal requirements.
Consider a scorching summer day when you enter a cafe craving a refreshing drink. You settle on a mango iced tea but now face the dilemma of choosing the size. Initially, with only two choices (small and large), you decide on the small, considering a $4 price difference.
Now, imagine a scenario with three size options – small, medium, and large.
The large size becomes more appealing despite the same $4 gap between small and large. However, the difference between medium and large is only a dollar.
This addition of a third option prompts consumers to choose the pricier item, even if it exceeds their actual needs. This decision is not unique; many individuals follow the same pattern, making it a common choice.
Why does this happen?
The explanation lies in the way our minds are wired. Our cognitive processes are designed to constantly evaluate items in relation to one another, influencing decisions not only in personal relationships but also in various comparable situations.
In summary, when presented with two options, consumers tend to decide based on personal needs. However, introducing a third strategic option can sway them towards choosing the more expensive of the three, showcasing the subtle yet powerful influence of the decoy effect on consumer behaviour.
“Humans rarely choose things in absolute terms. We don’t have an internal value metre that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.”
Dan Ariely, Predictably Irrational: The Hidden Forces That Shape Our Decisions
Decoy Effect in Marketing
Marketers refer to the decoy effect as the asymmetric dominance effect, exploring a phenomenon where consumers may signal a change in preference when presented with a third option in addition to the two options they had, creating an asymmetrical dominance towards the novel stimuli.
The alternative option is considered to be asymmetrically dominant when it is inferior in all aspects to one of the options. In addition, the other option is both inferior and superior in comparison to the other alternatives.
When specific attributes are considered for preferability, this option is completely dominated by the other, and partially dominated by the third.
The experiments reveal that when the asymmetrical option is present, a higher percentage of consumers tend to prefer the dominating option, as opposed to when the asymmetrically dominated option is absent.
This is why the asymmetrically dominated option is referred to as a “decoy”, functioning to increase preference for the dominating option. The decoy effect violates the independence of irrelevant alternative axioms under the learnings of decision theory.
Now, let’s explore some practical examples of the decoy effect in action.
Decoy Effect and Decoy Pricing Examples in Marketing
1. Subscription-Based Models
Subscription-based services like newspapers, magazines, streaming platforms, B2B SaaS solutions, etc., frequently use the decoy effect and decoy pricing to nudge users to choose a slightly pricier option.
2. Upselling Strategies
From consumer electronics to the beauty industry, many different industries take advantage of the decoy effect as part of their upselling strategy.
The key point in using decoy pricing strategy for upselling purposes is to ensure that the consumer knows what they are gaining by getting the pricier option: Apple uses decoy pricing strategy on its product comparison pages, while games will try to get you to buy the deluxe edition that comes with more content for a slightly higher price.
How to Use the Decoy Effect for Marketing Your Business
Decoy effect and decoy pricing strategies are doubtless extremely influential—if they are done right. Here are some ways in which your business can take advantage of the decoy effect phenomenon:
Offer three choices. Including more options can complicate and overburden the decision-making process, diminishing the decoy effect in return. When consumers are presented with more choices, they may end up making a rash decision and choose the item you don’t desire.
Do not make the decoy option too appealing. You should be using the decoy effect to convince buyers into making the choice you desire. In many cases, the choice you desire is not the decoy. The decoy should have a price that is relatively close to the most expensive third alternative, but with a relatively better value than the cheaper ones. If you feel like the decoy seems slightly absurd, that is natural; that is how it is supposed to look!
Consider the middle bias. Given that three choices are displayed on the website or shelf, you should remember that buyers have a tendency to go with the middle option, disregarding the value. You might want to display the desired choice in the middle of the array, instead of creating a price-centred arrangement.
Through such techniques, you can power your eCommerce site and use eCommerce psychology to boost your sales. Discover how Segmentify implements such psychological principles into their feature catalogue to help eCommerce businesses excel and reach their full potential.
Editor’s Note: This article was originally published on June 17, 2021, and was updated for accuracy and comprehensiveness on December 22, 2023.
No, email marketing is not dead. And yes, personalised emails are more effective than generic emails.
Instead, we’ve handpicked five questions straight from you that cut to the chase. But be mindful that these questions aren’t just about email marketing; they’re about showing you the ropes on how to practically wield email marketing to your advantage.
Let’s answer some questions and dish out the nitty-gritty on how to make email marketing work for you!
1. Why shouldn’t I buy email lists?
Here are a few problems buying email lists will cause you:
It violates data privacy laws.
They often contain outdated or inaccurate information.
Sending unsolicited marketing emails can and will damage your email sender’s reputation and brand image.
When you buy an email list, you’re getting a bunch of email addresses, but you don’t know if those people want to hear from you. Some might get annoyed or upset because you’re sending them emails they didn’t ask for.
That way, you’ll have a list of people who are genuinely interested in what you have to offer, and you can send them emails they’ll be happy to receive.
2. What are some best practices for writing better email subject lines?
Crafting effective email subject lines is crucial since they serve as the initial impression and decisive factor for open rates. So follow these best practices:
Understand your audience to tailor subject lines effectively.
Avoid misleading and clickbait subject lines; set clear expectations.
Keep subject lines concise and engaging.
Infuse your brand’s personality for authenticity.
Exercise caution with emoji usage.
Pose questions to spark curiosity.
Incorporate numbers for impact.
Use personalisation judiciously to prevent overuse.
3. Should I use first names while creating my email marketing campaigns?
The decision to use recipients’ first names in personalised email campaigns hinges on strategic placement—in the subject line or email body.
But first, consider daily conversations: While using someone’s first name grabs attention, incessant repetition becomes off-putting. Similarly, in emails, leveraging first names can be effective for ensuring attention but risks appearing unsettling if misapplied. Context is paramount.
And this falls under the category of “overusing personalisation”.
Using first names for email personalisation can work so well when you want to make absolutely sure you get the recipient’s attention. But beware of the context and what you’re trying to achieve unless you want to be known as “that weirdly sinister brand”.
Balancing personalisation with tact will ensure your email campaigns resonate positively with recipients.
4. What’s my ideal email marketing frequency and how do I find it?
The truth is there isn’t one single ideal email marketing frequency. Your ideal email sending frequency depends on your industry dynamics, brand, and audience.
But regardless of those parameters, excessive emailing can lead to subscriber fatigue, increased unsubscribes, spam complaints, and reduced engagement. You just need to find where that limit lies for you. To find the right balance:
Define your goals: Clearly understand the purpose of your email campaigns, whether it’s driving sales or directing traffic to your blog.
Know your audience: Recognise the stages of the buyer’s journey (Awareness, Consideration, Decision) and tailor your messages to each stage, adjusting frequency accordingly.
Test different frequencies: Experiment with sending emails weekly to one group and twice a month to another. Analyse results to discover the optimal frequency for better engagement.
Monitor engagement metrics: Keep a close eye on certain email marketing KPIs like open rates, click-through rates, and conversion rates. Identify trends over time to pinpoint the frequency that maximises engagement while avoiding fatigue and unsubscribes.
5. How can I measure the success of my email marketing strategy?
You can measure the success of your personalised email marketing strategy by leveraging data for precision. Tracking specific email marketing KPIs provides insights into the performance of elements like subject lines, content, and design. This detailed feedback enables data-driven decisions, empowering you to optimise future campaigns.
Additionally, analysing email analytics enhances your understanding of the audience by revealing preferences, behaviour, and engagement levels. This knowledge allows tailored messaging, significantly boosting relevance and effectiveness.
Moreover, email marketing KPIs serve as an early warning system, helping you detect issues or trends that could impact campaigns negatively. Proactively monitoring metrics facilitates timely adjustments, preventing potential damage to your sender reputation and ensuring overall campaign success.
Nobody asked, but I’ll say it anyways:
A digital marketer’s Roman Empire is the next “big” thing (not Metaverse) that will become the next Google (not Meta).
Before anyone tells me the Roman Empire thing is already in the past, I am very much aware, but honestly? I couldn’t come up with a better introduction for this article.
Anyway…here are this year’s top 3 ecommerce and digital marketing trends to watch out for!
1. New Email Deliverability Rules by Yahoo and Gmail
Google and Yahoo have partnered up to build a safer, more enjoyable experience for Gmail and Yahoo email users. And if you’re an email marketer who sends over 5,000 emails daily, you need to listen up.
“No matter who their email provider is, all users deserve the safest, most secure experience possible,” says Marcel Becker, Sr. Dir. Product at Yahoo.
This strategic partnership between Google and Yahoo aims to:
Make organisations less vulnerable to spam attacks,
Establish trust and credibility with their email subscribers, and
Ensure emails’ contents are relevant and valuable to each recipient.
If your organisation sends more than 5,000 emails daily to Yahoo and Gmail users, you need to:
Authenticate your email domain using DKIM, SPF, and DMARC security protocols.
Enable one-click unsubscribe with a 2-day processing time.
Keep your spam complaint rate under 0.3%—max 3 spam complaints per 1,000 emails.
The new email deliverability rules by Yahoo and Gmail will be put in motion starting February 2024. Start taking the necessary steps to ensure compliance with these new requirements as a part of your 2024 email marketing strategy!
2. Hyper-Personalisation with Big Data and Real-Time Analytics
As digital marketers, we’ve been discussing the various aspects of personalisation for a couple of years now. Personalisation has been both the source and the reaction of consumers’ expectations about tailor-made interactions and experiences.
Jennifer Gaier, Director of Marketing at Elwyn, tells Forbes why she sees hyper-personalisation as one of the biggest digital marketing trends for 2024:
“With the vast amount of data available from various touch points—be it social media, websites or even physical stores—brands can harness this information using sophisticated analytics. This results in hyper-personalised marketing strategies where content, product recommendations and even advertisements are customised for individual consumers.”
Ken Condon, Global Channel Director at Segmentify, ventures a bit deeper into the rabbit hole of personalisation and draws attention to a challenge created by these various touch points:
“Insights gathered from an SEO campaign are very rarely shared in ‘real-time’ with the email marketing or social selling channels and instead form part of the siloed data for SEO…Insights or trends created offline in your bricks-and-mortar very rarely re-merchandise a PDP page or a trigger email.”
As the amount of data collected through various touch points rises, personalisation becomes trickier due to the need for more unified data.
So yes, hyper-personalisation will continue to be all the rage, but true personalisation can only be achieved through breaking down data silos. Then, you can really really personalise your content.
3. Video Marketing and Short-Form Content
It’s not that static content is going extinct; it’s just that video marketing and short-form content continue their momentum.
“Video on landing pages can increase conversion rates by over 80%, and mentioning the word ‘video’ in your email subject line increases open rates by 19%,” says Helen Aboagye, CMO of Divido and former CMO of Imagen, an intuitive video management platform.
The main reason for the continued rise of video marketing is that video production is less time-consuming and expensive than in the past.
In-house content creation is booming, with marketers building studios to meet the insatiable demand for fresh content. But looking at brands like Duolingo or Ryanair on TikTok, you don’t even need an “in-house corporate studio”. A Gen Z with an iPhone and an unhinged sense of humour can work wonders.
Social media, mainly TikTok and Instagram, is becoming increasingly a form of entertainment rather than a social platform. And this transformation goes beyond ad creation.
This level of scalability goes beyond ad creation and gives the brands the freedom to tell their stories at their own pace. That is obviously not to say that you’ll never ever need to produce videos with a proper production.
But for marketers with limited budgets, such low-budget, short-form video content will continue to be an excellent way for community building, if they deem video marketing a worthy endeavour to pursue.
Wrapping Up
Without a doubt, there are more things one can add to a list titled “Top eCommerce and Digital Marketing Trends for 2024”. However, we’ve wished to keep our list concise and focus on the digital marketing trends and updates that we deem the most important and require the most attention.
Once more, let’s go over the top 3 eCommerce and digital marketing trends to look out for in 2024:
Ensure you’re abiding by the new email deliverability requirements by Yahoo and Gmail.
Embrace unified data and real-time analytics to fully take advantage of hyper-personalisation.
Consider where and how you can incorporate video marketing and short-form videos to your marketing strategy. That is only if you believe video marketing makes sense for your business, of course.
And remember, digital marketing is hella dynamic. Even one month after this article is published, we’ll have new updates and marketing trends to talk about. So follow Segmentify on LinkedIn to stay on top of new digital marketing and eCommerce trends!
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