Get All Access for $5/mo

#7 Psychological Theories Every Marketer Should Consider The beauty of the theory of reciprocity is that it is premised on the policy of give and take

By Arpit Sinha

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Marketing lies at the heart of any business... and the psychology of marketing

Are you building a product that you think will take the market by storm? Worried about how to market when there's confusion galore thanks to non-stop sensory overload that never seems to abate?

It's no rocket science that your brand's success hinges on its ability to make your audience feel (and think) better.

Easier said than done? Not quite if you begin to understand the dynamics of consumer psychology.

Let's dive straight in.

Decoding the Decoy Effect

Let's say you are buying nachos in a movie theatre. And, there are 2 variations.

Small – Rs.120

Large – Rs.250

Which one would you choose?

The smaller one, right? Why?

Because large seems a little too expensive!

Now, apply the decoy effect and bring in another variant.

Small – Rs.120

Medium – Rs.220

Large – Rs.250

Which one do you think will sell more? The larger one? Because you think that the large is reasonably priced of the three when a closer analysis decodes the entire story.

This is known as the decoy effect. When given a third choice - which is asymmetrically placed of the first two other options - customers tend to choose the third one.

Framing Effect

Let's assume you are in a supermarket to buy juice. One brand claims it is 90% sugar-free. Another brand says it only contains 10% sugar. Which one would you go for?

More importantly, why?

Most customers would opt for the one that is 90% sugar-free. Let's face it; that sounds so much better. This is because "% sugar-free' worked better than "% sugar only'. This is called the framing effect.

Though the same content is placed under different labels, consumers tend to pick a choice depending on their risk-avoiding mentality of loss or gain. The predicament of framing effects is that people are frequently provided with options within the context of only one of the two frames, which limits their choice and in effect, decision.

The Theory of Reciprocity

Goodmenu is a food preparation and delivery app. It is struggling in the market with a mere 500 customers. In order to turn the table (literally), they announced a new scheme whereby one can order 5 meals over the next 10 days and get a chance to visit one of their sophisticated kitchens in the city.

This inevitably piqued people's curiosity about food preparation, the quality of food and other tidbits about the app. Predictably, the number of customers who wanted to explore new options began to increase. Word of mouth spread like wildfire, which brought in newer customers.

Is this a good marketing tactic? Sure is, but not just because it worked! Most brands worth their salt would happily tell you that at the end of the day, its goodwill and positivity that make their business grow organically – for the long haul.

The beauty of the theory of reciprocity is that it is premised on the policy of give and take. This implies that customers tend to be more cooperative and positive towards the company if they are treated in the same way. Give something and get something back.

Thinking of Foot-in-the-door

Gofor is a cloud-based Saas provider. They have lined up some fantastic products in their suite. In order to expand their market, they announced a new scheme. All their products were made available as trial versions for one month. The purchase details are captured right at the beginning. During the course of usage, users have the option of ending the contract.

Guess what? They soon found that more customers were willing to try the product for the first time and close to 54% ended up renewing their subscription.

"Foot in the door" refers to getting past the first step in the customer acquisition journey by being the first one to make that all-important move.

This also implies that if the company gets their foot in the door, preferably as a leader in its niche, it has more chances of finalising the opportunity. Also, they learnt the importance of starting with something simple- probably as innocuous as a small request. Once they agree to the small offer, their resistance to exploring something bigger tends to diminish.

The Familiar Face Effect

Why are people still attached to old brands like Adidas, Nike, Coke, Gucci, etc? They have been around forever and are treated like next door neighbours. The same concept can be applied the realm of products as well. The more they see the brands/products, the higher their chances of getting interested to try it out.

Against this backdrop, social media can do a great job at augmenting the familiarity of a message that you believe in. Keep repeating the message till they "get it', albeit in interesting ways. The more the customer is exposed to something, the more they are likely to like it.

The Endowment Effect

Before and during its release, Apple iPod created quite a buzz. Much of it is attributed to the marketing strategy which hailed the product as a supreme, one-of-a-kind product that would set the world ablaze (and that did happen in varying degrees).

In the customers' mind, this created a deep-rooted impression that they would acquire superpowers and become a rare breed of empowered individuals if they somehow managed to get the device. In other words, they were made to feel that they would own an awesome product that would make a real difference.

Hence, when the customer owns something they believe is of a high quality, they tend to value it more. If they wish to sell it, they usually want more than its actual worth. This is called the endowment effect.

Digital marketers have been known to help consumers "raise the stakes' in terms of ownership in the brand by asking questions, seeking suggestions and collecting feedback. And, as usual, creating meaningful buzz on social media about how great it feels to own something special wouldn't hurt the cause.

The Limited Edition or Scarcity Effect

From time to time, companies like Apple, OnePlus, etc. release limited edition products at a special price and package them as limited-period offers. The idea is to let their audience know that here is a product that is not going to be around for long, urging them to rush and take the plunge before it becomes too late.

When you're sent an email that warns, "Something left behind in your cart will soon get sold out" you're more likely to do something about it than if it only reminded you that you happened to leave something behind in the cart.

Is there a caveat in the email? There probably is, but then it increases the intrigue factor and facilitates engagement.

Many customers are intrigued by such statements due to the fear of missing out on a good deal. Regardless of whether they truly need the product, the sheer sense of uniqueness, scarcity and elusiveness impels them to quell any scepticism in their mind.

The scarcer the item is, the more valuable the product becomes. This is a variation of the endowment effect.


A solid understanding of consumer psychology is paramount in getting your marketing strategy right. Getting access into your audience's psyche and knowing what makes them tick can make it that much easier to hit the bull's eye and grow your business. The knowledge of psychology is particularly useful if you're able to assess what drives you to do things, as opposed to merely thinking about them.

Arpit Sinha

Copywriter at Classy Writeups

A passionate curator, creator, editor and manager of all kinds of written content with other accompanying nuances at Classy Writeups. He has a penchant for unique and result- driven content creation along with its marketing, management and promotion.Also has considerable experience in writing and editing academic research work.


Business News

How to Be a Billionaire By 25, According to a College Dropout Turned CEO Worth $1.6 Billion

Austin Russell became the world's youngest self-made billionaire in 2020 at age 25.

Starting a Business

3 Things to Consider Before Your Perfect Business Partner Becomes Your Perfect Disaster

There are many reasons for start-up businesses' high failure rate, including lack of cash, not doing enough research and poor marketing. But this one reason is definitely not getting enough attention.


Taylor Swift Has a Lucky Number. And She's Not the Only High Performer Who Leans Into Superstitions to Boost Confidence.

Even megastars like Swift need a little extra something to get them in the right mindset when it is game time.

Buying / Investing in Business

I'm a VC With Over 50 Startup Investments. Here Are the 4 Secrets to Securing Funding for Your Ventures.

Investor relationships are crucial in most businesses, but navigating them is no walk in the park. These insider tips from a former founder and current venture capitalist reveal how entrepreneurs can tap into the investor mindset and masterfully manage investor relations.


SEO Trends You Need to Be Aware of Right Now, According to a Seasoned Pro

Navigate the future of search engine optimization to elevate your online presence and drive meaningful engagement.