Marketing Bias

The Decision Lab
Cognitive Biases
in Marketing
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Cognitive
Biases and
Contents
Who We Are 3
1 - The Bandwagon Effect 4
2 - The Cheerleader Effect 7
3 - The Confirmation Bias 9
4 - The Endowment Effect 12
5 - The Framing Effect 14
6 - The Certainty Effect 16
7 - The Gambler’s Fallacy 18
8 - The IKEA Effect 20
9 - The Illusion of Control 22
10 - The Mere Exposure Effect 25
11 - The Negativity Bias 28
12 - The Rhyme as Reason Effect 30
13 - The Status Quo Bias 32
Cognitive Biases and Marketing

© The Decision Lab, A Non-Profit Using Behavioral
Science For Social Good
Who We Are
We believe that a better understanding of decision making will change the world for the better, but
only if it is applied. The Decision Lab is a non-profit organization aimed at promoting discourse around
how decision science can positively impact business, tech and policy.
Our initial mandate is to bring together researchers and practitioners from various fields and ask them
to discuss the practical applications of their research.
The longer term vision is to

leverage our network of
experts to carry out research in
collaboration with
government organizations,
NGO’s, etc. with the final goal
of having a meaningful
impact on decision processes.
In this short e-book, you will

find a collection of articles that
we have written to explore the
link between biases
uncovered by behavioral
economics and their use in a
traditional marketing context.
We will break down each bias into the what, the why, and the how. What is the bias? Why does this bias
occur? And, how have organizations leveraged the bias to achieve a marketing goal? We hope you will enjoy
this e-book and we welcome any feedback and comments you may have.
Make good decisions!
3
Chapter 1: The Bandwagon Effect
The Psychology
The Effect
The bandwagon effect is a form of conformity within social
The phrase “jumping on the psychology. Conformity is a powerful motivator of human
bandwagon” can be traced back to behaviour and Solomon Asch’s infamous conformity
19th century America – first experiment illustrated as much. Under the guise of being a
mentioned by Dan Rice. At the time, ‘perceptual study’, participants were asked to match the
Rice was famous circus entertainer. length of two lines.
In 1848, Rice assisted Zackory Taylor,

a presidential candidate. Rice invited
Taylor to run his political campaign
by touring with Rice on his wagon.
With the success of the campaign
and the following election of Taylor
as president, it was not long before
every political candidate wanted to
‘jump on Rice’s bandwagon’.
By the 1900s, bandwagons had

become an integral part of political In this example, the line on the left matched with line C,
campaigns. Since then, the phrase while line A and line B are clearly either too short or too long.
has been used to describe The experiment went like this. Each session had eight
individuals who support a individuals present, sitting around a table. Seven of these
movement simply because it is individuals were hired confederates, so only one was a true
popular to do so. subject. In the experimental group, the lines were presented
to the 8 individuals, and going in a circle, each participant
In a similar vein, the bandwagon called out their answer. In the control condition, where there
effect refers to a psychological were only two participants – the subject and the researcher –
phenomenon in which people do error was less than 1%. In other words, the subject matched
something because they perceive the lines correctly 99% of the time. In the confederate
everyone else to be doing it. condition, however, where the confederates unanimously
called out erroneous responses, 37% of the participants
agreed with the wrong answer given by the majority.
4
From an evolutionary psychology perspective, we can see how in-group conformity can be a
survival strategy. Firstly, siding with the majority would allow you to co-exist peacefully within the
group – giving you a better chance of survival. Back when the human race was just a number of
tribes, being exiled from your group is a death sentence. Being part of a group gives you
protection, better access to food, and so on. Fast forward to today, and we see that people still
tend to conform with a group – even when they disagree with the opinions or actions of the
group. People seek social acceptance, and going against the grain is a risk.
There are a number of important caveats with Asch’s experiment. First, people conformed
more when the majority is unanimous in their decision. For example, when one of the seven
hired confederates disagreed with the majority about which lines matched, the conformity
rates of the subjects decreased dramatically. In this case, when he has an ally, the subject does
not feel the need to be socially accepted by the group as much as when there was unanimity
within the group. Second, conformity rates were much higher when the task was difficult.
When the subject was even a little unsure about the answer, they tended to side the majority
opinion. However, when the task was easier (one line was obviously the right length), subjects
were a little stronger in the conviction to go against the group.
The Marketing
The bandwagon effect is still very much present within the modern political world. The only
difference is that these days, politicians switch out wooden wagons for fake supporters. By
creating an impression of popularity, politicians hope to trigger the bandwagon effect among
non-supporters. The same marketing strategy has also been used within the music industry.
Take the top 40 chart for example. Sales are greatly skewed towards songs in the top of the
chart. Sales increase exponentially rather than in a linear fashion as your song makes its way up
the chart. The difference between being at #30 in the chart and being #20 in the chart is
negligible compared with the difference between being #20 and #10 in the chart – even
though each is just a difference of 10 spots. This makes sense, we buy in part by what we think
is popular at the time – and being in the top ten exudes mass appeal. So what artists have
been known to do is to purchase their song up to thousands of times, until it reaches that
hallowed #10 spot. The same concept applies for different spots – the jump from 6 to 5 is
much more significant that from 5 to 4 in the chart.
5 5
Now, we are not suggesting buying your product multiple times to make it seem more
popular. But there are ways to leverage the bandwagon effect and social conformity for your
brand and business: social proof. Letting the public know how much your brand is loved and
supported by your customers is a great way to get them to hop on that proverbial bandwagon.
Here are some quick tips to make the most out of the natural human tendency to conform:
1. Include testimonials and reviews on your brand/ business website

2. Display the number of media likes and shares on your content
3. Make it easy to share content with social sharing icons on your website.
4. Build a social media presence – this is a great way to give your happy customers a
platform to express themselves, and to address the concerns of your less happy
customers.
5. Reach out to prominent influencers in your market, their endorsement would
likely spread to their followers, and encourage a favourable view of your brand or
business.
.
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Chapter 2: The Cheerleader Effect
The Psychology
The Effect
This effect is supported by the research of Drew Walker &
Have you ever wondered why all
Edward Vul (2013) and van Osch and colleagues (2015).
cheerleaders seem so attractive?
It might be from all those long
The cheerleader effect is a result of the interplay of three
hours of practice, but it also
cognitive phenomena. When viewing a set of items (1) the visual
could be due to the cheerleader
system automatically computes the averaged information of the
effect.
set, (2) individual items are viewed as more similar to the set
than they are, and (3) average faces are attractive. In other
The effect is a cognitive bias
words, individual faces are perceived as more attractive when
which leads you to perceive
presented in a group because they will appear more similar to
individuals as more attractive
the average group face, which is more attractive than group
when they are in a group than
members’ individual faces.
they do when seen individually –
also known as the group
effect. The term ‘cheerleader Walker and Vul (2013) tested
effect’ was coined after its this effect by having subjects
mention on an episode of the rate the attractiveness of
popular TV show “ How I Met faces presented either alone
Your Mother”, when the character or in a group. Their results
Barney Stinson said “the were consistent with the
cheerleader effect is when a cheerleader effect. Van Osch
group of women seems hot, but and colleagues
only as a group… Just like with (2015) contribute to the
cheerleaders. They seem hot, but literature on cheerleader
take each one individually: Sled effect by pointing out that
dogs.” people selectively attend to
the most attractive members
of a group and their
attractiveness has a greater
influence on the evaluation
of the group.
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Chapter 2: The Cheerleader Effect
As such the cheerleader effect would not work to the same extent in groups where everyone
has similar facial features, because the value of the group’s averaged attractiveness is the same
as that of the individual.
The Marketing
It’s no secret that marketers try to get us to associate their product with attractive people. That
is why attractive models are seen on fragrance commercials, or why attractive females are often
seen in car advertising. When we see attractive faces, our brain is rewarded. Without going into
the science behind this too much, the basic idea is that seeing pretty faces triggers
biochemical reward circuits in the brain. The neuro-chemicals being released are called μ-
opioid receptors (MOR), which are an essential part of the body’s biochemical reward system.
They play a role in human attachment and bonding. Putting attractive girls next to a car you
are advertising is no more than classical conditioning. You see the car and the attractive face,
your brain is rewarded. You see this many times until your brain subconsciously associates the
car with attractiveness. You reach the point where your brain releases μ-opioid receptors when
you see the car, even when the pretty face is not there.
Marketers have long acknowledged that humans are not perfect creatures, and as such do not
always make decisions driven by purely rational reasons – we are influenced by emotion and
desires too.
So to sell a product, you want to associate it with attractiveness. This is where the cheerleader
effect comes in. The more people you put close together – the more attractive they all seem.
And as van Osch’s research showed, even one attractive face at the forefront of the ad is
enough to make the rest of the faces seem more attractive than they actually are. The more
attractive your models seem, the more attractive your product and ad seem.
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Chapter 3: The Confirmation Bias
The Effect
Confirmation bias is among one of the most frequently committed cognitive biases. We’ve
all experienced it, from presidential candidates cherry-picking statistics to support their
campaigns, to how you convince yourself that red-wine is good for you after reading an
article about antioxidants (while ignoring the negative aspects of alcohol).
People are twice as likely to seek information that confirms what they already believe than
to consider evidence that would challenge those beliefs. In addition to affecting how
people search for information search, the bias also influences their interpretation of the
information that they do find.
The Psychology
Confirmation bias is a heuristic wherein

decision makers actively seek out and assign
more weight to evidence that confirms their
preconceptions, and ignore or give less
weight to evidence that challenge their
preconceptions. The explanation is that
humans are mentally lazy, and they prefer to
stick to their preconceptions, rather than
change it.
Our belief systems are the foundation upon

which we build our values and personal
narrative upon. Changing one belief
would require us to have to change the
numerous of other associated beliefs, and
possible how we view ourselves as well. As
such, we try to avoid situations that
challenge our beliefs, especially those that
are core to our identity.
9
In an interesting study, Vladis Krebs of orgnet.com, revealed confirmation bias in real-life

situations by looking at shopping lists on Amazon. Krebs pointed out that during the 2008
presidential election, people who were already supporters of Obama were the same people
buying books that are pro-Obama. While people who dislike Obama were buying books that
paint him in a negative manner.
The Marketing
“Confirmation bias” is one of the biggest drivers of brand loyalty. It is much easier for a
consumer to repeat decisions than to make new ones. As such, whatever inclinations that
they had previously, they will continue to support and justify for them.
Take for example the case study of Holiday Inn Express and their shower-heads. In 2004, the
franchise invested over $20 million into a complete makeover of all their hotels’ bathrooms.
After their major investment, Holiday Inn started to advertise heavily on this new and
improved bathrooms, with a particular focus on their multi-purpose and high
pressure shower-heads. Attached to each shower-head is a small pamphlet describing the
various functions that it could do. A large number of guests since the makeover has
commented on how great the shower-heads are. Now, maybe the shower-heads are indeed
as amazing as Holiday Inn advertised, however confirmation bias is also at play here. If not for
the heavy attention that Holiday Inn placed on the shower-heads, under normal conditions,
the shower-heads would not have been noted by the guests.
As a marketing application, brands

can “find their own showerhead”.
Utilize confirmation bias by drawing
your customers attention to
something you do well that they
might not have notice otherwise.
Highlight a specific aspect of your
product or service offering (that may
have otherwise gone unnoticed), and
you will find that consumers will not
only start noticing it, but will look for
more reasons to support your
product or service.
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Now for a final example where this was done well. A roofing company one day decided to
highlight the fact that they leave the work-site clean at the end of each day. Now, they had
always done this, in fact, this is something that most roofing companies do – it’s common
courtesy.
However, by putting it on the contract, highlighted under services they would complete,
customers now started noticing how clean the work-site was at the end of each day. Their
service hadn’t changed, they just highlighted an aspect of their service that was taken for
granted and as a result, customers noticed and appreciated it. This small effort improved
customer satisfaction. Customers had a more favourable image of the roofing company and
would now (as a result of confirmation bias) look for evidence to support that. Positives such as
politeness of the workers were now being noticed, and negatives such as a failure to complete
work on time was now being given less weight and attributed to situational factors.
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Chapter 4: The Endowment Effect
The Effect
Even if the grass is actually greener on the other side of the field, according to the endowment
effect, you still wouldn’t trade your precious grass for that grass from the other side. The
endowment effect is a cognitive bias where people ascribe more value to things merely because
they own them. The effect can be observed in two ways:
1. Evaluation- people will tend to pay more to retain something they own than to obtain
something they do not own
• One of the most famous study conducted on this effect was by Daniel Kahneman,
Jack Knetsche, and Richard Thaler (1990)– participants were given a mug and then
offered the chance to sell it or trade it for an equally valued pen. The amount that
participants required as compensation for the mug once their ownership of the mug
had been established was twice as high as the amount they were willing to pay to
acquire a similar mug.
2. Exchange: when people are given a good, they are reluctant to trade it for another good of
similar value
• Knetsch (1989)– Participants in Group A were given a coffee mug at the beginning of
the session for compensation for completing a short questionnaire. At the end of the
session, the participants were given an opportunity to exchange the mug for a bar of
Swiss chocolate. Participants in Group B were given the opposite exchange after first
being given the chocolate bar. Only 10% of the participants opted for the trade- the
majority of the participants preferred to keep the items that they owned.
The effect is not due to wealth or transaction cost. It is also not a result of emotional attachment-
the effect takes place almost instantaneously.
The Psychology
Kahneman and colleagues (1990) attributed the effect to loss aversion. Knutson and colleagues
(2008) observed for neural antecedent of the effect- they found heightened activation in the
nucleus accumbens, which is associated with cognitive processing for loss aversion and
motivation in participants who displayed the endowment effect. People simply do not want to
lose the things that they own.
In addition to loss aversion, there is an element of self-identity: possession of an item creates a

self-item association, and due to this association, value of the item increase. Dommer and
Swanminathan (2013) gave support to this explanation- the researchers found that participants
who were previously subjected to a social threat, has higher selling price than those who did
not.
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Chapter 4: The Endowment Effect
The Marketing
1. Trigger a sense of ownership through usage

Ownership can be fostered with usage. Although the usage period will only be
temporary, that short time span is already enough for the endowment effect to take
place. Return without questions asked policy, free trials, and samplings, are all good
strategies to trigger a sense of ownership.
For clothing stores, fitting rooms can also lead to the endowment effect- research has
shown that customers are more likely to buy clothes that they have tried on. This is
because trying something on fosters a sense of ownership for that person.
2. Highlight self-item association through personalization

Involve the customer in the process of product development. By contributing to the
development of the product, they customer will feel like that the product is part of
themselves- the product is a reflection of who they are. Nike’s NIKEiD service was
precisely this strategy in action- the service allows customer to design their shoes, with 31
different customizable parts and 82 material and option types. In 2009, the service alone
brought in over $100 million in revenue for Nike.
13 13
Chapter 5: The Framing Effect
The Effect
Imagine you are looking to lose weight –

which between the two frozen yogurts on the
right would you choose? Chances are you
would choose the one of the right- 80% fat
free. This right here is the framing effect at
work.
The framing effect is a cognitive bias in which

people react to a particular choice depending
on whether it is presented as a loss or as a
gain. People tend to avoid risk when a
positively framed (i.e. a gain) option is
presented, but seek risks when a negatively
framed (i.e. a loss) is presented.
With the example above, although the fat

content of the two tubs are the same, the one
on the right will stand out more to those who
are weight conscious. The wording puts a
focus on the fact that the majority of the
content is fat free- it therefore appears as a
safer choice between the two. Although fat
consumption doesn’t work this way, in the
customer’s mind, by eating the yogurt
that “contains 20% fat”, suggests to them that
they are taking on a 20% risk of getting fatter.
And so, it is more comforting to know that you
are eating something that is essentially fat free
than to eat something that contains a little bit
of fat.
14
Chapter 5: The Framing Effect
The Psychology
The framing effect is an example of Prospect Theory at play. The theory was developed by
Daniel Kahneman and Amos Tversky in the early 80s. Kahneman and Tversky showed
that losses have twice the psychological impact than gains. As such, the theory stipulates that a
loss is more significant than an equivalent gain, that a sure gain is favored over a probabilistic
gain, and that a probabilistic loss is preferred to a definite loss. Through framing, we can
manipulate choice based on prospect theory.
Loss aversion is the underlying mechanism for why people behave the way prospect theory
suggests. People have the tendency to strongly prefer avoiding losses to acquiring gains. Based
on evolutionary psychology, loss aversion could be traced back to our ancestors’ need for
survival. Our ancestors lived by hunting and gathering. The idea of a loss of these hard earned
resources not only mean that their work had been for waste, but it also means that they now
have no resources to survive on. As such, major focus was put on the protection of
resources. Although, in modern day, many economic transactions are not life or death choices,
our evolutionary reflex for loss aversion is already hard wired in our heads.
The Marketing
Being loss averse leads people to also being risk adverse, and this is where marketers can take
advantage off. The key to utilizing this cognitive bias for marketing applications is to phrase your
product offering in a way that minimizes risk.
The framing effect is particularly effective for marketers that work in industries that require the
customers to make high-risk choices: medical, insurance, and finance. But it works for more
trivial decisions too. Take for instance the yogurt example, marketers should highlight a loss that
customers can prevent (i.e. prevent weight gain by eating yogurt that is 80% fat free) as
opposed to what they can gain (i.e. save on fat consumption by eating yogurt that is only 20%
fat).
Another framing technique is to spread out the risk that the customer will take. A great
example of this is in the way companies advertise subscription fees. A gym membership that
costs only $2/day seems much cheaper and more attractive than one that costs $56/month. At
the end of a 28-days month, both options would end up costing $56, but by framing it at a
lower daily value, the cost of subscription is now almost non-existent in the customer’s mind.
15
Chapter 6: The Certainty Effect
The Effect
In the previous chapter, we introduced the framing effect and its underlying mechanism –
the prospect theory. The certainty effect is another cognitive bias that stems from the
prospect theory.
The certainty effect refers to the psychological reaction that results from when you go from
‘certain’ to ‘probable’. It is the simple idea that people find comfort in certainty and as a
result, they use 100% certainty as a reference point. Any probability below 100% is considered
a risk and a loss.
The Psychology
Normally, a reduction in probability of winning a reward (e.g. a reduction from 40% to 20%)
creates a psychological effect – a sense of displeasure. This displeasure leads to the perception
of loss from the original probability, causing individuals to prefer a risk-aversion decisions.
Certainty effect proposes that the same reduction has a larger psychological effect when it is
done from certainty than from uncertainty. In other words, a reduction from 100% to 90% is
more distressing than a reduction from 40% to 30%, even though the total reduction is 10% in
both cases.
For instance, in a recent research conducted by Li and Chapman (2009), it was reported that
people significantly preferred a vaccine if it was described as eliminating risk from 10% to
0%, over one that was described as reducing the risk of one disease from 20% to 10%. The
first description was preferred because it allowed people to feel secure in the choice- there is
now 0% risk of the disease.
16
Chapter 6: The Certainty Effect
The Marketing
There are two marketing applications that we can derive from the certainty effect:
1. Reduce the risk of trying a product or service to 0%
• This is fundamentally the 30-days return policy in the retail sector that we are all so
familiar with. Or, the “satisfaction guarantee or your money back” tagline that you see
in the service sector. All of these policies are set in place to provide the customer a
sense of certainty and security. Once the customer knows that they have nothing to
lose, they will be more willing to adopt the new product or service.
• However, every company out there is offering a policy like this – so how do you stand
out? In order to utilize this strategy effectively, you need to push the boundaries of
convention. Take the case of Zara, the clothing company, for example. The
convention with most clothing retail store is that in order to return an item, the
customer needs to return the item with its price tag still attached to it. Zara
recognizes that sometimes this can be difficult. Price tags can fall off during
transition, or people can realize that they don’t like an item only after having worn it
out. Thus, in order to provide their customers a stronger sense of security, Zara
does not require price tags on returned items.
2. Frame product proposition with reference points at 100% or 0%
• When you advertise the efficacy of your product or service, re-frame it in a way that
induces certainty. You see this strategy at play with vaccine example that was
described earlier. This application of the certainty effect is very suitable for brands in
the pharmaceutical industry. However, this application can also be used for other
industries as well. For example, if you are an investment consultant, instead of
describing the performance of a stock as being twice its initial value, say that it has
increased by 200% since the last report.
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Chapter 7: The Gambler’s Fallacy
The Effect The Psychology
Before we jump into the gambler’s fallacy, The gambler’s fallacy is a cognitive bias in
let’s put on our most James Bond-esque which people incorrectly assume that
smirk and talk about roulette. The game of future occurrences are dependent on
roulette is very simple- on a small wheel, previous outcomes- such that, if
there are 37 slots (38 if you play American something happens more frequently than
roulette), each slot is numbered. The “0” normal during some period, it will happen
slot is colored green, while all remaining less frequently in the future.
numbers are either red or black. In the
game, the player can choose to bet either It is the simple idea that things must
on a single or series of number, the color balance out. This assumption is erroneous
black or red, or whether the number is because, when it comes to chance, every
odd or even. To determine the winning instance is independent of another. Just
number and color, a croupier spins a like how the probability of a getting
wheel in one direction, then spins a ball in heads-tails on a coin flip is always 50-50
the opposite direction around the no matter how many times you
circumference of the wheel. The ball consecutively got tails.
would eventually lose momentum and fall
into one of the slot.
On August 18, 1931, during a roulette game

in the Monte Carlo casino, the ball fell in
the black for a record number of 26 times.
This record sent the players at the casino
into a frenzy. In a single game, millions of
francs were lost. People were betting
against black, incorrectly reasoning that to
balance out the probability, the ball would
have to eventually fall in the red. This was
how the Gambler fallacy, also became to
known as the Monte Carlo fallacy came to
be popularised.
18
Chapter 7: The Gambler’s Fallacy
The Marketing
This fallacy can be taken advantage of when marketers are faced with a position where they
want to sell a product that is currently under performing. Particularly for products that involves
constant fluctuation, such as: stock investment, real estate, and gambling. For example,
an investment portfolio that is currently losing money can be re-framed to the customer as one
that has high potential. The stock’s performance has been so poor that it is only a matter of
time for it to pick up. It will increase, it has to!
As a customer, it is important to be aware and cautious of falling into this pitfall- both from
your own biases, as well as, from any unethical consultant who wants to con you. It is hard not
to be persuaded by talks of big money, but here is some advice I want you to think about
before making any big investment: “The number-one job of the hedge-fund manager is not to
make sure that you can retire with a smile on your face – it’s for him to retire with a smile on his
face”- Mark Cuban.
As with anything that involves an element of chance, it’s important to be aware of any potential
biases affecting your thinking. Just because your stocks have been falling does not mean that
they will pick up, so be wary of any reasoning such as “it’s just the natural fluctuation of the
market – it’ll go back up again”. When it comes to chance, past events have no bearing on
future ones.
19
Chapter 8: The IKEA Effect
According to Statista, IKEA is now The IKEA effect was documented

the largest furniture retailer in the by Mochon and colleagues in 2012. The
world. In 2015, IKEA’s global revenue effect postulates that a self assembled or
exceed 32 billion Euros with 375 created product is valued more than an
stores present in 47 countries. With identical product which the individual did
such a reach, it’s a safe assumption not take part in creating.
that you have had assembled IKEA
furniture at least once or twice in In the study, the researchers gave Group A a
your life. packet of LEGO parts along with an
instruction manual to build a LEGO car. For
We can all probably relate to the Group B, the participants were given a pre-
experience of buying from IKEA: See assembled LEGO car and was asked to
it in the store, buy it, bring it home, examine it. Both groups were then asked to
and then struggle for two hours to indicate how much they are willing to pay
assemble something which you were for the LEGO car. Participants in Group A
assured would be easy. Despite the valued their cars twice as expensive than
frustration, the moment you step those in Group B. This result was mediated
back to admire your finished piece, by the participants level of competence.
don’t you also feel this surge of pride
and accomplishment? That right In other words, the reason why participants
there is the IKEA effect- and in Group A valued their LEGO cars more
according to the effect, no only do than those in Group B was because by
you feel proud of the building the LEGO car, it made the
piece that you’ve just built, you are participants feel proud and accomplished.
most likely to also value it more than
any other furniture that you own.
20
Chapter 8: The IKEA Effect
In order to confirm the mediating effect of self competence, in following studies, the researchers
manipulated the participant feeling of self competence prior to presenting them with the
assembly task. The results showed that participants who had their sense of self affirmed were less
susceptible to this effect. On the other hand, threatening participants’ sense of self led them to
want to increase their propensity to create things themselves.
The researchers also found that this effect only applies when the DIY (do-it-yourself) is done to
completion. A half finished project would not have elevated value- which is in line with the self
competence explanation. Just like how a half assembled table is simply a plank with two sticks
coming out of it- it is not much to be proud of.
The Marketing
The marketing implication for this effect

is straightforward: DIY-ify your product
offering. The idea of DIY is no stranger
within the retail and culinary sectors:
LEGO, NikeID, and self-cook restaurants,
to name a few. If applicable to your
brand and industry, allow for product
design customization. For example- allow
users to make changes to a SaaS
dashboard (not in the beginning but as
they become power users) – this makes
them feel vested in it, like it’s the perfect
product for them (they ‘created it’ after
all)
If customization post-purchase is not possible, an alternative is to engage the customer in
the product development process. Ask for the customers’ opinion on what they want the
product or service to be like.
Once you launch the offering, emphasize on the fact that it was the customers who made
this product possible- they made the product. Harvard Business Review previously wrote an
article about the benefits of involving customer in the process of product development, and
they mentioned that using this strategy can also increase the speed of product acceptance.
Furthermore, not only would this method trigger the IKEA effect, but it would also allows
your brand an opportunity to gain valuable customer insights.
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Chapter 9: Illusion of Control
The Psychology
The Effect
This judgement of control is dependent on
Did you know that Serena Williams, the two components: (1) the intention to create
nine time Wimbledon winner, has the the outcome and (2) a relationship between
superstitious ritual of bouncing the ball an action and the outcome. To put this into
five times before her first serve and twice the example of Serena Williams, the intention
before her second? And it is not just
is to win the match, and the action is play
Serena Williams, many other pro athletes, tennis. And along the way, this simple
like Michael Phelps, Tiger Woods, and association can turn into an illusion of control.
Michael Jordan, to name a few, all have That if she plays tennis a certain way (i.e.
their own quirky rituals that they have to bounce the ball 5 times before the first serve),
do pre-competition. she will be able to control the outcome of her
matches.
So why do these professional athletes,
who spend thousands of hours training, What makes this illusion even more
rely on such superstitions? interesting is the fact that research shows that
athletes (and laypeople) do perform better
Psychologists believe that it might be due after engaging in a superstitious ritual
to the cognitive bias for illusion of control.
(Damisch, Stoberock, & Mussweiler,
People have the tendency to 2010; Schipper & Lange, 2012; Wiseman &
overestimate their ability to control Watt, 2004). Psychologists believe that the
external events. This illusion is particularly enhancement in performance may be
prominent in situations which the attributed to an increase in a sense of self-
individual is familiar with and that desired efficacy. In other words, following through with
outcome is known – like Serena Williams
their ritual makes athletes feel more confident
playing tennis (familiar situation) to win a and in control. And confidence plays a huge
trophy (desired outcome). With athletes role in the success of athletes. The phrase
rigorous training regimen and overly “whether you believe you can or can’t you’re
encompassing desire to win, it is not right” alludes to the power of confidence and
wonder that many pro-athletes (among mindset when trying to achieve a goal. The
others) fall into this illusion.
illusion serves as a tension regulating
mechanism- when individuals feel like they
have control over the situation, they will feel
more confident in their ability, and
consequently, perform better.
22
Beyond, enhanced performance, the illusion also serves an adaptive advantage. By having an
illusion of control over an unpredictable situation, it motivates people to persist in difficult tasks
which they otherwise would have given up.
The Marketing
So, let’s bring this all back to marketing. What does self-efficacy and illusion of control have to
do with selling more products?
Do you remember those viral AXE commercials that all have the same underlying plot of how
after the male lead cover himself in copious amount of AXE spray, women all rush towards
him? In a way, AXE was using illusion of control to sell its body sprays.
We are not bees, and you won’t be able to attract eligible partners by simply smelling nice. But,
what AXE is doing through its commercials is instilling this illusion of control in our minds. The
intention (attract partners) and the action (use AXE body spray) were perfectly laid out to us in
those commercials. Or, how AXE likes to phrase it:
23
Like AXE, marketers can take advantage of the illusion of control in their sales pitch: make an
intention-action execution plan for your products and increase your customer’s sense of self-
efficacy. Make your customers believe that by purchasing and using your product, it can help
them achieve their goals!
There are two key points to remember when applying the illusion of control to your marketing
campaigns:
1. Select goals/intentions that have an element of chance. The more unpredictable

the event, the more susceptible the customer will be to the illusion. Gambling is
the perfect industry to take advantage of this illusion.
2. Identify the intention-action plan, and figure out how your product can fit into this
relationship. The more seamless the integration, the more convincing your message
will be. For example, AXE spray and athletic performance would not be a good fit.
Are you going to charm your opponent with how amazing you smell on the field?
24
Chapter 10: The Mere Exposure Effect
The Effect
One of the most talked about psychological “experiments” within cognitive psychology
is James Vicary’s Popcorn experiment. The experiment was conducted in a New Jersey
movie theatre in 1957. While the movie is playing, Vicary projected the messages, “Drink
Coca Cola” and “Hungry? Eat popcorn”. These were repeatedly displayed at the rate of
1/3000 seconds, throughout the duration of the movie. The speed of display was too fast
for people to be consciously aware of them. But, according to Vacray, popcorn and
Coca Cola sales skyrocketed during these movie sessions. After the publication of this
study, the general public fell into a frenzy out of fear of potentially being brain washed
by government propaganda.
What they didn’t realized at the time was that, this experiment was fake. Vicary never
actually conducted this experiment, he lied about the results for fame.
Although the experiment was never conducted, the psychological concept is actually
valid. Vicary was trying to increase people’s preference for popcorn and coke through
the mere exposure effect. The effect is a psychological phenomenon by which people
have a preference for things merely because they are familiar with them. This effect
applies for inanimate visual (i.e. characters and images) and auditory stimuli, as well as
for individuals.
The Psychology
The mere exposure effect arises because repeated exposure of a stimuli increases its
perceptual fluency, which is the ease at with which a stimuli can be
processed. Perceptual fluency, then in turn, increases positive affect (i.e. liking) (Bornstein
& D’Agostino, 1994; Seamon, Brody, & Kruff, 1983).
The psychologist that was known for the development of the mere exposure effect is
Robert Zajonc. The 1960s marked the start of his research, through a series of
experiments, Zajonc found that exposing participants to various stimuli (i.e. geometric
shapes, photographs of expressions, Chinese characters, and nonsense words) led them
to rate those stimuli more positively than stimuli that they were not exposed to. One of
the most important conclusions derived from his experiments was the revelation that the
mere exposure effect can operate unconsciously through subliminal priming.
25
It is often argued that subliminal priming is more effective at eliciting likability than conscious
priming. The reasoning is that if people know that are being manipulated by this effect, they will
actively try to fight against it. On the other hand, if they are not aware of the priming, they will not
try to block the stimuli.
The Marketing
Subliminal priming is no stranger within the advertising industry. In the 1950s, after Vicray’s
publication, many advertising firms started releasing sexual subliminal ads with the reasoning
that sex sells. Some, more subliminal than others:
(1980, Coca Cola)
Personally, we find the idea of subliminal advertising rather archaic and distasteful. A more
effective and straightforward way to apply the mere exposure effect to marketing is simply
through increasing your brand exposure.
For the 2012 London Olympics, Nike launched its #FindGreatness campaign. Hundreds of
Nike billboards around the city of London featured the Twitter hashtag #FindGreatness
alongside their motivational images of youths attempting to train for Olympic sports. By
the end of the year, Nike’s quarterly report increased 12 percent in 2012 after the
Olympics ($6.5 billion in annual revenue made). Over 16,020 tweets were sent during the
time of the Olympics that were associated with the word “Nike” with “Olympics” versus just
under 9,300 for Adidas.
26
However, clearly not every brand can afford to rent out hundreds of billboards to increase
exposure. But, there are cheaper ways to increase brand exposure too. Lululemon, for
example, went out of their way to make their shopping bags sturdy and fashionable,
encouraging people to re-use them. The result is people using the Lululemon branded bag to
carry their groceries, gym gear, or pretty much anything else. Another sure fire way of
leveraging the mere exposure effect is to build up a social media presence. With people of all
age groups spending hours online every day, social media is becoming one of the best ways
to reach your customers. #MereExposureEffect
27
Chapter 11: The Negativity Bias
For all the boyfriends, girlfriends, Psychologists hypothesized that negativity

husbands and wives out there who are bias developed as a result of an evolutionary
frequently frustrated by the fact that mechanism. For our hunter and gatherer
their partners seem to only remember ancestors, there are two fundamental daily
that one small mistake that you made, actions that they partake in: approach a
while ignoring all the other loving reward (i.e. gather food) or avoid a danger
gestures that you have done for them – (i.e. run away from an animal attack). Both
here is the reason why. It is not that actions are important to their livelihood-
your partners are not appreciative of however, negative information carries more
your loving gestures, chances are, they weight on how they engage in these
were just demonstrating the negativity actions.
bias.
For example for our ancestors, if they fail to
As Vanish and colleagues noted in their act on a neutral/ positive piece of
2013 research study- “not all emotions information, there is always next time. But, if
are created equal”. The negativity bias they are not aware of a predator that is
refers to the phenomenon where even looming behind them, there might not be
when of equal intensity, negative a next time. In a way, we can say that
information has a greater psychological negative information carries more impact
impact on us than neutral or positive because of its urgency- it tends to require
information. The bias is present within immediate reaction.
numerous cognitive domains:
attention, learning, memory, and To apply this example to modern world-
decision making (i.e. loss aversion). imagine you are stock investor. I think many
Negative information and events are investors would agree with me that
more salient, we remember it better, knowing if the investment is performing
and rely on it more heavily to direct our poorly is more crucial than if it is performing
behavior, compared to positive well. Because, if you don’t respond quickly
information. enough to a falling investment, you can lose
hundreds of dollars within mere seconds.
28
Chapter 11: The Negativity Bias
The Marketing
So what does this bias have to do with marketing? Negativity bias is actually crucial to
the customer management component of marketing. Just like your partner will only
remember your bad behavior, customers will tend to remember how your brand failed them.
You may have time and time again excelled in customer service, always leaving your customers
happy and satisfied with their experience. However, all those happy memories will be out of
the window the moment you let these standards slip. This can be as insignificant as a slightly
small scratch on the product, or as a big as a company tax scandal. Your customers will be on
the look out for such things, and they will mark it down in their memory. There has been
research to show that customers are more unforgiving of brand transgressions that are within
the service sector (i.e. airlines) than those in the retail section. This is because customers believe
that the brand could have prevented the service failure (i.e. not overbook the flight).
The most damaging offense that a brand could commit is the double deviation: a service
failure followed by the failure to resolve that transgression. MIT Sloan reports that the driving
factor behind why customer resort to online complaints is because of double deviation. In their
study, only 4% of online complaints were the result of a simple service failure.
Mistakes are inevitable- that is just the way life is. However, upon making the mistake, it is
important that the brand takes immediate actions to reconcile the problem. If you let your
customer sit on their dissatisfaction long enough, with the negativity bias, you may have lost a
customer for good.
And with the prevalence of social media platforms, one dissatisfied customer can have the
power to publicly shame your brand to an audience of over 15 million people. And it is not only
the public shaming that is problematic, because, at the end of the day, you have just lost
yourself a customer (and any other customers that may have seen the bad review).
It costs five times more to acquire a customer than to retain one. So if you want to save
yourself, your reputation, and your money – focus on your customer management.
Reconciliation can be in the form of compensation, but most times, recovery of the problem
and an apology is all that is needed (Wirtz & Mattila, 2004). The key to solving customer issues is
speed! More important that how you respond, is how quickly you respond!
29
Chapter 12: The Rhyme as Reason Effect
The Effect
Do you remember all those poems that you wrote back in elementary school? The ones
where you were taught to use rhyme as a literary tool? Aside from writing poems, rhymes
can be used as a marketing tactic. According to the rhyme as reason effect, phrases are
more memorable and are judged as more accurate when they are written in rhymes.
An example of this is Dawn’s TV commercials for its dish soap in 2015. During this
campaign, Dawn released several different commercials, but all of them ended with the
same tagline: “A drop of Dawn and grease is gone”. Even from the first watch, the tagline
already stood out to me. As you can see, even a year later, I could still recall it!
The Psychology
To understand how this effect works, we need to first talk about heuristics. In cognitive
psychology, heuristics are simple and efficient rules that people use when they need to
make a decision or judgement about a complex problem or a situation in which they have
incomplete information. In lay terms, heuristics are rule-of-thumbs; they will not necessarily
always lead to accurate judgments but it will allow the individual to make those judgments
quickly.
There are many types of heuristics, the one that rhyme-as-reason effect operates on is the
fluency heuristic. In other words, when an object is processed more fluently or faster than
another, the mind infers that this object has the higher value. Our response to a phrase is
based on what is said and how it sounds- but it takes time and effort to process them
separately. When we do not have enough information to fact-check the content or the
motivation to make the distinction, we base our judgment on the way it sounds. As such, the
more elegantly and eloquently an idea is communicated, the more likely it is to be
considered accurate, whether or not it is actually true.
Rhymes are use to add flow, and therefore it scores high on fluency. And because of the
fluency heuristic, when people hear rhymes, their mind process it more fluidly, and accept it
more readily without thorough assessment.
30
Chapter 12: The Rhyme as Reason Effect
The Marketing
The application for this cognitive effect is very straightforward: use rhymes in your tagline or
product description.
Here is how you can apply rhyme-as-reason in your marketing:
1. Boil your value proposition down to the simplest word

• e.g: Ice cream -> fun
2. Find a word that rhymes with your product proposition (rhymer.com)
• e.g: sun
3. Add the rhyming phrase to the start or end of your product description
• e.g.: Have fun with a tub of Ben & Jerry ice cream under the summer sun!
Don’t worry about having your rhymes stand out. If it is well written, it actually should just flow
while the customer is reading the product proposition and be unconsciously processed by
their mind.
31
Chapter 13: The Status Quo Bias
The Effect As such, customers are adverse to

change because they fear that change
The status quo bias refers to the would risk losing what they currently
preference that individuals have have. For example, if you have been
towards having things stay the same as driving a manual car for many years, you
they are. This preference persists even might be reluctant to switch to
when the alternative solution is better automatic cars. Even if objectively the
and when there is low transaction cost pros of switching outweigh the cons, but
associated with switching. The because we are loss averse, we tend to
worrisome part about this bias is that it over-emphasize the cons.
does not just apply to trivial decisions- 2. Optimism bias– customers are likely to
research on subscriptions for health overestimate their current state and do
plans and retirement programs have not see the need to change their
also consistently shown this bias. individual status quo. Following the car
example, you might only focus on all the
good aspects of driving manuals and how
good you are at driving it. You will think
The Psychology about how much you enjoy the process of
shifting gears, while ignoring the risk of
stalling the car.
The status quo bias arises as a result of an
interaction between multiple cognitive biases:
3. Opportunity cost- because of our
1. Anchoring effect– customers are likely to use sensitivity to the cost of switching and our
the status quo as their reference overestimation of our current state, we do
not take into consideration the cost of not
point. From this perspective, any
switching and maintaining the status quo.
improvement is considered a gain and any
If you are a bad driver, causing the car to
shortcoming is a loss. And, as we know from
stall often, it will be only a matter of time
loss aversion theory, individuals attribute
more weight to a loss than a gain- with the before the car start breaking down. Or,
pain of loss being rated as 2-3 times higher worse, potentially get into an accident
because you were fumbling with the
than the pleasure they may receive from a
gears. All of this because you
gain.
overemphasized the cons and
underemphasized the pros of switching.
32
Chapter 13: The Status Quo Bias
The Marketing
Due to the preference for the status quo and it’s underlying cognitive biases, innovative
solutions that require big changes to a system may not be readily accepted by
customers. Thus, when developing products and services, brands need to keep in mind the
importance of simplicity. The implementation of a solution needs to be simple and is able to
be seamlessly integrated into the current working system.
Once you have a simple product, the next step is to convince your customer as to why they
need to change their status quo. Brands can help to offer customers an accurate reality
check- help them recognize their own biases. By showing that the risk of the status quo
outweigh the risk of change, customers will be more receptive to the product.
If one-on-one consultation is not applicable, here are three strategies that brands
can implement globally:
1. Emphasize the ease of switching on your advertising material -> e.g. “Easy
financing for new cars!“
2. Third party review and ratings to overcome anticipated regret -> this can be done
on your brand’s website, or even through inserting the reviews directly on your ads
video and posters.
3. Re-frame status quo as a loss, in order to create fear of missing out . You can shift
attention from risk assessment to opportunity cost of product -> e.g. “ Only X
number of items left”
Another great option is to reduce the cost of switching for the customer. Phone companies
do this all the time, offering to buy out your current contract if you switch to their service.
33
The End
For more information, or to share your thoughts and
commentsplease contact us at:
info@thedecisionlab.com
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Marketing Bias

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The Decision Lab

Cognitive Biases and Marketing

The longer term vision is to

In this short e-book, you will

Make good decisions!

In 1848, Rice assisted Zackory Taylor,

By the 1900s, bandwagons had

1. Include testimonials and reviews on your brand/ business website

Confirmation bias is a heuristic wherein

Our belief systems are the foundation upon

In an interesting study, Vladis Krebs of orgnet.com, revealed confirmation bias in real-life

As a marketing application, brands

In addition to loss aversion, there is an element of self-identity: possession of an item creates a

1. Trigger a sense of ownership through usage

2. Highlight self-item association through personalization

Imagine you are looking to lose weight –

The framing effect is a cognitive bias in which

With the example above, although the fat

1. Reduce the risk of trying a product or service to 0%

2. Frame product proposition with reference points at 100% or 0%

The Effect The Psychology

On August 18, 1931, during a roulette game

The Effect The Psychology

According to Statista, IKEA is now The IKEA effect was documented

The marketing implication for this effect

1. Select goals/intentions that have an element of chance. The more unpredictable

(1980, Coca Cola)

The Effect The Psychology

For all the boyfriends, girlfriends, Psychologists hypothesized that negativity

Here is how you can apply rhyme-as-reason in your marketing:

1. Boil your value proposition down to the simplest word

The Effect As such, customers are adverse to

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