How do you persuade people to buy your product or service, particularly when there is an increasing number of demands on their time and wallets?
I’ve always been fascinated about how an understanding of human psychology can help marketers to change people’s behaviour. Whether it is nudging people to choose the ‘right’ option or appealing to the herd mind, there is a lot that marketers can learn from the social sciences.
One theorem that can help improve marketing is Maslow’s hierarchy of needs. Originally proposed by Abraham Maslow in 1943 it essentially ranks the varying needs of humans, from the basic to the most complex. The key point is that it is only when one level of requirements are met will humans then move onto the next one.
So at the bottom are physiological needs – breathing, food, water, sleep, excretion. Without these humans simply cannot function. So, if you are selling basic products, appeal to this need, but if what you offer is more complex or higher value, look further up the hierarchy.
Next is safety (security of body, employment, family, resources, health, property). We’ve all seen marketing/advertising campaigns that play to these needs, normally by warning of the dangers that a particular product or service guards against. Insurance is the perfect example.
The third layer of the hierarchy is love and belonging, covering friendship, family and sexual intimacy. This is where sex sells, and also products that deliver a sense of being part of a group. Remember the scene every week in Cheers, where Norm comes in and everyone greets him by name? That’s key to this layer. However too many brands attempt to generate a sense of belonging, but make it too corporate and intrusive, such as Starbucks’ attempt to call customers by their first name when they were buying their latte.
Above belonging is the esteem level (confidence, self-esteem, respect of others, achievement). All humans have a need to feel respected, and clever marketers exploit this by offering products that (they claim) will increase your confidence and earn the esteem of others. Buy our car/mobile phone/bank account and your world will be transformed.
So, what’s at the top of the pyramid? All the previous levels were seen by Maslow as deficiency needs and have to be not just met, but mastered, before humans can move onto self-actualisation. This is much more complex and varies from person to person, but is essentially about achieving your full potential. To do this they need accept themselves, happy in their judgement and have an efficient perception of reality.
On the face of it self-actualisers should be immune to marketing, as they can see through attempts to manipulate their thoughts or feelings. However those on the path to self-actualisation can be targeted with images that show successful people and intimate that they can only be achieved by buying particular products. Think American Express Black credit cards or most celebrity adverts – drink Nespresso and you can be George Clooney!
I’m not saying that the hierarchy of needs is the sole way of planning marketing campaigns or boosting sales. But understanding which level your product best appeals to is a good way of focusing your efforts and going beyond features to look at what the customer is looking for. And that can only lead to better targeted products that consumers actually want, after all.
Very few of us like paying tax, but there’s a fine line between legitimately reducing your tax bill and actively avoiding paying the tax that is due. And at a time of austerity where everyone is tightening their belts, there’s obviously a push by governments to close loopholes and maximise the revenues they receive.
Given their high profile and obvious success Starbucks and Amazon have both been the subject of widespread condemnation of their tax avoidance methods, and I’ve covered Starbucks inept PR response in a previous blog. Google was up before a House of Commons Select Committee last week (for the second time), backing up its claims that, despite revenue of £3 billion in the UK, all its advertising sales actually take place in the lower tax environment of Ireland. Google boss Eric Schmidt has countered that the company invests heavily in the UK with its profits, including spending £1 billion on a new HQ that he estimates will raise £80m per year in employment taxes and £50m in stamp duty.
Apple is the next company caught in the public spotlight, with CEO Tim Cook appearing before a US Senate committee that had accused it of ‘being among America’s largest tax avoiders’. Meanwhile, the loophole that sees Amazon and other big US ecommerce companies avoid paying local sales taxes is being challenged by a new law passing through Congress, with estimates of between $12 and $23 billion extra being collected.
Given the close links between Google and UK politicians (Ed Miliband is appearing at a Google event this week and Schmidt is expected to meet David Cameron on his current UK trip), the cynical view is that this is a lot of sound and fury, signifying nothing. But it does create an image problem for the companies involved, particularly at a time when we’re all meant to be in it together.
Obviously the most popular thing for companies to do would be to re-organise their tax affairs so that they meet the spirit as well as the letter of the law. But that’s not likely to happen given the enormous sums at stake. Instead expect increased calls for global tax reform (so that the organisations involved don’t have to operate the way they are currently ‘forced’ to) and a slew of feel good announcements that demonstrate the level of investment and support for the UK economy by the companies concerned. Being ultra cynical perhaps the whole tax situation explains the huge support by big tech companies for Tech City – it is simply an elaborate way of diverting attention from their financial affairs…………..