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Marketers, entrepreneurs, and business owners assume that most people make decisions by researching and then weighing the options.<\/p>\n
But that’s not how most people make decisions.<\/p>\n
People frequently act illogically, making their behavior<\/a> difficult to predict. And they rarely take the time to learn the full facts before taking action.<\/p>\n Instead, people tend to unconsciously latch onto the first fact they hear, basing their decision-making on whether it’s accurate or not.<\/p>\n This phenomenon is called anchoring. Anchoring is one of the most fundamental principles of marketing psychology<\/a>.<\/p>\n Why should you care that anchoring affects people’s decision-making?<\/p>\n The anchoring effect<\/a> can work for you or against you. It’s one of the most important effects of cognitive psychology.<\/p>\n When anchoring works for you, marketing your company’s products or services becomes easier. When anchoring works against you, it’s increasingly difficult to do so.<\/p>\n Before diving into how the anchoring effect can help or hurt your business, let’s look at how it works.<\/p>\n In 1974, psychologists Amos Tversky and Daniel Kahneman published a research article titled “Judgment under Uncertainty: Heuristics and Biases<\/a>.” This article documented the first clinical evidence of the anchoring effect.<\/p>\n Amos Tversy and Daniel Kahneman – Image courtesy of Time Magazine<\/a><\/p><\/div>\n In the article, Kahneman and Tversky describe an anchoring bias experiment that challenged two groups of high school students to complete a lengthy multiplication problem.<\/p>\n One group was asked to solve the following problem: 1 x 2 x 3 x 4 x 5 x 6 x 7 x 8. The other group was asked to solve this problem: 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1.<\/p>\n The answers to the two problems are, of course, the same. The problems are<\/em>\u00a0identical – the numbers are just reversed. But the experiment was never really about math.<\/p>\n Neither group was given sufficient time to solve the problem and arrive at a confident answer – only 5 seconds! The tight timeline forced them to estimate.<\/p>\n The group of students who solved the first problem (1 x 2…etc.) estimated that the solution to the problem would be significantly lower than the group that solved the second problem (8 x 7…etc.).<\/p>\n Tversky and Kahneman concluded that the final estimates (on average 512 and 2250, respectively) were influenced by the numbers with which the two sequences began.<\/p>\n The anchoring effect led the students whose problem started with lower numbers to estimate lower. While the students who solved the problem in reverse anchored to the higher numbers, resulting in a higher estimate.<\/p>\n Both groups were wildly off in their answers. The solution to both problems is 40,320.<\/p>\n The takeaway here is that each group was unduly affected by the first numbers they saw.<\/p>\n Kahneman, in a video interview with Inc. magazine<\/a>, claims that the anchoring effect routinely happens “everywhere” and calls it “one of the most robust phenomena in cognitive psychology.”<\/p>\n The implications of the anchoring effect for businesses cannot be denied.<\/p>\n So let’s take a deeper look at how you can take advantage of the anchoring effect to price your company’s products or services, negotiate more effectively, market better, and make better business decisions.<\/p>\n First impressions matter, especially when it comes to your brand identity<\/a>.<\/p>\n For example, when it comes to website design, if you don’t help people understand in a few seconds how you can solve their problem, they’ll leave your site.<\/p>\n First impressions are quick. A Google study<\/a> showed that they can be made in 17 milliseconds!<\/p>\n When a prospective customer first learns about your brand, they hear your company’s name or see your logo.<\/p>\n First impressions matter when it comes to your company’s name and your logo. After all, it’s impossible to anchor and create an advantage if your prospective customer can’t remember or spell the name of your business.<\/p>\n The same holds true for your logo. Far too many struggling businesses created their logo from a generic template or an online template logo maker.<\/p>\n The problem is that thousands or tens of thousands of other businesses have identical or similar logos.<\/p>\n It’s impossible for a brand to use the anchoring effect to its advantage when a consumer can’t recognize the brand<\/a>!<\/p>\n So, how can you apply the anchoring effect to create a stronger brand and make sure that design works for your business and doesn’t undermine your marketing?<\/p>\n![\"\"](\"https:\/\/images.crowdspring.com\/blog\/wp-content\/uploads\/2018\/08\/27130932\/rsz_161208_bromanced.jpg\")
The anchoring effect in branding and design<\/h2>\n
How to use the anchoring effect to improve branding and design<\/h3>\n
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