Have you ever bought something because of an advertisement on TV? How about buying something on impulse? The answer to that question is obviously yes, but have you ever thought about why you bought those things. Even if you haven’t, companies do daily; and they spend an extraordinary amount of money every year just to figure out what makes someone spend money on their products. The simple fact is, that companies are using your own tendencies and emotions to get you to spend money. Do you remember in 2013 when there were Coca-Cola bottles with people’s names on it? That was Coke’s marketing campaign, “Share a Coke,” and it was one of the most successful marketing campaigns in history. Chances are in 2013, you either bought, or were given a bottle of Coke with your name on it. Coca-Cola sold hundreds of millions of these bottles during the campaign. The reason this campaign was so successful, was that people were simply impulse buying these drinks because of the name on the side. The results of the campaign were astounding. “Intake increased by 7% … more than 18,300,000 social media impressions, and traffic on the Coke Facebook site increased by 870%, with page likes going up 39%” (Skene). Although 7% might sound like a small percentage, for a company that reported over 48 billion dollars of revenue in 2012, you’re looking at almost 3.6 billion dollars of additional revenue being generated from this one campaign. For companies, manipulating human tendencies and emotions to make money clearly is extremely profitable. Using imagery to evoke emotions towards a product isn’t necessarily a bad thing. I’m sure many people were happy to have a bottle of Coke with their name on it. However, it becomes a problem whenever a company abuses this power. A good example of this, although fictional, is season 16 episode 2 of the popular comedy show South Park. The beginning of this episode deals with the Home Shopping Network, a real television station on basic cable that sells things over the phone. The basic premise of the episode is that the main character’s grandparents are brainwashed into believing that repeatedly buying expensive jewelry is an investment, and a good gift for their grandchildren when in reality it is a scam (AV CLUB http://www.avclub.com/tvclub/south-park-cash-for-gold-71073).  This situation, although from a cartoon, deals with a real issue of companies exploiting people’s, especially the elderly into buying things they neither need nor truly want. The importance of consumers being aware of companies’ use of psychology cannot be overstated. People are constantly being marketed to in some way shape or form, and without realizing it, can end up wasting their money. I have experience using consumer psychology to make a sale at my job, a sales consultant at Best Buy. The same tactics companies use on a large-scale advertising campaign, are also used to push sales at technology stores, car dealerships, and even grocery stores. Currently, I am also studying these at the Darla Moore School of Business, where I am currently a Marketing major with a concentration in sales and advertising. With this major I eventually hope to go into the field of Marketing Analytics, which deals with the analysis of consumer data, which in turn is used to develop marketing strategies for companies. Through the classes I have taken, along with my current job, I have significant knowledge and experience on the topic of consumer psychology.

Before this essay begins to deal with more complicated topics, I would like to preface my argument with a short overview of some basic concepts and techniques companies use in relation to marketing, as well as define and explain a few terms that relate to the argument’s topics that some readers might not know. First, let’s learn a few vocabulary words that will make an appearance later on.

Market share: This simply means the amount of the total market. For instance, saying something like “Android holds 87% of the market share for cell phones” means that 87 out of every 100 cell phones sold in the world are Android phones. 

Consumer Psychology: Though mentioned before, Consumer Psychology is really the study of why people buy things. This sect of psychology is of most interest to large companies, as they can use findings from studies to better market their product.

Brand: This concept is one of the harder ones to understand, as it can mean different things. In its simplest form, brand is just what a product or product line is called. The important thing to note, is that a brand is not necessarily a company, but most companies are also brands. To better explain, let me use Nike and Jordan as an example. The brand and company Nike are essentially the same thing. Nike the company is the “owner” and manufactures and ships all of their brands’ shoes. Nike the brand is what most consumers recognize, products with the swoosh logo and inspiring slogan. Jordan on the other hand is one of Nike’s brands. Jordan has its own logo, own packaging, but its products are made and owned by Nike. Sometimes brand is combined with other words like “store-brand” and “name-brand.” These two simply mean a product marketed by a specific store, like Great Value Ketchup, or a product marketed by a “household name company,” like Heinz 57 Ketchup (McLaughlin).

Ambush Marketing: This is a tactic that is often seen in the sports industry. A company will attempt to have its own products be synonymous with some event that already has official sponsors. A good example of this would be Beats by Dre giving out free custom headphones to many NFL athletes to wear during warmups, even though Bose is the official headphone sponsor of the NFL. Even though Bose paid a lot of money for exposure, Beats was able to take the spotlight by having star athletes wear their headphones instead (Shintaro). 

R&D: This is the shorthand for Research and Development. This is most often used to describe a type of cost associated with creating a product. A good example of this lies with the drug and pharmaceuticals industry. A pill that cures a certain disease might only cost $0.05 to manufacture; but the costs associated with researching the different side effects, testing different formulas, and ultimately making a final product that works reliably and is safe could be astronomically higher. These costs would be called the R&D costs. 

Perceived Quality: This concept is one of the major deciding factors for customers buying a product. The quality that a customer believes a product is would be the Perceived Quality, while the true quality of the same product is the Actual Quality. Often times Perceived Quality is almost entirely based on packaging and brand familiarity. One example of this would-be Store-brand vs. Name-brand ketchup. Frequently, grocery stores will just pay larger companies to put their name on the bottle, then sell it at a cheaper cost. As a result, the Perceived Quality of Heinz 57 Ketchup is higher because the brand name is popular, while Great Value Ketchup has a lower perceived quality because the packaging is not as nice and the name is not as familiar. The Actual Quality of the two different bottles of ketchup is identical, since they both contain the same product from the same factory.  

For consumers to be knowledgeable on how companies are using them, they should first learn the basic core concepts and techniques that are most often used. An article by Bryan Kramer in Brand Quarterly highlights some of the main techniques used. “Some individuals have a documented personality trait that makes them predisposed to buying things on impulse. But more often than not, it’s because impulse buys are driven by a desire to experience happiness and the purchase is seen as a way to elevate their mood.” The idea of “retail therapy” is actually fairly well known by most people, but the way a store is organized to take advantage of this is often overlooked. “Marketers count on this and strategically place products throughout stores while providing supporting branding and online promotion that showcases the item as an ‘affordable luxury’ to be enjoyed. Which, in turn, causes the consumer to rationalize the purchase” (Kramer). The location of items being used to influence customers is best seen in a grocery store. Have you ever paid any attention to how far apart the most common items people buy are? Milk for instance, is nearly always located in a back corner of the building, while bread is typically on the complete opposite side of the store. This is not by accident; by forcing customers to walk all the way across the store, they are exposing the customers to more products, which in turn leads to more impulse buys. 

Another common technique used, you may remember from English class: The logical appeals of Ethos, Pathos, and Logos. While these three ideas are great for backing up your argument, they also are great for making a sale. Ethos is one of the hardest for companies to utilize, as most consumers typically look at large companies as “money-grubbing” or “greedy.” To get around this, companies often try to highlight how “good” they are, or somehow show that they care for their customers. Take Dawn dish detergents for example. Did Dawn really have to clean up oil spills? No, but by doing so they now have become the “good guys,” and people will buy their product to “support the cause.” Ethos in relation to a company also is heavily focused on brand. A brand’s popularity often gives itself credibility, more on that later. The other reason people may by Dawn is because of the cute, now non-oil-covered animals on the front of the bottle. This is a rather clear appeal to Pathos, or ‘emotion.’ Emotional manipulation is the single easiest thing for companies to do. Humans are fairly simple creatures, we like to be part of a community. “Our sense of community is heightened by the act of sharing products and purchases with others” so by having advertisements show happy groups of people all drinking Coca-Cola, then we in turn will subconsciously associate the symbol of an ice-cold Coca-Cola® with happiness (Kramer). Logos, or logic, comes in to play with quality. Most consumers would likely rather buy the best possible product they can afford than a lesser one. To validate this idea, companies often simply put a rating, review, or testimonial on their ads or packaging. Think about cars for a few moments, and now think about which car brand is the safest. A reasonable amount of people will most likely say Volvo, the Swedish car company. This is likely because of their numerous testimonials, as well as their brand’s image. Brand image is really the result of Ethos and Logos combining. Brands are often compared against each other in reputation, quality of product, and price. Two of these, reputation and quality, are feeding off each other in somewhat of an endless loop. “Nike makes quality shoes because they are a reliable brand. Nike is a reliable brand because they make quality shoes.” This idea is exactly what companies are striving to achieve: to have their Ethos and Logos become the same idea (AMA).

One of the other defining factors of Ethos in relation to a company is a single form of advertisement: Celebrity endorsements. This is one of the most powerful types of advertisements, as it often can use all three of these logical appeals. Celebrities themselves are looked up to, their opinions are valued, and often have some sort of expertise in a field related to the product they endorse. Celebrity endorsements are also one of the more lucrative techniques that a company can use. One of the best examples of this in today’s era would be Beats by Dre headphones. For the rest of this essay, I will be doing a small case study on Beats, as they are very well known, influential, one of the largest marketing success stories, and can be easily related to every argument I am about to make. One other reason for choosing to do this, is that most readers of this essay remember a time before Beats was a company, their rise to popularity, and can currently see their place in the market.

To further understand the arguments I am about to make in relation to Beats, as well as to provide context, I feel it is necessary to know a brief history behind the audio company. In 2006, Jimmy Lovine, a music producer, and Dr. Dre, a prominent rapper, founded a small headphone startup company. The duo saw two problems in the music industry: music piracy and bad audio quality. "Apple was selling $400 iPods with $1 earbuds.” Dre told Inc.com “Man, it's one thing that people steal my music. It's another thing to destroy the feeling of what I've worked on" (Helm). Lovine also saw another opportunity for endorsements: the musicians. The idea that different athletes were a ‘Nike athlete’ or an ‘Adidas athlete’ had been around for a while, but there was nothing in the music industry at the time to compare it to. Beats filled these gaps, providing a perceived premium headphone to the masses, as well as sponsoring artists. This is how Beats became popular seemingly overnight. “The list of artists who've endorsed Beats, used them in music videos, or designed a signature line reads like the guest list for the Grammys: Lady Gaga, Snoop Dogg, Nelly, Justin Bieber, Ludacris, Miley Cyrus, Nicki Minaj, Wiz Khalifa, and more” (Klara). After taking over the music scene, Beats turned to professional athletes, giving out free pairs to notable athletes like Lebron James, Serena Williams, and most notably, nearly every Olympic athlete at the 2012 Olympics. These constant instances of ambush marketing caused several scandals, which only increased the popularity of the brand. Other contributions to their success were their partnerships with HP computers and Chrysler automobiles, where special “Beats edition” versions of their respective products were sold. By 2013 Beats controlled nearly 70% of the $100+ market share, and in 2014 the company was sold to Apple for over $3 billion (Klara). Now that you have some context about the company and its place in the market, the arguments I am about to make will be more easily visualized with examples taken from the company’s history and past ad campaigns. 

The arguments I wish to present can be broken down into three parts. First, I would like to argue that average consumers follow patterns, and have emotional and behavioral tendencies when it comes to purchasing products. Second, I would like to argue that the perceived quality of an item is far more important than the actual quality to the average consumer. Finally, I would like to argue that many companies maliciously target certain demographics, as well as mislead consumers with false advertising. All of these arguments apply to our daily lives as consumers, and I hope that the presentation of these arguments will educate readers, and help them to think about why they are buying things before making a purchase. 

The idea that consumers have behavioral tendencies as well as patterns to their purchases, is one that is scientifically backed. A study conducted by Dankook University in South Korea set out to test this notion, and studied buying behaviors of consumers. The methods for their test included interviewing test subjects on product knowledge, showing the subjects several options with attractor marks, and interviewing them once more after they had made their purchase. Surprisingly, 71% of the subjects who were knowledgeable on products still picked an option with an attractor, even if the two products to choose from were identical. The study addresses a few key concepts, mainly calling back to the ideas of Ethos and Logos, as well as their effects on perceived quality. The items that were marked with an attractor (#1 Best Selling, or Most Popular) performed overall better than their counterparts that lacked the attractor. The findings show that the reliability of the items that were marked was perceived to be higher than the identical products that were not marked in about 86% of the tests. This also correlates to the perceived quality of each item. The study found that not only were the marked items thought to be more reliable, but also of a higher quality and a better bargain. This is interesting as it shows that the average consumer in this test believed that, simply because of a tag saying “Best Selling” that their item was overall better, even when compared to an identical, but cheaper priced item. This supports the idea that consumers are more comfortable if buying as a community, tying to a behavioral tendency (Ji-Hern). Some of the same ideas were reciprocated in another study by the International Journal of Scientific Management and Development. Hamed Moslehi and his colleagues conducted a study analyzing the effects of pricing promotions on consumer habits. The findings support the idea that people are more likely to buy things if they are on sale, regardless of original purchase intentions. By sampling customers in a coffee shop in Isfahan, they found that issuing a sales promotion increased traffic, particularly those who had no intention of purchasing, and had an overall increase in sales. Additionally, Moslehi found that “The results showed that price promotion has a significant impact on product perceived quality and service perceived quality, satisfaction and repurchase intention” (Moslehi). This is important, as it shows that simply running a promotion impacts the human psyche on multiple levels. These same ideas are applied by companies worldwide, especially on “shopping-holidays” like Black Friday. At Best Buy, one of the tactics used to increase sales on Black Friday is to sell an item at a significantly reduced price as a “sale.” The best example of this would-be TV sales during the holidays. Often times, the $900 TV that is on sale for $350 isn’t actually on sale. Many times, manufacturers like Samsung will produce specific “holiday-model” TVs that are only available on Black Friday and have never actually been sold at $900. The idea of saving money drives customers to make these purchases, regardless of if they ever intended to purchase a TV.

The other piece of evidence that supports the notion that consumers follow patterns and tendencies is the current practice of advertising. According to the Council of American Survey Research Organization, Fortune 500 companies spent on average around $18.9 billion each year on both consumer and marketing research (Anderson). It seems rather logical that companies would not be spending this amount of money on research yearly if there were not some sort of results. This in combination with the easily observable techniques mentioned above in the preface makes it nearly undeniable that there is not a common link to how consumers think and how they purchase. Beats audio is a great example of a company that knows how to exploit these tendencies. The standard practice of Beats using celebrity endorsements is one that also appeals to the idea of purchasing with a community. Consumers rationalize their purchase by comparing themselves to their idols. The same concepts looked at by the Dankook University study also apply directly to this, as on average Beats headphones sell better than others simply because of attractors in the form of celebrity testimonials. Although I do not have hard sales numbers, in my experience working at a technology retailer, specifically in the cellphone and audio departments, Beats tend to sell better than anything else, regardless of sale price or product knowledge. Even whenever someone who is trained on the different audio products like myself recommends a different pair of headphones for their needs, often times they will still purchase beats instead. Over the past 3 weeks or so, I have gotten in the habit of asking customers “what made you choose Beats over X?” The most common answer I have received is something along the lines of “These are what I saw (insert famous athlete or musician) wearing on TV.”

The last piece of evidence I have that supports this idea is simply the way companies behave. Earlier in this paper, I laid out some of the basic concepts of marketing along with common marketing tactics. These fundamental strategies are what companies rely on to convince a customer to purchase their product. The end goal of a company is to make money, so it would make logical sense that if all these massive companies use the same tactics to maximize profits, there is some reason for that. Consumer psychology seems to be that reason, as most large companies not only follow the basic principles that the study of consumer psychology supports, but also pour hundreds of millions of dollars into further study of this topic. The entire global economy supporting something that doesn’t exist seems not only illogical, but highly improbable as well. 

The idea of perceived quality being more important to the average consumer than the actual quality of the product, is very easily noticeable when observing consumers in a retail location. In relation to the story I told immediately above this, a celebrity endorsement raises the perceived quality. This makes sense, why would a multi-millionaire use headphones that aren’t good? However, if you ask most audiophiles, the term for a headphone enthusiast, they will often tell you that they are overpriced for their sound. Marques Brownlee, a professional technology reviewer on YouTube with a following of over 4.5 million people, actually made a video discussing this topic. In this video, Marques gives a comparison of Beats by Dre and a pair of Audio-Technica headphones. Despite one being a mass market product available everywhere and the other being a studio monitor for professional sound mixing, these two products are in the same price bracket with the Audio-Technicas actually being priced less than the Beats. His review on sound quality of the two is right in line with other audiophiles: the bass is overdone, the higher frequency sounds are washed out, and overall, they just sound too ‘punchy.’ The subjectivity of the enjoyment of sound does raise an issue, as many people genuinely enjoy Beats. However, when comparing the sound to other headphones in the same price bracket, even in my own experience at Best Buy, most people tend to side with another pair when it comes to sound quality. So why exactly is the quality of these headphones perceived so much higher? In his video, Marques sums this idea up well, saying: “the more people think your product is worth, the more they’re willing to pay for it. And with celebrities wearing them all over the place all the time, the design, the premium unboxing experience, even the custom spots in stores all over the country that separate them from the rest, that’s why they’re able to charge 300 dollars for these” (Brownlee). 

One other example I would like to address in regards to the idea of perceived quality is the “unboxing-experience.” The quality of the packaging oftentimes is what puts the idea of a quality product in consumers’ heads. I somewhat touched on this in the preface, with the difference between “store-brand” and “name-brand.” Even whenever an end product is literally identical, the perceived price of the packaging can cause consumers to side with the more expensive version of a product. Lo Sheng Chung, a Taiwanese market research analyst, conducted a study on how packaging influences a customer’s decision on purchasing a product. “There is a tendency for buyers to form opinions of various products, such as food, depending on their understanding of the different designs and graphics on the packaging that capture their attention” Sheng Chung writes in his report (Sheng Chung). The findings show something seemingly obvious: the nicer the box, the more likely people are to buy it. The specific factors behind this go a bit deeper, as the font, size, shape, color, and even placement within a store all contribute to the total perceived quality from the consumer. The importance of this “first impression” is often underestimated, but a survey conducted by the Journal of Marketing found that “Companies spend close to 40% of the selling price of a product in ensuring that it has a good packaging” (Argo). This clearly shows that companies value that first impression, or the perceived quality of their product, at almost the same as the actual product itself. 

The prospect that some companies maliciously target certain demographics, is unfortunately high. The darker side of marketing comes to how some companies look to squeeze every last penny out of a customer that they can, and in the process sometimes may cause a consumer harm. Though the South Park episode mentioned earlier is fictitious, it is also merely satire of a very real world issue. The two most at-risk demographics for this type of behavior is the elderly and the lower class. A 2008 study by Virginia Tech and Metlife found that fraud by business and industry accounted for nearly 12% of financial abuse cases where the victim was over the age of 65 (Allen). Underneath the title of fraud is also the category of false advertising. False advertising can come in several forms, but more often than not it is simply promising something that is not true in regard to a product. This is illegal, and unfortunately a common occurrence. What is not illegal however, are misleading ads that hide terms and conditions in small print. This issue is something that has likely impacted us all, whether it be having a sale price denied at a store, or having extra fees hidden into the cost of a trial or product. The other type of common false advertising is one that straddles the line of legality. Misleading promises are a type of advertising that can be seen in every day. Sometimes, due to specific regulations, this can be legal. An example of this would be Splenda, the 0-calorie sweetener that technically is 4 calories per serving. This is legal due to an exception rule by the FDA, which allows any food additive that is under 5 calories per gram to be marketed as “0 calorie” (FDA Ruling). These false advertising laws, while sometimes seem rather petty, can have big impacts on consumers. I suggest a reform to the current legislation to be more thorough and strict with what is considered misleading or outright fraud. Overall, this would likely have a positive effect on consumers, as they would know exactly what it is they are buying. 

Beats is an example of a company that, while not necessarily malicious, is often harmful to certain demographics. The issue with Beats comes from three separate issues. Firstly, there target audience being youth/ children. This in itself is not bad, but combined with the second issue, the price, a problem begins to arise. Beats has cemented itself as a status symbol, and to many young children, it is almost a necessity for social validation. Charging a child $300 for a pair of headphones, though slightly questionable, in itself is not a problem. The third issue comes from the physical quality of the materials used to produce the headphones. Plain and simple, they break really easily. Though there is not statistical proof of this I am allowed to release, I am allowed by Best Buy to talk about the history of the product in our stores. If you weren’t aware, Best Buy offers an insurance plan on basically everything in the store except Beats headphones. That was not always the case, we used to offer them on Beats as well, until it caused huge losses in profit. An insurance plan is only profitable if the customer never actually uses it. With Beats headphones, an overwhelming majority of pairs purchased with a protection plan were brought back in to receive a new pair (as per the insurance plan’s policy) within a time span of 6 months. Combining this with the previous two issues, we now have a company that knowingly markets and sells an extremely expensive item to children, that is designed so that it will break. This is more of a moral issue than anything, but still illustrates the concept of malicious targeting of a demographic. 

The issue that may arise from some of these arguments is the subjectivity, specifically with the idea that perceived quality is more important than actual quality. This is true, there is a great deal of personal preference when it comes to products. Subjectivity is indeed one of the hardest things to account for when looking at a large group. However, the argument is not centered on 100% of consumers, it is simply centered on the average consumer. The counterargument of subjectivity is simply represented in data as statistical outliers. While there might not be exact data to show this in every case, there is the business practices of the world’s largest companies. Though, yes, you cannot guarantee that 100% of your target demographic will end up purchasing your product, the methods that are currently used by these large companies show that perceived quality is one of the most important factors. The best piece of data to back this up, though not directly addressing this idea, comes from the Journal of Marketing survey. If companies are willing to spend close to 40% of the total cost of a product on packaging, the appearance on the shelf is clearly extremely important (Argo). Combining this with the study from Dankook University that found consumers’ first impressions as well as others’ opinions were some of the most driving forces for a purchase, it is quite clear that perceived quality of a product can and often does outweigh the actual quality in terms of importance to consumers. 

Through this essay, I hope you have learned at least a small amount of what companies are capable of, and how exactly they market to you. Much like rhetoric, marketing is simply getting someone to do what you want. By its nature, the concepts of marketing are usually very human, and focus on the different psychological behaviors that we all possess. Because of how abstract marketing is, I find it hard to believe that legislation will ever come through to truly protect consumers. Advertising is not necessarily bad, but it can cause people to think differently than they normally would. In all honesty, the best way to prevent yourself from being taken advantage of is to learn these concepts. Understand what a company is doing in an advertisement. Think about what emotions, what tendencies an ad is attempting to exploit. By doing this, it is often easier to see through the guise of perceived quality, and actually look at the product you are really buying. 
