Business Icons’ Advise:
Industry is the soul of business and keystone of prosperity.— Charles Dickens
The “placebo effect” is a term used in a number of different disciplines to refer to the way a person’s behaviour, attitude or feelings can change when they are convinced they’ve received or experienced something attributable to the change. The interesting part is that the change is actually based solely on perception and has little to nothing to do with the thing received or experienced.
In healthcare, placebos – fake treatments such as sugar pills or even sham surgery – work, in the sense that the relief of pain from a headache or a bad knee is often real. You can think yourself better. The reverse is also true. If you don’t have faith in your treatment, you are less likely to improve: effective treatment is an equal partnership between physician and patient.
There are obvious parallels with management. Management is much less scientific than the world of medicine, and probably always will be. Vast swathes of what goes under its name are half-truths at best. But although the corporate placebo effect – the power of expectation – is utterly unquantifiable, ruling it out in the name of science deprives management of one of its most effective ploys.
A placebo makes a toothpaste or detergent more effective, a food healthier, a drug more effective, or employees perform better and that’s what modern marketers do-create stories, build rituals and produce external cues to effect desired change in personal behavior and expectancies.
How Placebos Are Used In Marketing
As with all kinds of placebo effects, the placebo effect in marketing has to do with the way in which expectations are managed. To get your customers to want to purchase your products or services, you need to convince them that they want or need the goods you are offering. There are a number of ways to go about this. You can include positive testimonials in your marketing materials, for example, or you can share photos of people enjoying your goods on social media sites. The idea here is that customers will respond positively to depictions of other people reacting positively to your products or services.
Price and Psychology
The placebo effect in advertising is also directly related to price. Most customers have a mental limit to the amount of money they are willing to pay for a given product or service. You’ve probably noticed that many businesses like Bata India sell items at Rs.499/- instead of Rs.500/- or at “50 percent off the retail price.” Both of these are psychological ways to convince consumers that they are saving money by choosing these particular goods. Apparel brand Koutons offers goods at up to 80% discount. Paying Rs.499/- is more palpable than paying Rs.500/- even though it’s only a rupee cheaper; and any item that is marked down with a sales promotion instantly seems like a deal.
Closely related to the placebo effect is the idea of using celebrities or famous people to market products and services. This can be a bit tougher for cash-strapped businesses, but using local public figures can also do the trick. People often respond positively to seeing famous people endorse products or services. Using the likeness of a celebrity on your print advertising materials, in your social media or on TV or radio commercials can help draw in customers that value the recommendations of seemingly trustworthy spokespeople.
Keeping it Real
While the placebo effect in the forms of celebrity spokespeople, price-point and testimonials can all work with your advertising strategies to bring in new customers, your business should be realistic about the potential outcomes. Not all people are convinced by placebo effects, just as not all marketing or advertising strategies work on all customers or demographics. Your goal as a business owner should be to produce high-quality, fairly-priced goods and services. Coupling this with a solid advertising plan will keep consumers coming back again and again.