In today’s consumer marketplace, which is more crowded than ever, experiential marketing is the tool businesses can use to form deeper connections with their audiences. However, today’s experiential marketing goes beyond the standard immersive experiences. There is a shift where brands are leaning into behavioral economics, which helps them better understand both the conscious and unconscious behaviors that influence consumer decisions. 

How Behavioral Economics Influences Experiential Marketing

As a business, it’s important to understand what motivates a consumer to engage with and commit to the product or service being offered. Traditional marketing makes assumptions about what drives consumer behaviors based on rational, logical decisions. However, we are all consumers and each of us knows that these assumptions aren’t always true. If they were, there wouldn’t be so many traditional marketing strategies that fall flat. 

Behavioral economics looks at how emotions, biases, and social influences affect how consumers react, and which brands they engage with. Behavioral economics helps brands discover these subconscious motivators that stray a little away from rational consumer tendencies. 

We see so many examples of behavioral marketing with the concept of social proof or social influence. In a world where we are all interconnected via social media, consumers are quick to catch on to what influencers are doing. An influencer using a product is often enough “social proof” for a consumer that it works. 

Behavioral economics is how brands can better understand these behavioral tendencies that often seem a bit irrational. On the surface, a consumer knows that a product might not work the same way for them as it does for an influencer. Owning this product won’t suddenly make them more like the influencer. However, through behavioral economics, brands are able to develop a true consumer persona; one that resonates with the customers’ actual behaviors and preferences without assumptions. 

Behavioral Economic Concepts for Experiential Marketing

The more we learn about behavioral economics, the more we discover just how nuanced it is. There are many different behavioral economic concepts that brands can use to enhance experiential marketing campaigns. Here are a few to consider. 

Loss Aversion: Today, we see this framed more as FOMO or the fear of missing out. The idea is that consumers are more likely to feel the effects of loss than they are the pleasure of gain. Businesses can tap into this through exclusive events, limited-time offers, etc. 

Social Proof: As a society, we often look toward others to guide our decision-making. Influence involvement, user testimonials, and creating a feeling of community around a brand make consumers feel more confident in their buying decisions. 

Anchoring: This is a behavioral marketing concept that is used to anchor the consumer’s perceived value. For example, highlighting a high-end, expensive item first, then leading into good quality, less-expensive items. The consumer is going to compare the quality and cost of every follow-up item to the first. In this case, the lower price point might seem like an incredible value compared to the high price tag of the first item. 

Endowment Effect: Another way of influencing consumer buying decisions is to make them feel as though they already own it. We tend to place higher value on items and experiences over which we feel a level of ownership. For experiential marketing, using tools like interactive demonstrations or VR simulations can create a feeling of ownership. 

Scarcity Principle: Does the toilet paper scarcity of 2020 ring a bell? When something is perceived to be limited or scarce, its value and desirability of it increases. By framing a product or service as being exclusive or limited, brands automatically create a sense of urgency for consumers to act quickly. 

Reciprocity: With this behavioral economics concept, we see consumers as being more inclined to invest in a brand, either through a purchase or social sharing, if they’ve been offered something for free. 

Peak-End: This concept is especially important for experiential marketing. The idea here is that consumers are more likely to remember an experience based on the “peak” moment, such as a surprise or fun, interactive activity, and also based on the ending. Ending on a positive note, such as with a free gift at the end, is more likely to leave a positive lasting impression. 

Framing: Brands have the ability to frame their products and services in a way that communicates emotional benefits or specific values that are important to their audiences. For example, this might look like framing a product as a luxury item, or one that supports sustainability. Framing is especially effective in experiential marketing for niche markets. 

Choice Overload: Less is more. We’ve heard this repeatedly and it often holds true, especially when it comes to behavioral economics. When faced with too many choices, it’s easy to feel overwhelmed. When consumers are overwhelmed they tend to put off any buying decision to wait before making a commitment. To counter this, brands can curate options, alleviating the burden of choice overload. This works especially well at in-person events where a limited range of products or services is offered. 

The Power of Subtle Cues in Experiential Marketing 

What’s so interesting about behavioral economics in experiential marketing is that brands don’t need to be bold with it. In fact, the opposite is true. Providing audiences with subtle cues are all that is needed to influence the perception of consumers and their behaviors. 

For a brand that leans heavily on authenticity in its marketing strategy (as it should), behavioral economics might seem a bit manipulative on the surface. However, this couldn’t be further from the truth. By providing audiences with subtle cues that influence consumer behaviors, brands can tap into what their potential customers really want. It’s a way of meeting customers on a new level, and it’s one that can be much more personal and engaging than traditional marketing tactics. 

Subtle cues that can be used in experiential marketing can be something as simple as the use of color psychology. For example, infusing an event venue with red sets the stage for an exciting event, while blue adds a more calming vibe. Other types of subtle cues might include sounds, scents, or customized messaging. 

The Future of Experiential Marketing and Behavioral Economics

Today, behavioral economics in experiential marketing is merging with technology to create experiences that are hyper-personalized, immersive, and geared to the behaviors and specific preferences of a brand’s target audience.

Innovations that are changing the ways behavioral marketing can be leveraged for successful experiential marketing campaigns include artificial intelligence (AI), virtual reality (VR), and advanced analytics. When used in the right way, technology, and behavioral economics can be used to add authenticity to marketing campaigns in so many ways. In today’s digital world where customers are constantly bombarded by marketing at every turn, learning how to connect with them in personal, meaningful ways is more important than ever. Behavioral economics is an important tool for making this happen. 

Conclusion 

Experiential marketing, when partnered with behavioral economics insights, the potential to shape consumer experiences into something personal and meaningful is massive. Through subtle cues and understanding consumer behaviors, brands can create memorable experiences that resonate with their customers. 

At Factory360 we’re committed to helping brands form stronger connections with their audiences through powerful experiential marketing campaigns. This includes knowing how to use behavioral economics as a tool to foster more meaningful connections. Now is the time to engage and form strong customer relationships. We invite you to contact us at Factory360. Let’s chat and discuss the type of experiential marketing strategy that will make your brand unforgettable.