A Southern comedian of the 1960s, Brother Dave Gardner (not Tom's brother, David Gardner!), said that you can have a great product and the public might beat a path to your door -- but advertising helps. And advertising is marketing.
A company can produce a good product, but if it doesn't market it well, the product could be a flop. Apple (NASDAQ:AAPL), for example, along with Coca Cola (NYSE:KO) and Ralph Lauren (NYSE:RL), are smart marketers.
Robert Cialdini, who recently visited Fool HQ, says we need to get real when it comes to how we're marketing our products -- and part of getting real is admitting weaknesses upfront.
Cialdini was the regents' professor of psychology and marketing at Arizona State University, founder and president of consulting firm Influence at Work, and author of the book Influence. His latest book is Yes!: 50 Scientifically Proven Ways to be Persuasive.
In his well-known book Influence -- a book about influence and marketing -- Cialdini lays out six principles of influence as they pertain to the psychology of marketing:
- Reciprocation
- Commitment and consistency
- Social proof
- Authority
- Liking
- Scarcity
During Cialdini's visit to The Fool, we delved into the principle of authority -- the notion that we defer to people with authority. Someone who has expertise -- credentials, background, or experience -- that one can use to take shortcuts to make an informed decision.
But it turns out that expertise alone doesn't define the "optimal authority," according to Cialdini. The optimal authority is defined not only by expertise and knowledge, but also by trustworthiness. "It's very important to try to establish both of those components in the eyes and minds of an audience before we try to be influential," he said. "If those two things are present in the way someone registers us, we have become the single most powerful authority, or communicator that social sciences has ever uncovered."
Establishing trust
Cialdini points out the obvious: that the first is easier than the second. You can represent your background credentials, experience, and years on the job fairly quickly. Establishing trust can take a period of time traditionally. But what if you don't have weeks, months, or longer? Is there anything you can do to produce instant trust? Cialdini says there is.
The secret is to produce your weakness before your strength. The concept was developed by the advertising community, which has to introduce new products or services to markets that have no history with those products and services.
The most savvy of them will mention a weakness in their case before they present the strongest argument in favor of their case. As counterintuitive as it might sound, Cialdini says it establishes them immediately as being credible and trustworthy. "There's no special reason for people to believe our most positive claims unless we've demonstrated our trustworthiness," he said. "So the place the moment of power actually exists most propitiously for us is in the moment after we mention a small drawback or a weakness."
Cialdini points to Berkshire Hathaway's (NYSE:BRK-A) letter to the shareholders as an example. He notes that in the letters, Warren Buffett first describes something that went wrong, but then follows that with the things that went well.
The power of 'but ...'
According to Cialdini, the word "but" says to recipients in all human languages to take the information they just received, put it away and focus your attention on the next thing I'm about to say. "This is why we want our weaknesses before the word 'but' and our strengths after," he said. "The weakness has to go first, otherwise you don't get the proper focus on the strength."
The top marketing campaigns of all time employed this strategy. He points to Volkswagen as an example. Each ad began with the same statement "We're ugly, but ..." Then they talked about gas economy, reliability, and availability of parts through a network they had set up. Other examples, according to Cialdini, include, Avis' "Avis, we're No. 2, but we try harder;" and Loreal's "We're expensive, but you're worth it."
Madoff's use of Cialdini's principles
Oddly enough, Cialdini's six principles can be applied to Bernard Madoff's $50 billion Ponzi scheme.
Madoff used several of Cialdini's principles, but for evil instead of good. He used the authority principle because he established himself as an expert in the area of investing. Madoff presented himself as trustworthy through serving as chairman of the Nasdaq stock exchange.
He also used the principle of social proof, that people want to follow the lead of those around them like them. As Cialdini points out, the recruiting always took place among individuals in their own network groups where people knew one another and let the message come from their colleagues instead of from somebody who is trying to sell a product or service. Finally, Madoff used scarcity, says Cialdini, noting that there were limited availabilities to gain access to investing with Madoff, which made those opportunities seem more valuable and exclusive.
Cialdini says there are two lessons can be learned from the Bernie Madoff saga. One is the power of these rules. The second is that if you used them the way Bernie Madoff did -- dishonestly -- the whole thing crashes down. "It's not sustainable if used that way," he said.
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