Most of us know that we human beings are social animals and yearn for belonging and validation from others.
We always choose to be a part of groups that fits our belief system and values. It could be our favourite sports team, music band, a spiritual organization, political party or even a brand.
We tend to maintain a substantial liking towards the insiders of the group and have a strong sense of togetherness. Sometimes, we even go to an extent of showing strong hatred-ness toward the outsiders of the group.
That is why we see frequent fights between the fans of Manchester United and Liverpool football teams. A review of an iPhone user that rails against android mobile users. A gamer who uses Sony‘s PlayStation takes a dig at Microsoft’s Xbox user.
In 1979, a social psychologist, Henri Tajfel recognised this phenomenon in his ‘social identity theory.’ Social identity is a person’s sense of who they are based on their association with the groups. Tajfel’s research revealed that the groups we belonged to were an important source of pride and self-esteem. It gives us a sense of identity and belonging to the external world.
Social Identity Theory comprises of three components:
Social Categorization –> Social Identification –> Social Comparison
Tajfel declares that the first part of defining our identity is Categorization.
We categorize things around us to understand them and identify with them.
In a very similar way, we categorize people (including ourselves) to understand the social environment.
Some examples of how we categorize the world:
- Working-class: Middle and Upper Classes
- Politics: Right-wing and Left-wing.
- Mobile Software: Android and iPhone.
- Food: Vegan and Non-veg.
We do these categorizations not just to make sense of the world around us but also to embrace the identity of the group and be a part of it. (Social identification)
The next step is the extreme stage and Henri Tajfel calls this as Social comparison.
Once we have categorized ourselves as part of a group and have identified with them we then compare it with other groups.
This is when polarization begins and we start behaving indifferently. We go to an extent of having strong hostility with the outsiders of the groups. This is the reason why we notice conflicts between the sports, political, religious and ethnic groups.
Evolutionary psychologists argue that this behaviour is part of the neurology of the primitive stone-age hunter-gathers and still exists in us.
When it comes to business and marketing, Tajfel’s social identity theory offers a unique insight into consumer behaviour.
When Apple introduced its first commercial personal computer – Macintosh in 1984 its original marketing slogan was, “the computer for the rest of us”?.
Through this slogan, Steve Jobs cleverly targeted only the early adopters and neophiliacs (a character archetype that has a strong affinity for novelty) and ignored the mass market. This is a brilliant example of Social Categorization.
Steve Jobs is not just an adroit product innovator but also deeply understood human psychology and crafted Apple’s marketing strategy in alignment with that. He knew innately that these early adopters will not just adopt Macintosh quickly but will also spread the word like crazy.
Even today, Apple never targets the mass market. It targets, what I call, the Category Lovers.
Though it sells shoes – a commodity, Nike has been able to gain their audience’s love, because it tells a story that truly resonates with the athletes, their core users.
Harley Davidson targets ardent bike lovers. Harley owners’ groups (HOG) give the enthusiasts a formal way to meet, share stories and organize rides with their fellow enthusiasts.
In his book, The True Believer which is about the nature of social movements, Eric Hoffer – the social philosopher reveals that “The game of history is usually played by the best and the worst over the heads of the majority in the middle.”
Eric Hoffer’s assertion apply even to markets and product categories.
Based on this principle, I have formulated a mental model – ‘The Irrational Behaviour Continuum’.
What is Irrational behaviour continuum?
Based on Henry Tajfel’s social identity theory, consumers in every product category can be categorized as below;
The Category Lovers – People who spend disproportionate amount of time and money in the category and drive the whole conversation.
The Passive – People who neither love nor hate the product category and show only lukewarm interest.
The Category Haters – People who hate the product category and talk ill about it (negative word of mouth)
As an entrepreneur and marketer, it is essential to understand this behavioural indifference. Generalizing the behaviour of the consumers will only yield average growth for the companies.
Since The Category Lovers spend a lot of money in the product category, a marketer cannot afford to lose them. For example, travel enthusiasts spend more time researching the various tourist spots, take frequent breaks to explore new places.
They just do not stop there. They rave about their experience with their friends, relatives and share them on social media. They are kind of super-spreaders. Some people may hate active travelling and will not be spending money on it. (The Category Haters).
People like me, are not passionate travellers (The Passives – Majority in the middle), but given a chance will not hesitate to explore the places.
In most of the markets, we can notice this behavioural continuum of Category Lovers — Passives — Category Haters.
The reason why Apple is the most profitable brand in the consumer-facing business category is that its product development and marketing strategy is entirely rooted in technology evangelists.
People who want to identify themselves as innovators naturally get attracted to Apple’s products. They form a community among them based on their common belief system and sometimes even go to an extent of criticizing the non-apple users.
Though they advertise to the mass market, it is these evangelists who make most of the noise in the market, wait in the queue and buy every product release of Apple.
Cult brands usually align their products and services to the small subset of core users, maintain a high level of intimacy with them and allow them to organize communities to create a sense of belonging.
The key takeaway for the marketers from the Social Identity Theory and The Irrational Behaviour Continuum is the natural polarization of the markets and the opportunities it presents.
As a fan of the 80/20 principle, I have always observed the following patterns in businesses:
– 80% of the revenue and profits are usually generated through 20% of the core customer segments.
– 80% of the word of mouth and referrals are carried out by 20% of the evangelists.
– 80% of the repeated purchases happen only from the 20% of the loyal customers.
No doubt, Category Lovers act as the biggest lever of growth for the companies. The cost to acquire and convert them is usually way too less because they are natural proponents of the new products.
Another super-important aspect is that they also act like super-spreaders and passionately unfurl the word about your brand.
(The author is an outsourced chief marketing officer, author and speaker. Views expressed are personal.)