Marketing

Emotions affect decision making more than anything else.

Jealousy, hope, desire, fear have been used by marketers to make people buy things they might/might-not need.

Fear is “an unpleasant emotional state characterized by

anticipation of pain or great distress and accompanied by heightened autonomic activity

especially involving the nervous system

Fear is “an unpleasant emotional state characterized by

anticipation of pain or great distress and accompanied by heightened autonomic activity

especially involving the nervous system

As defined by Merriam-webster “Fear is an unpleasant emotional state characterised by anticipation of pain or greater distress”.

Fear is easier to evoke as societal, environmental, and even evolutionary reasons create insecurities in human beings which can create platform for fear.

For example, reacting to a nonexistent threat like a snake which is a stick happens because the brain is wired to flinch first and ask questions later.

Tail Risks-The Unknown

Think about it more people have died of car accidents in India than terrorist attacks.

In 2019 alone 151000 people lost their lives to road accidents compared to around 7500 lives lost to terrorist attacks since 2001.

However, no politician ever raises the bogey of road-safety to win elections but each politician worth its salt will raise the bogey of terrorism to rally the populations.

It’s the “tail risk” associated with the terrorism, the unknown, the sudden which creates the fear factor.

Road accidents happens so often that somehow, they have become normalized and do not evoke fear.

The FEAR Appeal

A fear appeal has 3 main components-fear, threat, and perceived efficacy.

Fear creates psychological arousal;

Threat creates external stimuli to act and

Perceived efficacy provides the messaging that somehow the solution suggested can be implemented to take care of the fear.

A fear marketing campaign needs a credible threat or important problem and specific direction on reaching the solutions.

Look at this as an example:

This is FOMO marketing at its best, gives you an important problem and provides a link to reach out to the solution and gets you where you want your audience.

There is a fear, threat of missing out something important and solution to keep yourself updated.

In financial marketing, often the audience thinks that fear marketing is only about negatives.

As with all marketing techniques, this has its own advantages, and the real challenge is in appreciating that fear marketing can even induce positive behaviors.

And as with every technique, there will be misuse.

Investing

In investing, the most common technique (sometimes even without invocation) is “FOMO”.

• Invest now
• Next best business to own
• If you don’t own this
• This time it is different, go all in

It is easy to make investors believe that markets will always go up and make them take irrational decisions.

As an investor, the way to think about “fear marketing” is to keep a few things in mind:

• Stepping back; Remember there is never any hurry to take a decision unless you have understood the decision and implications in full.
• You don’t have to react which doesn’t mean you don’t have to act
• Asking the messenger to describe the situation, problem case with clarity
• Ask “why” X solution is better than Y.
• More descriptive you ask the salesman/marketer to be, better will be the quality of solutions
• Invert the problem

Your “PLAN” is your “PATH”.

Staying on it requires discipline and rigour and not reaction.

“FEAR MARKETING” invokes “REACTION” but you don’t have to give reaction.

Its controllable and like everything will require practice and ability to ask the right questions.

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