Neuromarketing

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Neuromarketing The science behind why we buy

• Douglas Kong
• Executive/business Coach
• Regional Director, The Alpha Group Singapore
• dsgkong_at_gmail.com

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What you will learn

• What neuromarketing is all about
• How corporations use neuromarketing
• An evaluative critique of neuromarketing
• How you can make use of it

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Traditional marketing research
Verbal reports, surveys etc
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Techniques used to study the brain

• Functional MRI
• Electro-Encephalo Graphy (EEG)
• Eye-tracking techniques
• Biometrics GSR, Pulse rate, thermal, muscle tone

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What is neuroscience?

• Any or all of the sciences, such as
  neurochemistry and experimental psychology which
  deals with the structure, function and/or
  development of the nervous system and the brain

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What is Neuromarketing?
A new field of marketing that studies Consumers
Sensori-motor Cognitive Affective response
to the stimuli of products, brands, and
advertisement
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• By studying activity in the brain, neuromarketing
  combines the techniques of neuroscience and
  clinical psychology
• to develop insights as to how we respond to
  products, brands and advertisements.
• From this, marketers hope to understand the
  subtle nuances that distinguishes
• a dud pitch from a successful campaign.

Mucha (2005, p 36)
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Understanding Consumer Behaviour

• Marketing and environmental stimuli enter the
  consumers consciousness (and/or
  subconsciousness). A set of psychological
  processes combine with certain consumer
  characteristics to result in decision processes
  and purchase decisions.
• The marketers task is to understand what happen
  in the customers consciousness. (and/or
  unconsciousness) between the arrival of the
  outside marketing stimuli and the ultimate
  purchase decision

Kotler and Keller, (2006, p 184)
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Researching customers behaviour

• Neuromarketing is neuro-scientific consumer
  research based on the assumption that the
  majority of consumer behaviour is made
  subconsciously
• What motivates consumers to purchase a certain
  product?
• Self-esteem
• Emotions
• Consumption experience
• Goal-directed behaviour
• External influences
• It starts, where traditional consumer research
  techniques end -- in the consumers brain

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Consumer Research linking science and marketing

• Overconsumption and compulsive shopping can be
  traced back to a dysfunction of the reward system
  and orbitofrontal cortex (OFC)
• Impulsive buying decisions are based on the
  emotional state of the buyer (governed by the
  limbic system), rational buying decisions are
  processed in the frontal cortex
• Memory retention is processed in the amygdala and
  the ventromedial prefrontal cortex (VMPFC)
• Irrational buying and selling is associated with
  the autonomic nervous system

- Leake (2006)
- Mucha(2005)
- Ambler, Ionnides and Rose 2000)
- Peterson(2005)
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Warnings on cigarettes pack, does it work?

• Highlighted by Martin Lindstrom in Buyology
• Intention was to discourage smoking
• MRI studies indicated when viewing warning
  labels, nucleus accumbens activated
• Nucleus accumbens is part of reward circuit in
  the brain
• Together with racing cars, rugged cowboys,
  warnings are associated with smoking behaviours

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• How corporations use neuromarketing research

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The Pepsi Challenge
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Read Montague 2004

• 67 had their brains scanned while being given the
  Pepsi Challenge, a blind taste test of Coca
  Cola and Pepsi
• 50 chose Pepsi and Pepsi tended to produce a
  stronger than Coke in the brains prefrontal
  cortex (region thought to process feelings of
  reward)
• When subjects were told that they were drinking
  coke, ¾ said that Coke taste better their brain
  activity also changed.
• The lateral prefrontal cortex, an area of the
  brain that scientists say governed high level
  cognitive powers, and the hippocampus, an area
  related to memory, were now being used,
  indicating that consumers were thinking about
  Coke and relating it to memories and other
  impressions.
• Results showed that Pepsi should have half the
  market share, but in reality customers are buying
  Coke for reasons related less to their taste
  preferences and more to their experience with the
  Coke brand.

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McClure and colleagues, 2004

• Stated preference, equal for both coke and pepsi
  no of subjects 15
• Tests allowed for up to 3 trials per test, so
  subject can chose from 0 to 3 times
• In Blind tests, no of times chosen was Coke vs
  Pepsi 22 vs 23
• In blind tests, both preferences showed
  activation of VMPFC (part of reward system)
• Cued test with coke produce significantly higher
  of counts(37), no difference between pepsi(23)
  and blind
• Knowing and drinking is simply more rewarding
  beyond just the taste of the drink itself
• In cued test, Coke produces activation of the
  hippocampus on both sides (memory), midbrain and
  the DLPFC
• People chose to drink Pepsi on the basis of taste
  preference (VMPFC involved in choices based
  strictly on sensory information)
• The choice of coke appear to be associated with
  recall of previous information with cultural
  information and modify behaviour based on emotion

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Daimler Chrysler

• A DaimlerChrysler study in Ulm showed pictures of
  66 cars
• 22 sports cars, 22 sedan cars and 22 small cars
  to 12 men with an average age of 31, as they lay
  in a scanner.
• Far more than other models, sports cars excited
  areas of the brain associated with reward and
  reinforcement.
• Among the sports cars that generated the
  strongest brain responses the Ferrari 360
  Modena, the BMW Z8 and the Mercedes SLR

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Campbells Soup
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Campbells Soup

• Use 3 different neuromarketing companies
• 1,500 subjects over 3 years
• Use a variety of measures, GSR, HR, thermal, EEG
• Direct observations, in aisle, shopping including
  eye tracking pupillometry
• Use of ZMET techniques and consumer feedback

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Hyundai cars

• Goal to know what customers think before mass
  production begins
• 15 men and 15 women were tasked at looking at a
  Hyundai test model
• They wear skull caps with EEG electrodes embedded
  in them
• They were told to focus on specific parts
  including the bumper, windscreen and tyres
• Their brain responses were recorded on to hard
  disks worn at the waist and then taken to be
  analysed as to their perception
• Korean companies that used neuromarketing include
  cosmetic companies Amore, LG, Hyundai among others

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Frito Lay

• Products targeted at women
• Neuromarketing used to test commercials,
  products, packaging
• Pitches should play up healthy associations and
  avoid guilt connections
• Matte packaging in favour of green noisy
  packaging
• Prank ad rejected by focus group showed approval
  on EEG activity

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Eye tracking methods
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Sex differences

• Sex hormones in women produces differential
  responses in different stages of the menstrual
  cycle
• To uncertain reward, stronger response in the
  follicular phase than the luteal phase (where
  estrogen is active)
• The stress response in men activate left
  orbitofrontal cortex (flight/fight activation)
  where in women the limbic system is activated
  (emotion processing)
• Advertising that activates fear may be processed
  differently

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• Some advertisement is based on the eliciting of
  fear, as in this insurance advertisement. The
  response of women to this ad will depend on what
  stage of their menstrual cycle they are in.
• Female response to fear is regulated by the
  female estrogen which fluctuates throughout the
  menstrual cycle.

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Brain loyalty

• Loyal brand followers showed activation of areas
  involved in the reward system (striatum,
  orbitofrontal cortex), emotion (amygdala), and
  memory retrieval system.
• Suggest affective bonding
• It has been suggested that hormones of bonding eg
  vasopressin involved

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Amygdala in processing emotion

• The amygdala is well known in stress theory as
  the trigger for the Stress Response
• Amygdala Hijack refers to stressful situation
  when the amygdala shuts off the rational brain
  and launch the flight/fight/freeze reaction.
• Under stressful situations, men tend to show a
  physical response, whereas women tend to be more
  thoughtful.
• This is due to the fact that in men, the right
  amygdala is activated and in women the left is
  activated

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Amygdala in emotion processing

• The amygdala besides the stress response system
  is also linked to the reward system
• The right amygdala has to do with negative
  emotion, it plays a part in fear processing, fear
  inducing stimuli and fear conditioning
• The left amygdala can process both positive and
  negative emotions and plays a role in the reward
  system
• From survival perspective, emotions are
  attractive or repulsive
• Activation of the amygdala alone cannot tell us
  that something is attractive or repulsive to the
  subject
• Perhaps we need to ask whether the subject
  like the stimulus concerned

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Emotional activation direction?
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Neuro-bullshitting I

• Vance Packard Hidden Persuaders
• Vance is a journalist. Based on the work of James
  Vicary, market researcher, who in 1957 claimed
  that flashing very brief messages quickly on a
  movie screen increased the sale of food and
  drinks. The messages were Drink Coca Cola and
  Hungry? Eat popcorn. Sales of popcorn and coke
  increased 57.8 and 18.1 respectively.
• Vance book provoked an outcry and lead to
  subliminal advertising banned in many countries.
• The Truth is in 1958 conducted a TV test with
  Canadian Broadcasting Corporation, flashing out
  the message Telephone now hundreds of times
  during a broadcast. There was no increase in
  calls recorded.
• In 1962, Vicary admitted that he fabricated his
  claim, the story itself being a marketing ploy.
• Efforts to replicate the results of Vicarys
  reports by other never resulted in success.

Wikipedia, Subliminal stimuli
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Priming as a modulator of behaviour

• An implicit memory effect, where a stimulus can
  affect the response to a second stimuli
• Context, words, mood, feeling can all serves as
  priming agent
• In marketing, music has been used as a priming
  agent
• Scent has also been used as a priming agent

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Neuro-bullshitting II

• The buy button Martin Lindstrom Buy-ology
• Makes interesting points eg
• Health warning on cigarettes does not work
• Subliminal advertising from billboards to
  supermarket shelves
• Sex doesnt sell, its a big turn-off unless sex
  is being sold
• Companies copy from religion and create rituals,
  corona, iPhone
• Most of his reviewers give negative comments
  not worth it, I want a refund, it should be
  a 3page article or 1,000 page report, art of
  hype, hype and verbosity, too much ego 285
  out of 306 endorses critical reviews.

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Warnings on cigarettes pack, does it work?

• Highlighted by Martin Lindstrom in Buyology
• Intention was to discourage smoking
• MRI studies (on smokers) indicated when viewing
  warning labels, nucleus accumbens activated
• Nucleus accumbens is part of reward circuit in
  the brain
• Together with racing cars, rugged cowboys,
  warnings are associated with smoking behaviours
• However, effects on non-smokers, ex-smokers may
  be relevant to preventive effects

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Neuro-bullshitting II

• The buy button Martin Lindstrom Buy-ology
• Makes interesting points eg
• Health warning on cigarettes does not work
• Subliminal advertising from billboards to
  supermarket shelves
• Sex doesnt sell, its a big turn-off unless sex
  is being sold
• - it does, depending on the target audience.
• Companies copy from religion and create rituals,
  corona, iPhone
• Most of his reviewers give negative comments
  not worth it, I want a refund, it should be
  a 3page article or 1,000 page report, art of
  hype, hype and verbosity, too much ego 285
  out of 306 endorses critical reviews.

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Love your iPhone?

• Martin Lindstrom (branding consultant)
  commissioned MindSign (neuromarketing company) to
  do a fMRI study of subjects shown video/audio of
  the iphone.
• Among other things, the insula was activated.
  This is said to indicate feelings of love and
  compassion.
• Lindstrom interpreted this to indicate that we
  love our iPhone.
• In actual fact, the right insula is associated
  with social disgust and social avoidance and
  engagement with the environment, while the left
  insula is associated with social compassion and
  social approach, also with contentment and rest
  and digest, away from the environment.
• Significantly, Lindstrom did not specify which
  insula is activated or other details.

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Advantages of Neuromarketing

• Able to measure emotions which shape behaviour
• More effective than traditional marketing
  research
• Transcend language and cultural barriers
• Scientific and objective perspective to marketing
• Accuracy of results must make sense
  scientifically as well as marketingwise

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Emotional aspects measured

• Purchase intent
• Perceived product value
• Emotionally salient features
• Right pricing strategy
• Attention activation of design
• Uniqueness among competitive displays
• Strength of brand reputation
• Compatibility with brand.

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Marketing to the Emotional

• 1. The emotional brain is self-centred
• 2. Contrast before/after, fast/slow,
  with/without
• 3. Tangible Input be specific, concrete
  unbreakable, save x, 24 hr turnaround
• 4. The beginning and the end good beginning and
  good ending
• 5. Visual stimuli pictures, videos
• 6. Emotion remember emotions better, a good
  story to connect
• We are not thinking machines that feel, we are
  feeling machines that think.

Damasio, Descartes Error
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The 4 step process to reach the emotional

• Diagnose the Pain
• Differentiate Your Claims
• Demonstrate the Gains
• Deliver to the Old Brain

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Use Neuromarketing Insights To Improve Your
Marketing Results

• douglas.kong_at_the-alpha-group.biz
• dsgkong_at_gmail.com