Saturday, October 26, 2013

Neuromarketing for Companies: Can it help?

Neuromarketing is a relatively new field of marketing research which focuses on consumers' cognitive and affective response to marketing stimuli. Neuromarketing is actually a child of the eternal corporate need to sustain a decision by all possible means when the pressure is way over the possibility of a decident to fight failure. Google, Coca-Cola, BMW, Procter & Gamble, Motorola, CBS are a few of the companies who have experimented neuromarketing for the past years. We have previously referred to neuroscience and neuromarketing research here and here, yet academics are still sceptical when it comes to predicting the future of this new marketing method. As a matter of fact, when i asked Prof. Alan Wilson, University of Strathclyde, about neuromarketing research a couple of weeks ago, his cautious response brought me down to earth: "Well, can neuroscience and neuromarketing provide, in the long term, any unique additional value to marketeers, compared to other marketing methods?" Well, i think it's too early to know the answer, but, at least let's try to discover some opportunities that neuromarketing may provide for marketeers, if any.


Trust is an issue which has been increasing in prominence within marketing. However, while consumer trust in brands and products is off course vital, marketing research has investigated trust on many other levels. Inter-organisational dealings such as joint ventures, strategic alliances and B2B buyer-seller dyads depend on mutual trust between parties. On one hand, consumer trust in marketing claims is crucial if they are to be believed, and ultimately lead to purchase behavior from consumers. The social utility of trust is clear when one considers that firms selling ‘fair trade’, ‘organic’, or other socially beneficial products must rely on consumer trust in their claims for success. Furthermore, in an organisational context, relationships depend on mutual trust between the parties. Without trust, opportunistic behavior dominates interactions, negating the possibility of long-term relationships between parties and again leading to a suboptimal situation for all. Marketing research has commonly conceptualized trust as more than a simple rational economic calculation, and it seems likely that neuroscientific methods can provide considerable insight into the nature and development of trust.

Neuroeconomic research has begun to investigate concepts of trust beyond rationality in recent times. Neuromarketing research can also be insightful to the investigation of trust. First and foremost, it is clear that, despite the centrality of trust to marketing relationships at a number of levels, controversies over the very nature of trust still exist. Neuroimaging is likely to offer considerable insight here. Research suggests that the caudate nucleus, which is often active when learning about stimuli–response relations, is involved in experimental games requiring some kind of trust. Yet is trust a simple response to a repeated positive stimulus, or something more? More interestingly, is the trust a buyer says they have in a seller, or a consumer in a product claim, similar in terms of the nature and location of brain activity to the trust that individual says they have in a close friend or family member? 

In particular, measuring both the spatial and temporal characteristics of neuronal activity may be important. For example does trust in an advertising claim or new business partner require increased information processing effort and time than trust in a long-term friend? This will have important implications as to the nature of trust. Furthermore, is consumer trust in claims relating to a product similar to a purchasing agent's trust in a contract with a supplier, and in turn is this of the same nature as the purchasing agent's trust in the individual sales executive they have negotiated with? Can trust be transferred from an organisation to a representative of that organisation? Finally, does trust evolve throughout the course of an inter-organisational relationship, or with continuing loyalty of a consumer to a single brand? Is trust ever truly existent in short-term marketing relationships? Exploring and understanding such questions about the nature of trust will then lead to greater ability to explore the antecedent factors to trust, and an ability to enhance firms' ability to build trust with customers and collaborators for mutually beneficial outcomes.


Pricing is a key tool used by organisations in the positioning of their products. Marketing research has investigated the effects of price on consumers. Despite the amount of academic knowledge available, companies appear to use little of it when setting prices, leading to suboptimal situations for both consumers and firms. Understanding the psychology of pricing is of crucial importance if firms are to make optimal decisions and in fact has considerable utility in a broader sense. Pricing research has implications for how we understand information processing in any decision context where resources and information are scarce and costs must be weighed against benefits. Recent behavioral research for example has explored errors made by consumers when they process prices ending in 0.99 rather than a whole number -suggesting that individuals pay less attention to later numbers in a sequence. At this stage however, almost all pricing research is behavioral in nature, and relies on ‘assumptions’ about what actually occurs when individuals process pricing information.

In fact, pricing seems to lend itself almost perfectly to neuroimaging research. For example, simultaneously exploring the temporal and spatial nature of brain activity may help us understand exactly why prices such as ‘$4.99’ are perceived as significantly cheaper than those such as ‘$5.00’. Do individuals really ignore the final two digits, or are they processed in a different manner or at a later time - for example only when detailed comparative decisions must be made? Furthermore, do time or other pressures influence the processing of prices? 

Furthermore, neuroimaging looks likely to provide considerable insight into the nature of price information. Is the price of products a purely rational piece of information, or does it have emotional and/or reward-based connotations? It seems likely that the price of a basic product such as sugar is very different in nature from the price of a conspicuous product such as a Nike sports shoe, or a BMW sports car, which should be evidenced in changes in the location of brain activity when these prices are viewed alongside their associations (Source:UCLA). Research such as this will allow us not only to understand how prices are processed, but will afford insight into all situations where seemingly rational information is processed in decision-making situations.

Source: Forbes
Here is a recent pricing example of neuromarketing research: Kai-Markus Müller of Stuttgart-based The Neuromarketing Labs, using EEG brain wave measurement, gauged the emotional reaction of consumers to different prices for a small cup of coffee, which costs €1.80 ($2.45) at a Stuttgart Starbucks.The firm claims their results show that our brains reject prices that are too low or too high as being unrealistic, and says that the optimal price point for that small coffee in Stuttgart would be €2.40 ($3.25). Starbucks shareholders might like the idea that at least some of the firm’s products could be priced higher, but some caution is in order. For commodity items like coffee, lower prices tend to increase sales while higher prices discourage them. It would be quite unexpected for a higher price to increase unit sales for this type of product (Source:Forbes).
Trust and pricing were just two examples where neuromarketing/neuroimaging tools can assist marketeers and organizations further understand consumers. Neuromarketing research itself is constantly evolving, both in terms of technology as well as insights into exactly what activity and processes in various areas of the brain actually mean. As technology evolves, we will be able to measure frequency, temporal, and spatial characteristics of brain activity more accurately and in a complimentary fashion, potentially leading to new insight into what were previously well-accepted brain functions and areas of activity. I hope that neuromarketing will offer marketeers much insight into how humans behave during what is a large part of our modern lives.

Thursday, October 17, 2013

Monozukuri for Sustainable Brands in the 21st Century

The word Monozukuri has only been in use for almost 15 years. In 1998, the Japanese Prime Minister’s Office set up a "Monozukuri Kondankai", in order to reverse the trend of deindustrialization and hollowing out that Japan was experiencing after the end of the Japanese financial bubble by affirming Japan’s strengths in manufacturing. In general, monozukuri  is the "art, science and craft of making things." While monozukuri is used to describe technology and processes integrating sustainable development, production and procurement, it also includes intangible qualities such as unique craftsmanship and dedication to continuous improvement. In the Japanese tradition of Monozukuri, when an item or human effort is taken into use, there needs to be a benefit for the society as a result while, at the same time, the balance between production, resources and the society should be maintained. Monozukuri should therefore be an inspiration for most global organizations in the 21st century in their effort to create strong, innovative brands, which deliver compelling content through their media channels, especially then it comes to branding and brand storytelling.

Toyota and Nissan lead the way

Companies such as Toyota and Nissan have already tried to elevate their brands or the company’s core interests by creating unique content that exceeds infomercial-like self reverence.

Back in 2011, Toyota chairman Fujio Cho said that Toyota’s mission is to “preserve the Japanese Monozukuri". What does "monozukuri" mean here? It probably captures the Toyota perception of sustainability. According to Toyota monokuzuri, the person doing the making is de-emphasized and the attention is on the ‘thing’ being made. This subtle difference reflects the Japanese sense of responsibility for using ‘things’ in production and their deep respect for the world around them both animate and inanimate. In its application of Monozukuri to the production of automobiles, Toyota has pursued a sustainable method of making its cars ever more safe, environmentally friendly, reliable and comfortable and circulating this perception to its customers.

At Nissan, brand storytelling has been dubbed “kotozukuri,” complementing the Japanese manufacturers’ mantra of “monozukuri”. Brand agnostic stories, intentionally omitting reference to the parent firm or its competitors, or in Nissan’s case, look to raise the profile of the people, products, technologies and relationships as part of infotainment


Why? Actually, it's about Nissan's recognition that traditional media and consumer engagement face more challenges as well as expense amid a growing range of choice. Meanwhile, internal communications, often constituting corporate media or house TV units until now, have expanded from a parochial approach to include more content for mass distribution. The relationship with broadcasters and print media, who often have their own on-line presence, has evolved to include video embeds, undeniably showing return on investment versus the cost of similar paid media exposure. Use by the blogosphere or consumers also has powered the metrics of successful marketing, as “shares” and “likes” offer potential for viral exposure.

It seems that every organization may perceive Monozukuri in a different way. However, "Many names now describe the trend such as brand journalism, corporate narrative or 21st Century Kotozukuri, but all require more sophisticated storytelling and delivery, making ties to traditional agencies"  (Dan Sloan, Nissan Global Media Chief).

Back to storytelling

Storytelling is a well known and ancient art form. Persona-focused storytelling is essential to branding. When it comes to creating a powerful brand narrative, the persona – the articulated form of the brand’s character and personality – comes first, and all other elements unfold from there. A compelling brand starts with a strong, well-drawn, and quickly recognized persona, the essential connection between what a company says and what it does.

This brand persona creates a long-lasting emotional bond with the audience because it is instantly recognizable and memorable, it is something that people can relate to, and it is consistent. Nike, McDonald’s, FedEx are all examples of brands with personas that fit these criteria. In each case, there is a clear personality associated with the brand. These companies understand that it is their clear articulation of their brand persona and their discipline in placing that persona into stories that work with and help strengthen that brand persona is what makes the difference between strong and weak brand associations.

That long-lasting and implicit trust is what distinguishes the great brands from the rest of the pack. It will also protect the brand when it makes a misstep. Nike has a strong brand persona that is all about performance and winning. Their long-used tagline, ‘‘Just do it,’’ is instantly recognizable as is their logo, the swoosh. In 2006, Nike teamed up with skier Bode Miller, which seemed like a good idea at the time. After all, he had won two silver medals at the Olympics in 2002, four gold medals and a silver medal at the World Championship in 2003, and in 2005, he became the first American in 22 years to win the World Cup title. His performance trajectory was clear. If anything, it seemed that the difficulty would be in finding words to match his expected performance.

There was no shortage of words: in TV spots for the 2006 Winter Olympics, Miller was shown talking about performance, talking about his attitude, and talking some more. But there was not much ‘‘doing’’ – he fell short in all five medal attempts. Worse, he did not even seem concerned with winning, an attitude that did not match well with the Nike brand persona. This created a disconnect between the audience and the brand, since the fit between Bode and Nike clearly was not right. Monozukuri here, as a unique value proposition for the consumer, through storytelling, went wrong.

Brand my brain

Brain studies have shown dramatic effects of branding. In one famous study, researchers used functional magnetic resonance imaging (fMRI) to see how subjects’ brains responded when they were given Coke or Pepsi. Some of the subjects were given the soda without knowing which brand it was, and were asked to give their preference on taste alone. Others were given the soda and then an image of Coke or Pepsi was flashed at them before they took a sip.

The result? The blinded tasting resulted in no preference for one brand over the other in the group, some preferred Pepsi, others preferred Coke, but they did not know which was which, so the overall results were what you would expect in two chemically and physically similar drinks. The unblinded tasting was something else altogether. While there was no influence of brand knowledge for people who thought they were drinking Pepsi, there was a very strong brand influence when they were shown an image of Coke. Their belief that they were drinking Coke actually altered their experience to the point where some areas of the brain lit up only when they believed it was a Coke that they were drinking. Clearly, branding is a real, measurable effect. Coke lit up the hippocampus and the dorsolateral prefrontal cortex, areas of the brain related to memory, control of action, and self-image. Our brains love Coke even more than our taste buds do.

How is it connected to storytelling? Actually, a lot of it has to do with the fact that Coke has been telling a good story, using an exciting yet accessible brand persona that people easily relate to. Storytelling has been engaging listeners and readers for ages and Coke figured out how to make that work to their advantage. Researchers have shown that successful storytelling (as a correct Monozukuri version) strengthens the connections consumers have to brands to a great extent.


When it comes to brand development, a unique perception of Monozukuri for each organization may lead our audience in the brand story and its actions. Marketing strategists should always perceive and apply Monozukuri in the optimum way to genuinely connect with the audience and ultimately convert them into loyal customers.

Tuesday, October 08, 2013

Competitive dynamics for marketing strategists

Time for strategic decisions.

Strategic marketing primarily revolves around the application of a great deal of common-sense. Dealing with a limited number of factors, in an environment of imperfect information and limited resources complicated by uncertainty and tight timescales. Use of classical marketing techniques, in these circumstances, is inevitably partial and uneven. For most of their time, marketing managers use intuition and experience to analyze and handle the complex, and unique, situations being faced, without easy reference to theory. A good marketing strategist should be drawn from market research and focus on the right product mix in order to achieve the maximum profit potential and sustain the business. The overall strategy, coupled with the knowledge of the customer which has been absorbed almost by a process of osmosis, will determine the quality of the marketing actions implemented.

Strategic Marketing Planning Process

Strategic decisions

Directional (sub)strategies

Portfolio Planning Tool 1
BCG Matrix (1970) - Strategic framework for resources allocation

Portfolio Planning Tool 2
GE model

Portfolio Planning Tool 3
Shell/A&H 3*3 Matrix

Back to the basics:Porter's competitive strategies

Requirements for generic strategies

Applying the best marketing strategy for every different situation

Back to the basics again: Ansoff for diversification

Critical factors for success/KPI's


Competitive position strategy

Failure, an unknown word 

Thursday, October 03, 2013

May i have your attention, please?

A long time ago, Daniel Simons and Christopher Chabris conducted a famous experiment. The participants watched a video tape of an amateur basketball game and were asked to count the number of times one team took possession of the ball.  During the film clip, which lasted for a couple of minutes, a person in a gorilla suit strolled onto the center of the court, turned and faced the audience and did a little jig. The gorilla then slowly walked off. Actually, the subjects who were busy counting the ball passes did not notice the gorilla. However, people who were simply asked to view the tape without being asked to count the ball passes had no trouble noticing the gorilla. The effect was so striking that some of the participants who missed the gorilla refused to accept they were later looking at the same tape.

This research offers a lesson for anyone who competes for customers' attention. Just because you think something is important and remarkable, does not mean that others will see it that way.  At any given moment, our audience is preoccupied with something to the point that their brains filter out anything else that does not relate to their focus of attention.

Influence. Creating and changing perceptions. Influence and perception, projecting messages out and taking them in. Two sides of the same coin.

Emotions, then facts

But, how can we have the customers' attention? How can we influence and shape consumers' perceptions? Let's start from the very beginning. The majority of consumers actually buy on emotions and then justify their decisions with logic. We all know that our mood affects our decisions and behavior.  People who receive a small surprise gift and shortly after that are asked about their opinions on home appliances, for instance, are more likely to give a favorable opinion compared to those who did not receive a gift.  Why are emotions so powerful when it comes to our perceptions and actions?  

Both human and animal emotions begin in the subcortical circuits of the mammalian brain, which is the ancient part of the brain.  Through brain stimulation, researchers have been able to isolate seven emotional systems in animals so far: Rage, Lust, Fear, Care, Panic, Play and the Search for resources. Scientists may discover more in the future. Originating in the deep areas of the brain, deep feelings may be more than just an expression after all.  

However, facts should not be ignored. Human brain likes to figure out patterns and make predictions. All our human planning, reasoning, abstract thought and other complex executive functions happen in the cerebral cortex, which forms the largest part of the human brain and is situated above most other brain structures.  The prefrontal cortex, the brain region implicated in planning complex cognitive tasks, decision making, and moderating correct social behavior, is easily overwhelmed. We can process just about seven pieces of information in our conscious mind at any given moment. The brain likes to rationalize, but the more data we have to deal with, the harder it becomes to think clearly. Long live the Analysis Paralysis effect.

Thus, an emotional wrap during our real-world or even better online communication with the customers, is more than needed, including storytelling to build human connections, including pictures and videos for emotional appeal, showing vulnerability, avoiding defensive language, being authentic or even contrarian, celebrating other people's achievements and, last but not least, engaging in discussions and other activities. 


Stimulation or boredom? Human brain is actually motivated by curiosity and the search for patterns. The brain makes sense of the world around by predicting certain outcomes, comparing these predictions to what actually happens and detecting prediction errors.  Based on this information, the brain adjusts the expectations, enabling us to learn from our past experiences. When the brain is busy searching for patterns and making predictions, it produces more dopamine, which is responsible for more pleasurable experience. The popular myth of dopamine is that the neurotransmitter equals pleasure, that it’s the hedonist chemical responsible for sex, drugs and rock n’ roll. The dopaminergic reality is actually much more complicated. 

Consider Wolfram Schultz. His experiments followed a simple protocol. He played a loud tone, waited for a few seconds, and then squirted a few drops of apple juice into the mouth of a monkey. While the experiment was unfolding, Schultz was probing the dopamine-rich areas of the monkey brain with a needle that monitored the electrical activity inside individual cells. At first the dopamine neurons did not fire until the juice was delivered; they were responding to the actual reward. However, once the animal learned that the tone preceded the arrival of juice, the same neurons began firing at the sound of the tone instead of the sweet reward. Eventually, if the tone kept on predicting the juice, the cells went silent. They stopped firing altogether. Schultz calls these cells “prediction neurons,” since they are more concerned with predicting rewards than actually receiving them.

Consumer behavior is not far from there; stimulating human interest and curiosity via engagement with the customers can accelerate the creation of dopamine who are already curious by nature and love unexpected surprises as long as they are pleasant. Social media marketing should involve gradually delivering interesting articles, contest, creative activities, open-ended questions, sharing something about the brand and satisfying customers' curiosity in general.

“We don’t see things as they are. We see things as we are”

Last but not least, a quotation from Anaïs NinWhatever seems real to customers may turn out to be a fabrication of their subconscious mind and the senses.  How they feel and think about the world influences how they actually see it. Their interactions can be, in fact, be shaped by the attributes of our environment. Using varied sensory language that caters for individual styles of communication (visual, auditory, kinesthetic, etcetera), using negative keywords or bizarre images in order to create different perceptions, inspiring and motivating customers (probably in a chaotic way) can take these customers' illusions and make them reality, our reality, via our engagement and communication with our customers.

Because, successful engagement brings satisfying customers and these customers can turn out to be the best business strategy of all.