Thursday, July 25, 2013

Neuromarketing research for the win - pt1

Marketing research methods continuously develop and over the last decade technology offered solutions to improve this area. Traditional marketing research methods fail at some point in certain cases, and since emotions are mediators of how consumers process marketing messages, understanding of cognitive responses to advertisements have always been a challenge in methodology. Neuromarketing is the branch of neuroscience research that aims to better understand the consumer through his unconscious processes and has application in marketing, explaining consumer's preferences, motivations and expectations, predicting his behavior and evaluating successes or failures of advertising messages.


Neuroscience gathers information on the structure and functions of the brain and its sub-domain called cognitive neuroscience seeks to understand the neural mechanisms behind thoughts, reasoning, emotions, memory or decision making. Using technology advances in neuroscience, researchers can obtain information on brain responses to marketing stimuli, not having full confidence in what they report. They provide new ways for understanding how consumers store, retrieve, develop and use information. Neuromarketing is an emerging interdisciplinary field that aims to investigate and understand consumer behavior by studying the brain. Thus, using neuroimaging techniques, researchers measure subjects' responses to marketing stimuli. Therefore, the development of this field depends on the advance of science, technology and computer science.

Neuroimaging tools

Functional Magnetic Resonance Imaging (fMRI) represents an appropriate methodology for uncovering the areas of the brain activation in response to a very simple experimental design with little potential for the temporal dimension to be a problem. fMRI combines magnetic field and radio waves, producing a signal that allows viewing brain structures in detail and following the metabolic activity in the brain. Τhe subject lies on a bed, with the head surrounded by a large magnet which causes the atom particles (protons) inside the subject's head to align with the magnetic field. As blood contains iron, the iron atoms that are not bound to oxygen produce small distortions in the nearer magnetic field and when a certain brain area is active, corresponding blood vessels dilate and more blood rushes in, reducing the amount of oxygen-fee hemoglobin and producing a change in the magnetic field in the active area.

Software allows viewing this change, displaying colored areas overlapping the grey-scale image of the brain and refreshing the image every 2 to 5 seconds. fMRI allows measuring brain activity and searching for patterns while subjects perform certain tasks or experience marketing stimuli. Data analysis can be conducted using specific software packages, as BrainVoyager QX or Statistical parametric Mapping (SPM5).

Electroencephalography (EEG) is one of the most used tools in neuromarketing research, after fMRI. The amplitudes of the recorded brain waves correspond to certain mental states, such as wakefulness (beta waves), relaxation (alpha waves), calmness (theta waves) and sleep (delta waves). A number of electrodes (up to 256) are placed on the scalp of the subjects, in certain areas, in order to measure and record the electricity for that certain spot. Technology allows EEG to be a portable device and record brain activity in any many circumstances, as for example in supermarkets. Also, EEG is able to record only activity data from superficial layers of the cortex.

Positron emission tomography (PET) is another expensive method to use that can obtain physiologic images with spatial resolution similar to fMRI by recording the radiation from the emission of positrons from the radioactive substance administered to the subject. A battery of detectors surrounds the subject's head and traces radiation pulse, without precisely identify the location of the signal. Technical issues involve obtaining the radioactive material and it's short life.

Transcranial magnetic stimulation (TMS) uses magnetic induction in order to modulate the activity of certain brain areas that are located 1-2 centimeters inside, without reaching the neocortex. New TMS technology allows also targeting lower brain areas and is less expensive than PET or fMRI scanners. A plastic case containing an electric coil is positioned near to the subject's head. TMS discharges a magnetic field that passes through the brain, allowing making changes in the brain tissue in certain locations and being able either to temporary activate neurons (using high frequency) or temporary disable neuronal activity (low frequency). TMS is able to highlight causal inferences by analyzing the subject in front of a marketing stimuli while certain brain areas are disabled, stimulated, or normal.

Neuromarketing methodology

Eye Tracking allows studying behavior and cognition without measuring brain activity, but where the subject is looking at, for how long he is looking, the path of the subject's view and changes in pupil dilation while the subjects looks at stimuli. Eye tracking allows measuring the attention focus and thus monitoring types of behavior. Eye movements fall into two categories: fixations and saccades. Fixation is when the eye movement pauses in a certain position and saccade is a switch to another position. The resulting series of fixations and saccades is called a scan path, and they are used in analyzing visual perception, cognitive intent, interest and salience. Eye tracking provides more accurate information than self-report, as research shows that claimed viewing is not always the same as measured actual viewing.

Measuring Physiological Responses to stimuli can provide information on the subject's emotional effects by monitoring the heart rate, blood pressure, skin conductivity (affected by sweat, measuring arousal level), stress hormone from saliva, facial muscles contractions, and inferring the emotional state for each moment. [Bercea,2013]

Response time measures computes the amount of time between stimuli appearance and it's response, informing researchers on the complexity of the stimulus to an individual and how the subject relates to it. This cheap method can be used on recall studies or on measuring subject's attitude towards certain stimuli.

                                                      To be continued...

Friday, July 19, 2013

Marketing & Social Psychology for a Better Future

Because Marketing is interested in persuasion, changing attitudes and provoking specific behaviours, it has always used psychological theories, and more specifically theories coming from Social Psychology. As early as 1928, the famous work of Edward Bernays on Propaganda, one of the many ancestors of marketing and Freud's nephew,explicitly refers to several social psychologist’s work in order to address and influence the masses to sell them products, for example by manipulating the nature of the source of information to for better influence in claims.

Apart from theories and experiments, Social Psychology also brought many a technique which is now used in Marketing, especially in the consumer research side: to name the most prominent, in-depth interviews, focus groups, attitude scales, laboratory experiments on choices.

Human behavior and the installation of the world

The determinants of human behavior are distributed: Some lay in the subject (motives, goals,preferences, habits), others lay in the context (artefacts, rules, other people). In an operational perspective, for practitioners who want to understand, predict or influence human behavior at a given moment, and a given place, the world can be considered as an installation.Installation must be understood here in the artistic sense of assembling patterns in space to modify the way we experience this situation. The installation of the world guides subjects into their activity track, at three levels: physical,psychological, social. It is possible to frame this installation in order to influence behavior. Let us detail these three levels.

The physical level refers to material reality and artefacts. It provides affordances for activity (which can be supported by the objects). For example, chairs afford sitting; buses afford transportation; on-line support affords help. One can only do what is afforded by the present environment. This layer of installation is distributed in the physical environment by construction of infrastructure, and various mechanisms of supply and procurement.

This first, physical, level of determination affords a tree of possibilities; but not everything that is possible will be realized. This is where psychology comes into play. To take action,subects must interpret situations. Objects evoke for humans specific connotations of activity, and operative images. At psychological level, motives,representations and practice provide possible interpretations of the situation by the subject.For example choosing between various artefacts (e.g. different brands of same product) which all provide some affordance for the desired activity. Representations include the “how to use” the objects; for example a web browser, a car, or a self-service restaurant. Representations also enable subjects to elaborate and plan behaviors  This layer of installation is distributed over individual humans, by the means of physiology, experience, education and exposures to discourse (media, advertising, etc).

But again, not everything that is even both possible and desired will be realized: a third level of determination, social, will cut off more branches from the tree of possibilities. For example, although we could drive on any side of the roads, only one is allowed in every country. Because individual actions produce externalities, they are limited by others. Institutions are a social solution to control potential abuse or misuse, and minimize social costs also called “negative externalities”. Institutions set common conventions which enable cooperation (e.g. people should all drive on the same side of the road; etc). Many of the rules are already contained in the normative aspects of representations, but institutions are special in their capacity to enforce behavior  by social pressure or more direct means.

So, at a given moment, individual behavior is determined by this distributed installation: Artefacts installed in the physical environment, interpretive systems installed in humans, and institutions installed in society. This enables us to understand better the role of Psychology in this framework. Because some determinants lay in the context, psychological theories alone cannot explain or predict behavior but because some determinants are psychological and social, a social psychological approach is necessary.

Installation theory is of course very schematic. Still, it enables a first orientation in the complex socio-technical systems which innovators must deal with; it provides a check-list for analysis and agenda for action. If we want to change the World, or more modestly one of its subdomains, it is clear that no action limited to a single layer of determination -for example a new product, or a campaign- will be enough to change the behaviors of people. We should make sure that appropriate installation in the three layers (physical environment, individuals concerned, relevant institutions) has been addressed. What is left to us is the strategy of how to create and distribute such installation.

Towards a more sustainable future

In this global change management, as said earlier, Marketing plays a key role. Marketing has been in charge of implementing change for most built environment and policies, in a market context. But now, precisely, we have become aware of the limitations of the market system.Now, we face a new challenge with global sustainability, of which the current financial crisis is only one of the first global symptoms, together with climate change and ecological destruction.Too often in the past, Marketing has been on the dark side of the force, mobilizing considerable resources only to move the frontiers between brand territories, in a zero-sum game. In doing so, though, a considerable amount of knowledge and agency has been accumulated. Now, marketers, the World needs your capacities to help degrowth. We have collectively failed in creating a sustainable civilization, and there is little time left to change it into a better system.

Social value is the resource. An observation of what does actually work in terms of sustainable consumption.In the end, what Humans look for is belong to a group where they are recognized, have status, and gain other’s people’s love. And for this they are ready to give, not only take. In fact, most consumption has this final use of building someone’s position in groups. When people buy fancy cars, display brands on their clothes, and in general work or spend their money and time, it is usually for that purpose of gaining or keeping position in a group.

This is probably the way into which Marketing should engage in this 21st century. After the markets of goods and services, it is the markets of sociability which will be the next frontier. Many of us have already recognized the social realm as a major source of value, and as said earlier there are numerous attempts to use it, but until now it has been mostly mobilized so serve the old regime of brands. It should now serve society itself, or there will be no 22nd century for the civilization we have built. But make no mistake: when I talk about a “market of sociability”, this means not that we should commoditize and sell sociability, as has unfortunately been often the temptation lately. I mean, on the contrary, that sociability is a kind of “money”, a psychological reward system for performing other activities. Building markets with this new currency is certainly a challenge for Marketing [Professor Saadi Lahlou,LSE,2009].

I strongly recommend the following lesson @Coursera for young marketers with no previous background on Social Psychology (, as well as The Social Animal,a must-read written by Elliot Aronson .

Monday, July 08, 2013

Behavioral Targeting: The Holy Grail of Online Marketing

Behavioral targeting, under which users are presented with advertisements based on their past browsing and search behavior and other available information (e.g., hobbies registered on a website), has been hailed as the new Holy Grail in online advertising.We will refer to the economic implications when an online publisher engages in behavioral targeting. Revenue for the online publisher in some circumstances can double when using behavioral targeting. On the other hand, increased revenue for the publisher is not guaranteed: in some cases the prices of advertising and hence the publisher's revenue can be lower, depending on the degree of competition and the advertisers' valuations. Although social welfare is increased and small advertisers are better off under behavioral targeting, the dominant advertiser might be worse off and reluctant to switch from traditional advertising.

A simple question

Who benefits (and what are the conditions required) from behavioral targeting as compared to traditional advertising? Would the online publisher benefit from the targeting of advertisements? Because of the increased effectiveness of behaviorally targeted advertisements, conventional wisdom would suggest that the answers to these questions are easily predicted, as summed up in an article in the Economist about behavioral targeting:  [...], Advertisers will be prepared to pay more to place ads, since they are more likely to be clicked on. That in turn means that websites will be able to charge more for their advertising slots.  (Economist, 2008)

However, this expected relationship between charges and clicks does not necessarily emerge when the advertisement slot is auctioned off . Instead, using targeted advertisements turns out to be similar to product differentiation: it causes relaxed competition between the advertisers, and hence it is possible that advertisers need not pay as much as they do under traditional advertising. That is, by focusing on a specific user segment, an advertiser's advertisement may be selected with a relatively low price on this segment, whereas under traditional advertising his advertisement would never have been selected or would have been selected only at a higher price. This competitive effect can depress the online publisher's income by realizing a lower revenue per click-through.

Competitive and Propensity effect

On the other hand, the negative effect of relaxed competition for online publishers might be off set by a positive propensity effect. Through targeting advertisements,the probability of a click-through is increased resulting in a higher volume of click-throughs, which positively contributes to the publisher's revenue. Whether the publisher can benefit from behavioral targeting depends on the trade-off between the competitive effect and the propensity effect. Behavioral targeting outperforms traditional advertising only if the competitive effect is dominated by the propensity effect. In particular,when the advertisers competing for the advertising space are comparable and the number of advertisers is large, behavioral targeting generates more revenue for the publisher. This gain under behavioral targeting is increasing in user heterogeneity and the number of advertisers, and the expected revenue for the publisher can double compared to traditional advertising.

 Online consumer heterogeneity: An advertiser for each face.


The whole research,conducted by Jianqing Chen and Jan Stallaert,University of Texas and Connecticut respectively, proved that that the effect of behavioral targeting on different advertisers' payoffs is asymmetric. While small advertisers are generally better off under behavioral targeting by winning their favorable users, the dominant advertiser may or may not be better off .The dominant advertiser is worse off under behavioral targeting when it has a significant competitive advantage over its competitors because under traditional advertising, he would otherwise grab a larger group of users and still realize a decent payoff . The real benefit brought by the increased effectiveness of behavioral targeting is realized in social welfare. In the end,the social welfare of both publisher and advertisers can be maximized under behavioral targeting.

Monday, July 01, 2013

Cross-Cultural Consumer Behavior

What are the key cultural constructs or dimension?

The constructs of individualism and collectivism represent the 
most broadly used dimensions of cultural variability for cross-cultural comparison. In individualistic (IND) cultures, people tend to prefer independent relationships to others and to subordinate the goals of their ingroups to their own personal goals. In collectivistic (COL) cultures, in contrast, individuals tend to prefer interdependent relationships to others and to subordinate their personal goals to those of their ingroups. The key distinction involves the extent to which one defines the self in relation to others. The focus is on whether the self is defined as autonomous and unique or seen as inextricably and fundamentally embedded within a larger social network. This distinction has also been referred to as egocentric versus sociocentric selves (Shweder & Bourne,1982), or independence vs interdependence.

In sum, the distinctions between IND and COL societies, and independent and interdependent self-construals, are crucial to the cross-cultural understanding of consumer behavior. Indeed, whereas the 1980s were labeled the decade of individualism/collectivism in cross-cultural psychology, similar distinctions represent the dominant structural approach in cross-cultural consumer research in 1990s and 2000s. The studies to be reviewed in this chapter offer a wealth of evidence that these cultural classifications have fundamental implications for consumption-related outcomes.

Expanding the Set of Cultural Dimensions

The nature and meaning of IND and COL (or of independent and interdependent self-construals) appear to vary across cultural, institutional, gender, and ethnic lines. Although the breadth of the INDCOL constructs lends integrative strengths, further refinement of these categories holds the potential to enhance prediction of consumer behavior.

The Horizontal/Vertical Distinction: Which additional cultural categories offer value in the prediction of cross-cultural consumer behavior? Within the INDCOL framework, Triandis and his colleagues have recently introduced a further distinction between societies that are horizontal (valuing equality) and those that are vertical (emphasizing hierarchy). The horizontal/vertical distinction emerges from the observation that American or British individualism differs from, say, Norwegian or Danish individualism in much the same way that Japanese or Korean collectivism differs from the collectivism of the Israeli kibbutz. Specifically, in vertical individualist societies (U.S.,Great Britain, France), people tend to be concerned with improving their individual status and distinguishing themselves from others via competition. In contrast, in horizontal individualist societies (HI; e.g., Sweden, Norway, Australia), where people prefer to view themselves as equal to others in status, the focus is on expressing one’s uniqueness, capability, and self-reliance. In vertical collectivist societies (Japan, Korea, India), people focus on fulfilling obligations to others, and on enhancing the status of their ingroups in competition with outgroups, even when that entails sacrificing their own personal goals. In horizontal collectivist societies (like exemplified historically by the Israeli kibbutz), the focus is on sociability, benevolence, and interdependence with others in an egalitarian context.

When such distinctions are taken into account, however, it becomes apparent that the societies chosen to represent IND and COL cultural syndromes in consumer research have almost exclusively been vertically oriented. Specifically, the modal comparisons are between the United States (VI) and any of a number of Pacific Rim countries (VC). It may be argued, therefore, that much of what is known about consumer behavior in individualistic and collectivistic societies reflects vertical forms of these syndromes and may not generalize, for example, to comparisons between Sweden (HI) and Israel (HC) or other sets of horizontal cultures. As an example, conformity in product choice, as examined by Kim and Markus (1999), may be a tendency specific to VC cultures, in which deference to authority and to ingroup wishes is stressed. Much lower levels of conformity may be observed in HC cultures, which emphasize sociability but not deference. Thus, it may be inappropriate to ascribe differences in consumers’ conformity between Korea (VC) and the United States (VI) solely to the role of IND/COL or independence/interdependence, because such conformity might not be prevalent in horizontal societies. In particular, levels of product conformity in HC contexts might not exceed those in HI contexts.

Predicting new consumer psychology phenomena

Several recent studies examining the implications of this horizontal/vertical cultural distinction have provided evidence for its value as a predictor of new consumer psychology phenomena and as a basis for refining the understanding of known phenomena. For instance, Gürhan-Canli and Maheswaran (2000) demonstrated that the tendency to favor products from one’s own country over foreign products (a country-of-origin effect) emerged more strongly in Japan (a VC culture) than in the United States (a VI culture). This fits well with a conceptualization of collectivists as being oriented toward their ingroups. However, mediational analyses using individual consumers’ self-rated cultural values indicated that only the vertical dimension of IND and COL accounted for the country-of-origin effects in Japan. In other words, the collectivistic tendency to favor one’s own country’s products appeared to be driven by cultural values that stress hierarchy, competition, and deference to ingroup wishes, not by values that stress interdependence more generally.

In line with this, research suggests that advertising messages with themes that emphasize status, prestige, hierarchy, and distinction may be more prevalent and persuasive in vertical cultural contexts. Such advertisements also appear to be generally more persuasive for those with a vertical cultural orientation, and may be inappropriate for those with a horizontal one. Shavitt, Zhang, and Johnson (2006) asked U.S. respondents to write advertisements that they personally would find persuasive. The extent to which the ad appeals that they wrote emphasized status themes was positively correlated with respondents’ vertical cultural orientation (and negatively correlated with their horizontal cultural orientation). Moreover, content analyses of magazine advertisements in several countries suggested that status-oriented themes of hierarchy, luxury, prominence, and distinction were generally more prevalent in societies presumed to have vertical cultural profiles (Korea, Russia) than a horizontal cultural profile (Denmark).

Last but not least,the horizontal/vertical distinction provides a basis for refining our understanding of individualism/collectivism effects. Their studies showed that individualism/collectivism differences in socially desirable responding appear to be mediated at the individual level by horizontal (but not vertical) IND and COL values. These findings shed light on the motivational drivers linking culture with socially desirable response styles. The main point here is that these dimensions of cultural comparison have multiple implications for advertising and marketing processes. Attention to a broader set of cultural dimensions will not only expand the range of independent variables in our research, but will also prompt consideration of cultural consequences hitherto unexamined in cross-cultural studies (based on publication by Sharon Shavitt-University of Illinois & Angela Lee, Northwestern University).