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

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

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).

Conclusion

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.

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Neuromarketing research for the win - pt2

The main question is: Should Neuromarketing research be closer to quantitative or qualitative approach?

Qualitative research is an in-depth exploration of what triggers people on a particular subject: their feelings, perceptions, decision-making processes, and so on. The most common forms of qualitative research are focus groups and depth interviews. Qualitative research will provide a much deeper understanding of how the target market thinks, but it does not provide data that can be projected and derived, so results cannot be generalized. 
On the other hand,  quantitative research  can be generalized, as it employs a larger sample (through mail, telephone or internet) which is representative of the entire population being researched, but it won't provide the depth of information available through qualitative research. 
Each approach has its drawbacks, as quantitative research often forces responses or people into categories that might not fit them, and qualitative research, on the other hand, sometimes focuses too closely on individual results and fails to make connections to larger situations or possible causes of  the results. But the solution would come in finding the most effective way to incorporate elements of both to ensure that their studies are accurate and valid[Bercea, 2013].

Neuromarketing and quantitative research

With regards to neuromarketing and quantitative research, there are some common points that are highlighted below: 

●  Psychophysiological techniques from neuromarketing research use a number of indicators to keep track of different psychological responses to stimuli, responses that can be represented by cognitive and affective processes. Quantitative measures of the cognitive processes include measures of beliefs, knowledge, attitudes, attention, memory, recall and everything that happens in the subject's mind. On the other hand, the affective process is a mental state that develops spontaneously without cognitive effort, and is involved with a set of emotional reactions.  

●  Rapid technological evolution enables marketing researchers to use more advanced equipment to conduct psychophysiological measurements. Researchers usually have to visually examine brain wave patterns recorded by EEG and also conduct brain wave mapping and statistical analyses using specific algorithms and software. Using computer-aided EEG, future marketing research may aim to identify the relationships between psychological processes and certain patterns of brain waves.  
●  Most data analysis in neuromarketing research includes preprocessing, statistical analysis, data interpretation (behavioral analysis and neuroimaging data analysis) and triangulation. Preprocessing includes having different phases which perform time correction (between appearance of stimuli and recording the signal of its effect), head motion correction, normalization (using algorithms in order to obtain a standard brain template) and smoothing (removing noises using Gaussian filters). Statistical analysis on the level of brain regions in order to find the Voxels (coordinates) for which the time series (fitting a general linear model) significantly correlates with a specific experimental condition. Data interpretation should confirm or infirm the hypothesis of the research, and triangulation should validate the research by correcting complementary sources and linking them to the data acquired with neuroimaging. 

● The purpose of neuromarketing studies is to test hypothesis, look at cause and effect and make predictions concerning consumer behavior, developing a quantitative approach.

● Although using a small sample size, findings can be generalized, as brain mechanisms of people are similar.

Neuromarketing and qualitative Research

● Neuromarketing research passes the boundaries of traditional marketing research methods through the information provided and with the great advantage that it requires only 10% of subjects that would be necessary for traditional methods. Also, neuromarketing studies are small sample sized (not randomly selected) due to costs and complexity of the experiments, but taking into consideration that the data collected also contains noises that must be removed, at least 15 to 20 participants should be recruited to such studies in order to obtain internal validity. The reasearch of a small amount of subjects used make neuromarketing  come closer to the qualitative side and stay further from the quantitative one.

● Invasive methods (such as PET or TMS - described in the previous post) change the role of the researcher, as he is able to activate or temporary disable areas of the brain or to add radioactive chemicals in the subject's blood.

Thus, we can consider neuromarketing research as being 

a triangulation of research, as it implies defining a problem (qualitative approach), 

defining and test hypothesis (quantitative approach) and exploring the results in depth (qualitative approach) [tribute to Monica Bercea, PhD, 2013] .

A sample Anti-smoking ad : Neuromarketing and UCLA fMRI 

www.neurosciencemarketing.com

A study published in Psychological Science brings us closer to that point: scientists using a UCLA fMRI facility analyzed anti-smoking ads by recording subject brain activity. They also asked subjects about the commercials and whether the ads were likely to change their behavior. The researchers found that activity in one specific area of the brain predicted the effectiveness of the ads in the larger population, while the self-reports didn’t.

The methodology involved comparing brain activity in subjects who viewed ads from three campaigns to actual performance of the campaigns in increasing call volumes. The researchers focused on a subregion of the medial prefrontal cortex (MPFC) but also compared activity in other brain regions for control purposes. They found that the ad campaign which created the greatest activity in the MPFC region generated significantly more calls to a stop-smoking hotline. The subjects failed to identify which ads would change their behavior; in fact, the most effective campaign, “C,” was the one judged to be least likely to work. The researchers also asked a group of industry experts to predict which campaign would work best. Like the experimental subjects, the so-called experts also predicted that “C” would be the least effective [Roger Dooley,2012] .

Even if this single, small study of smoker behavior can’t be readily extrapolated to campaigns for BMW or Pepsi, it’s still of great significance in proving neuromarketing studies can actually work. As the authors note, “The approach described here is novel because it directly links neural responses with behavioral responses to the ads at the population level.” Simply put, the brain scan data correctly predicted how the ads would perform in the real world – not just how the subjects would behave, but the broader public audience. Well, that’s a major milestone.

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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

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...

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