Monday, November 23, 2015

Perspective - NeuroMarketing || Anuj Goel || IIM Shillong || September October 2015 edition

NEUROMARKETING: The Next Generation Marketing Technique

Marketers have always struggled to find out what customers think about various products and services and what is thinking process. As a result, they conduct surveys and focus group discussions to find out a customer’s opinion about their products or services. But, there have been many cases where it has been found out that there is a big difference between what they say about their thinking and what they actually think about. As a result, marketers are never able to find the true insights and they never know what is going on in a customer’s mind. However, this has been rapidly changing in the past few years. 

Neuro-Imaging and Behavioral psychology are two scientific disciplines that are mining our brains to
find hints to develop new marketing strategies. Neuro-Imaging Science has bestowed many gifts upon us. However, probably the most important of them all is neuro-imaging especially functional magnetic resonance imaging (fMRI). Neuro-Imaging includes a lot of techniques that also includes functional magnetic resonance imaging. It measures the activity of the brain like use of oxygen, metabolism of sugar, blood flow etc. The use of these kinds of techniques for the purpose of marketing research is known as neuromarketing. In order to track brain functions, neuroscientists generally use EEG of fMRI. EEG involves attaching electrodes to a person’s head and then evaluating the pattern of his brain waves to find out the intensity of his visceral responses such as excitement, anger, lust, disgust etc. 

Frito-Lay hired a neuromarketing firm in 2008 to find out what the customers felt about Cheetos which was the largest selling brand of cheese puffs in the United States. EEG technology was used
for this experiment and it was found that customers react strongly to the fact that after eating Cheetos their fingers turn orange because of the cheese dust. This data helped FritoLay to develop an ad-campaign “The Orange Underground”. In the famous “Pepsi Challenge,” people liked the taste of Pepsi more than Coke if they couldn’t see the cans and they couldn’t identify which product it was. Yet, people continued to buy more Coke, and that brand stayed on top rather than taste. This experiment helped to understand that a brand will dominate the product in the minds of the consumers. However, there are various limitations to the use of EEG for the purpose of neuromarketing. Because the cap of electrodes is attached to the surface of a person’s head, a neuroscientist isn’t going deep into the brain. Functional magnetic resonance imaging eliminates this limitation. It uses a large magnet to track the blood flow inside the brain as the person responds visual, audio or taste element. It helps the marketers to get a view of the person’s pleasure center. 

Pleasure center is that part of the brain that is involved in pleasure. Dopamine release in the nucleus accumbens is so tied up with pleasure that scientists refer to this region as the brain’s pleasure center. But, a major problem with fMRI is that it requires the person to be very still inside the machine unlike EEG which can be very intimidating. Behavioral Psychology Using this scientific tool scientists try to find out how people think and make decisions and what factors influence those decisions. This is done because people think they are logical but in reality a large number of our decisions aren’t based on logical processes. 

According to a research, during a purchase decision people respond to abstract information rather than concrete information. As a result, people are more inclined towards advertisements that describes a positive experience with a product or service in abstract terms rather than dealing with specifics. Through behavioral psychology, it has also been find out that a consumer purchasing decision is also based on the fact whether an advertisement directs the consumer’s attention to the present or to the future. In a research, before sending all the participants for grocery shopping half of the participants were told to think about themselves in the present scenario while the other half were told to think about themselves in the future scenario. It was found that people who thought about present scenario bought pleasure oriented products like chocolates while people who thought about future scenario bought healthy foods. 

Neuro-Marketing’s value proposition Neuro-Marketing involves the use of neuroscience research techniques to shape advertising and marketing strategies that could help brands connect with consumers in deeper and more lasting ways. Campbell used pupil dilution, biometric heart and measurement tests along with changes in body and sweat levels to update its soup label. Campbell added steam to the old label so as to engage consumers emotionally, the spoon was removed because it added no value and Campbell’s logo was shifted to the bottom of the bowl as it drew too much attention towards itself. This is neuro-marketing’s value proposition because consumers are generally unable to understand their decision-making processes while purchasing goods and services and conventional market research methods such as focus groups and surveys are of very limited value to marketers. 

Techniques of Neuro-Marketing:

1. Implicit association measurement: It measures the reaction time of consumers as they come across a brand or an advertisement 

2. Eye tracking: It monitors the consumers’ eye movements while they interact with an advertisement. It also tries to find out what captures a consumer’s visual attention and how do they navigate websites and communication. 
When Sunsilk used the image on the left nearly 94% viewers looked at model’s face while only 6% of them looked at the product. Result were exactly the opposite when only a simple change was made
to the print ad. 84% viewers looked at the product when they were shown the image on the right. This trick could be used by today’s marketers while designing a website or a print ad so as to make viewers concentrate on the most important things that the marketers wants to communicate 

3. Automated facial coding: It tries to decode the expressions of consumers when they watch ads. The expression could be anything like smile, raising of eyebrows or even a frown. This has helped neuro-marketers understand consumers’ emotional reaction to communication on a moment –by-moment basis.

4.Galvanic skin responses: It is known as skin conductance and it measures the electrical conductivity of the skin that generally varies with the moisture level. Increased level of moisture because of sweating could mean psychological or physiological arousal 

Possible future of Neuro-Marketing:

1. Neuro-Marketing is here to stay - A tools that not only provides effective branding options but also helps produce better products by involving consumers in design of products even before they are brought into the market. 

2. There will be many frauds - As the entire process is very complex and difficult to understand there will be many people who will claim that they can read a consumer’s mind.

3. Universities can monetize their expertise by forming partnerships with business houses - This is an opportunity for various scientists to come to the forefront, try a new field and apply neuro-imaging to practical problems. There are various examples like Dr. Justine Meaux who is a neuroscientist but now works as a neuro-marketer. 

4. Investment opportunities for companies that supply MRI and EEG machines - This can be an opportunity for entrepreneurs to enter this lucrative market with disruptive business models and pricing schemes. 

Issues with NeuroMarketing: 

As this technique is expanding on a daily basis, the concern among regulators and consumers is also rising. They believe this is a way to deceive them and it erodes privacy. These sort of claims aren’t new to the marketing industry, the concerns regarding consumer tracking brought on due to internet cannot be forgotten. However, there are some issues that need to be taken care of before this technique becomes the future of marketing research. 
Legal Issues A number of legal issues can be raised by the use of neuromarketing. They can be broadly classified into 3 major areas: 

1. Privacy Issues: The aggressive claims by the neuromarketers about this technique hasn’t gone well with the general public. The regulators and the general public have raised privacy concerns. The prospect of intrusions into a person’s personal thought process has raised concerns. This will be a problem for the neuro-marketers because in the last year alone, more than 100 cases have been filed alleging that modern marketing techniques like behavioral advertising violates consumer privacy. 

2. Tort Issues: Using neuro-marketing to induce the intent to purchase the product which if misused will cause personal injury raises very critical and important questions that definitely need to be answered. There can also be claims that through neuro-marketing protected internal areas of brain are being touched that again becomes a liability for neuro-marketers. 

3. Consumer protection: Regulators are also concerned that with the advancement of this technique people may be made to believe that they want a product even though that product is useless for them. In Europe a case has already been registered with a company that employed neuro-marketing. Policy Issues A number of policy issues have been raised by the use of neuro-marketing as it seeks to safeguard industry interests. 

These issues can be broadly classified into 3 major areas:

1. Scope of Use: A disciplined assessment needs to be undertaken as to where and how the growth this technique is being occurring on a worldwide basis. Country wise and product wise data should be collected on a regular basis for this assessment 

2. Engagement: A strategy needs to be made for positively interacting with various stakeholders interested in neuro-marketing. This is done to prevent granting licenses to those who might sensationalize this technique and fill suspicion among the regulators 

3. Self-Regulation: Policies need to be drafted to establish ethical standards for implementing neuro-marketing techniques so that it could prevent targeting of vulnerable groups like children and it must also ensure accountability. 


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