Neuromarketing

Neuromarketing Communications and Leadership Conference Western New England College April 7, 2010

Neuromarketing Defined Strict Definition: Measuring brain response to marketing ads. Expanded Definition: Additional use of biometrics to include heart rate, breathing rate, and galvanic skin response. Loose Definition: Marketing tips/decisions based on neuroscience, neuromarketing, behavioral economics, psychology, etc. knowledge but not actual measures. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 3

Neuromarketing Biometrics/Tools EEG: Measures brain waves to determine what parts of the brain are activated. Eyetracking: Measures where a subject is looking. fMRI • Functional Magnetic Resonance Imaging. • Measures brain activity in real time. • Vastly more expensive and cumbersome than EEG, but gives more accurate picture of the brain. Measures what? • Attention. • Retention (memory). • Emotion (positive vs. negative). Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 4

How Data Is Used To determine what parts of an ad (still or moving) show the highest engagement across the three measures: attention, retention, and emotion. Firms are also collecting proprietary data to determine patterns. For example, one firm has seen that dark backgrounds consistently result in lower engagement. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 5

Controversy: Pseudo-science Some claim neuromarketing is a pseudo-science because there is a paucity of information sharing. This lack of information is because: • Private vs. academic. No requirement for peer review. • Neuromarketing clients rarely release data or results to the public. Concerns about negative perceptions by consumers (mind-control, manipulation) and giving knowledge away to competitors. • Any “results” released to the public is in reference to ROI, not comprehensive. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 6

Controversy: Big Brother/Mind Reader Books like Neuromarketing–Find Your Customer’s Buy Button or Buyology can overstate findings to suggest to marketers that neuromarketing can identify magic bullets. Advocacy groups have been quick to believe neuromarketing hype leading them to believe neuromarketing will lead to consumer mind control. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 7

Controversy: Ethical Concerns Either of the above two theories regarding neuromarketing lead to ethical issues. • Should marketers have access to our unconscious minds? • Should the technologies be limited to adult consumers? • Who should determine standards and regulation? • Should businesses be forced to disclose use? • How can businesses be protected from faulty claims and large expenditures of money? Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 8

The Truth Lies somewhere in between. Neither pseudo-science nor mind control. It is morally ambiguous and complicated. Big business has already used marketing in harmful ways by targeting the animal brain, particularly when selling addictive substances. • Big tobacco. • Alcohol. • Big pharmaceuticals. • Video gaming industry. • Sex industry (sex sells when it’s selling sex!). • Gambling. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 9

The Truth Neuromarketing has potential to advance what we know about decision making much more quickly than academia. Though not peer reviewed, ROI is a review process. Firms or techniques that don’t work will be quickly discarded in favor of results. Neuromarketing has just as much potential for good. • Education. • Producing better products. • Creating better usability and design. • Use by social movements. • Educating consumers about their own irrational decision making. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 10

Example: Campbell’s Problem • Need to sell more soup. • Budget-conscious consumers have little tolerance for price increases. Goal • Increase soup sales 2% over the next two years. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 11

Example: Campbell’s Studies 2-year study and over 1,500 subjects. Various teams were brought in at different stages to conduct different types of analysis, and each interacted with the other to triangulate the data. Multiple methodologies (triangulation) • Focus groups are not enough. • Traditional consumer feedback. • Neuromarketing techniques. • Deep interview process called ZMET (The Zaltman Metaphor Elicitation Technique). • In-store consumer behavior. • Biometrics. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 12

Example: Coca-Cola (vs. Pepsi) Study • Understand the cognitive processes behind the choice between Coca-Cola and Pepsi. • 67 people had their brains scanned while being given the “Pepsi Challenge,” a blind taste test. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 14

Example: Coca-Cola (vs. Pepsi) Findings • Half the subjects chose Pepsi. • Pepsi tended to produce a stronger response than Coke in their brain’s ventromedial prefrontal cortex, a region thought to process feelings of reward. • When the subjects were told they were drinking Coke three-quarters said that Coke tasted better. • Their brain activity had also changed. The lateral prefrontal cortex, an area of the brain that scientists say governs high-level cognitive powers, and the hippocampus, an area related to memory, were engaged. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 15

Example: Coca-Cola (vs. Pepsi) Results • While Pepsi’s and Coca-Cola’s success was similar in blind tests, a strong bias toward Coca-Cola was found in brand-cued tests. • Demonstrated that Pepsi should have half the market share, but in reality consumers are buying Coke for reasons related less to their taste preferences and more to their experience with the Coke brand. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 16

Example: Frito-Lay Situation Marketing to women, who snack twice as much as men. Research and Inferences • Communication center in women is more developed, leading to infer that women can process ads that contain more info. • Hippocampus—the memory and emotional center—was larger, and concluded women look more for characters they can empathize with. • Anterior cingulated cortex, which processes decision-making was larger in women, so they are more susceptible to feelings of guilt. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 17

Example: Frito-Lay Research 100 women kept journals for a couple of weeks—showing women feel guilty a lot about a lot. Conclusion: we can’t alleviate guilt, but we must be sure not to trigger it. Marketing changes • Tone down packaging: not shiny yellow, but beige. • Show off healthy ingredients. • Cartoon ads with empathetic figures, like animated Sex in the City. Only in a Woman’s World series. • Not girlie: no pink, no big calorie count. Results? Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 18

Take Aways Rules Neuromarketing is not exempt from marketing good practices. • Always triangulate. • Context: audience, media, social climate. • There will always be exceptions/outliers. Example: less is not always more. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 19

Take Aways Keep it simple. • Poor memory for detail. • The “good idea”. • Less really is more. • Cognitive fluency. • Tips for keeping it simple. You don’t have much time. Subliminal messages do influence. Be aware of bias. • Social validation. • Confirmation bias. • Hindsight bias. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 20

Take Aways Stories are how we remember and decide. • Narrative is the foundation for both memory and decision making. • Narrative overrides facts (refer back to Coke vs. Pepsi). There’s no escape from stereotyping. • The brain groups data, takes mental shortcuts. • Men vs. women. • The best marketing is not gender neutral—it speaks to both genders. • Taps into stereotypes in a transcending way (i.e., Old Spice ad). Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 21

Take Aways We’re wired for nostalgia. • It’s good for our health and promotes positive feelings. • The mind is predisposed to positive mood. • Music is especially powerful. • Nostalgia surges in tough times. • Fake nostalgia works too. • Tips for using retro to invoke nostalgia in your marketing. Engage all the senses. • Sound often ignored in marketing. • Sound directly affects the brain and emotions. • How to market with music. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 22

Take Aways Emotion brings recall and relationships. • Emotional responses influence brand recall and liking. • Positive emotions work best. • Make sure the emotion fits the brand. • Emotions interest, facts justify. • Sharing emotion builds relationships. • How to encourage customers’ emotional participation. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 23

Cautions on Application • As more proprietary data is gathered and released we can more confidently apply findings. • Much is still unknown. • The brain is complex, and results in a lab may not hold true in various real life contexts. • Data from neuromarketing is still best used when triangulated with more traditional data such as interviews, questionnaires, and historical data. • Level of engagement is the best predictor we have so far, but it is imperfect. It is not a cause and effect. Engagement does not guarantee conversion. Western New England College | April 7, 2010 | Copyright © 2010 Bidwell ID, Inc. and Verilliance | 24

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Neuromarketing

by John Bidwell on Apr 12, 2010

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