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.