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Neuromarketing : The Basics. It’s only business. We are exposed to over 2 million ads during our lifetimes

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slide2

It’s only business

  • We are exposed to over 2 million ads during our lifetimes
  • $8 billion dollars was spent on market research in 2006
  • Expressed attitudes on surveys and focus groups are easily influenced by peer pressure and not always a good predictor of actual decisions or purchase behavior
  • Over 50% of all purchasing decisions by customers are made spontaneously (unconsciously) at the point of sale
  • There are over 90 neuromarketing consultancies that work with Coca Cola, General Motors, Home Depot, General Mills, Proctor and Gamble, Eastman Kodak, Bank of America, and Nestlé.
slide3

$1000/hour

Functional magnetic resonance imaging, or fMRI, works by detecting the changes in blood oxygenation and flow that occur in response to neural activity – when a brain area is more active it consumes more oxygen and to meet this increased demand blood flow increases to the active area. FMRI can be used to produce activation maps showing which parts of the brain are involved in a particular mental process.

• It is non-intrusive, and entirely passive

• Its temporal resolution enables causal

connections between continuous stimuli and responses

• It is scientifically robust

• It is fast

• It is low cost

• Consumers like it

• Recordings can be obtained in a naturalistic environment

MindSignNeuromarketing

slide4

Neuromarketing guru: Martin Lindstrom

Starting in 2004, Martin Lindstrom and Oxford University researchers began a $7 million study of more than 2,000 people. They studied brain activity when exposed to product placement, subliminal messages, brand logos, health and safety warnings, and provocative product packaging. Presented in his book, Buy-ology, Lindstrom argues that almost 90% of customer purchasing is driven by unconscious processing

Buy-ology Overview

Book Brief (6:36”)

Neuromarketing Conference

slide8

Eye Tracking

Heat mapping shows where the eyes are repeatedly drawn

Gaze plots shows the order of eye fixations to better identify search patterns

slide9

Bing

Google

So, what’s the big deal?

  • No differences on informational searching, but different on transactional searches (e.g., booking trip)
  • For sponsored links, ~42% for Bing and ~25% for Google
  • Bing’s related searches on left attracted 31% Ss during search, Google only 5% of related searches
  • Bing’s left categories got more attention (50% even selected them), than Google’s flyouts
slide10

http://www.sutherlandsurvey.com/Column_pages/Neuromarketing_whats_it_all_about.htmhttp://www.sutherlandsurvey.com/Column_pages/Neuromarketing_whats_it_all_about.htm

slide12

Order effect affects orders– so much for logic

  • A study by Alexander Felfernig et al., tested web buying behavior by presenting a series of tents in a different sequence to see which order was most effective. Each tent had unique characteristics.
  • What they found was that rather than sequencing, it was first in order that was most important. The first presented tent was chosen 2.5 times more often than any other.
  • Although people would always come up with some explanation of their choices, the first was preferred in any rearranged sequence.

http://www.futurelab.net/blogs/marketing-strategy-innovation/2009/09/order_effect_affects_orders.html

slide13

Hey, that feels good!:

The brain’s pleasure circuit

When a reward is anticipated or received a signal is sent to the Ventral Tegmental Area (VTA) that activates and releases dopamine to the nucleus accumbens, septum, amygdala, and prefrontal cortex.

When people are exposed to a stimulus (product, message, etc.,) the brain reacts spontaneously, usually outside our conscious awareness, and reflects our attentional and emotional predisposition

slide14

Purchase decision– weighing benefits and risks

Nucleus accumbens: part of the dopamine pleasure circuit involved in reward anticipation

  • Anterior Insula: associated with risk aversion; activation involves loss prediction, pain, anxiety, disgust;
  • A study at Carnegie Mellon University presented participants with $20 to spend on a range of 80 products that, if they bought any of them, would be shipped to them. If they made no purchases they would keep the money.
  • For each item the nucleus accumbens (anticipation of reward) and insula (anticipation of risk) were monitored ; the relative activity reflected the perceived gains and losses
  • The activation was a good predictor of actual purchases

Knutson, B., Rick, S., Wimmer, G. E., Prelec, D., & Loewenstein, G. (2007). Neural predictors of purchases. Neuron, 53(1), 147-156.

slide15

I feel your pain…but not as much as you do

In 2007 Sprint advertised a “special deal” for new customers. While this may have been attractive to new users, it angered and alienated their current loyal customers.

Paying $99 dollars rather than $250 set off the brain’s reward circuit for new customers, but conversely activated the pain circuits!

http://www.neurosciencemarketing.com/blog/articles/how-to-increase-customer-pain.htm

slide16

Mirror neurons: Monkey see, monkey do

(or, “you’re fine, how do I feel”)

  • Newborns as young as 72 hours old can imitate some facial expressions
  • A mirror neuron is a neuron which fires both when an animal performs an action and when the animal observes the same action performed by another
  • mirror neurons have been found in the premotor cortex (motor behavior) and the inferior parietal cortex (distinguishing self/other)
  • These appear to be involved in understanding intentions of others, empathy, predicting actions of others, and social bonding (e.g., “I want what you have…”)
slide17

Paul Slovik at the University of Oregon studied the emotional basis of donations

  • He presented Ss with pictures of sad and malnourished children with the result of each person, on average donating $2.50 to Save the Children
  • Alternately he provided Ss with considerable statistics about starving children– more than 3 million starve in Malawi, 11 million in Ethiopia, etc. However the donation was 50% lower
  • Statistics don’t activate our moral emotions

Animal Allies Ad

slide18

Thinking more and enjoying it less?

  • The average American spends 35 hours comparing automotive models before making up one’s mind
  • ApDijksterhuis at the University of Amsterdam had Ss choose the best car among four used cars rated on four categories, for a total of 16 bits of information (e.g., mileage, transmission, sound, handling, etc.). More than 50% chose the best car
  • Then he got four cars with 12 categories resulting in 48 separate pieces of information. The result was that Ss now chose the best car less than 25% of the time (focusing on variables that don’t matter?)
  • He developed a “complexity score” for a variety of consumer products. More time on decisions led to lower satisfaction; they did better when they thought less and responded to their emotions (unconscious preferences)

http://www.sciencemag.org/cgi/content/abstract/311/5763/1005

slide19

Sensory Branding: Makes scents…

  • In a 2005 study, researchers placed a lemon-scented cleaning fluid in a bucker of warm water hidden behind a barrier. Half of volunteers sat in the scented, and half in unscented room. They were asked what they planned to do that day
  • 36% of Ss in the scented room listed an activity related to cleaning, while only 11% did in the unscented room
  • Another group were given a messy crumbly cookie to eat . Hidden camera recorded those in the scented room were more fastidious.
  • None of the groups were aware of the influence of scent on their behavior.
  • Light floral scent was pumped into one room and not another where Nike running shoes were shown. 84% Ss preferred the same running shoes they’d seen in the floral room, and estimated that they were $10 more expensive
  • Grass fragrance was sprayed into a home improvement store. 49% of all customers surveyed before and later said the staff appeared to be more knowledgeable about the store’s products

Pepsi sensory branding ad

slide20

Does sex sell?

  • About 1/5 of ads uses overt sexual content to sell its products; it needs to be related to the product
  • Ss shown sexually suggestive ads are no better at recall of brand names & products (only about 10% of men and women) than Ss who have viewed unerotic ads
  • The sexual content sometimes actually eclipses the product & interferes with ad effectiveness
  • Sex in advertising does not sell as much as the controversy over it
  • Women felt more negative about extremely attractive models, and more positively about wholesome ones
  • Mirror neurons likely explain when the ads work
  • Twice as many people buy products related to “love” than to sex
  • As we become desensitized to sex, they will shift from explicit to subtle
slide21

Smile at your customer!

(and server)

  • Brief exposure to images of smiling or frowning faces for as short as 16 milliseconds
  • Ss did not consciously feel more positive or negative following the expressions, but…
  • Smiling doubled the amount of money people are willing to spend on a beverage (twice as much as for frowning).
  • They also poured significantly more drink from a pitcher and drank more

http://www.neurosciencemarketing.com/blog/articles/smiles-boost-sales.htm

slide22

Subliminal ads & the brain

  • In 1957 James Vicary started an outcry against manipulative advertising. He claimed to have increased sales of popcorn and Coca Cola by inserting frames with a message flashed so fast that viewers could not see it consciously, but were still influenced to buy.
  • Over 200 studies failed to replicate the study, and Vicary finally admitted that he fabricated the story.
  • Nonetheless, Vance Package with “Hidden Persuaders” book, and others, fed the concern
  • Subliminal promotions only seem to work when it is related to a person’s current needs and goal seeking. It may have a “priming effect” by making it easier for a person to notice other related cues.

Bush “rats” ad against Gore

slide23

Negative Political Ads– do they work, or are they just revolting?

Top 10 Negative Political Ads (video clips)

slide24

The study

  • 30 Ss, men & women, democrat & republican randomly assigned to 2 groups
  • Obama Treatment group watched 4 ads emphasizing hope & positive outcome from Obama, and four ads by McCain emphasizing fear & negative outcomes if Obama were elected.
  • McCain Treatment group– reverse of the above
  • Task: Ss had to identify the “real” Obama & McCain in the ads from look-alikes
  • Images were preceded by subliminal positive words (“leader, honest, winner”) and negative words (“Loser, risky, danger”), or neutral
  • If they had a positive view of a candidate the positive priming would facilitate facial recognition, while negative priming would inhibit recognition (and vice versa if they had a negative attitudes toward the candidate)
  • The real question was how much hope and fear appeals affected recognition and therefore micro-attitudes about candidates

Facial coding in presidential campaigns (2:53”)

slide25

Brain worms and sticky music: “I just can’t get you outta my mind”

  • Nearly 98% of people have had tunes stuck in their heads: lyrics stuck 74%, commercial jingles 15%, instrument tunes without words 11%
  • Episodes last over an hour and are frequent for 62% of young adults
  • They tend to irritate & annoy women more than men
  • Nonetheless, they tend to prime the brain for product recognition after we may have forgotten the source

Chili’s (Baby Back Ribs)

Who Let the Dogs Out?

We Will Rock You

Kit-Kat bar jingle

Mission Impossible Theme

YMCA

Whomp, There It Is

The Lion Sleeps Tonight

It’s a Small World After All

Head-on commercial

Head on revised

HTC commercial

http://www.business.uc.edu/earworms/

slide26

More activation

As expected, after viewing ads, Ss were more responsive to their preferred candidate, and less to the other. Also paid less attention to the “other” after viewing negative ads

Less activation

But…

Negative ads also subtlely diminished their responsiveness to their preferred candidate as well

http://lucidsystems.com/blog/2009/03/our-study-of-hope-and-fear-in-political-advertising-released/

slide27

How to pour a Guinness: How to change the emotional meaning of an act

  • In the early 1990s Guinness was facing losses in pubs because customers did not want to wait 10 minutes for the beer head to settle.
  • The company redefined the inconvenience:
    • “Good things come to those who wait”
    • It takes 119.23 seconds to pour the perfect pint”
    • Commercials showing the “right” way to pour
    • “We don’t want just anyone putting liquid in a glass”
slide28

With all these adverse ad campaigns, why have global consumers continued to smoke over 5.7 trillion cigarettes annually?

  • About a third of males smoke globally
  • 15 billion cigarettes sold daily (10m a minute)
  • Smoking related diseases affect 438,000 Americans annually
slide29

However, the unbranded images (e.g. cowboy) activated more cravings among smokers than the branded images (e.g. cigarette packs).

The brain scans revealed increased brain activity when exposed to cigarette packs as well as the Western imagery in a small region of the brain called the nucleus accumbens, which controls pleasures and addictions.

When people aren’t consciously aware they are being exposed to advertising message, they let their guard down.

slide30

Cigarette warnings, no matter how gruesome, actually stimulated the nucleus accumbens (“Craving spot”)

  • Overt, direct, visually explicit antismoking messages did more to encourage smoking than any commercial promoting smoking could have
  • Subsequent studies with subliminal images only related to cigarette commercials elicited the same responses as the actual commercials
  • In 1997 a British tobacco brand, Silk Cut, was portrayed against a purple silk background in every ad. Following an advertising ban, billboards only showed a logo-free swath of purple silk. 98% of consumers identified the BB related to Silk Cut although the could not say why
slide31

In 2004 P. Read Montague of Baylor College of Medicine conducted a fMRI on 67 people repeating the Coke Pepsi Blind Taste Test.

  • Following tasting of each drink, the reward or pleasure centers of both groups of subjects lit up and showed about equal preference for the two brands
  • When the test was repeated and participants were told which brand they were drinking, 3 out of 4 said they preferred Coke over Pepsi.
  • In addition to the pleasure centers, the memory regions of the medial prefrontal and hippocampus showed broad association to Coke
  • Experience with ads, images and experiences with Coke were so powerful that the associations and memories overrode the actual taste of Pepsi…again.
slide32

Last 2 digits of SSN: ____

Cordless Keyboard

Popular Design Book

Cordless Trackball

SSN$ _____

Yes / No

Bid _____

SSN$ _____

Yes / No

Bid _____

SSN$ _____

Yes / No

Bid _____

1996 Hermitage Jaboulet La Chapelle. “92-point rating from Wine Advocate, Finest La Chapelle since 1990, only 8,100 cases made”

1998 Cotes du Rhone. “Received 86 points from Wine Spectator, flavor of red berry, mocha, and black chocolate; medium bodied, medium intensity, nicely balanced red”

1 lb box Belgian Chocolates by Neuhaus

SSN$ _____

Yes / No

Bid _____

SSN$ _____

Yes / No

Bid _____

SSN$ _____

Yes / No

Bid _____

slide34

Once people are willing to pay a certain price for one product, their willingness to pay for other items in the same category is judged relative to the first price (anchor) (e.g., pay more for keyboard than trackball).

  • Initial prices are arbitrary and can be influenced by responses to random questions. But once established in our minds, they shape what we are willing to pay for an item and related items.
  • Implication: What is the purpose of manufacturer’s suggested retail price (MSRP) for cars, lawnmowers, and coffeemakers, or real estate’s statements on local housing prices?
  • Just a price tag is not an anchor– but if we buy or seriously think about buying, the decision becomes out anchor for that category.
  • Example: people who move from one city to another remain anchored to the prices they paid in the former city. They don’t adjust their spending to fit the new market.

Ariely, D. (2008) Predictably irrational. Harper Collins, New York.

slide35

Iowa Gambling Task:

The brain knows before you do

Task: Choose a card to win game money. Decks vary in payoff: some pay constant low reward, while others pay high but also have large penalty.

  • People have to turn over about 50 cards before they switch to a profitable deck
  • It took up to 80 cards for people to be able to explain why certain decks were favored
  • Physiological monitoring showed that Ss showed signs of tension after only 10 cards, when they unconsciously began noticing “bad” decks.
  • With increasing failure the dopamine levels began to drop

http://www.millisecond.com/download/samples/v3/IowaGamblingTask/default.aspx

slide36

“What I tell you three times is true” (Lewis Carroll)

The Frequency-Validity Effect

  • If false information is repeated often enough, we begin to believe it
  • Over time when people remember the core piece of information but not the details, they tend to think of it as true
  • If repeated false information goes unchallenged, be finally accept hearing it and therefore become primed to accept it
  • The more we hear it, the more we think there must be something to it
  • It tends to be most effective for positive points, when brief, with periods of delay, and strongest for the first 10 exposures

(Brown & Nix, 1996)

slide37

So what?...

  • Popularity of brain research applications in many fields is growing rapidly
  • There is some interesting evidence of brain processes reflecting consumer behavior
  • Some critics strongly question the evidence, accuracy, and methodology
  • Ethical issues are just beginning to emerge
  • Competition will continue to drive exploration of methods that may provide advantage
  • Promotion of neuromarketing has become a promotable business in itself
slide38

Current Status

  • Advertising Research Foundation (ARF) NeuroStandards Collaboration Project conducted an examination of several methods. It concluded that more research is needed; that while there are important insights, results are not definitive.
    • As a business, it may engage science to adopt it
    • It must be simpler & reduce “noise”
    • Its quantitative and qualitative methods must be combined with other methods
    • Utility will be based on broad samples and populations (may not be as applicable for individuals)
    • Combining methods of monitoring may be more useful and accurate

Stop Neuromarketing! (7:34”)

Beware Neurobunk(11:18”)

Review of the conference

slide39

The Ethics of Neuromarketing

  • Private research that promotes NM does not require peer review, results are proprietary, results are usually framed in ROI not comprehensive, and promises exceed evidence.
  • Should marketers have access to our unconscious minds?
  • Should the technologies be restricted to adult consumers?
  • Should businesses be required to disclose use?
  • Would you use NM? Why or why not?
  • How can businesses be protected from faulty claims and large expenditures of money?