Neuromarketing: The Science of Decision Making

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Illustration by Olimpia Zagnoli

Illustration by Olimpia Zagnoli

By Andrew Myers

Combine the tools of the brain scientist with those of the academic marketing researcher. The result is a relatively new field that seeks to fathom the subconscious motivations behind consumer choices.

In a familiar scene that might have played out in any neighborhood wine tasting, a handful of people, one by one, sipped wines and talked about what they thought of their experiences. This wine tasting, however, was a little different. It didn’t happen in a neighborhood bodega or upscale restaurant but in a neuroscience lab. Each taster was ensconced in a brain scanner, and the researchers were studying which regions of the brain became active when the tasters sipped and talked about the wines.

The hosts were careful not to prejudice the tasters. The labels were removed. Each wine was identified simply by price per bottle. In all, there were five wines ranging in cost from $5 to $90 per bottle. The researchers, however, were not the least bit interested in the tasters’ opinions of the wines but instead in how price influenced their perceptions. Unbeknownst to the tasters, the $5 and $45 wines and the $10 and $90 wines were identical.

The results would not surprise anyone who has ever traipsed through Tiffany’s or window-shopped the boutiques of New York. The researchers found that as the prices increased, so, too, did the consumers’ enjoyment of the wine. More intriguingly, they discovered why.  They noted a particular increase in brain activity in an area of the brain known as the medial orbitofrontal cortex, where pleasure is processed.

A Discipline Emerges

These wine tasters were part of a now well-known academic study conducted in 2008 by researchers from the California Institute of Technology and the Stanford Graduate School of Business. The researchers were working in the then relatively new field of neuromarketing – traditional marketing studies of consumer decision making and behavior, enhanced by the insights of neuroscience.

“We want to understand how the human organism makes decisions – consciously and subconsciously. What stimuli they respond to – whether it’s a reward, to avoid risk, to seek a thrill, and so forth.”

—Dipankar Chakravarti, research professor, Carey business School

Neuromarketing enables researchers to see which areas of the brain are active as consumers encounter product designs, packaging, advertising, and more.

“Human behavior works by thought and gut-level emotions. Sometimes it’s automatic. Other times it’s very deliberative. We want to understand how the human organism makes decisions – consciously and subconsciously. What stimuli they respond to – whether it’s a reward, to avoid risk, to seek a thrill, and so forth,” says Dipankar Chakravarti, a research professor at the Johns Hopkins Carey Business School and an expert in marketing and consumer behavior. “Neuroscience can help us do that on a level never before possible.”

Chakravarti is among the growing number of business academicians in the vanguard of neuromarketing, a field entering its second decade. It began with a 2005 paper titled “Decision Neuroscience” in the journal Marketing Letters. That paper, in turn, grew out of a 2003 discussion – among Chakravarti, neuroscientist Antoine Bechara of the University of Southern California, and Baba Shiv of the Stanford Graduate School of Business – in which they explored the potential, the techniques, and the risks inherent in applying neuroscience to marketing.

The paper laid out a research agenda for the then emerging field of study of the neuro-science of consumer decision making. It was penned by a handful of noted business academicians from across the globe, including Shiv and Bechara. In what now appears to be an understatement, the authors alerted colleagues that “the exponential accumulation of knowledge in neuroscience can potentially enrich research on decision making.”

Marketing researchers have long used biofeedback in their studies, ranging from heart and breathing rates to galvanic skin response to brain waves. The goal has always been to get to the subconscious motivations behind consumer decisions.

Only relatively recently, however, has the technology begun to match the potential, and business schools have gone all-in, investing heavily in the hiring of faculty and the training of doctoral students. As of 2013, approximately 30 business schools had faculty working in neuromarketing. For a field that didn’t exist 10 years earlier, that showed a remarkable rate of growth.

Among the most promising tools available to researchers today is functional magnetic resonance imaging, or fMRI. This is the same technology that researchers in fields from oncology to orthopedics have used since the early 1980s to take images inside the body. But fMRI does so with a twist. In 1990, physicist Seiji Ogawa discovered that large magnets affect oxygen-rich blood differently than they do oxygen-poor blood – by as much as 20 percent.

This contrast, and the understanding that the flow of oxygen-rich blood is greatest to the regions of the brain in highest use, lets neuroscience researchers see which parts of the brain are most active at any given time. (These days, it is not uncommon to see colorfully illustrated cross-sections of the brain indicating areas of greatest blood flow. The colors are not real; the brain doesn’t literally light up, as Chakravarti explains. The colors are artists’ renderings done after the fact to help illustrate where blood is flowing.)

While fMRI has proved a boon to psychology and neurology, it was not long before it became a powerful tool in the hands of academic researchers in business schools. Where once fMRI was strictly the province of medical schools and neuroscience departments, many business schools now have access to fMRI machines.

“The machines can run $1 million or more, and a single scan session of a customer can cost $600 to $700, making neuromarketing tests rather expensive,” according to Chakravarti, “but those costs are coming down to more reasonable levels.”

fMRI is not the only type of brain imaging to be used in neuromarketing, however. Phillip Phan, a professor and executive vice dean at the Carey School, and Dean Wong, a professor at Carey as well as at JHU’s School of Medicine, are using positron emission tomography (PET) scanners to study dopamine circuits and the propensity among entrepreneurs for risk taking.

Surprising Studies

“Neuromarketing works best where people can’t articulate very well why they feel or act a certain way. Neuroimaging can help us infer what’s going on in the brain and can help us predict which ads will work better or which product is more likely to sell better,” says Carolyn Yoon, an associate professor of marketing at the Stephen M. Ross School of Business at the University of Michigan and a noted expert in neuromarketing.

Among Yoon’s many published papers, her 2006 precedent-setting study used fMRI to show that the brain does not see products and people similarly – contrary to theories long in favor among academicians and professional brand managers. Yoon showed that the brain processes people in an area of the brain known as the medial prefrontal cortex, while responses to products occur in the left inferior prefrontal cortex, an area known for object processing.

“People talk about brands like they are people, as if they have a personality, but our brain imaging shows us that people aren’t really seeing brands as personalities. We may need to rethink the metaphor,” Yoon says.

In the years since Yoon’s 2006 study, numerous studies have led to some surprising findings about how and why people make judgments about products, brands, advertising, and even other people.

Among those at the vanguard is Angelika Dimoka, an associate professor and director of the Center for Neural Decision Making at Temple University’s Fox School of Business. She is using all of the tools of neuromarketing – traditional consumer surveys, eye tracking, EEG, heart rate, fMRI, and others – to study how advertising affects consumers’ purchasing decisions. She and her team have been able to show how a particular area of the brain, known as the ventral striatum (see page 15), can affect the likelihood that someone will purchase an advertised product.

“People talk about brands like they are people, as if they have a personality, but our brain imaging shows us that people aren’t really seeing brands as personalities. We may need to rethink the metaphor.”

—Carolyn Yoon, associate professor of marketing, Stephen M. Ross School of Business, University of Michigan

The ventral striatum is very active when humans win or anticipate rewards, and neuroscientists can now tie this activity to an increased likelihood that a consumer will purchase an advertised product. It is this sort of promise, Dimoka says, that has a lot of neuroscientists focusing on the ventral striatum.

The next major step for the field will be to generalize the data from a few isolated studies to the broader population of consumers.

“We’ve built up a good base of knowledge and data from what is a relatively small sample of people, and we need to ask: Does the neuroscience apply to larger groups?” Yoon says.

Toward that end, Professor Greg Berns and economics research specialist Sara Moore, both of Emory University, were able to show how the neural signals of a small group could predict the popularity of particular songs. Berns and Moore’s 2010 study was the first to apply the neuroscience of a small sample to the behaviors of a wider population.

“Many people worry that we are trying to find the consumer’s ‘buy button’—the key to making people actually go out and purchase something that they don’t want—but that’s not accurate. We want companies to take these findings and make their marketing more selective and to be more targeted with their advertising, so they work better.”

—Angelika Dimoka, associate professor and director of the Center for Neural Decision Making, Temple University’s Fox School of Business

Berns and Moore played 15-second snippets of music to a group of teenagers and used fMRI to measure their brain activity. Surprisingly, the researchers found that the teens’ own subjective reporting on how much or little they liked a given song – “It had a good beat and I could dance to it” – was not good at predicting sales. Activity in the ventral striatum, however, was predictive of future success.

“Many people worry that we are trying to find the consumer’s ‘buy button’ – the key to making people actually go out and purchase something that they don’t want – but that’s not accurate,” says Dimoka. “We want companies to take these findings and make their marketing more selective and to be more targeted with their advertising, so they work better.”

The merging of brain science and marketing research could also be put to more altruistic uses. Consider the work of Susan Carnell, an assistant professor of psychiatry and behavioral sciences at the Johns Hopkins School of Medicine, who is exploring the neurobehavioral basis of obesity in children. One of her funded projects uses neuroimaging to examine whether children who are obese demonstrate greater food-related reward sensitivity and poorer food-related self-regulation at a neural level. “Findings from such studies,” the Carey School’s Chakravarti says, “will inform the design of marketing and policy interventions designed to address the global epidemic of childhood obesity.”

Capitalizing on the Promise

Neuromarketing studies do not necessarily have to be product- or brand-related but can delve into management decisions and interpersonal relationships as well, Chakravarti says. There is a growing body of neuroscience of important business-related factors such as trust, deception, racial and gender bias, sensory stimuli, and the brain’s reward systems.

Chakravarti points to a particularly intriguing study looking at the neuroscience of negotiation. It is a common belief that a smile would be a good thing in a negotiation, helping to build camaraderie and trust, he says.

“In an adversarial setting such as a negotiation, however, this study found that a smile takes on a different meaning, leading one party to think the other is winning at his or her expense – completely opposite of what you might assume,” he explains. “These are things that neuroscience can tell us that we can’t get from paper and pencil tests.”

While neuromarketing began in academic circles, it soon spawned a number of businesses looking to capitalize on the promise. The Nielsen Company, well known for its television ratings that underpin billions in advertising expenditures every year, made headlines in 2011 when it purchased NeuroFocus, a neuromarketing company.

Nielsen quickly rebranded NeuroFocus as its “Consumer Neuroscience” division and promoted NeuroFocus’s founder, A.K. Pradeep, to the role of “Chief Provocateur.” Pradeep has since become a fixture on the lecture circuit and is the author of the best-seller The Buying Brain: Secrets for Selling to the Subconscious Mind.

Nielsen’s website says that the division uses “eye-tracking monitors” and a “non-invasive cap” to measure electroencephalographs (EEGs) of brainwave activity. From this flood of data, it divines valuable marketing insights. Nielsen’s website promises: “Together, these technologies identify areas of focus and people’s precise responses to them, providing an unparalleled understanding of how consumers perceive your marketing material.”

By all appearances, many companies are increasingly paying attention to the gurus of neuromarketing. Nielsen now boasts a client list drawn from the biggest and best-known names among the Fortune 100.

21st-Century Cartographers

The lofty promises of some commercial neuromarketers have led to claims of charlatanism as well as to ethical concerns about how the insights will be used. While neuromarketing can help brands and products better appeal to their customers, it could just as easily raise the specter of manipulation.

Accordingly, a healthy skepticism exists, both about how the neuromarketing insights will be used and about how much of an inference can be drawn from the data that the research is generating. EEGs, for instance, are limited in what they can show us, Yoon says.

“EEGs are very fast. They can tell us, to the millisecond, when the brain is active, but not what parts of the brain are active exactly. fMRI, on the other hand, is very good at spatial analysis – it can tell us very specifically which parts of the brain are active,” she says.

Nonetheless, Yoon says, “neuromarketing has a place in the commercial space. I’m not that worried about the potential charlatans. The firms that oversell and don’t deliver won’t make it. The market will take care of that.”

Indeed, for many in the field and beyond, the question of whether neuroscience will play a part in the future of marketing is no longer in doubt. The insights are too intriguing, and the payoffs too great, for the field to dissipate.

Chakravarti likens neuromarketing to a sort of 21st-century cartography. We are mapping the brain to help us understand how and why consumers decide what products they will buy, he says. The data gathered should then be used in a focused way to help businesses determine how to position their products and execute their advertising.

“No one is talking about designing a perfect ‘neuroscience pizza,’ where our brains are stimulated in just the right way to manipulate us to buy. We now have some of the best minds in the field working on these questions, and the opportunity for expanding our knowledge is great, not just to improve marketing effectiveness and efficiency but even neuroscience itself,” Chakravarti says.

“I’m actually quite optimistic about the future of the field,” Yoon says. “The questions we ask will get better, and so will the methods. This is not a passing fad.

 


Mapping Emotion and Desire

iStock_000020351273MediumThere can be no doubt that emotions are closely tied to consumer behavior. Emotions, in turn, are driven by all sorts of external stimuli. The things we see, smell, hear, taste, and touch all feed into how we feel at any given moment.

“Neuromarketers are mapping strong relationships between places in the brain where activity is occurring and what consumers are experiencing and how they are thinking.”

—Dipankar Chakravarti, research professor, Carey business School

Neuromarketers are working to map where in the brain these stimuli get processed into behavior. One area of great interest is the amygdala, a small, almond-shaped nugget buried deep within the brain (red shape at right). The amygdala is the heart of our most instinctual human arousal and response systems.

“All emotions – those behaviors most closely tied to the subconscious – seem to be rooted in the amygdala,” says Professor Dipankar Chakravarti of the Carey Business School. “Neuromarketers are mapping strong relationships between places in the brain where activity is occurring and what consumers are experiencing and how they are thinking.”

Desire, on the other hand, appears to be seated elsewhere, particularly in the ventromedial prefrontal cortex and ventral striatum. The ventromedial prefrontal cortex has been linked to the human willingness to pay for branded products, while the ventral striatum plays a key role in the anticipation and processing of rewards. The ventral striatum is key to wanting – the degree to which consumers are motivated to obtain certain rewards.

Neuromarketers can use these understandings to advance our knowledge of consumer behavior. Studies, like those of Greg Berns and Sara Moore of Emory, Angelika Dimoka of Temple, and others, have identified activity in the ventral striatum, particularly during product evaluation, as “the strongest predictor” of future sales.

“The ventral striatum can very accurately tell us which advertisement will be successful,” Dimoka says. “We can actually predict sales, based on activity in this part of the brain.”

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