Insights – Branding and Neuromarketing

Top 10 Global Brands 2013 Position Brand Value $million 1 Apple 98.3 2 Google 93.2 3 Coca Cola 79.2 4 IBM 78.8 5 Microsoft 59.5 6 GE 46.9 7 McDonalds 41.9 8 Samsung 39.6 9 Intel 37.2 10 Toyota 35.3 Interbrand 2013 judged on 3 criteria: the financial performance of the branded products or service; the role the brand plays in influencing consumer choice; the strength the brand has to command a premium price, or secure earnings for the company. September 18

What the Top 10 have These companies do not just offer quality commodities which service a real need and give us a benefit, but they offer “emotional” products which build relationships and create real attachment and engagement with their consumers, by creating a unique “experience”. …At Apple - consumers don’t just buy computers, they buy Appleness….”complexity made simple”. …At McDonalds – we don’t just buy a hamburger, we buy a “quality, service, cleanliness, and value” experience. September 18

“Marketing battles take place in the mind of a consumer or prospect “Marketing battles take place in the mind of a consumer or prospect. That's where you win. That's where you lose.” Jack Trout consultant September 18

Bit of history - Descartes “Error” Descartes 1637 – I think therefore I am! Separation of mind and body, rationality and emotion. Damasio 1994 – The Iowa Gambling Task – Emotions guide (or bias) behaviour and decision-making, and rationality requires emotional input. September 18

The Pepsi Challenge 2004 Two sets of people were tested: one given Coke and Pepsi to taste without knowing which brand they were drinking. The second set were told before tasting which brand they were drinking. First set 50% said they preferred Coke. Second set 75% said they preferred Coke - the MRI scan showed increased activity in the part of the brain associated with positive value judgements. For the 75% there was also increased brain activity in parts of the brain associated with high level cognitive powers and memory. September 18

Neuromarketing - Marketing through Science Neuromarketing was coined in 2002 by Ale Smidts … only 11 years ago! Uses sophisticated tools and techniques (fMRI, EEG, GSR) to measure changes in activity in parts of the brain and delves into biometrics to measure changes in physiological state (heart rate) to learn why consumers make the decisions they do and what part of the brain is telling them to do it. Fast becoming multi-disciplinary – blend of psychology, biology, economics, medicine and neuroscience. Google has invested in its own laboratories to conduct company-specific market research. September 18

Example - fMRI Scans showing activity Plassmann, H., et al., Branding the brain: A critical review and outlook Journal of Consumer Psychology (2012), doi:10.1016/ j.jcps.2011.11.010 September 18

The many brain systems which have been implicated in brand preference Prominent brain areas involved in brand decisions.Abbreviations used:ACC = anterior cingulate cortex; dlPFC = dorsolateral prefrontal cortex; lOFC = lateral orbitofrontal cortex; mOFC = medial orbitofrontal cortex; NAcc = nucleus accumbens; vmPFC = ventromedial prefrontal cortex; VS = ventral striatum. Plassmann, H., et al., Branding the brain: A critical review and outlook Journal of Consumer Psychology (2012), doi:10.1016/ j.jcps.2011.11.010. September 18

Proponents of Neuromarketing Company Application Proctor and Gamble Launching of Febreeze room freshener Motorola Product design Delta Airline To learn what would make a fabulous experience Hyundai Changing the exterior appearance of the car Frito Lay (Pepsi) To test commercials products and packages and to learn more about appealing to women Yahoo To test pre-release effectiveness of its branding campaign Paypal/ebay To test speed and security issues of e-shopping Microsoft To know engagement of Xbox users while playing the game, including their feelings of surprise, satisfaction and frustration Buick Motors In enhancing dealers’ experience with customers - Increased sales from 9% to 40% Google To measure effectiveness of YouTube overlays versus prerolls and found that overlays were much more effective with subjects September 18

Case study Campbell soup 2005 2013 September 18

A framework for brand decision making Value signals important for brand decisions, Plassmann, H., et al., Branding the brain: A critical review and outlook Journal of Consumer Psychology (2012), doi:10.1016/ j.jcps.2011.11.010. September 18

Implications from neuromarketing studies Good for service Industries and testing abstract ideas. Widened definition of branding and helps us understand the levers required for brand success. Confirmed context and location important for advertisers. Confirmed packaging and display positioning important. Emotional arousal important throughout but particularly at the identification stage. Staged marketing techniques required. Repeated communications necessary to reinforce thinking for both current and prospective consumers. It has huge implications for the marketing industry regarding recruitment and research. September 18

Summary Verified much of our existing knowledge but it enables us to gain insight into how consumers operate subconsciously and the emotions they generate in decision making, offering huge potential for marketers. Its potential stems from the fact that it may make it possible to predict behaviour in a more accurate way than through traditional methods. Likely to become a standard tool in the researchers toolkit. Integrating disciplines and approaches can be no bad thing but currently it is costly and invasive so limited in reach. Whether it will become a substitute for talking to real people remains to be seen. Limitations – small scale studies on individuals, neglects wider effects of social influence and culture. September 18