Challenges of Traditional Market Research - Neuromarketing Overview
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Neuromarketing: The Future of Better Communications Today’s Market Research Challenges Diana Lucaci, Founder & CEO www.trueimpact.ca| True Impact | @dianalucaci Canadian Chair, Neuromarketing Science and Business Association “I know that half the money I spend on advertising is wasted, I just do not know which half.” John Wanamaker (1876) Are You a Savvy Decision Maker? True or False Spectacularly bad decisions get a lot of media attention, but in fact most decisions that companies make every day are sound ones. Results: False. Research shows that 50% of all decisions managers make go wrong in one way or another. Executives in most companies are so wary of failure that they rely heavily on decision-making methods that have been proven to work in the past. Results: False. Nutt has found that "decision-makers are prone to using tactics with poor track records, applying them in two-thirds of their decisions.” Adapted from Why Decisions Fail: Avoiding the Traps and Blunders that Lead to Debacles, by Paul C. Nutt. Decision-making is complex and not always rational or practical. Emotions are Stronger than Rationality Decision making involves multiple areas of the brain, most of which are subconscious or emotional. For example, the amygdala is an important structure in assigning emotional meaning, such as joy or sadness. What Are You Really Buying? Top 3 Challenges of Traditional Market Research 1. People will not or cannot say what they feel. Data collected is expressive (spoken) hence subjective. Analysis based on subjective data is anecdotal. Top 3 Challenges of Traditional Market Research 2. Conducting traditional market research is time consuming. Devising the right questions takes a long time. Risk to not address business problem because the wrong questions was asked. Top 3 Challenges of Traditional Market Research 3. Failure to apply findings to corporate environment. Failure to think strategically. Data providers vs strategy advisors. Why Does it Matter? Competitive Marketing landscape. Impulse buying, confusion in marketplace. Conventional marketing is disruptive. Shift to digital, inbound marketing. Marketing & Advertising need better tools. De-clutter – Simplify messaging and visuals. Differentiate – Sharp contrast against competition. Build brands – Brands are shortcuts to reward. Adapted from Gemma Calvert, Neurosense, Chair of Applied Neuroimaging, University of Warwick. Future of Neuromarketing Deloitte predicts that the marketing and advertising industry will likely have brains on the brain for 2012. (Source: Deloitte TMT Predictions 2012) About True Impact True Impact provides Neuromarketing research and strategy, to solve Marketing and Advertising challenges. Learn more at www.trueimpact.ca
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Challenges of Traditional Market Research - Neuromarketing Overview
- 1. Neuromarketing: The Future of Better Communications Market Research Challenges Diana Lucaci, Founder & CEO www.trueimpact.ca| True Impact | @dianalucaci Canadian Chair, Neuromarketing Science and Business Association
- 2. “I know that half the money I spend on advertising is wasted, I just do not know which half.” John Wanamaker (1876) Still having this problem today? Time for a better way to understand your customers. 2 www.trueimpact.ca
- 3. Are You a Savvy Decision Maker? True or False Spectacularly bad decisions get a lot of media attention, but in fact most decisions that companies make every day are sound ones. Executives in most companies are so wary of failure that they rely heavily on decision-making methods that have been proven to work in the past. Adapted from Why Decisions Fail: Avoiding the Traps and Blunders that Lead to Debacles, by Paul C. Nutt. 3 www.trueimpact.ca
- 4. Are You a Savvy Decision Maker? True or False Spectacularly bad decisions get a lot of media attention, but in fact most decisions that companies make every day are sound ones. False. Research shows that 50% of all decisions managers make go wrong in one way or another. Executives in most companies are so wary of failure that they rely heavily on decision-making methods that have been proven to work in the past. False. Decision-makers are prone to using tactics with poor track records, applying them in two-thirds of their decisions. Adapted from Why Decisions Fail: Avoiding the Traps and Blunders that Lead to Debacles, by Paul C. Nutt. 4 www.trueimpact.ca
- 5. Decision-making is complex and not always rational or practical. 5
- 6. Emotions are Stronger than Rationality Decision making involves multiple areas of the brain, most of which are subconscious or emotional. For example, the amygdala is an important structure in assigning emotional meaning, such as joy or sadness. 95% of cognition exists in the subconscious mind*, therefore emotions are the drivers of decision making. * How Customers Think: Essential Insights into the Mind of the Market, Gerald Zaltman 6 www.trueimpact.ca
- 7. What Are You Really Buying? Old Paradigm 4Ps - price, product, promotion, and place. New paradigm Emotions determine the experience, influence future loyalty and customer lifetime value. Measuring emotion is key to customer understanding. So, let’s measure emotions! Wait. Even with surveys and focus group, 80% of new products still fail. Why is that? 7 www.trueimpact.ca
- 8. Top 3 Challenges of Traditional Market Research 1. People will not or cannot say what they feel. Data collected is expressive (spoken) hence subjective. Analysis based on subjective data is anecdotal. Super awesome! Awesome! Kind of awesome. 8 www.trueimpact.ca
- 9. Top 3 Challenges of Traditional Market Research 2. Conducting traditional market research is time consuming. Devising the right questions takes a long time. Risk to not address business problem because the wrong questions was asked. 9 www.trueimpact.ca
- 10. Top 3 Challenges of Traditional Market Research 3. Failure to apply findings to corporate environment. Failure to think strategically. Data providers vs strategy advisors. With better market research, you will know which half of your advertising money is working. 10 www.trueimpact.ca
- 11. Why Does it Matter? Competitive Marketing landscape. Impulse buying, confusion in marketplace. Conventional marketing is disruptive. Shift to digital, inbound marketing. Marketing & Advertising need better tools. De-clutter – Simplify messaging and visuals. Differentiate – Sharp contrast against competition. Build brands – Brands are shortcuts to reward. Adapted from Gemma Calvert, Neurosense, Chair of Applied Neuroimaging, University of Warwick. 11 www.trueimpact.ca
- 12. Neuromarketing Explained Neuroscience Neuromarketing Marketing Neuromarketing is a new form of market research, that uses Neuroscience tools to measure the emotional impact of communication across all media, and translate the findings into actionable Marketing recommendations. 12 www.trueimpact.ca
- 13. One Way to Look at It… Neuromarketing Research – Measures Traditional Market Research Emotions as They Happen. People don’t say what they think. Brain imaging metrics, with no questions Time consuming exercise, prone to error. asked. Lack of actionable, corporate insights. Quick turnaround and no chance of asking the wrong question. Neuromarketing Strategy expertise for better corporate direction. Neuromarketing can also be employed to validate traditional market research. 13 www.trueimpact.ca
- 14. Neuromarketing for Better Decision Making Identifying the right communication is easy with brain imaging data from Neuromarketing research. The ad campaign that created the greatest activity in a certain brain region, generated significantly more calls to a stop-smoking hotline. (Source: Sage Journals, 2012) 14 www.trueimpact.ca
- 15. Future of Neuromarketing Deloitte predicts that the marketing and advertising industry will likely have brains on the brain for 2012. (Source: Deloitte TMT Predictions 2012) 15 www.trueimpact.ca
- 16. About True Impact Marketing challenges. Better For example, what do communications customers really want? campaigns! Neuromarketing Process Neuromarketing Neuromarketing research Strategy & measures evoked emotion, Recommendations. attention and memory. Data collection and analysis. 16 www.trueimpact.ca
- 17. About True Impact True Impact provides Neuromarketing research and strategy, to solve Marketing and Advertising challenges. Technologies: fMRI, EEG, eye-tracking Learn more at www.trueimpact.ca True Impact Neuromarketing Research and Strategy Toronto, Canada 17 www.trueimpact.ca
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- Quiz, adapted from Why Decisions Fail: Avoiding the Traps and Blunders that Lead to Debacles (Berrett-Koehler, $22.95), by Paul C. Nutt. The author, who teaches management at the Fisher College of Business at Ohio State University, analyzed 400 decisions in U.S. companies over 20 years to see which ones didn't work out and what went wrong. Answer "true" or "false" to each of the following questions.Results: False. Research shows that 50% of all decisions managers make go wrong in one way or another. Results: False. Nutt has found that "decision-makers are prone to using tactics with poor track records, applying them in two-thirds of their decisions."
- Quiz, adapted from Why Decisions Fail: Avoiding the Traps and Blunders that Lead to Debacles (Berrett-Koehler, $22.95), by Paul C. Nutt. The author, who teaches management at the Fisher College of Business at Ohio State University, analyzed 400 decisions in U.S. companies over 20 years to see which ones didn't work out and what went wrong. Answer "true" or "false" to each of the following questions.Results: False. Research shows that 50% of all decisions managers make go wrong in one way or another. Results: False. Nutt has found that "decision-makers are prone to using tactics with poor track records, applying them in two-thirds of their decisions."
- What effect do our emotions and feelings have on our daily lives? Emotions assign value to objects, aid the learning of how to obtain those objects, and provide the motivation for doing so (Gifford, 2002).Emotions are not just the shady side of reason, they help us reach decision. Emotions prioritize certain goals, mobilize energy and give direction to behaviour.Approach or avoidance.Triggers changes in arterial blood pressure, heart rate.Secrete adrenalin to mobilize the organism, or other hormonesStrong link between emotion and motivation.Emotions are stronger than rationalityWe need to learn how to deal with situations when they arise and this is where emotional learning comes into play. Previously formed emotional memories of a positive and negative nature will guide us to fulfil our needs. Emotional learning is so quick and impactful, that more often than not, it bypasses rational arguments. So if a situation occurs in which we are used to dealing with in one way, our brain will keep forcing this solution onto us. Logically speaking, it may not be the most optimum solution to a situation, however somehow we just cannot resist doing the same as we have always done. These patterns of behaviour are hard to break, unless the associations within the brain are altered by stimuli that will lay down new emotional experience. The more frequently an action is performed, the stronger the associations within the brain. This explains for example addictive behaviour that is usually quoted beyond physiological addiction and it’s true for everything from smoking to eating chocolate. We know it ́s not healthy, but given a stressful situation our brain will still jolt us into wanting to go out for a cigarette to relieve the stress, not because this is necessarily the best solution for stress relief, but because this is the way a smoker has relieved stress everyday for say 20 years.
- To get a business audience engaged marketers need persuasive content that appeals first to emotion, then logic. Further evidence comes from studying patients with damage to certain regions of their frontal lobe. They can still reason logically, but because they have lost the ability to feel emotion, their decision-making ability is flawed. Other evidence from neuroscience highlights the importance of subconscious and memorable moments. Even when people cannot remember how they made a decision, they like to say they made the logical decision. However, evidence says it is not all logical and the subconscious is critical. Walden noted that the subconscious processes 200,000 times more information than the conscious mind and processes emotions about 10 times faster than the conscious mind., feeling wowed by the experience, having that feeling embedded in memory, and creating the emotional connection that makes the customer want to return and stay with that company in the long term—in effect, creating loyalty.“Recent research in neuroscience, behavioral economics, and psychology reveals that consumers’ decisions are driven as much by gut instinct as considered thought, but how can marketers understand something as nebulous as gut feel?While conventional market research uses powerful techniques such as surveys, interviews, and group discussions, O’Connell said “neuroscience is beginning to offer some new possibilities” in helping marketers understand decision-making drivers that are based more on intuition than on reasoning or analysis. Neuroscience techniques, such as brain scanning and eye tracking, measure people’s responses indirectly rather than directly. O’Connell gave an overview of neuroscience, its adaptation and value to market research, specific techniques, and examples of applications. She concluded that while neuroscience methods are a useful addition to conventional market research methods, greater insight can be achieved into consumers’ responses to brands and marketing when both types of approaches are combined.O’Connell cited social scientist Barry Schwartz, author of The Paradox of Choice: Why More is Less, who argues that the large number of choices available to consumers today can cause anxiety and bring about “decision paralysis.”For example, O’Connell said, a gourmet grocery introducing a new line of jam set up a table with 24 varieties of jam, and offered samples. While 60% of the customers stopped and tasted the jams, only 3% of them actually made purchases. The next day, the grocery set up the table with only six varieties, and while only 40% of the customers stopped, 30% of them actually bought.“Choosing which of 24 varieties to buy seemed to be too daunting a task,” said O’Connell. “Whereas selecting from six was a much more manageable choice.”80% of new products brought to market fail, largely due to failures in traditional techniques", Rob Stevens, Bunnyfoot."I can't think of any other area of business where such a failure rate would be considered acceptable, yet somehow, in market research, it is."
- Most people don’t know why they’re feeling what they’re feeling. Even with a biasagainsta brand, a communication can still be effective.
- Brand is a network of neurons in the brain
- There’s a huge difference between what science knows and what business does. Neuromarketing allows science to optimize business investments.
- Think of all the myths science disproved – much like mythbusters.
- People don’t say what they feel.UCLA fMRI facility analyzed 3 anti-smoking ads by recording subject brain activity, as well as surveying the participants.Activity in one specific area of the brain predicted the effectiveness of the ads in the larger population, while the self-reports didn’t.The ad campaign that created the greatest activity in a certain brain region, generated significantly more calls to a stop-smoking hotline. (Source: Sage Journals, 2012)A new study published in Psychological Science brings us closer to that point: scientists using a UCLA fMRI facility analyzed anti-smoking ads by recording subject brain activity. They also asked subjects about the commercials and whether the ads were likely to change their behavior. The researchers found that activity in one specific area of the brain predicted the effectiveness of the ads in the larger population, while the self-reports didn’t.The methodology involved comparing brain activity in subjects who viewed ads from three campaigns to actual performance of the campaigns in increasing call volumes. The researchers focused on a subregion of the medial prefrontal cortex (MPFC) but also compared activity in other brain regions for control purposes. They found that the ad campaign which created the greatest activity in the MPFC region generated significantly more calls to a stop-smoking hotline. “The approach described here is novel because it directly links neural responses with behavioral responses to the ads at the population level.” Simply put, the brain scan data correctly predicted how the ads would perform in the real world – not just how the subjects would behave, but the broader public audience. That’s a major milestone.
- TIM VisionHuman values centered - Neuromarketing can benefit the world (non-profit, government)Growing knowledge of the brain – Neuromarketing research must be shared to advance global understanding of decision making in the brain.Objective analysis – In time, there’s need for peer-reviewed research.