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Summary. Neuromarketing is a potential game-changer in the marketing landscape. Brain scanning and imaging equipment can be used to determine prospects’ reactions and preferences to stimuli such as logos, packaging material and campaigns, allowing marketers to essentially reverse engineer their marketing strategy by knowing which elements will contribute to conversions first. This could save significant amounts of time and money because all marketing efforts can be laser-targeted from the get-go.

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Is it possible that all human feelings, thoughts, and actions are products of neural activity in the brain? Nobel Laureate Francis Crick, who put forward this hypothesis, certainly thought so. Its potential application for marketers to fully understand their audience on a neural level opens up new avenues that could have a seismic, game-changing impact on the marketing industry.

An article published in the Harvard Business Review discusses Crick’s theory saying, “For marketers, this idea promises that neurobiology can reduce the uncertainty and conjecture that traditionally hamper efforts to understand consumer behaviour. The field of neuromarketing—sometimes known as consumer neuroscience—studies the brain to predict and potentially even manipulate consumer behaviour and decision making.”

There are different schools of thought about the efficacy of neuromarketing. Many people dismiss it as a ‘frontier science’, not worth any investment; others are intrigued, studying it more in-depth to find its marketing application potential.

Neuromarketing could be a vehicle that would allow us to determine the ideal customer experience first. In theory, an innovative marketing consultancy could reverse-engineer traditional marketing processes because, technically, we’ll know what elements are needed to induce the desired behavioural change, leading to increased quality lead generation and conversions.

This could potentially mean that because we are essentially starting at the conversion stage, long-lasting marketing methodologies such as the sales funnel could be inverted, entirely changing the way we market to consumers. Sounds cool, right? But is it really feasible? Let’s take a deeper dive.

 

What is neuromarketing exactly?

The article published by the Harvard Review further states, “Neuromarketing” loosely refers to the measurement of physiological and neural signals to gain insight into customers’ motivations, preferences, and decisions, which can help inform creative advertising, product development, pricing, and other marketing areas.”

There are two components to consider.

Neuroscientific medical research

Neuromarketing includes the direct use of brain imaging and scanning by using brain activity measurement technology such as functional magnetic resonance imaging (fMRI) and an electroencephalogram (EEG) as trackable measurement methods.

A regular contributor to Forbes, Roger Dooley, comments, “[You] may find that a particular stimulus causes a consistent response in the brain of test subjects and that this response is correlated with the desired behaviour (e.g., trying something new). A marketing campaign that specifically incorporates that stimulus hoping to create that behaviour can be said to incorporate neuromarketing, even though no physical testing of subjects was done for that campaign.”

In a nutshell, the aim is to see which brain areas are stimulated (light up) and the subjects’ coinciding reactions (positive or negative) when ‘experiencing’ different products, types of advertising, packaging, campaign ideas, and other marketing components.

Once we have images from which to work, benchmarks could be set, and the reactions could be measured across a spectrum ranging from highly positive to extremely negative feedback.

How does the equipment work?

The articles further explain how the brain measuring equipment functions:

“An EEG (electroencephalogram) reads brain-cell activity using sensors placed on the subject’s scalp; it can track changes in activity over fractions of a second, but it does a poor job of pinpointing exactly where the activity occurs or measuring it in deep, subcortical regions of the brain (where a lot of activity takes place).

An fMRI can peer deep into the brain but is cumbersome, and it tracks activity only over several seconds, which may miss fleeting neural incidents. (Moreover, fMRI machines are often more expensive than EEG equipment, typically costing about $5 million with high overhead, versus about $20,000). Tools for measuring the physiological proxies for brain activity tend to be more affordable and easier to use.”

So, it’s theoretically possible that the data obtained and analysed from brain scans and imaging can provide marketers with the golden all-access pass into the mind and consequent consumer behaviour. The acquired quantitative data could be applied in different social contexts to determine particular responses.

The social application

The interest in consumer neuroscience began approximately 15 years ago.

 

Case study

Business school researchers started to demonstrate that advertising, branding, and other marketing tactics can have measurable impacts on the brain.

“In 2004, researchers at Emory University served Coca-Cola and Pepsi to subjects in an fMRI machine. When the drinks weren’t identified, the researchers noted a consistent neural response. But when subjects could see the brand, their limbic structures (brain areas associated with emotions, memories, and unconscious processing) showed enhanced activity, demonstrating that knowledge of the brand altered how the brain perceived the beverage.”

From a marketing perspective, it can be deduced that brand reputation, awareness, trust, and loyalty significantly influence an individual’s neural pathways, which result in them choosing between Coca-Cola or Pepsi. The whole point is the choice rested on their previous holistic experience of the product, which was corroborated by the measured brain activity methods.

Another academic study using fMRI revealed that “when consumers see a price this may change their mental calculation of value: When price was displayed before exposure to the product, the neural data differed from when it was displayed after exposure, suggesting two different mental calculations: “Is this product worth the price?” when the price came first, and “Do I like this product?” when the product came first.”

Neuroscientists are constantly learning more about the brain, and social psychologists are applying the data to further understand consumer behaviour on a neural level. All marketers will agree that the three crucial touchpoints, authenticity, connection and emotion, heavily dictate whether a prospect ultimately converts or not – in other words, their ‘experience’ of the product.

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Key takeaways

  • “Neuromarketing” loosely refers to the measurement of physiological and neural signals to gain insight into customers’ motivations, preferences, and decisions, which can help inform creative advertising, product development, pricing, and other marketing areas.
  • All marketers will agree that the three crucial touchpoints, authenticity, connection and emotion, heavily dictate whether a prospect ultimately converts or not – in other words, their ‘experience’ of the product is the crucial touchpoint. Neuromarketing could help us determine the ideal customer experience first. This means businesses will eliminate time and money wastage and can expect a high conversion rate.

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Even with the data gathered from brain scanning and imaging, the customer experience still needs to be created as if the reactions and preferences weren’t already known. So, that brings us to the efficacy of scientific research’s application in society. Enter: the customer experience (CX). What is it exactly? Before we answer that question, we first need to understand that a customer’s experience is in itself an economy.

Customers want to experience a product and/or service. It’s evolved into an ‘economy’. UK CX Consulting expert Branwell Moffat discusses the evolution from the Industrial Economy to the Service Economy and the Experience Economy.

 

Understanding the ‘experience’ economy

Moffat posits that to truly understand the customer experience, we need to look at the evolution of commerce and economics from the last 2000 years. Here’s a summary.

The agricultural economy

People bartered goods and services. A producer could oust the competition simply by having crops that no one else could provide. It gave him value. However, as technology evolved, it made subsistence farming redundant. It also allowed crops to be produced at scale, commoditising the products and diminishing the competitive advantage or value.

The industrial economy

Technology became more advanced, and businesses were established to offer unique, high-value products on a large scale. E.g., “The owner of a textiles factory which could produce different and unique textiles on a large scale was adding value because very few others could do this which, in turn, gave him a competitive advantage over others.”

The service economy

At this point, localisation deferred to globalisation, meaning “the availability of products became more widespread. The textiles produced by the local factory were now less unique, as many more manufacturers were able to supply the demand, sometimes at a better price, and their value dropped.”

Throughout all this time and change, one fundamental principle has remained constant: if a person or business can provide something of value that people want, that others can’t offer, they’ll have a competitive advantage. In short, at each transition stage, “people and businesses started offering something new, unique, and of high value to others.”

 

Introducing the experience economy

We’ve recognised that enhancing value and keeping a competitive advantage are the key elements to commercial success over time. Well, it’s been proven that products and services can be produced at scale; so, what’s next?

Moffat says, “As many economies have evolved from producing commodities, through to products, and then onto delivering services, they are now evolving to deliver customer experience.”

An article published by Inc provides some fascinating statistics, and fundamental comprehension brands need to have about marketing to millennials and generation Z. It states, “A study by Harris Group found that 72 percent of millennials would rather open their wallets based on experiences rather than on material items.”

So, suppose you’re an entrepreneur looking to start a new business geared towards targeting millennials and generation Zs as your primary audience. In that case, objective data shows that they prefer an experience over a product. Customer experience (CX) is now the critical battleground in which most companies must compete. If a company isn’t focusing on and investing in CX, they’ll begin to lose their value and competitive advantage.

Throughout economic history, people and businesses have had to evolve to ensure that they continue to add value and compete as the world changes around them and now is no different.

We’ve now reached the stage where the customer has become the focus, not the product and/or service. “Economies have evolved from producing commodities, through to products, and then onto delivering services; they are now evolving to deliver customer experience, says Moffat.

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 Key takeaways

  • We’ve now reached the stage where the customer has become the focus, not the product and/or service.
  • Brand reputation, awareness, trust, and loyalty significantly influence an individual’s neural pathways.
  • Choice rested on their previous holistic experience of the product.
  • Economies have evolved from producing commodities, through to products, and then onto delivering services; they are now evolving to deliver customer experience.
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Pessimism should fade over time

The reality is that there are always going to be people opposed to specific changes to established ‘proven’ methodologies – this is true within any industry.

Despite what many people in the marketing industry have hailed as a triumph of coalescence between science and society, some marketing experts remain pessimistic. Ming Hsu, a marketing professor at UC Berkeley, stated that “The prevailing attitude…can be summarised as… ‘neuroscience either tells me what I already know, or it tells me something new that I don’t care about.'” For example, brain scanning can show that the same beverage with different price tags may produce differing responses in test subjects, but so can simpler methods. He asks this question, do marketers really need to be told that people’s brains react differently to Coke and Pepsi to understand the importance of branding?

My short, direct answer is ‘No.’ However, in my opinion, Hsu is oversimplifying the value of the data provided by images and scans. Firstly, he assumes the technology has reached its peak and can’t tell us more than we already know. This is not necessarily correct.

Any marketer will tell you that the evolution of mobile technology is constantly providing us with new inspirations, ideas and ways to market products, services and streamline experiences.

 

So, should companies invest in neuromarketing?

According to the Harvard Business Review article, “some already have. NBC and Time Warner have operated neuromarketing units for years; technology companies such as Microsoft, Google, and Facebook have recently formed units. Karmarkar says that in-house neurocapability is still out of reach for most organisations simply because of the expense but that smaller companies can look to partner with specialist consulting firms.”

Experts warn that the field is inundated by vendors who oversell what neuromarketing can deliver. We have the opportunity to use a powerful marketing technique that can change marketing forever. However, no marketing method is without flaws, and it’s vital we are cognisant of that fact. Overselling its capability could destroy a precious marketing asset.

In conclusion, it can be said that neuromarketing has enormous potential in the marketing industry. It has the potential to give marketing consultancies and businesses the ability to access prospects’ reactions and preferences on a neural level. A meticulous context-driven strategy analysis, development and implementation are vital and ethical guidelines definitely need to be compiled and regulated to prevent malicious manipulation of customers’ choice.

If used ethically and correctly, neuromarketing could, with time, contribute to establishing one of the most powerful marketing techniques in existence.