How to apply neuromarketing? II Docente encargado:

Leon Zurawicki Profesor del Departamento de Gestión y Marketing de la Universidad de MassachusettsBoston. Experto en comportamiento del consumidor

CASE 1: THE “OPTIMUM” PRICE ISSUE

The method addresses the problem with people’s ability to determine the “right” price. If asked to quote one specific number (“willingness to pay”) people typically are not very confident about such value and have difficulty justifying it. In practice, smart salespeople can convince the buyer to pay a bit more (if you can afford $10, you most probably can afford $11 as well). Hence a number obtained as an answer to a question on a survey need not truly reflect the subject’s valuation. Also, people can be manipulated to increase/decrease their bids

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Some sectors make most of possible profit margins: Willingness to pay

Midnight black, no additiMonal charge

€ 660

Profit potential

Cosmos black metallic, surcharge € 666.40

Additional costs for metallic

4

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The solution lies in confronting the study participants with different values either using a slider or showing consecutively several numbers and asking whether they appear “cheap/expensive”. Similar to measuring time to answer—can be simultaneously performed as well—index of brain activity highlights the acceptable range.

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NEUROPRICING® ILLUSTRATED BY STARBUCKS COFFEE

What is the true willingness to pay for a small cup of Starbucks coffee, which currently costs €1.80 in Stuttgart?

These images are presented to the subject one after another. The subject then responds with “yes” or “no” via button press. 2.40 € expensive

Response Yes/No

EEGmeasurement

data analysis and interpretation

brain response reveals true willingness-to-pay

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PRICE-SPECIFIC BRAIN RESPONSE: THE PRICE OF 2.40 € REVEALS THE BEST PRICE-PRODUCT FIT Disbelief – Quality?

Optimum

High activity

Brain response to the price of 2.40 € shows the best price-product fit

Shock – Profiteering!

brain activity

2.40 € 2.40 €

1.90 €

Low Activity

price [€] 0.10 €

9.90 €

The higher the price-specific brain response, the better the match of price and product

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ATTRIBUTE-SPECIFIC BRAIN RESPONSE: AT A PRICE OF 2.11 € THE BRAIN STARTS PERCEIVING THE SMALL STARBUCKS COFFEE AS EXPENSIVE The attribute “cheap” and 0.10 € fit together well. High activity

2.11 €

too expensive

too cheap [1.95

2.27] €

brain activity

2.40 €

At 2.11 € the attributes “cheap” and “expensive” fit the price equally well

expensive

The attribute “cheap” and 9.90 € do not fit together

expensive cheap

Low Activity

price [€]

The higher the attribute specific brain response, the better the match of the attribute (“expensive” or “cheap”) and the presented price

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REACTION TIME: AT A PRICE OF 2.41 € SUBJECTS PONDER THE LONGEST, WHETHER THIS IS CHEAP OR EXPENSIVE FOR A SMALL STARBUCKS COFFEE

The easier the decision, the shorter the reaction time, independent of the explicit answer

When the price fits the product, subjects need to think longer

reaction time [sec]

2.41 €

Response Yes/No

price [€]

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NEUROPRICING® CAN DETERMINE THE REAL WILLINGNESS-TO-PAY USING THREE IMPLICIT MEASUREMENTS 2.31 €

Depending on the exact pricing question, only one of the three factors is taken into account

Price-specific brain response: Attribute-specific brain response: Reaction time:

2.40 € 2.11 € 2.41 €

too cheap

1

too expensive

2

3

4

5

6

7

8

9

10

People are willing to pay 30 % MORE than the current price of 1.80 €. 11

A new project Application to “value of privacy.”

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CASE 2: STUDYING THE MUSEUM VISITORS

Why do people visit museums? To learn, to admire beauty, to spend time in a pleasant setting. Each would reveal in different behavior which we want to capture but also figure out the degree of satisfaction and acceptance of the rules and charges

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Issues to be studied

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The degree of viewer interest in exhibited artifacts (real world and online)

•

The types and amounts of emotional responses to exhibited artifacts



Emotional depletion, if any, during longer sequences of consecutive viewing of different objects

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The amount of time spent by individuals and groups in the museum

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The reasons people visit

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How inspirational each visit is

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The acceptability of prices and fees

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The appropriateness of exhibits for specific audiences

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Study 1 Museum will offer volunteers free admission to the main collection and special exhibit of interest. Volunteers will be asked to wear eye tracking glasses during their entire visit. The trajectory of all participants will be stored and studied in detail. Our focus is on offering data-supported insight into the viewing patterns and enjoyment of museum visits. At the end of their visits, volunteers will be asked to fill out a survey documenting recollections of their experiences. Working together, eye tracking and survey data will highlight the popularity of individual exhibits, as well as rooms and collections within the museum. Captured data will identify the amount of time spent viewing specific artefacts, obstructions/distractions to viewing, and the overall level of satisfaction. Please note that eye tracking devices look like ordinary reading glasses and can record up to 2 hours continuously. A minimum sample of 50 will be required.

Study 2 Through the use of small cameras positioned strategically within exhibits, we will amass a database of the reactions on visitors’ faces as they view specific works. Data will reflect both the type and intensity of emotional response. We will also assess interest in works by how close viewers stand to them

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Study 3 Facial reading scans will be performed on a sub-sample of the museum visitors participating in Study 2. Participants will view content on the museum website or in a customized PowerPoint presentation. The study will identify the “longer lasting” effects of visitor exposure to art by comparing memories of the museum visit to the subsequent (online) experience.

Study 4 A sample of regular museum visitors will be asked to participate in a non-invasive, off-site EEG recording session, the goal of which is to determine the perceived fair value of museum admission and other “paid for” services. Participants must know (or learn) first-hand what paid services the museum has to offer. By utilizing EEG equipment in a laboratory setting, we will monitor brain reactions to a variety of price/value levels. Furthermore, with our propriety methodology, we will determine the narrow range of acceptable price brackets. Within the framework of Study 4, it will be possible to gather more accurate responses to visitor surveys and investigate additional number-rated aspects of the museum visit.

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INTO THE FUTURE: STUDYING VOICE COMMUNICATIONS

Speech is how we communicate most of the time (does it change with texting?)

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Contexts where personalized communication is critical (can you give examples?)

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Non-verbal aspects of communication

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University of Trento

Also app for iPhone iPhone App

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INTO THE FUTURE: DEVELOPING EFFECTIVE PLOYS

Future: we need to re-define first the key dimensions in consumer behavior and then see how with modern techniques these can be explored Smart concepts to advance understanding of the consumers • Hardly any decision we make is solely individual and even if it were it is strongly influenced by those we interact with: • Family • Friends • Social media community

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Have you been in that situation?

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We do not know exactly how the interactions influence outcomes but it is obvious that we need to study the joint consumer behavior. One ploy is to develop techniques to monitor the intertwined process of influence and persuasion. If I say that I would very much like to travel to ……with you and your response is far less enthusiastic, how can we trace the forces which lead to “yes”, “no” or another alternative.

Do people realize the extent to which they are influenced by others and how much they influence them? We can help figure out but it is an interactive process based upon logical persuasion and emotional pressures.

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Connecting people to high-tech machinery is not sufficient—we have to develop a methodology of modeling the bi- or multilateral dynamic influences. Then, we can better interpret the changing collaterals of changing positions.

Matrix of agreement (simplified) A

B

A

0.8

0.7

B

0.7

0.9

How do we figure it out?

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Studying consumer behavior at home

How people choose food/drinks from their refrigerators is equally important as how they choose in the supermarke

Are there strong similarities/significant differences? One ploy would be to ask consumers from the same list in the store and at home and compare their reactions in the p

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Typology and analysis of “buying styles” From emotional style (a la Davidson) 1. Resilience is the rate of recovery from unpleasant circumstances.

2. Outlook is the length of time you can keep your positive emotion. 3. Social Intuition is your ability to notice social cues from other people. 4. Self-Awareness is your ability to notice bodily feelings that reflect emotions. 5. Sensitivity to Context is your ability to control and follow your emotional reactions during challenging circumstances. 6. Attention is the quality of your focus. How clear and sharp is it?

To Buying style Trick is to detect and confirm with the neuromarketing apparatus the psychological traits of consumer segments and then attempt to predict their behavioral characteristics Zurawicki

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What metrics can be proposed • The degree of the emotional component in envisioning one’s needs and desires*. Susceptibility to impulse buying, self-indulgence*, and inclination to seek information and interact with peers. • The individual level of self-dependence in the decision making. • The information-processing skills – “conceptual fluency”– and the approach to problem solving: simplicity seeking vs. comprehensive solution. Also, the willingness and ability to establish benchmarks (reference points) for considered buys. The negativity/positivity bias in interpreting the data. • The level of intentional control/involvement in the solution-oriented consumer behavior. • The curiosity factor as a sign of the novelty-seeking behavior and the degree of risk proneness/aversion in making decisions. • Proneness to feelings of guilt or regret in connection with purchases planned/ made or foregone*.

We are dealing with continuous rather than discrete variables. * Denotes the scales which are rather difficult to measure using the traditional research methods (e.g. surveys).

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Who belongs to what category and how to detect it? Once we found sufficient support that people differ along these dimensions can the differences be observed by “spying” people’s activity on the web? In-store profiling?

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INTO THE FUTURE: ARE THERE ANY GENETIC / CULTURAL DIFFERENCES IN MENTAL RESPONSES?

YES—is it surprising? This complicates the task of any international or intercultural comparisons

Why does it matter? In the global era, comparisons across the borders are important to marketers, we wish to test universality When considering genetics but also the environment (weather, climate, food) we develop a new perspective on culture With that we get new arguments for national stereotyping (differences in the expression of genes in charge of transporting neurotransmitters)

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Examples Revealing research has shown different degree of engagement of the brain regions in charge of socio-emotional processing in Americans v. East Asians while reading persuasive relative to unpersuasive message Other studies found neural correlates in the brain corresponding with different cultural perception modes for same visual tasks by more individualistic Americans and more collectivist East Asians

Variations of dopamine receptors account for independent (Caucasian) v interdependent behavior (Asians) There is far more to quote

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AGING BRAIN: ARE SENIORS DESTINED TO HAVE LESS FUN?

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Are seniors destined to have less fun? Maybe 10% of the world population over 60 today, in some countries much higher rate, more in the future Elderly are not just weaker, they are different

For each passing decade - into our 50s - 60s - 70s - our ability to recall dates, names, facts and figures fades - slowly at first, then perhaps more rapidly. And that's assuming we're lucky enough to be in good health.

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Need to be considered not only in explaining their behavior as consumers but also in research with participation of the elderly Deteriorating performance of all senses not only affects perception but also leads to personality changes (lower self-confidence, anxiety, less novelty seeking) Weaker processing skills, memory, slower encoding of new information Difficulty to ignore the communication clutter (=too many stimuli) Greater cumulative experience--older adults have a larger number of the emotional markers to guide their choices and use more shortcuts, compounded by lower cognitive skills “positivity effect” – attention to positive elements of information (and memory thereof) Lower level of dopamine (less fun?)

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Behavior, including mental reactions influenced by medications. Mentally, women age differently than men and various ethnic groups also show differences Most elderly tend to be the morning-types (implications?)

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CONCLUDING REMARKS

QUESTIONS & ANSWERS