WE ARE THE PRODUCT – The study of neuroeconomics
Written by: Emil Makkula, Nikkolett Róder and Samu Nyqvist
WE ARE THE PRODUCT
The study of neuroeconomics
In modern era of trading, a common misconception is that consumers have nothing to offer to companies and enterprises but money. However, money isn’t the only thing we’re providing – our time and attention have become the new currency. To gain our attention and time, companies use various ways and methods of influencing. Neuromarketing and social marketing are both good examples of that. They both use neuroscience to analyze the average consumer brain to later on develop methodologies to influence them for a desired behaviour. Neuroscience has gotten such a grip on consumers and audiences around the world, it begs the question: how in control of our own decisions are we?
What is neuromarketing?
Neuromarketing, also known as consumer neuroscience, is the study of how to predict consumer behaviour and even manipulate it for the enterprise’s best interest. Neuromarketing is a part of a wider field called neuroeconomics, which also cointains many other subfields like neurofinance. Neuroeconomics studies decision-making in an economical context, whereas neuromarketing applies neuroscience to marketing specifically. As it gained more and more popularity, bigger companies like Google, Microsoft, Facebook have already established their own neuromarketing units. There are different ways and methods to use marketing. Some companies focus only on making their product profitable completely disregarding the ethical background of it. However, there are good examples as well, like social marketing, which focuses on the humanitarian aspect of influencing.
Brainwashing or just science?
What do scientists search for when they scan the brain? They look at the limbic system (the emotional part of the brain) and analyse which product activates which hormone. One of the most famous hormone is dopamine, which is responsible for all the pleasurable feelings associated with eating a chockolate or happy meal. Most companies want to leave a positive feeling in the customer after purchasing their product.
Terry Wo, who received a Ph.D. in neuroscience and established his online marketing firm in 2003 mentioned in his TEDx talk that 95% of our decisions made unconsciously. Moreover, we can’t make decisions without emotions. If people are so emotionally driven beings, how does a company know for sure what people say is the true representation of their feelings and thoughts? They wouldn’t know for sure, that is why they need to ask the brain for answers.
According to Harvard Business Review, 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 (Harrell, E. 2019).
We relate to brands in the same way we relate to people. Let’s take Apple as an example, some people love it, some people hate it. There was a study conducted by Michael Platt and his team where they observed Iphone and Samsung users’ brain with an MRI machine. Iphone users showed a brain empathy response when faced with good or bad news regarding Iphone, in the exact same way as they would show towards their family. On the other hand, Samsung users did not show any brain response when they were shown news about Samsung, only a negative response towards Iphone. This means Apple’s brand is such a strong player in the market that it not only impacted users’ brain but also non-users’ (Big Think. 2021).
There are many neuromarketing tools, however, most of them involves modern, expensive technologies and machines. Are you a new company and want to invest in neuromarketing but don’t know what technology should you use? To give a few examples, as of 2022 these technologies are popular and widely used for marketing purposes:
- fMRI (functional magnetic resonance imaging): it detects blood flow in the brain associated with increased neural activity. When used, it can show the subjects’ detailed emotional response, level of engagement and recalls. How can it be used in marketing? Based on the findings researchers can collaborate with marketing professionals to set a price, and improve branding.
- EEG (electroencephalogram): it records electrical signals on the scalp from neurons inside the brain. The difference between an fMRI and an EEG is that the EEG is more expensive and it doesn’t show the participants’ detailed emotional response. Companies use EEG to improve ads branding.
- Eye tracking: it measures whether subjects’ pupils are dialated and detects exactly where they direct their gaze. This method is used to research what grabs the subjects’ attention, what confuses them and the level of engagement with the speed of recognition of a given object. It is widely used in UX/UI design to improve website design, ads and packaging.
- Biometrics: it measures skin conductance, heart rate, and respiration. It measures whether their response is positive of negative and the intensity of the reaction.
- Facial coding: it identifies general facial expressions like anger, surprise, happiness and so on. Facial coding as well as biometrics is used to improve the content of an ad.
The above mentioned information was published in Harvard Business Review and it was prepared with assistance from Moran Cerf, of Northwestern University; Carl Marci, chief neuroscientist at Nielsen; and the Advertising Research Foundation (Harrell, E. 2019)
Using neuromarketing for good
What is social marketing?
One method of marketing that utilizes the methods of neuromarketing is social marketing. It is a concept that gets thrown around in the academic literature with slightly different definitions. However, Philip Kotler, Nancy Lee, and Michael Rothschild’s definition of Social Marketing gives you a clear idea of what is being talked about: “Social marketing is a process that applies marketing principles and techniques to create, communicate, and deliver value in order to influence target audience behaviors that benefit society as well as the target audience. (Philip Kotler, Nancy Lee, and Michael Rothschild, 2006)
Social marketing bears close resemblance to neuromarketing, in a sense that like neuromarketing, social marketing also strives to manipulate their target audience’s behavior according to their own interests. Like neuromarketing, social marketing also utilizes systematic planning processes and applies traditional marketing principles and techniques. The only difference is their goal; as neuromarketing and commercial marketing in general is there to support enterprise’s financial interests, social marketing supports humanitarian interests. Traditionally, companies use marketing as a tool to persuade customers and consumers to buy their products or services, but as explained by Kotler & al., social marketing strives to bring about a positive change on a societal problem by influencing desired voluntary behaviors. Social marketing is also commonly used by NGO’s, which aren’t driven by financial success.
How does social marketing work?
To make a change in behavior, social marketing typically tries to get their target audience to do one of four things:
- influence the target audience to accept a new behavior (e.g., recycling),
- influence the target audience to reject an undesirable behavior (e.g., driving drunk),
- influence the target audience to modify a current behavior (e.g., increase the use of public transportation)
- influence the target audience to abandon an old negative behavior (e.g., violent communication methods).
Social marketing and the ability to change a behavior relies heavily on the fact that a person changes their behavior for good only if they have the inner motivation for it. That’s why social marketing so very challenging. Unlike commercial marketing, social marketing cannot often offer any direct or instant reward for buying (adopting) a product (operating model). When a person sees an advertisement about a new Mercedes Benz model and they decide to buy it, they get instantly rewarded by being able to drive that fresh new car. However, if a person sees a similar advertisement, but in the context of road safety, and decide to put their phone down whenever they drive, they don’t get rewarded by this directly. The only people who see a direct benefit from this are the pedestrians.
To sell the idea of changing a behavior, certain things need to be in check. According to Alan R. Andreasen, an author & a professor from the McDonough School of Business at Georgetown University, argues that social marketing programs, in order to reach their maximum potential and sell the operating model, must, and I quote:
- “Give out enough information so that the target audience can acquire the necessary knowledge to be aware of the option;
- Embrace the values that permit the behavior to be considered for adoption;
- Perceive the marketed behavior as potentially relevant to the target audiences’ circumstances, those of a member of their family or those of a broader society;
- Conclude that the positive consequences of the marketed behavior exceed the negative consequences to a degree that is superior to the alternatives;
- Make the target audience believe that they have the ability to carry out the action; and
- Make the target audience believe that their action would/is supported by those who are important to them.”
Examples of social marketing
Picture 1. Anti-plastic bag social marketing campaign. (Credit: Digital synopsis)
In this example, social marketing is used to influence the target audience to abandon an old negative behavior – the use of plastic bags. Just like traditional commercial marketing, social marketing appeals to the feelings and emotions of target audiences to bring about a change. Like seen in this example, however, it is for a societal issue – the littering of the oceans / nature. It uses symbolic methods to concretize the direct negative connection between plastic bags and ocean and wildlife (Plastic bags kill). This makes the target audience believe that they can make a positive impact on this problem. By depicting animal cruelty on the bags, the social marketers embrace the values against it through sympathy and ethics that permit the behavior to be considered for adoption. By using words like “our oceans” the advertisement also enables the target audience to perceive the marketed behavior as relevant to them. Ultimately, the advertisement raises a question: plastic bags, or the lives of innocent animals?
Picture 2. Road safety social marketing campaign (Credit: Digital synopsis)
This second example deals with another important societal topic, road safety. The goal of this marketing campaign is to influence the target audience to start driving slower (to reject an undesirable behavior) by making them understand the consequences of reckless driving. The campaign uses multiple methods to induce change in behavior. The first thing that catches the eye of a passing driver is the number on the screen and the text saying, “Days in the hospital bed”. This is there to illustrate the correlation of reckless driving and damage caused by it. The slower you drive, the less days you would spend in the hospital bed if a crash occurred. This enables the drivers to understand that the power is entirely in their hands. The positive consequences are then concluded by the slogan “Slower is better”. In addition to this, the campaign is run by ELM Grove Police, which makes the target audience more compliant, since the promoted operating model is supported and encouraged by authorities.
Neuroeconomics in traditional consumer marketing
Real life examples
According to Statista mobile user statistics in April 2022, there are currently 6,648 billion smartphone users in the world. This means that roughly 84% of the world’s population owns a smartphone. Smartphones have made our life a lot easier. They have brought some great advantages, like socializing and making connections for people across the world. Smartphones and social media have made some people dreams come into life, making it their profession and even millionaires. But like with everything else, there is a downside to it.
Figure 1. Pew research center survey conducted March 7 – April 10, 2018.
This Pew research (Pew Research center May 29, 2018) shows that almost 25% of teenagers in USA say, that social media has a mostly negative effect in their lives. Why still most of the persons on this planet still use it?
Scrolling is gambling
In 2018 the founder and CEO of Facebook, Mark Zuckerberg said that they hire “attention engineers”, who are working just for the sole purpose of making social media scrolling addictive. They use the same principals known from casinos to make the products similar to gambling slots. Every time you see something you like, you get a dopamine rush. But human is never satisfied, so the next scroll you hope to see something even more pleasing and boom, just like that you are addicted. You no longer get the dopamine from the content you see. You get it from the scrolling, hoping that you will see something interesting, scroll after scroll.
Unlike gambling, the app is free to use. But that’s where it gets scary. You are not the customer of Facebook. You are the product of it, and your attention and time is being sold without you even noticing it. You could almost say that Facebook is not a social media platform. Its main goal from a business perspective is to collect as much data as possible. You could almost call it a data collector company. In 2018 congress hearing Mr. Zuckerberg said that they have thought about making Facebook users to pay for an ad-free version of it. That would basically mean that users would pay to not let Facebook collect so much data out of them.
Real life scenarios
Likewise we have seen with social marketing, marketing aimed to influence people’s behavior doesn’t only happen in social media platforms. Neuromarketing is very ubiquitous. Have you ever wondered why every shopping mall you go to you always get hot? There is a reason in that, and the reason is in neuromarketing. There have been studies showing that if a shopping malls temperature is warmer than the “normal” that we have used to, you will take your jacket off and feel more “at home”. It will also make us to try on more clothes, since our top layer is already off, which leads to more sales.
One of the most common ways of neuromarketing is the colors that brands choose. For example, Starbucks did not choose white, brown, and green by coincidence. They relied on neuromarketing and tested what kind of colors do they like, or what their coffee products would look like. Starbucks found that these specific colors appealed to open-minded people with and attraction to nature, harmony and expansiveness. According to Starbucks, “neuroscience confirms marketing and brand management focuses on creating an emotional connotation directly associated with a product”.
Since companies and other third parties continuously strive to affect our behavior, it’s impossible to estimate to what extent our behavior is influenced on an individual basis. Each marketing campaign has their specific interests and target audiences; some campaigns are driven by humanitarian and societal issues, whereas others may be driven by financial and economic benefits. Even though we may be powerless to the fact that we’re constantly pushed in direction or another, at the end of the day, we as consumers have the final say. Because for a person to decide on changing their behavior, the change must always come from within. This is simultaneously neuromarketing’s biggest challenge, and the biggest advantage.
Andreasen, A. 1994. Social Marketing: Its Definition and Domain. Sage Publications, Inc. for American Marketing Association. Journal of Public Policy & Marketing 13 (1), 108-114. Read on 25.3.2022. https://www.jstor.org/stable/30000176?read-now=1&seq=5
Harell, E. 2019. Neuromarketing: What You Need to Know. Harvard Business Review
Lee, N. & Kotler, P. 2012. Social Marketing: Influencing Behaviors for Good. E-book. Sage Publications, Inc. Accessed 24.3.2022. https://books.google.fi/books?hl=fi&lr=&id=NCoCYp-ZcR8C&oi=fnd&pg=PR1&dq=social+marketing&ots=K_22XBG3KT&sig=YGH2FJ6BBaF_qQwVaPpjAwA23NQ&redir_esc=y#v=onepage&q&f=false
Neuromarketing: The new science of consumer decisions. TEDxBlaine. Presented by Terry Wu in Blaine, United States. 2019.
How Apple and Nike have branded your brain. Your brain on Money. Big Think. 2021.
60 Powerful Social Issue Ads That’ll Make You Stop And Think. Digital Synopsis. Accessed 26.3.2022. https://digitalsynopsis.com/inspiration/60-public-service-announcements-social-issue-ads/
How many smartphones are in the world? Bankmycell, April 2022, read on 29.3.2022
Teens have mixed views on social media’s effect on people their age; many say it helps them connect with others, some express concerns about bullying, Pew Research Center, May 29 2018. Read on 29.4.2022
Absolute Motivation. You Will Wish You Watched This Before You Started Using Social Media | The Twisted Truth. 20.4.2018. Viewed on 30.4.2022
Facebook CEO Mark Zuckerberg answers questions, addresses possibility of regulation. 11.4.2018. Viewed on 30.4.2022