The ‘Neuro-age’ of Product Management

“Neuromarketing.””Neurosegmentation.” “Neuro Power.” Buzz words of the last decade, but what exactly is it all about – and most importantly, is it relevant and useful to us as Product Managers? To start, a few definitions might be helpful.

Neuromarketing: The combination of marketing and neuroscience, the term was coined by Ale Smidsts (Erasmus University) in 2002. Essentially, neuromarketing is the use of brain-scan technology such as EEG (ectroencephalograph brain wave technology) and fMRI (Functional Magnetic Resonance imaging), to predict how consumers will react to stimuli in the marketplace, from specific products to prices to adverts.

Neurosegmentation: Is segmentation based on how the mind works. In this segmentation, demographics and lifestyle are irrelevant. Instead, clusters are identified according to the brain’s response to stimuli. Australian based company “NeuroPower” practices this segmentation, and groups according to 9 ‘Core Belief Profiles’ (such as ‘The Groupie’ The Idealist and The Obsessive). Their methodology is largely based on Peter Burows ‘Human Operating Systems’ framework (Burow, 2010).

The early stages: Pepsi Challenge, 2004

An early example of the application of neuromarketing was in 2004 when Read Montague, Director of the Human Neuroimaging Lab at Baylor College of Medicine, decided to redo the Pepsi Challenge blind taste test – using brain imaging. 67 volunteers underwent the taste test while hooked up to brain scanning machines. Half reported a taste preference for Pepsi, when they didn’t know what brands they were drinking, while three-quarters said they preferred the taste of Coke when they were told it was Coke. Furthermore, during this second test, brain activity changed and was focused in the prefrontal cortex (associated with thinking and judging), and the hippocampus (the part of the brain related to memory) – suggesting that memories and other impressions about the Coke brand were influencing consumer perception of taste.

Revolutionary? Perhaps not, if you consider that conventional research methods have delivered similar results. A recent article by Jennifer E. Breneiser and Sarah N. Allen in the North American Journal of Psychology, gives a sound account of Cola blind tests since the 1940s. The most recent studies concluding that ‘brand’, and specifically the better known brands such as Coke, do indeed change consumer taste preferences. (http://findarticles.com/p/articles/mi_6894/is_2_13/ai_n57525307/?tag=content;col1).

Neuromarketing vs Traditional means

Given that almost 90% of our decisions are made by our sub-conscious, neuromarketing presents an attractive alternative to interviews, focus groups and surveys. One of the leading practitioners, Californian based ‘science-based consumer research’ firm NeuroFocus (owned by Nielsen Holdings), claim that their specially designed electrode-studded cap can measure brain wave activity at the rate of 2,000 times per second, and in doing this, can read the subconscious responses to adverts or products in real time, and decipher the degree of emotional engagement, attention and cognition by monitoring the various parts of the brain.

The sales pitch has won over big brand clients including Google, Frito-Lay (Pepsi), Paypal, and Walt Disney – all of whom recognise the potential of neuromarketing to deliver results that are ‘pure’ and untainted by the biases inherent in traditional research. The cost and efficiency benefits are also appealing, with a minimum sample size of 20 at a cost of $US40,000 to $US50,000.

What we need to decipher then, is whether the sub-conscious mind always dominates the conscious mind when making purchase decisions? It is reported that Paypal used a conventional online survey in addition to NeuroFocus when deciding on their new corporate identity. The two methods showed discrepancies as to the benefits of the Paypal brand; according to Neurofocus, ‘on my side’ was the dominant benefit, whereas the surveys suggested this was a weak association. In cases like these, how do we reconcile such differences? Which method is to be believed as the true reflection of how consumers will respond in the market place?

As Chris Frith, Professor of Neuropsychology at the Institute of Neurology in London, says “People have the idea that because you are using big, expensive equipment it is more real than asking what people think. They think they’ve got an easy way to get the information they want — a short cut. But it is very important to consider the subjective measures. If we see from scans that someone is happy, but they say that they aren’t, who do we believe?”

A balancing act

It seems somewhat misguided to ignore the control that the conscious mind exerts over our sub-conscious impulses. Not to mention the psychological, social and cultural aspects that effect consumer choice and purchase in the marketplace. For that reason, I am dubious about the benefits of neuromarketing used as a tool on its own. Perhaps used in conjunction with conventional research and marketing tools it could work to inform decisions around packaging, advertising and other promotional material, but I fail to see how brain reactions to very specific stimuli – words, images, advertisements – can provide a complete picture of the consumer’s problems and needs and hence replace these tried and tested methods.

So while traditional methods of market research cannot dig deeper into the subconscious, products like NeuroFocus cannot measure the affect of the rational mind. As humans are such complex creatures, it would be beneficial for product managers to understand both. Neuromarketing could be used as a complement to traditional means – a way to fine tune product design, development and deployment once we know and understand our target market.

With the continued rise in number of global firms enlisting the help of neuromarketers, there is no doubt that this new ‘scientific’ form of marketing will become even more pervasive. The issue then becomes one of confidence in the traditional methods and of competitive advantage. Can we as Product Managers afford NOT to be using this new technique?

Can neuromarketing research generate valuable and valid insights? Is it fact or fad? Market research or manipulation?