An insight into the subconscious

Brain-imaging technologies have given economists and marketers a whole new set of tools with which to understand human decision-making processes. At the forefront of developments in this exciting new field is the Erasmus Centre for Neuroeconomics.

Sometimes our subconscious mind can be a better predictor of our future behaviour than our conscious intentions would have us believe. As an example, a team of neuroscientists and marketers from the Communication Neuroscience Lab at the University of Michigan recently monitored the neural activity of individuals watching advertisements designed to help them quit smoking.

Using an fMRI (functional Magnetic Resonance Imaging) scanner, the study compared the neural activity of subjects during the screening with their own ratings of the advert and how great an impact they predicted it would have on their behaviour. The neural activity proved a closer match with the actual behaviour they displayed over the coming month than their verbal reports indicated.

This is just one of the most recent insights to emerge from a burgeoning new interdisciplinary field of scientific research called Neuroeconomics – a fusion of methodology and theory from neuroscience, economics, management and psychology. In Neuroeconomics, high-tech brain-imaging techniques are used to solve questions of an economic and marketing nature. Neuromarketing, the discipline’s sub-field and an area of most direct interest to business, narrows in on the consumer and his or her responses to marketing stimuli.

"It is the first time that biologists are collaborating with economists to shed light on economic and marketing theory – and it has enormous implications for both practice and theory," says Professor Ale Smidts, Director of the Erasmus Centre for Neuroeconomics. "The brain is the machine behind the decisions that are being made in economics. This is an opportunity to get inside that machine and see precisely how it is working. No other methods can bring you to access to this kind of data."

Leading the way

The Rotterdam School of Management (RSM) became one of the first schools in Europe to pursue this branch of interdisciplinary research with the founding of its research centre in 2005. It is now amongst the most high profile in Europe.

Academics at the school collaborate with neuroscientists at the Donders Institute for Brain, Cognition and Behaviour at the Radboud University, Nijmegen, the Netherlands. One recent study examined why people conform to majority views, even when it goes against initial ideas.

Using neuro-imaging tools, the study – which was published in the respected journal Neuron – revealed that when people hold an opinion that differs from the majority, their brains produce an error signal, while the ‘reward area’ slows down.

"We show that a deviation from the group opinion is regarded by the brain as a punishment," said Vasily Klucharev, the lead author on the paper and a former post-doctoral fellow. Essentially, our brains tell us we are being too different – and that we need to pull ourselves back into line.

Another study examined the effect of celebrities in advertising. The study revealed that the presence of a celebrity enhanced memory retrieval and created positive associations – but only if the celebrity had some credibility in relation to the product. It also showed that the effect was rapid and did not require repeated exposure to achieve the desired effect.

Commercial value

The techniques employed by neuroeconomists clearly have immense potential value when turned to commercial ends. In the past, companies have relied on consumer feedback through questionnaires and focus groups for direction on their products and marketing. These methods take it as a given that people know their own minds enough to reliably indicate preferences. While this is often true, it’s not always so.

Prof. Smidts says that in theory Neuromarketing could save companies considerable resources. It could help companies create products that more closely reflect the needs and tastes of their customers, from the design of the product to its functionality. It could prevent companies from investing in costly marketing campaigns that leave little impression on their target audiences.

It could even, says Ale, help economies operate just that little more efficiently. Even a one per cent saving could make a big impact: "If these methods could even marginally help reduce the number of products that are introduced into the market and fail, this could have a significant impact on the economy."

However, the key word here is 'could'. He says: "It is still an open-ended question as to whether or not products or advertising really can be improved simply on the basis of brain pattern results."

Neuromarketing companies

Thus far, the scientific community has largely focused on applying neuroscience techniques to enhancing their understanding of the underlying processes behind economic or consumer decisions. The task of assessing the effectiveness of various marketing tactics has been left to agrowing number of neuromarketing companies.

Neuromarketing companies commercialising these techniques make impressive promises. Companies are offering services such as ‘Sub-conscious Brand Tracking’, in which a company’s brand performance is measured over time through the monitoring of brain activity in subjects. They offer to test everything from your company’s brand and product design appeal, to its product packaging, advertising and even in-store experience.

Instead of focus groups, these companies use techniques such as having subjects watch a TV commercial, while an EEG cap (electroencephalogram) on their head detects and tracks their brain responses second by second. Using this information, companies can then suggest how memorability might be improved, or more positive associations created. Some companies are also using other techniques including skin conductance and heart-rate responses. Only a few apply fMRI.

Commercialising the science

Prof. Smidts is sceptical, however. Most neuromarketing companies use EEG scans. These are cheaper and easier to use than fMRI scanners but cannot get into deeper, reward areas of the brain, which are crucial from a marketing perspective. As a results, says Prof. Smidts, "these companies are making claims that are currently unsupported by scientific testing. There is no proof yet that what they promise is delivered – that they can help you to make a better commercial."

"While we have spent several years establishing expertise in these techniques, we now want to move into the realm of practice. We intend to work with companies and agencies to check what the added value is for their marketing in using these techniques as opposed to conventional methods of market research and so on," he says. "These methods need a lot of careful scientific development before you can justify all the things these companies are claiming."

It’s a new direction, and, with the rate that the technology is developing, its potential for companies and profitability is huge. "The technology behind neuroimaging methodology and thus our knowledge about the brain is developing at a rapid pace. New methodologies are continually opening up. We are thus now very interested in how current and new techniques could be commercialised to bring greater value to companies."

Adopted from RSM Outlook Winter 2011.