Neuromarketing & Virtual Reality for Consumer Insights

• Neuromarketing and virtual reality paired with experimental approaches have implications for consumer insights and marketing.

Course Presentation

• The purpose is to address 2 major developments affecting consumer insights and marketing.
• The experimental approach consists of presenting a sample of consumers with a marketing concept, manipulating variables, and removing other influences.
• This approach analyzes the causal impacts of manipulated variables on consumer responses.
• The experimental approach is useful for understanding and optimizing the impact of marketing concepts on consumers.
• It is becoming increasingly important and garnering growing interest from companies for scientific research and business purposes, while still remaining a valuable contribution.
• The course objectives include understanding the experimental approach, judging the interest of using it and designing and converting the results into useful guidelines for marketing decisions.
• Neuromarketing is about understanding how consumers react to stimuli.
• Cognitive (neuro)science developments allow for a better understanding of the "black box" when it comes to consumers.
• There are multiple factors which may influence consumers' perceptions and behaviors, sometimes quite irrationally.
• Courses will outline advances in new knowledge and innovative techniques to analyze genuine perceptions from consumers.
• Course objectives include understanding how modern marketing can take advantage of recent developments in neurocognitive sciences.
• It includes understanding the disadvantages and advantages associated with different techniques involved and how perceptions and behaviors may be shaped by non-conscious influences,
• Course objectives include developing a critical look at influence processes and ethical issues concerning consumer protection.
• Quantitative approaches have bias like with a given sample.
• It is about overlooking the biases to have a deeper insight on consumer mind and non-conscious behaviors and emotions.

The Experimental Approach - Basics

• Experimentation is the objective observation of phenomena in a controlled situation, where one or more factors are manipulated while others are constant.
• This allows for examining the causal effects of one or several variables on others.
• Experiments measure and quantify relationships between variables and test hypotheses using statistical relationships.
• The experimental approach is often used in exact sciences, cognitive sciences, and increasingly in consumer sciences/marketing.
• Experiments help analyze cause-and-effect relationships.
• 3 possible research settings are Lab, field and online experiments.
• The setting decision is crucial as it affects internal and external validity plus they all have advantages and disadvantages.

Independent Variables (Manipulated)

• These are characteristics of the physical or social environment that are manipulated by researchers to examine their impact on dependent variables or responses.
• They are possible or suspected causes of certain reactions, resulting in a causal relationship.
• Controllable factors can influence changes in the values of dependent variables.
• Elements of the marketing mix may change certain elements like color, price, promotion, lighting, how products are displayed on the shelves
• Optimizing independent variables maximizes the outcome of dependent variables
• Two main types of Independent Variables are Inter-subjects/ inter-participants variable and Intra-subjects/ intra-participants variable
• Inter-subjects/ inter-participants variable consists of each subject being submitted to only one value of the IV which implies several groups (between-subjects design).
• Intra-subjects/ intra-participants variable consists of subjects being submitted to the different values of the IV, answering to all the possibilities. Implies 1 group (within-subject design)
• It must be noted that complexity of conducting the study and of the results increases with the increase number of IVs
• Number of conditions (and groups, if between-subjects) required increases with the number of IVs.

Conducting the study

• To analyse the impact of music on purchase amount, 1 condition with music, 1 without. This implies two groups/conditions.
• By adding another variable, impact of music and smell on purchase amount, 1 condition with music and smell, 1 with music only, 1 with smell only, and 1 without.
• All variables have to be combined, resulting in lots of conditions, making the study difficult.
• Inter-subject design requires a sufficient number of subjects and representativeness (target-population, age, gender, etc.).
• The more different groups that exist, the more complex it is to have comparable conditions.

Results

• There are 2 main effects of Music and Smell regardless of each other.
• The impact of one IV depends on the other, this being known as an interaction effect.
• The complexity of interactions grows exponentially as more Independent Variables are added in the experiment.

Dependent Variables (Responses)

• The choice among is subject to the setting, the topic, expertise, logistics, and, timing of the study.

Memory

• Usually we start with recall then recognition.
• Recall answers questions like:
  • What products were on the shelf?
  • What advertisements did you see?
  • Which brand sponsors the Roland Garros tennis tournament?
• Recognition is easier to test asking:
  • Which of these products were on the shelf?
  • Which of these ads did you see?
  • Which brand sponsors the Roland Garros tennis tournament?

Attitude Scales

• Widely used, 'Likert' scales use a response option that best matches the attitude.
• Can be formatted with usually 5 points or more (allowing respondents to provide a precise response)
• The questions are direct measures to obtain general atmosphere of an establish, but also semantic differential scales measure with endpoints corresponding to opposite adjectives.

Intention Scales

• Purpose: Collecting from respondents a stated behavioral intention, such as those after a packaging change.

Behavioral Measures

• Time spent (ex: see if it is higher when there is music).
• Consumers direction
• Gazing direction/duration/sequence).
• Touching and handling.
• Testing.
• Non-verbal behaviors.
• Purchase.
• Social behaviors.

'Indirect' Measures

• 'Implicit' measures
• Physiological measures (heart rate)
• Neurological measures _Analysis of 'automatic' / 'non-conscious' reactions

Basic Criteria

• Information criterion is the truest reflection of the studied phenomenon.
• Sensitivity criterion is high sensibility to changes in the IVs to effectively detect their effects
• Effective detection of their effects.
• Attitude measurement towards the brand or ad must be measured by affective evaluation of the products/ads themselves.

Memory

• Prior exposure measures influence the results
• Using recall or recognition influences assessment
• Message recall reflects a better message effectiveness
• Brand name recognition and familiarity are key metrics

Online Ads

• Measuring the number of unique visitors, time spent watching the ad, and through completion rate
• The click-through Rate measures the interactions the user made the ad itself
• Relationships assumed between IVs & DVs = Hypotheses (to be tested statistically)
• Affirmative phrasing question or Statement can be rejected or confirmed

Validity

• How well the results of a study are trustworthy and meaningful between internal and external factors
• Internal validity: how well a study is conducted (its structure) & ruling out alternative causes
• External validity: how applicable findings are to the real world

Internal Validity

• Extent to which a study establishes a trustworthy cause-and-effect relationship between a manipulated factor (IV) and an outcome (DV).
• Factors like field experiments make it hard to be accurate.
• Need to establish that changes are from change and new packaging
• Internal validity is often difficult in field experiments, but field experiments may be more controlled by eliminating stimuli that influence the DV
• Minimizing influence of confounding factors is vital

Online Experiments

• They are suitable for a large number of participants quickly and inexpensively.
• They have issues with biased test subjects like internet users and self-selection and can result in false reporting.

Assuming Cause-and-Effect Relationships

• The 'cause' has to precede the 'effect' in terms of time, be proportional with variations and not have other explinations related to the 'effect'

Addressing Research Design Problems

• The stimuli in tests have to be identical for the Independent Variable to be effective so tests must be randomized for each test subject
• Study problems to control in real environment must acknowledge noises/distractions and must be controlled and accounted for in lab experiments.
• Selecting of the test subject group has to be equivalent/representative to the average user (gender, age),

Unwanted Variables

• Unwanted individual/external variables must accounted for, measured and controlled for test accuracy
• Researcher interactions leading to possible social desirability effects must be avoided as well because it creates biased results

External Validity

• Aims to establish that the result came from changes and is reflected on a wide scale
• Experiments are often artificial in lab testing, which can be mitigated by running experiments in real Field instead.

Lab Studies

• Possible to set up close-to-real experiment, like simulating expressed emotions during different scenarios.

Psychological Realism

• If the psychological process under study can operate in other people, the validity holds.

Effects on Affecting External Validity

• Situation factors like time of day
• Sample factors that limit generalizability
• High internal validity is irrelevant to the real world
• Field studies may be more relevant but difficult to attribute results and causes

The Environment

• Labs allows control, but have no natural realism.
• Online tests have high rates of distraction and lower engagement

Controlling Potential Issues

• The purpose of the study may be difficult to establish in experiment
• The instruction is as important as the subject of the experiments
• A baseline group is needed to test accurately against
• Typical measures need electrodes for stronger emotional intensity, instead of explicitly asking subjects their feelings

Design types

• Within-subjects design needs the same subject to tests all conditions to one variable, needing a single group of test subjects. -Between-subjects design is similar but instead assigns different test subjects on separate variables (randomized) -Mixed design utilizes a mix of both to conduct the same tests needing less subjects

Incentives

• Monetary/non-monetary objects can motivate users to take part in the experiment
• Higher motivation/incentive may improve the test quality in tests where the test subject is made to be uncomfortable

Main Takeaways of Testing

• Powerful way of reliably examining the causal impact that marketing variables may have
• Experiments can reliably give results regarding a wide range of relevant consumers' responses
• Experiments are not suitable for all situations or in context where there are large numbers or variables and thus expertise is needed to conduct correctly + they take more time than usual

Sensory Factors

• In natural environments music can increase Time spent and purchase of toy stand users
• The increase might be affected by gender

Style

• Cafeteria and storefront purchases have differences between different user bases
• wine purchases can be affected by customer preferences to classical music

Level of Noise

• Type of noise affects peoples' ability to conduct noise based task
• In a cafeteria context the type of music has varying effects, some working where others fail

Tempo

• Both fast tempo and jazz tempo with no lyrics will increase different actions in restaurant environments.

Contamination

• Exposure to product samples must be randomized for the user or there will be false positive reinforcement

Lab setting

• A controlled environments allow accurate and easier tests due to variable controls
• Different approaches must be used to study certain phenomena. Examples = Visual transparency storefront test

Virtual Reality

• VR headsets allow isolated study of a user base that is immersed in a simulated environment, allowing different sensory information to be recorded with control
• Testing a grocery store is now easier as you are able to manipulate store product choices and test user action across variables

Online Testing

• Offers tests that show the relation between reaction time and various actions using a computer interface
• Requires focus and effort on establishing balance against external factors to be conducted.

Non-Verbal Factors

• Body language in a natural sitting will make users willing to perform different actions (donation)

Neuromarketing

• Has been used for hundreds of years by marketers to establish actions/reactions relating how to make/influence decisions
• New/innovative ways of examining consumers actions come from using insight of cognitive neuroscience

Cognitive Neuroscience

• Is about understanding what drives processes and behavior and has roots in different clinical environments.
• By using results of academic research in neuroscience one may enhance consumer behaviour for a company

Measurement

• Application of consumer tools are used for Neurophysiological analysis to conduct market research and gain a more direct view into the "black box" of the consumer

Important metrics of evaluation

• Examining and using different scientific/neurological methods can enhance understanding for consumer behavior.
• The methods help understand market bias/logistics limitations to reach reliable conclusions

Self-Report Measurements

• Traditional marketing research is based on self-reporting biases which makes it difficult to be accurate as well as account for un/conscious action

Brain Processes vs External Bias

• Consumers make actions related to emotion, external process outside the rational
• Using tests that study action gives an idea for understanding traditional research (bias limitations)

Traditional/Modern Marketing

• Traditional practices will only consider what what customers can accurately describe
• Modern techniques will focus on system 1 of processes, gaining data to make better understand insights

"MODE" testing

• Used to help understand how different brain levels may be applied in relation to one another during testing

Reliability

• Subject and honesty can be questioned in the data collection so focus on real action that can be measured

Honesty

• Using real tests is vital as it becomes difficult to control and measure if there are real results behind it
• People perform actions to please and that must be factored for to determine if the result can be properly measured

Tests - Measurements

• Tests must account for correct measurements and the system in action as well as being able to identify any kind of data from any testing system

Test Considerations

• Experiments and setups need to be considered for both internal and external use/variables + how those variables influence each part of research

Types of Tests

• Experiments are classified and used based on the type that is conducted and if it's a relevant use case for the different applications. Examples = Neurological, Electrical

Main takeaway

• Neuromarketing can help create unique products and campaign benefits by giving insight into customer actions that enhance decision make

Shortcomings

Ethical concerns and the difficulty interpret data can create an issue for this approach for a reliable test