Do We Need a Copernican Revolution in Market Research?

In cut-throat markets, businesses need an updated behavioral framework that focuses on the power of the subconscious. How do we revolutionize our insights?

Scientific and technological innovations have penetrated almost every area of business, but in market research, most companies have stuck with methods that were developed decades ago.

The main issue with these methods is that they only tap into the conscious mind, while most brain activity – relevant to purchase decisions – takes place in the subconscious part. Analyzing only the conscious behavior might provide insufficient data, which could lead to wrong business decisions. Perhaps, then, we need to have a Copernican revolution in insights…

What Conventional Methods Can and Cannot Do

Conventional methods are based on assumptions in line with neoclassical economics, suggesting that people know what they want, can predict their own behavior and make logical decisions based on rational preferences. Unfortunately, it turns out that this is not a solid foundation for making behavioral predictions.

For instance, a study with more than 20,000 coffee shoppers showed that the difference between stating vs. actually buying fair trade coffee was a factor 4.

People are also subconsciously influenced by the choices provided for them. Even a minor change in a line-up of three products (e.g. Tesco beer placed next to bottled Blanc beer) changes the preference by a factor 3. Although it is hard to estimate the correlation between stated purchase intent and real purchase behavior, it is generally accepted that the number is low (lower than 0.2).

Left: http://www.marketing-trends-congress.com/archives/2012/Materials/Papers/Consumer Behavior/Schmidt.pdf Right: Decoded – The Science Behind Why We Buy, Phil Barden

Left: http://www.marketing-trends-congress.com/archives/2012/Materials/Papers/Consumer Behavior/Schmidt.pdf
Right: Decoded – The Science Behind Why We Buy, Phil Barden

It should, therefore, not come as a surprise that the failure rate of new products is very high – reportedly 80-90% – and that CEOs consider 65% of marketers to be living in a “Marketing la-la land.”

What do they think about market researchers then?

Raising Consciousness on Subconscious Behavior

Contrary to the neoclassical economics paradigm is behavioral economics, which studies the effects of psychological, social, cognitive, and emotional factors on the economic decisions of individuals. It does not assume complete information (i.e. bounded rationality) nor that individuals are completely rational (e.g. heuristics).

This is closer to reality, especially in a world dense with stimuli, in which the human brain needs to filter out information in order to function. Our daily grocery shopping would take so much longer if we considered every article in the store in order to gain all necessary information!

The founding fathers of behavioral economics were Herbert Simon and Daniel Kahneman. The latter is well known for his book “Thinking, Fast and Slow,” where he proposes a dichotomy between two modes of thought. Kahneman’s “System 1” is fast, automatic, frequent, emotional, stereotypic and subconscious, while “System 2” is slow, effortful, infrequent, logical, calculating, and conscious. The book delineates cognitive biases based on each type of thinking.

So far, market research has only dealt with “slow thinking”, i.e. System 2; the “fast thinking” System 1 was unfairly neglected, despite the increasing number of studies proving its importance. This leads us to the question: is the industry ready for a change? In the words of Rory Sutherland, Vice-chairman at Ogilvy Group UK, “[….] to be frank, the record of the marketing services community, to what seems to be a Copernican revolution in behavioral science, has so far been mostly notable by its absence.”

Updated Behavioral Framework for Deeper Understanding of Decision-Making Process

Measuring System 1 and 2 is necessary, but to understand and measure the decision-making process more clearly, two pieces are still lacking: (a) input – data acquisition for making a decision and (c) output – the behavior.

System_1_System_2_Thinking

Input is an important, yet often minimal, requirement for marketing communication. It basically measures what information our senses (i.e. sight, sound, smell, taste, and touch) obtain. One of the key senses is vision, especially for marketing activities – if shoppers do not see the package, they will certainly not buy the product. Approximately 83% of available information is processed by sight, while half of the human brain is devoted directly or indirectly to vision. Furthermore, the latest findings show that we are wired to process entire images in as little as 13 milliseconds.

Measuring the output and behavioral process is important, yet behavior itself is what counts. The main goal is to discover the links between findings on (a), (b) and (c) phases, so that valid predictions of future behavior can be made.

A major part of the consumer decision process – some say up to 90% of it – actually takes place in the subconscious part of the brain, aka System 1. Therefore, measuring the subconscious can increase predictive power, as these insights provide information on how different marketing content stimulates the brain, if it evokes emotions and how those emotions impact final behavior.

Which Methods Can be Used to Measure Framework

The most renowned scientists are the ones who come up with completely new theories, however a lot of scientific breakthrough also comes from the invention of new measurement tools that (dis)prove and help to further fine-tune those theories.

System_1_System_2_Thinking

Neuro-marketing techniques measure System 1 mechanisms via biological aspects of behavior – such as what kind of visual content naturally attracts the eye or what increases heart palpitation. Here are some of the techniques used:
Eye tracking: measuring eye gaze, i.e. eye positions and movement in order to determine where the person is looking;
Facial coding: measuring emotions through naturalistic and spontaneous facial expressions;
• Brain-imaging techniques: functional magnetic resonance imaging (fMRI), magnetoencephalography (MEG), electroencephalography (EEG), positron emission tomography (PET), etc.;
Biometric reactions monitoring (heart rate, skin conductance), which depends on the level of emotional excitement.
Implicit Association Test (IAT): exposing the subconscious associations that respondents are not able, or not willing, to self-report;
Virtual shopping simulation: used to re-create actual shopping experiences;

These methods have proven to predict impact better than surveys alone in marketing research:
Eye tracking: an increase in package visibility by 10% can lead to an increase of sales by 2%
Facial coding can predict viral potential of videos 2x better than surveys alone;
Virtual shopping has a correlation with real market shares of 0.8-0.95.

Farewell to Traditional Market Research?

With all this being said, are neuro insights the future tool we have been looking for? This is, however, not the case, as “fast” and “slow” thinking work together at any given moment in time. By disregarding System 2, we would be making a similar mistake as the one conventional researchers do now and we would, consequently, base our conclusions on incomplete data. Therefore, both systems are included in the framework.

Through our work with clients from different industries, we found that results, those based on pairing traditional surveys with online eye tracking, facial coding and/or virtual shopping technology, provide higher predictability and, therefore, a solid base for recommendations for future activities. This mixed-methodology approach covers different aspects of consumer psychology, thus leaving little room for guesswork in advertising, branding, shopper marketing as well as digital, innovative and strategic research.

Some researchers are reluctant to use new tools and decide to play it safe by sticking to more conventional methods. However, the price of this conservative approach might be higher than the risk and subsequent, potential rewards (i.e. more comprehensive insights) that would come from experimenting with these new tools.