Transcript Presentations - Xavier Institute of Management

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Neuro Marketing
The new revolution
in Marketing knowledge
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The starting point
“ Their’s a sucker born in every medial
prefrontal cortex”
New York Times 2003
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Dr.Read Montague of Baylor College of
Medicine used fMRI while doing
the Pepsi challenge
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Top down approach
PET, fMRI, Transcranial Magnetic Stimulation
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Fruits of a long journey
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90% of the new product launches fail
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“50% of the advertising expenditure is
wasted, but I do not know which 50%”
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Marketing loosing its importance
“All that marketers want from CEOs is more
money to spend”
Prof. Nirmalya Kumar, LBS, Marketing as Strategy
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Mr.Karsanbhai Patel made me eat my words
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The root of the problem has to be more
fundamental
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What ails marketing?
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Scientific basis for marketing
theory
Main cause of marketing failure is the
inability to understand the consumer
behaviour
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Scientific basis for marketing
theory
Unlike other sciences, there are no
fundamental theories in psychology to
decipher human behaviour
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Fundamental theories
Quantum mechanics and general relativity
are true throughout the universe.
Darwin’s theory of evolution and DNA based
genetics apply to all organisms that have
ever lived on earth.
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“ Psychology on the other hand has been
characterized by an embarrassingly long
sequence of ‘theories’, each really
nothing more than a passing fad that
rarely outlived the person who
proposed it”
V.S ramachandran, J.J Smythies, Uni. Of California
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The incomplete science!
Psychoanalysis although it had tremendous
influence in psychology, it had little
influence in marketing
Freudian Fraud by E.Fuller Torrey
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The incomplete science!
Behaviorism propagated by B.F. Skinner Ivan
Pavlov etc had huge influence on
marketing
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The incomplete science!
Behaviorism which virtually denied the
existence of mind, took a beating with
the article written Noam Chomsky, an MIT
professor and linguist
( language and problems of knowledge)
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Scientific basis for marketing
theory
Cognitive science has been influenced by
studies on Artificial Intelligence too had
tremendous influence on marketing
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Scientific basis for marketing
theory
Cognitive science as much as AI has huge
limitations. More so its inability to
consider emotions and its role in human
behaviour
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Scientific basis for marketing
theory
You, your joys and your sorrows, your
memories and your ambitions, your sense
of personal identity and free will, are in
fact no more than the behavior of a vast
assembly of nerve cells and their
associated molecules
Francis Crick, The Astonishing Hypothesis
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Neurology will help build a scientific
foundation for marketing theories
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More than 90% of what we know about the
brain has been discovered in the
last 10-12 years
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The stagnant knowledge base of the
marketing field
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Many new developments in the field of
neurology, sociology, anthropology,
psychology, etc
But very little of that has permeated into
the world of marketing and advertising.
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Marketing is like Astrology. It is a quasi
science. It is based more on past
practices.
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Even Ries and Trout have used only logic of
past practices and not scientific facts to
develop the theory of positioning
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Who are the best marketers in the
world?
Politicians
God men/God women
Organised Religions
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The conman at Chennai central station
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Heuristics
The science of fast and frugal decision
making
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The Mother turkey and the pole cat
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Civilizations advances by extending the
number of operations we can perform
without thinking about them
British philosopher Alfred North Whitehead
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Daniel Kahnemann,a psychologist wins the
Nobel prize for Economics in 2002
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Harvard University introduces a course in
Behavioural Economics
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Economist predicts that Behavioural
Economics is the new trend in
management consultancy
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Rational man, the fundamental
assumption of Classical Economics is
under scrutiny
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Most of the Marketing theories are
influenced greatly by the classical
economic theories and are based on the
assumption that human beings are
rational
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Great amount of Market Research, Media
planning hides their fundamental flaws
behind the correctness of mathematical
models
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Even the world of finance and project
management falls prey to the workings of
the brain
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What is the length of Nile?
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Over confidence
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Huge implications in business forecasting,
the insurance sector
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Reciprocation rule
Reason behind mother’s advice to ‘good
girls’
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Reciprocation rule
We should try to repay in kind what ever
another person has provided us.
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Contrast Principle
If two things are presented one after
another, and if the second item is fairly
different from the first, we will tend to
see it more different than it actually is.
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Rejection-then-retreat
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Commitment and Consistency
Once we have made a choice or taken a
stand, we will encounter personal and
interpersonal pressures to behave
consistently with that commitment
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The more effort that goes into a
commitment, the greater is its ability to
influence the attitudes of the person who
made it
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Social Proof rule
The means we use to determine what is
correct is to find out what others think is
right
e.g.Suicides
donations
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Liking principle
We most prefer to say yes to the requests of
someone we know and like
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Secret behind the success of
Tupperware corporation
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Scarcity rule
Opportunities seem more valuable when
their availability is limited
Francis Xavier Exposition, annual sale
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Reactance theory
Whenever free choice is limited or
threatened, the need to to retain our
freedoms makes us desire them
significantly more than previously
( Jack Brehm)
E.g. Romeo and Juliet, BMW commercilas
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The Undiscovered Mind – John Horgan
Phantoms in the Brain – VS Ramachandran
The Making of Memory - Steven Rose
Descartes’ Error
- Antonio R.Damasio
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How customer’s Think – Gerald Zaltman
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Blink
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The Hidden Power of Advertising – Robert Heath
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- Malcolm Gladwell
Thank You
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