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STRATEGIC BRAND MANAGEMENT MCOM 501

Dr. Bar UrsavaLecture INAVIGATING THE CONSUMER MINDParts of the BrainNeural NetworksBrands in MemoryBrand Cognition Brand Emotions

The Mental World of Brands, Franzen, G & Bouwman, M., World Advertising Research Center, 2001The Branded Mind, Du Plessis E., Kogan-Page, 2011Descartes Error: Emotion, Reason and the Human Brain, Damasio A., Harper Collins, 1995

BRANDWhat is brand anyways?How would you define brand in one word?A name, symbol, logo, message, promise, all, none?

According to AMA brand is a name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name.

In the good old marketing mix, brands do not even appear

BRANDWhat is missing in the AMA definition?The mindA brand does not sit on a shelf next to other brands, it exists in the minds of consumers. Otherwise, the brand does not exist

An understanding of brand and brand management without knowing how the consumer mind works is never complete

Therefore, this course begins with a journey to the center of the mind

Decision Making in a NutshellConsumer decision making can be seen as a three step processInputFirms marketing efforts (information, need creation)Sociocultural inputsProcessNeed recognition: occurs when a consumer is faced with a problem (distance between actual and desired states)Information search: internal (past experiences, memory) & external info search (commercial & noncommercial info)High risk decisions involve extensive information searchEvaluation of alternatives: evoked set (consideration set) & selection criteria (price and other product attributes)Output (purchase & post-purchase behavior),Looks like a perfect world, doesnt it?

A New Understanding of ConsumersTheoretical economics traditionally conceptualized humans as rational decision makersValue maximization goal based on price and other product attributes

In the late 1960s consumer behavior emerged as a new discipline and criticized the economic man theory No perfect market information (limited knowledge of available brands and product attributes)No perfect information processing Avoidance of extensive problem solvingHumans as cognitive misersTherefore, no perfect decisionsA New Understanding of ConsumersConsumer research demonstrated that we do not make purely rational decisions when it comes to choosing brands Use of heuristics in an information overload environmentGuided by emotions and mood instead of rationalityImpulsive & compulsive buying

A more thorough look into the consumer mind is required to understand how we behave in the marketplaceResearch in social psychology, cognition & emotionNeuroscience as a new research toolUnderstanding the how and why requires scientific research and theory development

Evolution-Designed BrainOur brain is a fabric of three systems, which represent our evolutionary phasesReptile (instinct)Mammal (emotion)Human (reason)

These three components function in a closely connectedway (they blended into a newwhole during evolution)

Evolution-Designed BrainThese systems have different ages, directed at different interestsReptilian (proto-reptilian) brainControls physiological needs (eating, drinking, sleeping, waking, sex, blood pressure, body temprature, etc.) & hosts instinctive reactions (sea turtles walking to the sea after hatching, human baby firmly gripping mothers hair, etc.)Paleocortex (Mammalian brain)Houses emotions (happiness, fear, anger, etc.) and deep-seated motivations (womens need to nurture, mens need to protect, organize, fight, etc.)Limbic SystemNeocortex / Cerebral cortex (Neomammalian brain) Higher brain functions (thinking, reading, writing, speaking and understanding language, music, mathemathics, ethics, etc.)Contains several areas that are specialized performing specific functions (processing visual info, awareness of touch, directing muscular movements, etc.)

Left & Right HemispheresLeft brainLogical, exact, analyzes and geared toward detailRight brain (my personal favorite)Emotional, abstract, geared toward coherence

Left & Right HemispheresBoth hemispheres are highly interconnected and function in a parallel fashionCorpus CallosumBoth halves needed to interpret a brand and its message Left brain processes knowledge elements of the brand, etc.Which articles are sold under that brand, how the brand name is writtenRight brain processes visual and emotional elements How does it look? Do I like it? etc.

The Neural NetworkThe human brain contains approx. 40 billion brain cells (neurons)A neuron consists ofA cell body (the soma)A fibre for sending signals (the axon)Fibres for receiving incoming signals (dendrites)

Neurons are interconnected via these fibres (neural network)One neuron may have direct / indirect contact with 50.000 others to send and receive informationA neuron can fire up to 1000 times per second

The huge number of neurons, each with thousands of contact points yields an unbelievable storage and processing capacityTotal amount of info stored in an average brain could fill 20 million thick books

The Neural NetworkThe brain continuously gets impulses from your senses even while sleepingOne minute of brain activity involves 100.000 to 1 million chemical reactionsThese reactions use a huge amount of body energy The brain consists of 3% of body weight but uses 30% of body energy at restBrain scans show a kaleidescope of constantly changing activity even at restDuring complex tasks, the whole cerebrum lights upAutomatic reactions (the purple elephant)

The Neural NetworkHuman memory consists of billions of these neural networks

Each connection from cell to cell may be strong or weakLearning: Through repetition specific connections becomes stronger (Brand knowledge is simply a network of cell connections in our brain)Forgetting: Connections that are not active become weakerThis explains how & why consumers react to certain brands in a certain way (based on brand knowlege, image, etc.)

Therefore, brand management (at its core) deals with managing the neural information networks in consumers minds

The Neural NetworkNeural brand networks consist of connections of varying strength. The more frequently specific connections are activated, the stronger they becomeThe more a brand name is connected with certain bits of information (marketting efforts, individual experiences, etc.) the more it penetrates into the networkThe neural basis of a specific memory is called the engram (physical representation of a specific memory)Brand engram: representation of a brand at neural level (where in our brain sits the Pepsi engram?)The Very Basics of Memory What is the function of memory?It helps to survive. Humans make decisions about present & future events based on past experiences

How are the stimuli that reach our senses recorded in our memory?The three step model of memory (Atkinson & Shriffin, 1971)Sensory memory short term memory long term memoryThe Very Basics of Memory In recent theoretical models, the idea of short term memory (as a passive recorder) is replaced with the concept of working memoryIt is an active processor of information between what we know (long term memory) and the outside world (external stimuli)

Brand stimuli and brand representations in the memory meet in the working memoryMeanings from the long term memory are drawn to interpret external brand stimuli

The Very Basics of Memory Memory can be reconstructed (false memory paradigm)Marketers can reshape consumers memory (even bad ones) of a brand to become more favourable

Post experience advertising effects on memoryAdvertising received after a direct product experience can alter how consumers remember their sensory and affective responses to that brandOrange juiceThe Linden experiment

Brands in Memory: Associative NetworksMemory is built of neural connections that are the basis of mental associations These connections are the final products of learning processesMental associations can be seen as connections between memory elements

Brands in Memory: Associative NetworksAssociation LawsContiguity: elements that are perceived together will be connectedRepetition: as elements are perceived increasingly together they are connected more stronglySimilarity: stimuli that indicate the same thing will be connected to each otherRecency: associations that are formed last will be easiest to rememberMeasured via brand awareness testsAfter giving a product category cue (e.g. automobiles) the order of associated brands and the period of time tranpired between the cue and a named brand is used as a measure for ther strength of association from product to brandBrands in Memory: Associative NetworksOld & well-established associations of an element with other elements create a negative influence on the emergence of new connections (this is both a strength and weakness for a brand)Dark side of the picture: think about the associations about Cherry automobile brandTry to mentally associate the element of style to the existing networkIt takes too much product design & communication effort (time and money) to place style into the existing network

Bright side of the picture: Brand associations in long term memory cannot be broken off. The only way this can happen is by developing (and repeating) new associations and not activating the old onesThe Spa brand (Netherlands) is so strongly associated with mineral water that competition Sourcy (subbrand of Heineken) cannot accomplish such an associationSpa protects its memory space in the minds of mineral water consumers

Brands in Memory: Associative NetworksA brand is represented in memory by a relatively small combination of neurons, which is called the epicenter Brand Gestalt, on the other hand, is the complete activated associative network (sights, sounds, taste, smell, usage, thoughts, emotions, all kinds of experience-based information and commercial messages in memory)

Activation is spread throughout the network in response to cuesWhat is activated depends on the type of cueWhich newspapers are you familiar with?Which newspapers are you familiar with, even if just by name?

In marketing, the brands that appear in our mind spontenously with a specific cue is called the evoked setEvoked set is different from the consideration set (strong candidates considered for purchase)A flying man: which athletic shoe brand comes to mind?

A sweatshop: which athletic shoe brand comes to mind?

http://www.time.com/time/nation/article/0,8599,1892389,00.htmlhttp://www.metacafe.com/watch/2707445/disgusting_dominos_people/http://www.metacafe.com/watch/2707445/disgusting_dominos_people/Brand Meanings:Cognition & EmotionsBrand CognitionConsumers connect brand names with associationsSometimes they are direct associations: Shredded wheat cerealSometimes indirect: Perrier mineral water France stylishConnections with images, sounds, tastes, smells ensure that the brand has a meaningMeaning makes it clear what a brand stands forVolvo stands for safetyVolkswagen stands for reliability

The meaning of a brand may originate from functional product Abstract concepts

Brand CognitionBrand meanings can be broadly classified into ten groupsBrand signsProvenance & historySubbrands (brand architecture)Product-related brand meaningsSituational meaningsSymbolic meaningsPerceived qualityPerceived pricePresentationCommunication

Brand CognitionBrand signs: visual, auditive, smell, touch, taste traits of the brandLogo, spellingColourDesign, formSoundSmell

The basic function of brand signs is immediate brand identification. It is essential for the brand to be recognized easily & quickly (competitors are ever-waiting)

http://www.confectionerynews.com/Markets/Colour-trademarks-a-powerful-weapon-in-the-war-of-food-brands

Brand CognitionBrand origin & subbrands: Country of origin, brand historyConsumers have stereotypical associations with products that come from various countries, therefore, it is important to find out what degree a country is associated with a specific product categoryPerfume & wine?Pizza & pasta?Chocolate?Electronics?Automobiles?Country image influences brand evaluation

Brand CognitionCountry imagesGermany: arrogance, orderSweden: efficiency, modernityGreat Britain: arrogance, traditionBrazil: style, miseryItaly: style, lazinessSpain: inefficiency, lazinessSwitzerlan: wealth, orderPortugal: poverty, backwardness (Anholt, 1998)

A strong manufacturer/company image can be used to endorse subbrands (notice the Ko logo?)

Brand CognitionProduct-related brand meanings: The first associations when activating a brand name are almost always direct associations with products or products categoriesCategorization is required for learning (what is apple cider?)

Consumers associate most brands with physical / functional product attributes, this is called the product image (not brand image!)Ingredients, durability, applications (e.g. Microwaveable), services, etc.

Situational meanings: may be about usage situations (e.g. social context) & usage moments (moments of the day, season, year, etc.)

Brand CognitionSymbolic meanings (from direct / concrete to indirect / abstract): Consumers allocate human attributes to brands. Two association categories are proposedRepresentations of the users of the brandAge, gender, social class, occupation & education, lifestyle, personality (macho, metrosexual, etc.)

Brand personality (will be discussed in following sessions)

Brand CognitionPerceived quality: Consumers form a subjective image of the quality of a brand (e.g. very good, bad). It is an abstraction of higher order and a direct association from the brandWhen forming quality image, we use external cues (packaging, price, WOM, usage experience, etc.). The less experience with the brand the more external cues usedPerceived quality is the single most important variable that is of influence to the profitability of companies

Brand CognitionPresentation: The external appearence (packaging) of a brand (in totality with shelf display, store design, company branch, etc) is an important association categoryChanging the basic elements of a brands appearence often leads to an immediate decline of salesChanges should be made step by step (below the treshold)

http://www.brandchannel.com/features_effect.asp?pf_id=469

Brand CognitionCommunication: Consumers store advertised messages as advertising associations, which often become associated with the brand Advertising associations can be very distinctive, influence the saliency of a brand, thus influence the purchasing behavior

Brand EmotionsSo far, we have limited the discussion on brand choice to the cognitive aspect of the process. However, this is only half of the story

A paradigm shift in decision making researchFrom Descartes to DamasioThere is no distinction between rational and emotional in decision making, these two systems are very deeply intertwined and both are needed to make a sound decisionReactions to external stimuli are always a combination of these two factors

It is an emotional reaction not to step on a snake (does this reaction makes us irrational because its purely emotional?)The curious case of Phineas Gage (bad things happen when reason and emotion do not work together)

Brand EmotionsWhen we talk about emotions and feelings, we generally use these two words interchangeably EmotionAn emotion is essentially an impulse toward an action. E-motion literally means movement awayEmotions are universal, automated action packages installed in our brains at birth. They are preprogrammed by evolution to direct our body to act in response external eventsFor instance, when an alarm bell sounds our body automatically reacts in certain waysFreeze or runAttention, increased heart rate, adrenalin rushBody postureFacial expressions

Brand EmotionsEmotionIf something in the environment changes and it is important for survival, we experience an emotion to react to the changeThis reaction should be fast to cope with the situation. Therefore, emotions occur very fast and usually remain unconscious (we do not think about it)The main fucntion of emotion is attentionning (an important concept in advertising theory)Despite scientific controversy, emotions can be groupped as basic emotions (e.g. fear, anger, joy, surprise, all necessary for survival) and social emotions (e.g. pride, shame, etc., necessary for social interactions)

Brand EmotionsFeelingFeeling (sensation) is the conscious subjective experience of emotionWe experience a feeling when we become aware of a specific emotionHappiness, sadness, envy, etc.While emotions are measurable responses (e.g. heartbeat, perspiration, muscular tension) fellings are subjective experiences (self reported)In consumer behavior, the term is used as feelings & emotions

Feelings & emotions are deeply rooted in the decision making machinery, therefore they influence our brand choice decisions

Brand EmotionsThe Limbic System (center of emotions)It is the part of the brain where emotions, motivations, desires and mood are awakened to steer our behaviorAll sensory input that enter the brain (via thalamus) pass through the limbic system on their way to the cortex It interacts constantly with the association cortex where thought processes take place

Sensory input that goes from the senses via the thalamus to the association cortex is interpreted as emotions in the amygdala (inside the limbic system)So, amygdala evaluates the emotional meaning of the outside worldIt provides emotional colouring to memories

It is not necessary for marketers to know which parts of the limbic system does what, but it is necessary to know what the whole system does

Brand EmotionsWhy emotions & feelings matter in brand management?

Every sensory perception (e.g. a brand) is coded in memory on the basis of its cognitive properties (old, young, fast, soft, strong, etc.) and emotional qualities (pleasurable, unpleasant, sad, happy, etc.)

In general, consumers tend to protect their positive brand emotions and react negatively to information that conflicts with these emotions

Under constant bombardement of external stimuli (e.g. firms marketing efforts) consumers have to make choices about which ones to pay attention or notThe only way for consumers to manage this is to consult stored emotional associations (emotional memories)Brand EmotionsIt is a complex world for consumersAverage consumer lives in a complicated and information-loaded environmentFurthermore, various goals often conflict and compete for priority in the decision making processDue to these major factors consumers never make purely rational considerations

Feelings as heuristicsIn such a complicated marketing environment, consumers use their feelings as heuristics to make decisionsHeuristic is a short-cut rule for decision making (they save time and energy)I know this brand! is a universally used heuristic during shopping (that is one of the reasons why awareness is so crucial in brand management)How do I feel about X brand? is an emotional heuristic that leads to take it or leave it behavior

Brand EmotionsEspecially in low involvement situations, emotional heuristics play an important roleHigh involvement situations require higher cognitive effort and an extended set of heuristicsDopamine brandsDopamine plays a major role in the brain system that is responsible for reward-driven learning (one of the most addictive substances)Dopamine flushes the brain with pleasure (happy Pepsi moments, a shiny diamond ring, a juicy steak, etc.)Dopamine system is one of the most important system as far as brand marketing is concernedA brand that causes more dopamine release when the consumer thinks about it has great advantages over competition

Brand EmotionsNeuromarketing as a new research toolConsumers do not know (let alone report) what they feel. These processes usually occur at the unconscious levelNeuroscience enables researchers to track changes in brain chemistry & electricity in response to marketing stimuliNeuroscience evidence suggests that Emotion (limbic system) overrides reason (frontal lobe) in most decision making circumstancesWe crave for short term (versus long term) rewardsWithout emotion there is no memoryAny piece of information without an emotional attachment is lostConsumers are naturally lazyEmotions are needed to motivate consumers to focus attaention on stimuli. Only after than rational brain evaluates brand messages

Brand EmotionsSensory brand elements such as visuals, jingles, taglines, odors, etc. are designed to evoke some kind of emotion in consumers mindsNeuroscience enables researchers to actually see if the intended emotions are stimulated in the brain

What about mixed emotions? (Good morning Vietnam)Effects of dramatic contrast on memory & attitude toward the brand and ad

Brand EmotionsThe famous Coke-Pepsi Taste ChallengeExperiment involved testing subjects preferences of Pepsi vs. Coke with and without brand identificationWithout brand: most of the subjects preferred Pepsi. Their short-term reward centers lighted up due to better (sweeter) taste of PepsiTwo cans of Coke (but one labeled as Pepsi): subjects preferred the can that was labeled as Coke (no such effect occurred when both cans contained Pepsi)Subjects frontal and mid brain activity showed strong cognitive and emotional reactions during branded taste testBetter memory of Coke, and stronger emotional ties to Coke led to a stronger brand preference that actually overrode taste preference

Brand EmotionsThe reptilian brain

http://www.pbs.org/wgbh/pages/frontline/shows/persuaders/

http://www.forbes.com/forbes/2006/0703/044.html