April 29, 2020

Neuroscience of brands

By Conor McKechnie and Dodi Axelson

How does your brain discover what it wants

Have you every felt terror in the grocery store, dodging the marketing blitz to find what you need? If so, you might relate to this podcast guest who’s also a neuro economist.

CONOR: So Dodi, since we last talked, there's been quite a bit of change in our lives hasn't there?

DODI: That might be the understatement of the century. But we're in fact not talking about COVID-19 are we? Yeah, almost a COVID-free episode here. We recently completed our transition from being GE Healthcare Life Sciences into being Cytiva  – new company, new brand, and so on. And in the process of creating this new brand we've had to really explore a whole bunch of things around storytelling, around branding, and what brands are and the science of it, and why people bond to brands, and so on. And that is what matters on this episode of Discovery Matters.

CONOR: Do you remember the book I gave you for Christmas?

DODI: I do, The Science of Storytelling.

CONOR: And what makes you remember a story?

DODI: Absolutely something that hits me in the head, the heart, or the wallet. So, something that makes me react emotionally.

CONOR: And how much do you know about what your brain is actually doing when you feel all of those things, where the science interacts with your experience as it were?

DODI: You know, me, I'm a feeler, I feel it in my gut. But I bet you want to tell me about what's happening in the brain.

CONOR: There's got to be science in this, right, because your brain is fundamentally either connecting or not connecting to information, processing it and making you make decisions, millions of decisions per second, probably without you knowing it. But I really wanted to find out about the science of branding and how people react to brands and how they use them to make decisions. So, I went and found somebody who really knows what they're talking about.

UMA: My name is Uma Karmarkar. I'm a dual appointment faculty between the School of Global Policy and Strategy and the Rady School of Management at the University of California, San Diego. I think that people who do the kind of research that I do now have several titles. The one that I use most frequently is neuro economist, because it's at least illustrative if nothing else. So, I study how people integrate the information in the world around them to estimate how valuable things are or how much value they place on the options they have available to them. And then based on that value, decision, or value computation, people can then make choices.

DODI: So, in a nutshell, what Uma is describing there is the study of how people make decisions. What kind of tools is she using to study those things?

UMA: It's a combination of research methods from psychology, neuroscience, economics, and the field that really spans all of those ‒ judgment and decision making, which is more a topic than a methodological field. I run experiments that look like psychology experiments, where you know, people may answer a survey or fill in a questionnaire either in a lab setting or online. I'm also doing some eye tracking work now, which is using an infrared camera that can track where you're looking at a screen to see what people are paying attention to. I've used functional magnetic resonance imaging or fMRI.

DODI: That sounds extremely advanced and a bit like something out of science fiction.

CONOR: I know, it's like Minority Report and The Matrix and everything all wrapped up into one but you know what, it's actually very real. And the results are being used by, as Uma says, neuro economists and neuro marketers. Just keep listening to this.

UMA: What fMRI allows us to do is to not only get an image of the structure of the brain but to look at how patterns of activity are changing across the brain, and to compare how brain activity changes based on specific types of exposure to stimuli. So, to make that a little bit less techie, I can show you a picture of a dog and show you a picture of a cat and compare the patterns of activity in your brain for dog versus cat. And potentially gain some understanding of what's special about dog in terms of the way that your brain is responding to it. By layering these different methodologies on top of each other, I'm able to get convergence evidence that speaks to particular phenomena like how we make decisions about investing money in uncertain financial situations, or even how we choose whether or not to buy a particular gadget on Amazon.

DODI: Right. So I'm now starting to think that we don't have any control over what we like or don't like. That basically our decisions happen outside of our will.

CONOR: Right, so we could get into the whole thing about free will here. But let's not go quite down that route. Let's talk about how brands influence us and why brands influence us to make decisions. Because you know me, I'd like to pretend that I'm not that influenced by brands and branding. Nothing that I wear is explicitly branded. It’s kind of almost by choice, right? And I wondered if Uma could tell us about what's going on in our brains when we make decisions about what we're going to buy or what we're going to pledge allegiance to, or what have you. And it turns out that it's not just about how the brands communicate value to us. It's also about the situation that we're in. If we're under stress or in a difficult environment, we use a different mode of decision making, using different parts of our brains. That's where brands can have a huge influence.

UMA: If you ask people to make a decision under what we would call cognitive load, that is a lot of other information or they have to keep repeating a number or something else, they will often make slightly different decisions. Or sometimes very different decisions than if you allow them to think through the process, which suggests that there are multiple factors that they see as valuable in the target of their choice, and that the context around them is changing the way they make their choice. So, a classic example of that is called heart and mind in conflict. If I asked you what you prefer for dessert, do you choose the chocolate cake or the fruit salad? And lots of people will choose fruit salad if they're given more time to think it over, but if I ask them to make a split-second decision, they may shift towards the chocolate cake.

Now, a sort of traditional or a rational point of view may argue that what you really want is the fruit salad. But if that was exclusively true that the most valuable option was a fruit salad, then putting a little time pressure on you, or a little extra stuff that you have to remember shouldn't change you over to the chocolate cake. So we're clearly holding competing preferences, and the way that we express them depends on the situation that we're in. So, when we're absent information that we know would be helpful to us in making a choice, that's a situation with ambiguity. And prior research in the neuroscience field and in the neuro economics field has shown that ambiguity tends to correlate with activity in specific brain areas in a way that's different from risks, different from when we know the probability of what's happening. And that is very aversive, and people hate it. So, it’s emotionally aversive. And you could imagine that finding it emotionally aversive also changes the way you make that choice.

DODI: Wow. So, our brains are making decisions, and we're not as in control of the choices we make as we think we are, especially when things are ambiguous or stressful. I don't know when they're not but, okay, we'll play. We've gone through the process of building a new brand for our company Cytiva with all of our colleagues, I mean, let's not pretend. It has been stressful. We were asking people to imagine stopping being part of one company, and people have had heritage in our company. So it's been a marriage. And they are separating from what they know, leaping into the unknown. It's a new company, new name, new brand, although there's an awful lot that's recognizable. But there's so much change and so much new. So it's a big ask to get people to come along on that journey.

CONOR: Exactly. And so how do we step away from the science of it for a minute, connect to the emotion as you said. You're a feeler, right? How do we do that? And we do that through storytelling. Remember, Tim Arthur who talked to us about that?

DODI: I do remember Tim, he's an expert at helping organizations through change. I bet he's going to tell us how companies sometimes do it right. And sometimes get it wrong.

CONOR: And as Tim says it's a lot about the soft values. He really connects to how people understand stories, relate to them, and then change willingly or unwillingly on an emotional level. Besides all the things which are underlying it in the science that Uma is talking about.

TIM: I think over the last 10 years of my career, I've been in three businesses that have gone through massive cultural change, or structural change, actually. So, it's sort of become part of my life. I think, if done well, it's an amazing opportunity to grasp what something could become. And so for me, I always get a massive amount of energy out of a change process, I get really excited by it. But it's about taking everybody on that journey. That cultural side of change, I think, is where a lot of companies fall down. They think that it's about processes or the strategies or something, but actually, all of that has to be based on people. If the people that you work with or your colleagues don't buy into the need for change, they don't understand it, or they don't feel passionate about where you're going, that's when it falls down. And then of course, the execution. If the execution is bad, then that can also be a factor. But actually, for me, a lot of it has become about storytelling. It's been about how do I explain or inspire the people that I work with to go on this journey? And why is it going to be great?

CONOR: One of the companies from Tim's past is a company from my past actually as a young, trendy guy in London. Can you imagine that I was ever that? And Time Out was where you went, right? He joined at the time when the magazine... Remember magazines, print media?

DODI: Print media, what?

CONOR: You know, the magazine was about to go broke.

TIM: And what I knew was the context that it was being delivered into people's lives. The way information was being delivered to people's lives had to change, because they weren't buying magazines. You know, it changed. But the stuff that we felt passionate about doing was letting people find amazing experiences. And if it had gone wrong, and it could have gone spectacularly wrong, the company would have closed. And probably more importantly, my colleagues that I absolutely loved working with would have lost their jobs. And I just couldn't. It just wasn't an option.

I have a quote, failure is not an option, which is the NASA sort of motto I have tattooed on my arm. It was a mindset piece. And when it came to Time Out, that was really where I was. I was nervous about it. But I never thought we wouldn't achieve success and keep it going. Because I had to. You know, I couldn't have lived with myself. And last, I'd have gone into grief if we had lost Time Out. And so we just kept working the problem, we just kept going like, okay, well, let's think of a different angle then. Or what's the other possibilities? Or go and look at some other total area that's not in the media and come up with what's happening there. And we just kept pushing and pushing and pushing different areas until a strategy began to develop. Then we went for it.

DODI: So, what did Tim do, exactly?

CONOR: They went to the free model, one of the first. They went all digital, and changed the business model completely.

TIM: One of the big changes was it became a big e-commerce platform, weirdly. And it was staring us right in the face, but we'd never really seen it. We told people where things were, but we never sold tickets to it. So we didn't finish that part of the journey at the start. We partly didn't do that because we thought that people would go, ”Well, you're only telling us this is good because you want us to buy the ticket.” And actually we stayed really true to our values. We didn't give somebody a good review if we didn't like it. And fascinatingly, there's a couple of shows that were on the West End in London, which were really big musicals. And we hated them. We gave them like one star, two stars. They still sold hugely on our website, it didn't make any difference at all. But we also didn't compromise. We haven't compromised who we were. So we were determined right from the start. However, we brought money in. We wouldn't change our basic DNA, our basic integrity or our values to do that. So e-commerce was a big play. We started to put on our own live events. Because I'd come from a live events background, I sort of realized one of the hardest things in live events is to find an audience. But we had an audience. So, if we put events on we could tell people. And if they were good, they'd come.

DODI: That sounds important, what he's saying about values and what's in a company's DNA. So how do brands know that they are striking the right tone?

TIM: What some people call soft stuff is about setting the right culture and more importantly, the purpose. What are we trying to achieve? If you don't get that right, every person in the company may have a different idea of where they're going. And that will end up costing. So, if I'm talking to the finance team, I'll explain to them, if we don't do this ideation process or this purpose process, it's gonna cost us more money in the long run. You do have to take people who are very process led. You know, people feel they're in their comfort zone, if their project managers know that, that's where they like to be, they like to go straight to their spreadsheets and start planning stuff out.

But if you don't know where you're going, or why you're going there, what are you planning, take the time. It's not an indulgence. It's actually an essential part of the journey. And you need to invest in that time and you need to invest in the people to allow them to do that. Because companies don't do this very often. They don't take this time. And it doesn't have to be a long period of time. It doesn't have to, but it is important work. And I genuinely don't see it as soft at all. These things that you do in this cultural realm actually allow you to attract the best talent. It may seem soft, but it has very hard and real outcomes if you don't do it.

CONOR: Which just amazingly brings us right back to Uma and the chocolate cake. This is how emotions play a really big part in our decision making. And Uma looks at which parts of our brains are doing that work, how they all work together.

UMA: When it comes to emotions and decisions, as you can imagine, these are fairly complex things that we're doing. I mean, a decision pulls in many different threads. And so while we can look at how particular brain areas seem to contribute more or less, whether those are separable and distinct is a challenge that a lot of modern neuroscience is still working through. In my own work and the work of others we've shown that liking for things, that is, how happy you are when you see that piece of chocolate cake associates more with one specific brain area called the nucleus accumbens. That is, activity in the nucleus accumbens seems to track changes in how much you like things as you experience them.

In contrast, willingness to pay for items seems to correlate more with activity in a distinct brain area, the prefrontal cortex. And so you could make an argument that your more affective or emotional value or preference for something was being represented in the commons. And your more economic value, which again, could be argued was a more cognitive value was being represented in the prefrontal cortex. Now those brain areas are highly connected to each other. So arguing that that's a distinct representation of value is itself a simplification, but you can see how the data might go back and forth between these areas. And evidence that's excellent in suggesting that these things are separable and distinct in the brain gets muddled with evidence showing how much they do connect. That distinction may not be the best one in terms of interpreting why we sometimes explain what we've done in one way but actually do things in a different way.

DODI: So, we live obviously in a world where we are inundated with images, sounds, words. How much of what we already know is contributing to faster decision making about brands?

CONOR: You mean, like I know what this brand stands for. It’s ethical in this way. It stands for values that I align with, you know, the sourcing supply chain is good.

DODI: The right values, it matches my lifestyle, all of that.

CONOR: Exactly. Those are shortcuts, right?

DODI: Yeah. So can you see those kinds of shortcuts, neurologically speaking?

UMA: That's a great question. In my findings, the brands aren't necessarily distinct. So, the right way to test something like that is to look at, for example, someone's response to a pair of silver earrings. And then you could add a Tiffany blue background to that pair of earrings and see whether the perceived value of those earrings changed from the liking perspective, the monetary value perspective, or both. Because we do know a little bit about how certain brain areas correlate with these different facets of value, we might be able to get a sense for that distinction.

Electroencephalography (EEG) is also sometimes used to get a sense for that quick, fast response versus the slower, potentially more thoughtful response. And Nobel laureate Daniel Kahneman referred to this as System One versus System Two. Again, these are loosely correlating perspectives. I would hesitate to say that they're all equivalent in terms of the psychology and the brain science, but I think they reflect an overlapping set of concepts. Whether adding that brand perfectly then changes the value in a radical sense is a little bit complicated. For example, right now, many people are feeling extremely uncertain in the current environment where not only is there political volatility, but we're experiencing a massive pandemic. So you could imagine that a brand at this point is not necessarily even offering value or the ethics, but simply security. It's a tiny piece of certainty and known information in the context of a lot of things that are uncertain and unknown.

DODI: Wait, is Uma saying that we have a different perception of a brand depending on the political zeitgeist, that brands help us latch on to what is certain in an uncertain world?

UMA: Cornflakes are cornflakes. Kellogg's cornflakes are Kellogg's cornflakes in a way that may be reassuring when you're not sure where to get your groceries or what kinds of choices you have to make.

CONOR: So, by clearly communicating to our colleagues what we stand for as a company as we go through this change, going from one well-known brand, a very well established company to something completely new, we help reduce the uncertainty of the situation that we're in. New company, new name, new owner, all of that's new. But by making a really strong statement internally as a brand, as an employer brand, about who we want to be, we at least know as a team of people as 6700 colleagues around the world, we can know and feel certain about who we are. And people connect with that as we go through what's an unsettling change.

DODI: So, have you changed your mind about brands? Would you wear a Cytiva branded t-shirt?

CONOR: I will wear a Cytiva branded t-shirt, but not because I've changed my mind about brands. But I have changed my mind about brands, about the utility of brands and what they're for. So I admit it. I'm a new brand aficianado if you could say that. It took a neuro economist to convince me to admit it.

DODI: Wow listeners, you heard it here first.

CONOR: Convince me with the science, show me the data, I'll spin on the dime. But hit me with woo-woo, and I'm not listening. But, friends really help us navigate the world. They also maybe make us buy things sometimes that we don't need. I mean, do I really need that Apple branded sleeve for my iPad™? When actually, I could use an all sewn up t-shirt around an Android tablet that is just as effective. I don't know.

DODI: So, how does Uma reconcile her research with simple everyday things she has to do herself like going to the store and not being influenced by the clever neuro marketing that's going on?

UMA: I will say that a lot of my research is actually motivated by the sheer terror of the grocery store experience. Grocery stores scare me, and here's why. We know as marketers and as neuroscientists that context matters, that everything matters. And we know that grocery stores are sending us thousands of messages at the same time ‒ the branding, the positioning, the choice sets, the way things are organized in a row, the smells coming from the bakeries, and just the variety in general. And so if all of the scientific and marketing research is true, then there's no way any of us should be able to get out of the grocery store in one piece.

Think of the fatigue from all of those factors pressing on you at the same time. And yet, we all somehow manage to pick up milk after work without having these kind of mental breakdowns. So, I think the grocery store is a great example of why it's fun and interesting to study decision making and why we have these challenges. Because we're clearly capable of taking massive quantities of information and handling it in a reasonable, functional way. So, when I step into the store, that's what I tell myself. Yes, I know 1000 things are going on. But I'm giving myself the latitude to make the choices in whatever way comes up for me at the moment.

DODI: Terror at the grocery store. That's fantastic.

CONOR: I know. It was so hard to wait till the end of the interview for that to come out. It was fabulous. So what she's saying is, as a neuro economist, as somebody who understands the science, she knows there's tons going on in her brain, but she's able, because the brain has an incredible filter, amongst other things, to focus on the outcome that she needs. She needs to go to the grocery store and buy milk and never mind all this stuff, telling her to do things.

And I think that's a real takeaway for us, no matter what the environment we're in is throwing at us. Our brains are incredible filters that allow us to stay focused on what we're trying to achieve. But brands and messaging and to Tim's point, really good storytelling help us take really good shortcuts, so that we don't need to sift out all of the information every time about what this company stands for, or that brand of car or clothes or whatever it might be, is going to bring this value to my life. So, that for me has been very interesting.

DODI: Absolutely. And I know a shortcut that we want all of our listeners to take, which is to subscribe to Discovery Matters and give us a rating. Thank you for listening.

CONOR: Thank you for listening, and see you next time.

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