Hsu, Ming. Customer-based brand equity: Insights from consumer neuroscience. in Moran Cerf and Manuel Garcia (eds.) Consumer Neuroscience. MIT Press, Forthcoming.

This review describes how insights from cognitive and behavioral neurosciences are helping to organize and interpret the relationship between consumers and brands. Two components of brand equity—consumer brand knowledge and consumer responses—are discussed. First, it is argued that consumer brand knowledge consists of multiple forms of memories that are encoded in the brain, including well-established forms of semantic (attributes and associations) and episodic (experiences and feelings) memory. Next, it is argued that there exist distinct forms of consumer responses that correspond to distinct behavioral systems—a goal-directed system that captures valence of attitudes and preference for a brand, and a habit system that captures previously learned values but no longer reflect ongoing preferences. Finally, a neuroscientifically-grounded conceptualization is proposed with the aim of ultimately improving measurement of brand equity and its effects on financial returns.

• The average number of planets that potentially support life, which WE DO NOT KNOW.
• The fraction that develop life at some points, which WE DO NOT KNOW.
• The fraction that develop intelligent life, which WE DO NOT KNOW.
• The fraction releasing detectable signs into space, which WE DO NOT KNOW.
• And the length of time releasing detectable signals, which WE DO NOT KNOW.”

Neuroscience either tells me what I already know, or it tells me something new that I don’t care about”.

The problem, not always but often, is that it lets someone else define the objective. Now you are solving someone else's problems, rather than what you are actually equipped to solve. Moreover, the problem with “other people’s problems” is that they are often intractable, or where the value of the returns is one-sided.

For example, I’ve had people ask for something like this, “I think our brand efforts are really reaching our target audience, but it’s not showing up in the standard metrics. Do you think you can find something in the brain that would show our effectiveness?"

Lest you think this is just practitioners lacking in scientific knowledge, here’s some from academics. “This type of behavior doesn’t make sense under any of our standard models. Maybe there’s something hardwired in our brains that produce these weird choices?” Or to paraphrase my favorite, Hey, I have this theory, can we test to see whether there’s support for it at the neural level?”

So yes, I think the current state of neuromarketing has many shortcomings, but I thnk the biggest one is that we’ve been letting others define our questions.

Title: Oscillatory mechanisms underlying decision-making under uncertainty

Abstract: Despite tremendous recent progress in elucidating core neurocomputational components that underlie economic decision-making, we still know little about the mechanisms that coordinate the various signals within and across various brain regions. Here I will discuss results from recent electrocorticography (ECoG) studies suggesting a fundamental role of neural oscillations in governing intra- and inter-regional communication during decision-making. Specifically, we recorded local field potentials in the prefrontal cortex of in neurosurgical patients who were engaged in a gambling task. ECoG signals reflect the coordinated activity of ensembles of hundreds of thousands of neurons, and are uniquely poised to reveal fast, circuit-level computations in the human brain. We found that different aspects of the gambling game generated event-related changes in oscillatory activity across multiple areas and frequency bands. Furthermore, oscillatory interactions between lateral and orbital prefrontal regions support cognitive processes underlying decision-making under uncertainty. Together, these data highlight the importance of network dynamics in characterizing neural basis of economic decision-making.

Title: Inside The Mind of the Consumer: Thoughts, Feelings, and Experiences

Abstract: Researchers and practitioners have long relied on self-report methods to understand how consumers evaluate, choose, and experience different product offerings. These methods, however, have remained largely unchanged since their introduction decades ago and have a number of well-known limitations. As a result, there is growing interest in brain-based approaches that may enable consumer researchers and managers to directly probe customers’ underlying thoughts, feelings, and experiences. Here I will describe recent progress and open questions in using such methods in understanding customer mindsets.

• How presentation of information affects consumer decisions in the real word: There is a lot of handwringing in basic sciences about the relevance of research for the "real world". Suzanne Shu presented some work on social security savings decisions and how different forms of presentation of information affects their savings decisions. Seems like a really natural area for consumer researchers. Standard economic theory provides very little guidance, and consumer researchers probably know more about this than anyone else.

• Value of interdisciplinary research: Perhaps my favorite session was the roundtable on interdisciplinary research, and broadly on the future of the discipline of consumer research. My impression is that in many other fields this type of discussion is done behind closed doors by a bunch of VSPs (very serious persons), so it's refreshing to see these discussions in person. Broadly, I think this is excellent news for those of us in neuromarketing/consumer neuroscience.

  • Broader training for students across disciplines: This might seem obvious, but one rarely hears that from psychology, and I dare say never from economics.
  • Increasing the value of conceptual/theory work: Consumer research is almost exclusively empirical these days. This one is going to be hard to change. Biology is iin a similar position. Not sure what to do about that one.
  • Need for educating reviewers and editors: I think this one is the most encouraging sign for me. There was a serious conversation about how to encourage innovative research without lowering standards. Again, seems so obvious, but really hard given the impetuousness of academics to get anyone to recognize the problem, let along think about solutions.

Here’s what each looks like to me:

• Status quo: Assume that consumer can be trusted to tell us the truth, at least most or all of the time. Otherwise it becomes difficult to convince clients to buy what we have to sell.
• Neuromarketing: Assume that consumers cannot be trusted, at all. Otherwise it becomes difficult to convince clients to buy what we have to sell.

Assume that consumers cannot be trusted.

It doesn’t require too much common sense to see what these positions are incompatible because of how each positions their products and services. The more reasonable, but maybe not as sexy or eye-ball attracting, position has got to be:

• Neuromarketing 2.0: Sometimes consumers can’t or won’t tell us the truth. We will help you figure out when those sometimes are.

  Oh, we might even be able to tell you what consumers are not revealing, but don’t trust us until we can validate it in some way.