Every purchase tells a storyâ¦

Marketers are using neuro-science to understand how marketing impacts on the way we think, but transactional data still has the power to pinpoint the changes in purchasing. By David Reed

Brave New World is often seen as a satire on modern con-sumer society. A segmented population is kept under control through a combination of sex, shopping and soma, a pleasure drug.

Substitute marketing for soma and it is possible to see close parallels between Aldous Huxley’s vision and our reality. Global corporations target audiences, fill their minds with attractive images, and offer a limitless choice of products to consumers.

If that sounds fanciful, then neuro-behavioural science is beginning to reveal the extent to which our minds have been highly conditioned by marketing. And the depth of data held on individuals by big companies is starting to allow them to spot every change of behaviour, even before we are aware of it ourselves.

Tesco is at the apogee of data collection and modelling in the UK (and possibly the world). Through its Clubcard, it links individual consumers to their transactions, allowing analytical consultancy DunnHumby to model and profile every dimension of its customers.

Spot the change

“Transactional data enables us to identify changes in consumer purchasing – for example, if somebody starts buying baby food,” says Martin Hayward, director of consumer strategy and forecasting at DunnHumby. “It does allow forecasting.”

Companies are beginning to realise just how much intelligence can be extracted from the data they already hold. In the retail sector, the ability to spot trends and work with suppliers to respond to them is vital to commercial success.

“When we build a segmentation based on till receipt information, we are trying to understand what customers are doing and what else they might like. Then we back that up with research,” says Ian Scholey, associate director at retail consultancy 5One.

He points out that behavioural data is a reflection of broader demographics and values. Lifestage will determine many buying decisions, for example.

There is a growing sense that personality can be unpicked, often using a relatively small number of variables or survey questions. By applying these answers to hard data, the consumer’s behaviour becomes highly susceptible to forecasting.

“People do display behaviours consistent with their personality type, for example, with a car or how they spend their money. People who follow the pack might tend to be more likely to buy on credit, for example” says Steve Mattey, partner at consumer insight consultancy Tree London.

By understanding consumers, marketers can align products and messages more closely with the target audience. As Mattey puts it: “The only way to predict the future is to control the future.”

The most extreme example of this desire to get inside the consumer’s mind is neuro-marketing. By using functional magnetic resonance imaging (fMRI) scanners, researchers can literally get inside the brains of individuals.

This technology is increasingly being applied to understanding how marketing impacts on the way we think. The benchmark study, carried out by Baylor University in the US, used volunteers who took the Pepsi/Coca-Cola taste test. When served blind, the group showed no preference either way. The individuals were then shown an image of either a blue or red can and given a sample of drink, each in a random order. The fMRI scanner was used to see what happened to their brains.

The result? Coke’s image made the hippocampus and pre-frontal cortex light up, while the Pepsi image had no effect. While the drinks may effectively be identical, decades of marketing by the Real Thing have reached deep into the consumer consciousness.

What we know

“What neuro-marketing is doing is verifying what we already know,” says Paul Edwards, chief strategy officer at Publicis UK. “It is not moving us forward in terms of prediction, but it is showing what happens when you go down a particular creative route.”

Where he believes the technique comes into play is in unpicking what the consumer does at the point of purchase. “Neuro-science is helping us to understand the way consumers change their buying patterns,” he says.

Whether identifying thought patterns by brain scans or embedded social values by questionnaires, these techniques are only useful if they have a practical outcome for marketers. Since marketing constantly talks about changing consumer behaviour, however, it is no surprise that psychology and science are being brought to bear on the problem.

And to a large extent, behaviour is predictable. If it was not, there would be no gains achieved by applying statistics to produce predictive models.

Higher intelligence

It is tempting when presented with the gigabytes of data now available via retail EPOS systems to assume that the answer must lie somewhere in those data rows. But compared to the low-level sampling from market research which has typified customer insight until now, transactional data certainly delivers a higher order of intelligence.

“I’m a real advocate of the power of transactional data,” says Roy Barker, managing director of analytical house Wegener Results. “One of the things we do is to identify patterns that are away from the norm. We can build individual-level models that tell you whenever a transaction is unusual,” he says.

Marketing has always been a conflict between two objectives – getting buyers to change behaviour and trying to keep them loyal. To know when things are changing, you have to know what staying the same looks like. That is what high-volume transactional data provides.

To achieve change, you have to know what will trigger an unusual event. Science and psychology, combined with hard data, are making those insights easier to achieve. But there is still some way to go. As Edwards says: “The day we can predict individuals, we’ll all be out of work.”

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