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The Mind of a Consumer Neuroscience in Business C onsumers are emotional, irratio- nal creatures who make decisions based on a host of factors other than thoughtful consideration, says Thomas Zoëga Ramsøy, associ- ate professor of marketing and neuroscience and director of the Center for Decision Neuroscience at Copenhagen Business School in Denmark. Among these factors are memories, emotions, and faith in brands. Traditional market research methods such as surveys and focus groups are insufficient for determin- ing how individuals choose to make a purchase, which is why business researchers are working with neuro- scientists to figure out what's going on in the consumer's brain. "The cognitive apparatus we're born with and develop as adults is not an optimal system," Ramsøy says. "We have bottlenecks and limitations, and we have inborn tendencies to stick with some things over others. Understanding these tendencies is a way of understand- ing the biological side of business." Since people don't understand why they make certain decisions, simply asking them won't uncover much information. Neuroscientists have long used equipment such as MRIs and PET scans to detect what individuals are seeing and responding to on a millisecond-by- millisecond basis. Most people believe they make decisions after thoughtfully com- paring options, Ramsøy says. "But we can use technology to follow their brain responses to products and predict which product they're actually going to choose several seconds before they believe they've made their choices." New technology is making it easier to track consumers while they're on the go. Instead of detaining subjects within the arti- ficial and noisy confines of MRI machines, researchers can wire them to smartphones, which indi- viduals can slip in their pockets. "We can do brain recordings while shopaholics are walking around a store or while gamblers are visiting a casino," says Ramsøy. Much of the current research is still deeply theoretical, Ramsøy notes, but the opportunities for applied research are enormous. For instance, public health could be improved if neurosci- entists learn how gamblers and compulsive shoppers make their choices—and Ramsøy has received funding from the Danish Research Council to study those very issues. And businesses could learn how to make their products and their marketing strategies more Crossing Disciplines, Making an Impact Today's business research is highly prized when it's multidisciplinary and can demonstrate an impact on real-world business. Here's a look at two fields that are moving beyond the boundaries of traditional academic business research. appealing to consumers once they understand what motivates people to buy. Neuroscientists have already made major discoveries, such as those in a landmark 2004 study about Coke and Pepsi that empha- sizes how greatly branding can influence consumers. Says Ramsøy, "In blind taste tests, most people are unable to tell the difference between the two colas. But if you tell them they're tasting Coke, even if you give them Pepsi, they will love the Coke much more. Brands imbue value to products. They have an impact on people's prefer- ences because memories have set up expectations." Other research has shown that if people believe the product they're consuming is expensive, they will like it better. "We've done studies with chocolate, wine, coffee, and fashion—and every time, people report they enjoy a product more if it's high-priced or associated with an esteemed brand," says Ramsøy. As neuroscience provides more information to businesses, more business schools are providing neuroscience-themed coursework. For instance, Copenhagen Business School offers both a minor and sev- eral electives on the topic, including courses on neuromarketing, neuro- economics, and even neurodesign. Graduates with deep under- standing in this field will be in high demand, Ramsøy believes, as neuromarketing becomes a more natural part of market research. He says, "Big companies like Procter & Gamble and Coke have teams of people who conduct marketing research through surveys and focus groups, but who also use the new tendencies to stick with some things them to smartphones, which indi viduals can slip in their pockets. "We can do brain recordings while shopaholics are walking around a store or while gamblers are visiting a casino," says Ramsøy. Much of the current research is still deeply theoretical, Ramsøy notes, but the opportunities for applied research are enormous. For instance, public health could be improved if neurosci entists learn how gamblers and compulsive shoppers make their choices—and Ramsøy has received funding from the Danish Research Council to study those very issues. And businesses could learn how to make their products and their marketing strategies more Kenan-Flagler Business School • The University Of North Carolina at Chapel Hill Campus Box 3490, McColl Building, 300 Kenan Center Drive, Chapel Hill, NC 27599-3490 www.Kenan-Flagler.unc.edu A Leader Inspiring Leaders Announcing The New Dean Of UNC Kenan-Flagler: Douglas A. Shackelford Excellence. Leadership. Integrity. Community. Teamwork. These are our core values at the University of North Carolina Kenan-Flagler Business School. And they are embodied in our new dean, Douglas A. Shackelford – seasoned academic leader, internationally recognized scholar and business education innovator. We are embarking on an exciting new chapter with Dean Shackelford to shape tomorrow's leaders and deliver positive and impactful results for North Carolina, the nation and the world. Please join us in welcoming Dean Shackelford to his new role. Follow our journey on Twitter @KenanFlagler. Douglas A. Shackelford Dean, UNC Kenan-Flagler Business School 24 May/June 2014 BizEd