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INTERNATIONALIZATION STRATEGIES
NEUROMARKETING
Neuromarketing is a word that exists only in the business world, but it is not a term in the theory world. NEUROMARKETING OR CONSUMER NEUROSCIENCE It involves a much broader term, what is related to it: Consumer neuroscience. Marketing is the term in business like consumer neuroscience is in theory. It is also referred to as neuromarketing, but an interesting distinction between the two terms has been made by Hubert and Kenning (2008) who proposed that consumer neuroscience refers to the academic literature, whereas neuromarketing is the term used in the industry.
- Consumer neuroscience (neuromarketing) research uses quantitative empirical research methods to measure nonconscious preferences and executive cognitive processes such as decision making. It is the application on neuroscience to consumer behaviour. Consumer neuroscience uses neuroscientific tools for quantitative evaluation of marketing stimuli, for example, advertising communications, brand images, pricing decisions, and value preference evaluation.
- Neuroscience ( Neural Science) is the study of how the nervous system develops, its structure, and what it does. Neuroscientists focus on the brain and its impact on behaviour and cognitive functions. Not only is neuroscience concerned with the normal functioning of the nervous system, but also what happens to the nervous system when people have neurological, psychiatric and neurodevelopmental disorders. They see how the brain of people behaves when making specific decision. Neuroscience is often referred to in the plural, as neurosciences. Neuroscience has traditionally been classed as a subdivision of biology. These days, it is an interdisciplinary science which liaises closely with other disciplines, such as mathematics, linguistics, engineering, computer science, chemistry, philosophy, psychology, and medicine. Many researchers say that neuroscience means the same as neurobiology. However, neurobiology looks at the biology of the nervous system, while neuroscience refers to anything to do with the nervous system. Neuroscientists are involved in a much wider scope of fields today than before. They study the cellular, functional, evolutionary, computational, molecular, cellular and medical aspects of the nervous system.
Human brains have 86 billion neurons (8.6 x 1010); neuroscientists investigate how these connect with each other and with other parts of the nervous system and the rest of the body. SO, IT IS=> Correlation between behaviour and things that can be observed in the brain of people when making decisions. Instead of us, firms would like to look at some strategies on what happens in our brain when we buy or not buy a thing, but why. (Ex. We are tired. Why? Ex. A specific product will be at the end of the supermarket because we are more prone to buy it) NEUROSCIENCES FIELDS Behavioural neuroscience: This is the study of how the brain affects behaviour. Cognitive neuroscience: This looks at how the brain forms and controls, thoughts and the neural factors that underlie those processes. During research, scientists measure brain activity while people carry out tasks. This field combines neuroscience with the cognitive sciences of psychology and psychiatry. Cultural neuroscience: This field looks at the interaction between cultural factors and genomic, neural, and psychological processes. It is a new discipline that may help explain variations in health measures between different populations. Findings may also help scientists to avoid cultural bias when designing experiments. Social neuroscience: this is an interdisciplinary field dedicated to understanding how biological systems implement social processes and behaviour. Social neuroscience gathers biological concepts and methods to inform and refine theories of social behaviour. It uses social and behavioural concepts and data to refine neural organization and function theories. How social nature of people can affect in social activity? BEHAVIOURAL ECONOMICS In order to understand neuromarketing, which is an application of neuroscience, we need to go back understanding the theory of irrational behaviour of economic decisions, how it has evolved through today’s application of consumer neuroscience. It all started with behavioural economics indeed. (Economics in the sense of theory of decision. People behave rationally we can study it making a formula, mathematical one to predict behaviour):
- we have mathematical theory
- we have people’s behaviour
We have a common set of cognitive skills that are reflected in similar decision habits. But we also bring with us a common set of limitations on our thinking skills that can make our choices far from optimal (Hastie and Dawes 2001, 2). A central focus of behavioural decision researchers, then, is to identify the common set of cognitive skills, their benefits and limitations, and to explore how they help produce observable behaviour. They are not rational but act in a very predictable way. If everyone was different there could be not theory, but if on average they act the same way is ok. People want to be accepted, so being part of the group is of essence. RATIONAL OR IRRATIONAL is a very relative term, if we want to be part of our group also something irrational may become rational. Basically, behavioural decision making is the field that studies how people make decisions. Because all types of people are making all sorts of decisions all the time, the field is potentially very broad. What has characterized the field both historically and theoretically is the comparison of actual decision making with certain principles of rationality in decision making (Dawes 1998, 497). THEORY OF RATIONAL DECISION MAKING (a) Do people perform the way that the models claim they should? How should people decide? (b) If not, how can people be helped to improve their performance? PREDICTABLE IRRATIONALITY People are not rational, not all the time, they make irrational decision which are very similar among them. Fortunately, after a lot of research and hypothesis testing, trends and concepts have emerged. And one really great thing has been discovered: While people are not logical or rational, they are very PREDICTABLE (Dan Ariely's book, Predictably Irrational, consistently shows this). Our brains evolved over a long time and have generally formed the same rules of thumb, scanning mechanisms, and other behaviours In order to understand how people behave in irrationally predictable ways, we can explore how brain works (briefly) HEURISTICS AND BIASES
How they apply to economics? Heuristics are based on practical intuitions. The heuristics and biases terms were identified by Tversky and Kahneman 1974 Science paper ‘Judgment under Uncertainty: Heuristics and biases’ and a 1982 volume with the same title (Kahneman, Slovic and Tversky 1982) We will study what heuristics and biases are (some) and see how they apply to economics and ultimately can help understanding marketing strategies People decide according to very few practical heuristic principles, instead of using the mathematical theory of 19th^ century, people use heuristic principles. ‘Judgment under Uncertainty: Heuristics and biases’ (Tversky and Kahneman 1974) “This article shows that people rely on a limited number of heuristic principles which reduce the complex tasks of assessing probabilities and predicting values to simpler judgmental operations” (Tversky and Kahneman 1974, 1124) “In general, these heuristics are quite useful, but sometimes they lead to severe and systematic error” (Tversky and Kahneman 1974, 1124). TO SUM UP We move from TRADITIONAL ECONOMICS to BEHAVIORAL ECONOMICS - > Observation of irrationality: HEURISTICS AND BIASES! Can we measure more directly the presence of biases without asking people directly (and perhaps avoid some of the biases)? Neuromarketing: physiological measures of brain activities (various ways) related to biases and irrational behaviours - > SOME EXAMPLES Can we fix biases? Or use them in a positive way? NUDGES=> A WAY TO MAKE PEOPLE MAKE THE RATIONAL DEICSION WITHOUT FORCING THEM. EX. Participation to organ donation, seeing the percentage of people deciding to donate organs. Spain was high, Italy medium, reasons may be cultural and so on. They found out that there is a problem in some countries you must decide to be part of the group which donates, in some others you are automatically in the group, but you can decide to opt out.
- You have to decide to be
- You have to decide to opt out 18 - 03 - 25
MOTIVATED BIASES
Definition: Motivated biases stem from personal desires, emotions, or self-interest, leading individuals to interpret or seek information in a way that aligns with their goals or beliefs. Why It Happens: These biases are emotionally driven and help protect self-esteem, maintain social identity, or support preferred outcomes. NEUTRAL BIASES Definition: Neutral biases occur when errors in judgment happen without clear cognitive or emotional influence, often due to external factors like framing effects or defaults rather than internal motivation or reasoning errors. Why It Happens: These biases are context-dependent and often shaped by how information is presented rather than deep-seated cognitive or emotional influences. HEURISTICS Heuristics are a way in which a way responds to some requirements of the brain in terms of decisions, a way to decide fast, immediate and intuitive. Can be efficient way to make decision but in modern life it can lead to biases. In behavioral economics, a heuristic is a mental shortcut or rule of thumb that people use to make decisions quickly and efficiently. Heuristics help simplify complex problems by reducing cognitive effort, but they can also lead to systematic biases and errors in judgment. Unlike traditional economic models, which assume individuals make decisions rationally and optimally, behavioral economics recognizes that people rely on heuristics under conditions of uncertainty, limited information, or time constraints. While heuristics often produce good-enough decisions, they can sometimes result in predictable cognitive biases.
WHY ARE IMPORTANT IN BEHAVIOURAL ECONOMICS?
They save time and effort – Allowing for quick, intuitive decision-making. They work well in many cases – Often leading to reasonable choices. But they also introduce biases – Causing predictable errors that impact economic and consumer behavior. ACTION BIAS The action bias describes our tendency to favor action over inaction, often to our benefit. However, there are times when we feel compelled to act, even if there’s no evidence that it will lead to a better outcome than doing nothing would. Our tendency to respond with action as a default, automatic reaction, even without solid rationale to support it IN EVERYDAY LIFE: A SCHEMATIC BREAKDOWN The Internet Lag Dilemma Problem: Slow-loading website or app. Instinctive Action: Repeatedly refresh the page or close and reopen the app. Reality: This doesn’t speed up the process—sometimes waiting is the only solution. The Water-Damaged Laptop Scenario Problem: Spilling water on a powered-off laptop. Instinctive Action: Frantically press the power button to check if it still works. Reality: Turning it on increases damage by pushing water deeper into the circuitry. Best Solution: Let it fully dry (e.g., in a bag of rice or in front of a fan). The Key Takeaway More action ≠ better results—sometimes inaction is the smartest move! WHY IT HAPPENS?
Modern life rewards action—whether it’s answering emails instantly or reacting to social media notifications. We are conditioned to believe that inaction = laziness or inefficiency. Example: In meetings, leaders make unnecessary decisions just to show they are in control, instead of waiting for more data. Action bias is a mix of instinct, emotion, and social pressure that drives us to act—even when the best choice is to wait. Recognizing this bias helps us make more strategic, thoughtful decisions instead of reacting impulsively. ACTION BIAS IN TRADITIONAL MARKETING
- Fast-Food Drive-Thru Menus & “Limited-Time” Deals Example: McDonald’s & Burger King Fast-food chains display limited-time menu items (“Only Available for a Limited Time!”). Consumers feel compelled to act before the offer disappears, even if they weren’t planning to buy. Marketing Tip: Highlight urgency-based offers to drive immediate action. 2. Limited-Time Discounts in Retail Stores Example: Macy’s & Nike Stores. “One-Day Sale” and “Today Only – Extra 20% Off” signs encourage shoppers to buy now. Customers fear missing out and make impulsive purchases. Marketing Tip: Use countdown sales to trigger action bias. 3. Free Samples Triggering Immediate Purchases Example: Costco & Sephora Customers try a free sample, feel engaged, and then feel inclined to buy. The act of trying creates a sense of commitment, leading to higher purchase rates. Marketing Tip: Use trial experiences to convert hesitant buyers. ACTION BIAS IN DIGITAL MARKETING
- Flash Sales & Countdown Timers on E-Commerce Sites. Example: Amazon Lightning Deals, Shopify Stores. A countdown clock creates pressure to act quickly (“Only 10 minutes left to grab this deal!”). Consumers are more likely to buy instantly rather than risk missing out. Marketing Tip: Use real-time countdowns on product pages.
- One-Click Buying & Instant Checkout Example: Amazon’s “Buy Now” Button
Reduces friction in the purchasing process. Instead of thinking, customers instantly act with one click. Marketing Tip: Reduce decision barriers with simplified checkouts.
- Cart Abandonment Emails & Retargeting Ads Example: Shopify & Facebook Retargeting. “You left something in your cart! Complete your purchase now and get 10% off.” Creates a sense of urgency and unfinished action, making customers return to complete the purchase. Marketing Tip: Automate retargeting emails & ads to nudge customers.
- Gamification & Progress Bars Example: LinkedIn Profile Completion & Duolingo Streaks. “You’re 90% complete! Add one more skill to reach 100%.” The desire to finish triggers immediate action. Marketing Tip: Use progress indicators to encourage further engagement. AFFECT HEURISTICS The affect heuristic describes how we often rely on our emotions, rather than concrete information, when making decisions. This allows us to reach a conclusion quickly and easily but can also distort our thinking and lead us to make suboptimal choices. Affect Heuristic influences decision-making by preventing humans from making completely sound, logical decisions. It forces them into patterns of thinking that are driven by emotions rather than what directly makes sense. We make decisions based on emotions. An example of this is when customers buy a product because the company stands for good values and perhaps donates to help charities. The fact that the company donates and does these positive things should have no impact on the decision because logically, people would choose the product purely based on how it functions. How does Affect Heuristic explain customer decisions? In the consumer setting, the Affect Heuristic causes humans to lean toward products that they feel an emotional connection with. A good example of this lies in patient profiles in the pharma industry. When patient profiles are included, potential consumers form a subconscious bond with that person who is also going through the same thing as they are. This subconscious bond causes customers to be increasingly impartial to the brand because they now have an emotional tie to this peer. Thus, consumers are more likely to purchase the product because of the feelings involved. WHY IT HAPPENS?
In the 1 st^ experiment:
- GROUP A=> personal description of the Fit Pro Tracker got an average of: 5.91on average
- GROUP B=> technical description of the Fit Pro Tracker got an average of: 6. on average The scale was from 1 to 10, the mean value would be 5. 1 - Since it is a little bit higher than 5.5 the product is slightly likable 2 - How significant are these results? How on the right of the mean are our results? 3 - Affect heuristics. Experiment to text the role of affect heuristic, personal description creates affection in the consumer so they will be more prone to buy it 4 - We find exactly the opposite; the result is against the effect of the Affect heuristics. It could be that:
- The question was not written as clearly as possible, maybe the respondents did not understand well the question
- A small sample can show a result that is not reliable. Larger sample reduce errors of estimation
- A bias sample. Students in the same class, same age, same fitness level, young 5 - The Affect heuristics is not good for this product because it provides an idea of a technical instrument that is efficient and not something related to personal issues In the 2nd^ experiment: DO YOU THINK THERE ARE MORE OR FEWER THAN 90 COUNTRIES IN AFRICA?
- GROUP A=> 47.
- GROUP B=> 38. ANCHORING BIAS=> ANCHORING EFFECT
The anchoring bias is a cognitive bias that causes us to rely heavily on the first piece of information we are given about a topic. Humans tend to remember and focus more on the prominent features displayed in the first part of any information displayed. When we are setting plans or making estimates about something, we interpret newer information from the reference point of our anchor instead of seeing it objectively. This can skew our judgment and prevent us from updating our plans or predictions as much as we should. It presents itself in such a way that it compels the human mind to arrive at an early hypothesis, even failing to adjust to the latter information. EXAMPLES For example, if you are out shopping for a shirt; you look through the entire store only to end up buying the first one you had picked out. Another example is, if you've set out to buy a watch for $50 and you see a watch that you like for $150, you decide not to buy it. But, if you see another watch that you like that is priced at $75, you think it’s relatively cheaper than $150 - even though it’s more than your actual budget. In this example, the watch that you see for $150 is your anchoring reference point. This is a clear example of how the Anchoring Bias affects our everyday life. WHY IT HAPPENS? The original explanation for the anchoring bias comes from Amos Tversky and Daniel Kahneman: in a 1974 paper called “Judgment under Uncertainty: Heuristics and Biases,” Tversky and Kahneman theorized that when people try to make estimates or predictions, they begin with some initial value, or starting point, and then adjust from there. The anchoring bias happens because the adjustments aren’t usually significant, leading to faulty decision-making. This has become known as the anchor-and-adjust hypothesis
- Insufficient Adjustment Theory (Tversky & Kahneman, 1974) Concept: People begin their judgment process with an initial value (anchor) and then adjust insufficiently from it. Even when they consciously try to modify their estimate, they remain biased toward the anchor.
Anchoring can have both positive and negative effects depending on the price that the individual is exposed to first. If a customer first sees a product at its original, non-discounted price, this number will become an anchor. If they subsequently see a discount offer, they will evaluate this as a great deal! Similarly, if the customer is first exposed to the product at a reduced rate, returning later to the standard price may be viewed as unreasonably high. In crafting messaging, marketers can leverage Anchoring Bias for more effective messages. The easiest way to do this is to focus on the numbers. When the target audience is uncertain about a number, they will take a guess based on the most recent number they were primed with. MARKETING EXAMPLES
- Have you ever seen the sign which reads, “Limit 12 Items Per Customer”? If you think this sign is only to prevent over-eager bargain hunters, think again.
- In a study done by Wansink, Kent, and Hoch, when this sign was placed near a display of Campbell’s soup cans, sales rose by 112%, from an average of 3. cans per purchase to 7 cans.
- Why? Because the brain anchored to the number 12 and began adjusting from there. Another possible explanation is that this also creates a bandwagon effect, because people may assume other people buy higher amounts. ANCHORING BIAS IN DIGITAL MARKETING
- Price Anchoring on E-Commerce Websites Example: Amazon & Best Buy Online retailers display the original price ("Was $199, now $129!") next to the discounted price. The original price acts as an anchor, making the sale price look like a better deal—even if the discounted price is still high. Psychological Effect: Consumers compare the price to the higher anchor, not to their actual willingness to pay. Tip for Marketers: Always show the original price prominently before revealing a discount.
- Subscription Plans – The Decoy Effect
Example: Spotify, Netflix, Adobe Subscription services often present three-tier pricing: Basic Plan: $5.99/month (Limited features) Standard Plan: $11.99/month (Popular choice) Premium Plan: $18.99/month (Extra features but costly) The highest price serves as an anchor, making the mid-tier plan appear like the best value. Tip for Marketers: Use strategic pricing tiers where the middle option feels like the "smart choice."
- Limited-Time Offers & Urgency Tactics Example: Booking.com & Expedia Travel websites use "Only 2 rooms left at this price!" alongside a previously higher price. The higher past price + urgency message creates an anchor, making it seem like a must-grab deal. Tip for Marketers: Pair anchored prices with urgency messages to drive fast decisions.
- Cross-Selling & Bundle Deals Example: Apple & Samsung When buying a smartphone online, users see "Add AirPods for $199" after seeing the iPhone’s price of $1,099. The phone price serves as an anchor, making the additional purchase seem minor in comparison. Tip for Marketers: Position add-ons relative to the primary purchase price to encourage upsells.
- High-Priced Products to Frame Cheaper Ones Example: Luxury Brands (Gucci, Rolex, Tesla) A luxury e-commerce site may show a $5,000 handbag first, making a $900 bag seem like a steal. Tesla introduces high-end models first, making its lower-tier models appear more affordable. Tip for Marketers: Display high-priced items first to make other products seem more reasonably priced.
- Free Trial to Paid Conversion Anchoring Example: SaaS Products (Zoom, Grammarly, Dropbox)
The Ellsberg paradox ... Which bag dID you choose? AMBIGUITY EFFECT-AMBIGUITY AVERSION Ambiguity aversion refers to the tendency of individuals to prefer known risks over unknown risks, even when the expected outcomes are the same. This cognitive bias leads people to avoid choices where probabilities are uncertain, favoring options with clear, well-defined probabilities Ellsberg Paradox: Demonstrates how people irrationally favor options with known probabilities over ambiguous ones, even when it leads to inconsistent decision-making. Psychological Mechanisms: Fear of the unknown—uncertainty triggers discomfort. Lack of control—clear probabilities provide a sense of predictability. Worst-case thinking—people assume ambiguity means a higher chance of negative outcomes. WHY IT HAPPENS? It has been suggested that the ambiguity effect is the result of a heuristic used to facilitate decision-making. This strategy occurs automatically and effortlessly, helping you to reach a conclusion quickly. To an extent, the ambiguity effect is an adaptive response. People prefer options that they feel well-informed about to options that they feel leave too much to the imagination. This can be useful for avoiding options for which we genuinely have too little information to go on. Even better, the ambiguity effect can lead us to seek out more information about the ambiguous option, so as to make a more informed decision. IMPLICATIONS IN MARKETING Ambiguity aversion plays a significant role in consumer behavior, influencing purchasing decisions, brand preferences, and risk perception. Marketers can use this bias strategically to reduce uncertainty and make products more appealing to hesitant customers.
- Reducing Uncertainty in Product Information Consumers are less likely to buy if they feel uncertain about a product’s features or benefits.
Solution: Provide clear, specific details (e.g., "Clinically proven to reduce wrinkles by 30% in 4 weeks" instead of "May improve skin appearance"). Example: Apple provides detailed specs and performance benchmarks for its devices to eliminate doubts.
- The Power of Guarantees and Risk Reduction People avoid ambiguous risks, so offering a money-back guarantee, free trial, or warranty helps mitigate hesitation. Solution: Use risk-reducing strategies like “100% satisfaction guaranteed” or free returns to ease purchase anxiety. Example: Zappos’ 365-day return policy makes online shoe shopping less risky.
- Leveraging Trust and Brand Reputation Established brands outperform new ones because customers see them as less uncertain. Solution: Highlight customer reviews, testimonials, and certifications to build credibility. Example: Amazon prominently displays star ratings and customer feedback to reduce ambiguity.
- Pricing Transparency Hidden fees or unclear pricing create uncertainty, pushing consumers away. Solution: Be upfront about costs, shipping, and extra charges to build trust. Example: Streaming services like Netflix use flat-rate pricing instead of complex pricing tiers.
- Avoiding Ambiguous Messaging in Advertising Vague marketing claims make consumers hesitant. Solution: Use precise, data-backed messaging rather than ambiguous or exaggerated statements. Example: Instead of "Our product is the best," say "Rated #1 by 10,000+ customers" or "Winner of the 2024 Consumer Choice Award." Key Takeaways for Marketers: Provide Clear Information – Avoid vague or complex descriptions; make benefits obvious. Reduce Perceived Risk – Use warranties, money-back guarantees, and free trials. Leverage Social Proof – Show customer reviews, testimonials, and expert endorsements.
