The Impact of Neurology and Behavioral Psychology on the Creation of Modern Marketing Databases

AUTHOR

Jacek Unold
The Wroclaw University of Economics
Komandorska 118/120
53-345 Wroclaw,
Poland

ABSTRACT

One of the best known specialists in marketing, Ph.Kotler, announced in 1999 that we are moving into the new marketing era. We must not thing of marketing as “business as usual” any more, because we are surrounded by a totally new environment; the world of new media. The new era of marketing has two basic determinants:

  • we have to put our company on the Internet very strongly, so that people can get information readily,
  • we have to go into database marketing so that we can learn a lot about our customers.

While the first issue seems to have been described sufficiently in the world literature, the second one still has many unknown aspects.

Usually, companies try to directly implement databases into their marketing activity, which means technological support of operational or tactical, at best, tasks. This approach reminds a typical situation described by M.Hammer and J.Champy in their idea of Business Process Reengineering: imposing a new technology on obsolete processes can only make matters worse. The modern and effective implementation of databases calls for a significant reinvention of marketing processes.

One of the most promising approaches in this domain is based on the achievements of neurology and behavioral psychology. The knowledge derived form this area helps understand how different media are perceived, and the reasons why people behave in a certain way. We can assume that human beings have been “preprogrammed” in the process of evolution, and this is reflected by the construction of the brain. The oldest part of it, consisting of the hypothalamus and the limbic system, is responsible for the most basic functions: drives, emotions, hidden desires. The youngest part of the brain, neocortex, controls the logic, reasoning, intellect.

These two parts of the brain are like two generations of computers, not much compatible with each other. However, the process of communication is the result of interaction and integration of those two separate systems, and the accent is shifted form one to the other, depending on the market situation. These observations help understand the very nature of consumers’ preferences and buying patterns.

The traditional approach to marketing was based on the market research. It involved series of questions, which the customers were supposed to answer. Even assuming the integrity and good will of the examined, the answers reflected the processes in the neocortex. We call it a reported information, and this information is only declarative. At the same time, the real buying behavior was usually different, and not because of the lack of integrity or dishonesty of the asked client. The actual behavior simply reflects the processes in the limbic system, and these processes are based on emotions.

The real advantage of marketing databases is the unique possibility of gathering, storing and processing the transactional information (behavioral information). It is the only true information about the market behavior, because it reflects the actual buying patterns. The value of information stored in the marketing database depends on whether it describes the processes of neocortex or those of the limbic system of the client’s brain. Thus, the functional structure of a marketing database should reflect the character and functioning of the human brain. It is possible due to the technological advancement in this area; the memory capacity allows for registering millions of real transactions. In the process of gathering and storing the marketing information, the database expands and develops itself, which is a self-accelerating process (self-learning phenomenon). A marketer does not have to ask questions any more, now it is just a matter of “listening” to the database.

These observations suggest that modern marketing databases should contain the transactional (behavioral) information only. We should avoid mixing it with reported information. This new approach releases us from complicated musings and analyses of the mysteries of human nature. The prediction process in marketing becomes very simple, because we take into account only these factors of a market situation, which really did happen in the past. It is the most effective way of developing one of the most recent and effective trends in business, the relationship marketing.

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