The Behavioral Economics of Branding

Of Brains and Brands

Product branding can be traced back to the Stone Age, when hunters labeled weapons in specific ways depending on their use. The term comes from the Old Norse word “Brandr,” which means to burn. Cattle and sheep had been marked with painted numbers, but the results tended to fade. Ultimately the Norse people began to use hot irons to “brand” their property, hence the name. Today, branding has moved way beyond the need to depict ownership and has become a company’s bridge to its customers.

Everyone has in their mind a network of consumer brands they associate with. We are exposed to approximately 125 brands an hour – but what makes one more memorable than the other?

One of the first things that can differentiate the identity of a brand is the impact of visuals. According to a study conducted by the University of Winnipeg entitled Impact of Color on Marketing, 90 percent of people base their judgment of a brand solely on color. But words are powerful too. For example, BlackBerry’s launch in 1999 followed a linguistic study by Lexicon, a firm that invents names for products, suggesting that the sound of the letter “b” was one of the most reliable in any language.

Douglas Van Praet, author of Unconscious Branding: How Neuroscience Can Empower (and Inspire) Marketing speaks of a dual necessity for brands. The human mind detects patterns, he says, making people feel comfort when they recognize traits they are familiar with. However, there are risks involved in following patterns, namely that the human mind may simply ignore them. A green field is not striking, but a purple one may turn heads. The key is to disrupt common patterns to trigger attention while still making people feel at ease.

However, it is only when memory begins to play a role that a bond with a brand can be created. Daniel Kahneman, father of behavioral economics and Nobel Laureate, says it’s not about the experience, but memory.

He believes people are capable of experiencing something, but if that experience is interrupted or ruined, the memory of it will disappear. In his eyes, humans are dual natured and consist of the experiencing self and the remembering self. Applying this theory, brands are much more than just a label to a consumer – they can be seen as an event or a moment they remember.

Neuroscience further differentiates between explicit memory and implicit memory of prior consumption experience. Advertising strategies were on the right path when they began to use experts to advertise products in the ‘60s but the scientific demonstration only just arrived. Recent research proves that showing an expert or a celebrity spokesman near a product strengthens the link between memory and preference.

Neuroscience can analyze the inner workings of the mind. And soon it may be able to influence it. MIT scientists Steve Ramirez and Xu Liu are two of the many researchers working on making Eternal Sunshine of the Spotless Mind a real possibility. Their method? “We are trying to shoot lasers into the brain.”