Definition of brand preferences by means of the Limbic® Tool

Table of contents

List of figures

1. Neuromarketing and the Lipstick Effect
1.1. Structure of the paper
1.2. Goals and approach of the study

2. German Cosmetic Industry
2.1. Facts and Figures
2.2. Cosmetic Segments
2.2.1. Skin care
2.2.2. Colour cosmetics
2.2.3. Natural cosmetic market

3. Neuro Marketing as support for brand management
3.1. Definition of the term
3.2. Findings and methods of brain research
3.2.1. Electroencephalography (EEG)
3.2.2. Magnetoencephalography (MEG)
3.2.3. Positron emission tomography (PET)
3.2.4. Functional magnetic resonance imaging (fMRI)
3.3. Emotions

3.4. Theoretical approaches to explain emotions
3.5. Limbic system: The emotional centre of the head
3.5.1. Amygdala: The emotional appraisal centre
3.5.2. Hippocampus: The gate to the memory
3.5.3. Hyphothalamus: The anteroom of the consciousness
3.6. Interaction of the areas of the brain in decision-making process

4. Limbic® as tool for the explanation of Consumer behaviour
4.1. Emotion and Motive Systems
4.1.1. Balance System
4.1.2. Stimulant System
4.1.3. Dominance System
4.2. Limbic® Map
4.3. Limbic® Types

5. The world of brands: brand preferences and emotionalization
5.1. Definition and functions of brands
5.2. Brands and Emotions
5.3. Brand image
5.3.1. The importance of labels for cosmetic brands
5.3.2. The importance of packaging designs for cosmetic products
5.4. Brand personality
5.5. Brand identity

6. Positioning of cosmetic brands on the Limbic® Map
6.1. Definition of motivation and motive within the Consumer behaviour
6.2. Motives for the purchase of colour cosmetics
6.2.1. Collection of motives for the usage of cosmetic products
6.2.2. Derivation of beautification worlds
6.3. Limbic® analysis of colour cosmetics brands
6.3.1. Rimmel of London
6.3.2. Maybelline Jade
6.3.3. Avon. The company of women
6.3.4. Astor
6.3.5. Lancaster
6.3.6. Yves Saint Laurent
6.3.7. Elizabeth Arden
6.3.8. Marbert
6.4. Limbic® Positioning of the brands

7. Summary and Conclusion

List of literature

List of figures

Figure 1: German Personal Care market 2009

Figure 2: Market shares of druggist and grocery stores, in %

Figure 3: Limbic® Types. Distribution in the German population

Figure 4: Limbic® Map: including motives for the usage of colour cosmetics

Figure 5: Limbic® Map: Worlds of “beautification”

Figure 6: Limbic® positioning of luxury cosmetics brands

Figure 7: Limbic® positioning of mass cosmetics brands

1 Neuromarketing and the Lipstick Effect

Neuromarketing is the current discipline that generates new hope and excitement at the enterprises for understanding how the consumer works and how to make him buy their products. The meanwhile popular term “Buy button” is supposed to be located in the human brain and enable to make people buy when “engaging” it. Apart from this probably utopian intention it is certain that findings of the neuroscience has been very helpful for the marketing-oriented research work and thus for the marketing praxis. In the huge range of products brand preferences are getting more and more important for producers as well as for consumers. For decades market research institutions, and companies try to give an answer to the question how brand preferences arise and whether they can be influenced. But the classical market research methods provide an increasingly distorted image of the results as meanwhile consumers understand the goals of the survey and therefore give matching instead of honest and spontaneous answers to the questions of the interviewer. In contrast to that the neuromarketing applies instruments of the brain research and can thus see what is going on in the brains of the respondents while being interviewed. This paper deals with the application of current findings of neuromarketing to the emotionalization of brands. As an example for this intention the author has chosen the colour cosmetics market as such purchases are highly emotional. Not even the economy crisis was able to change the fact that the total sales of the cosmetics and toiletries market has been rising over the past years. Women still enjoy buying colour cosmetics in order to embellish the everyday life by indulging themselves and keeping up their appearance for the sense of well-being. Hence many people talk about the so-called “Lipstick Effect” which has been arisen from a strange theory of Leonard Lauder, head of the cosmetic group Estee Lauder. He claimed that there is a coherence between the sales of colour cosmetic articles (especially the lipstick) and a cyclical downturn which will be proven by the current figures of the cosmetic market.

1.1 Structure of the paper

Before coping with the analysis of brand preferences within the colour cosmetic market necessary theoretical basics will be described. First part of the paper (Chapter 2) illustrates current facts and figures of the German cosmetic market - with a special focus on colour cosmetics. Chapter 3 covers the neuromarketing as an economic discipline. Thereby not only the definition and required brain research instruments but also the role of emotions for human behaviour will be indicated. This will be followed by general biological interactions of the different brain areas as this is helpful for the understanding of further elaborations. Especially the functions of the limbic system will be pointed out as this area is the actual centre of control and power and therewith the setting for the beginning of neuroeconomic researches. The introduction of the study- relevant tool - the Limbic® tool - will be fulfilled in Chapter 4. The developed instrument by the Nymphenburg group will be explained in this part. Relating to the previous chapters in Chapter 5 the centre is set on the importance of the emotionalization of brands. Besides the indication of the functions of a brand for companies as well as for consumers it will mainly be gone into the correlation between emotions and brand behaviour (preferences). And so the definitions of the brand image, brand identity, and brand personality are also geared to a successful emotionalization of the brand. Finally the praxis part of this thesis will be covered by starting with an introduction of a Limbic® positioning and ending with a conclusion referring to the practical results. Details to the definition and the approach of the study will be explained in the following.

1.2 Goals and approach of the study

The general goal of this thesis is to illustrate which influence emotions and motives have on the decision-making process and thus on the consumer behaviour by means of the example of potential brand preferences within the colour cosmetics market. It will be assumed that the various consumer types, differing in their attitudes, personality, and motives prefer different cosmetic brands. For the conduction of the target the author has chosen the Limbic® tool, a neuromarketing-oriented approach. This tool is based on the junction of information of various extensive brain researches and psychological studies, and the definition of the different emotion worlds within the brain.

In the first part the Limbic® Map will be made over, by attaching specific buying motives for colour cosmetics. Those will be merged into beauty segments which shall ease the allocation of the brands to the Limbic® instructions. The second part is about the actual Limbic® positioning of mass market and luxury cosmetics brands, according to the different values and motives of the Limbic® instructions. This will be done by means of the analysis of the self-expression of the companies and compared to the external display of advertising measures and other features of the Corporate Identity. This is important as semantic qualities, brand identity, and promotional strategies influence the Limbic® profile of a company and the perception by the consumers. It will be analysed which messages can be related to the various Limbic® Types, according to their personality structures. Thereby the author leans on sources such as the web presence, claims, point of sale (POS) presentations, commercials, and other advertising measures.

Besides the above mentioned goal of the paper it is about the demonstration of the importance of a neuromarketing-orientation to the companies and an incentive to concentrate on a Limbic® positioning of their brands. Thereby the elaborated results can be used as a guideline for the promotional approach of the specific Limbic® instruction.

2 The German Cosmetics Industry

2.1 Facts and Figures

The total sales of the German cosmetics and toiletries market have been growing steadily over the past years. According to the market data of the German Cosmetic, Toiletry, Perfumery and Detergent Association (IKW) there have been two slums of the sales, in 2002 and 2004. But overall the market has grown by 14 percent since 2000. In 2009 spending for cosmetics reached € 12.83 billion, which was an increase of 1.7 percent over the previous year. Per-capita spending for cosmetics and toiletries also grew from € 153.77 to € 156.67 (cf. URL:http://www.ikw.org/pages/prodgr_tpl_marktdaten.php?page_title=K%F6rperpflege mittel&subpage_title=Marktdaten&navi_id=km&subnavi_id=marktdaten).

2.2 Cosmetic segments

The IKW classifies the cosmetics industry into hair care products, skin care products, colour cosmetics, dental and oral hygiene articles, female perfumes and fragrances, cosmetics for men, bath and shower products, deodorants, soaps and syndets (synthetic detergents), and other toiletries. As an analysis of all the segments would clearly go beyond the scope of this paper Figure 1 shows a summary of the developments of all sectors while the author will go more precisely into the markets of skin care products and particularly colour cosmetics as this segment is the element of the observation for this paper. The rising market of the natural cosmetics will also be mentioned in the following. The indicated data will be particularly drawn on the reports of the IKW unless there is another mentioned source.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: German Personal Care market 2009

Source: Based on IKW market data Personal Care products ( www.ikw.org ), updated on 01 Dec 2009

2.2.1 Skin Care

The sector of skin care products - the second largest market after the hair care market in - rose by 1.6 percent, to € 2.97 billion in 2009. Crucial for this positive development were like already last year facial care products, while skin and hand creams edged down. Antiwrinkle creams and other antiageing products are the growth engine for this sector. Not only private brands but also established brands profit from this field through diverse market launches.

The biggest sub-segment of skin care is the facial care and includes articles like cleansers, moisturisers, toners, vanishing crèmes, crèmes night care, antiwrinkle creams, face lotion, and others. The employment of all of these products stays for years at a high level due to the growth of older population and the changing progress of the sense of aging. People care more for their appearance by using skin care products in order to reflect their inner youthfulness. According to the Bauer Best Age Branch Report over 66 percent of women aged 50-69 use skin care products every day (cf. URL:http://www.bauermedia.de/uploads/media/BBA_Branchenreport_Kosmetik_2009_0 1.pdf).

2.2.2 Colour cosmetics

The biggest sales increase with 7.8 percent to € 1.44 billion was reached again by the colour cosmetics and its segments concerning the application areas complexion, lips, eyes, and nails. Four of five women nowadays use colour cosmetics and reach above all for mascara. Last year it generated a binary increase volume and is therewith the newbiggest segment with an ongoing demand for new products that promise length and volume of the eyelashes. Unlike in recent years in which always the lipstick headed the sales make-up for eyes in general gains in importance as also eyeshade and kohl have been growing above average over the last years.

The permanent growth of the colour cosmetics market is particularly due to consumers from the age of 40 which again is a proof that women try to point out their feeling of being young at heart. According to the BBA Branch Report 2009 8.3 millions of women between 50 and 69 employ colour cosmetics (cf. URL:http://www.bauermedia.de/uploads/media/BBA_Branchenreport_Kosmetik_2009_0 1.pdf).

Preferred shopping places are druggist stores but permanently increasing also grocery stores. The segment has been able to reach a sales increase of 13 percent, to € 340 million, in those two shopping categories, only during the first five months of the year 2009. But this is especially due to the trend towards private labels of the stores. Meanwhile their growth is developing above-average, what is also owing to the boost of private labels in natural cosmetics segment. While brands with discount price levels like essence climb, market leader L’Oréal has to take a little minus in sales of L’Oréal Paris but can be happy about the sales increase (especially in druggist stores) of its cheaper brand Maybelline Jade which has acceded the throne of the sales. But all in all it was a rather disappointing year for the company (cf. URL: http://www.loreal.de/_de/_de//index.aspx?direct1=00006&direct2=00006/00002&direct3 =00006/00002/00003&direct4=http://www.loreal- finance.com/v9/us/contenu/communique_finance.aspid_page=693). It looks similar at the competition Manhattan Cosmetics and Max Factor. They stand also behind the positive market development. Further drops in turnover had to be accepted by the brands Rimmel, Astor Against this trend Nivea with its Make-Up products indicates a sales increase of 7 percent, already in the first half of the year. (cf. URL: http://www.lz- net.de/dossiers/sortimente/pages/show.php?id=4826). Figure 2 shows a summary of the market shares in druggist and grocery stores.

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Figure 2: Market shares of druggist and grocery stores, in %

Source: Based on chart from LZ.net ( www.lz-net.de ), updated on 12 Aug 09

Furthermore the segment of colour cosmetics was a successful drive for the selective distribution channels. According to the German Association of Perfumeries it was able to contribute 15.3 percent to the total sales of the perfumeries, achieving € 402.4 million (cf. URL:http://www.parfuemerieverband.de/statistik.htm).

2.2.3 Natural cosmetics market

There is hardly another product category which is as close to people as cosmetics and toiletries. By cleaning, caring for, and beautifying all the parts of the body they provide people with attractiveness, well-being, and health. That is why more and more consumers look out what kind of products they actually use for body and beauty care. In the last two years the segment of natural colour cosmetics was able to reach a 50- percent-rise of the total sales (cf. URL:http://www.lz- net.de/dossiers/sortimente/pages/show.php?id=3644). In 2009 the natural cosmetics market has grown by five percent, to € 700 billion (cf. URL:http://www.cosmetic-business.com/showartikel.php?art_id=1950) and holds therewith seven percent of the total cosmetic market (cf. URL:http://www.lz- net.de/dossiers/sortimente/pages/show.php?id=3644). Natural cosmetic articles are particularly on the rise in the facial respectively skin care field but also the colour cosmetics with an organic basis indicate an upwards trend.

The favoured points of purchase are pharmacies, health food stores, and by far on the first place druggist supermarkets. Meanwhile they hold 30 percent of the sales ratio of the natural cosmetics market. But also grocery stores indicate a rate of eight percent. This is like already mentioned also due to the rise of private labels, which hold 21 percent on a value basis and 40 percent, according to quantity. (cf. URL:http://www.lz- net.de/dossiers/sortimente/pages/show.php?id=3644).

3 Neuro Marketing as support for brand management

3.1 Definition of the term

As part of the neuroeconomics the field of study involves findings of the brain research, neurochemistry, biology, psychology and results of the classical empirical consumer analysis. It shows coherencies of these fields and points out completely new improvement opportunities for enterprises. According to Hans-Georg Häusel - the current endorsement of neuromarketing - and other supportive scientists and researcher basically this field of study is the usage of the extensive findings of the brain research for marketing-oriented respectively market research-oriented activities. So the main aim of neuromarketing is to find out how purchase and choice decision process in the human brain and how it is possible to influence those decisions.

3.2 Findings and methods of brain research

Although most of the consumers claim their buying decisions were made on a rationally basis, without any emotions involved it is meanwhile proved that this is not true. Häusel indicates that 70-80 percent of all our decisions are made unconsciously and even the remaining 20-30 percent are not completely influenced by our ratio (cf. Häusel 2008, p. 70). Furthermore he leans to the findings of the neurobiologist Antonio Damasio who holds that all the essential buying decisions are made on an emotionally basis (cf. Damasio 2000, quoted Häusel 2008, p. 70). Those products or brands which are not - are simply worthless to the consumer. This points up the importance for the marketing and thus the basic goal of neuromarketing which is to understand which roles the several brain areas - especially those responsible for the formation of emotions - play when a consumer makes a decision.

There is a close link between psychological and neuronal actions. This coherency between electric signals and neuritic respectively muscle functions has been recognized very early. However it took a long time to create techniques to measure those electric signals which only last about one to two milliseconds (cf. Fonds “Jahr des Gehirns 1999”, p. 22). In the past brain research was based on the contrast of humans with damages in physical or mental functions (due to brain lesions) and “normal” people (cf. Warmbier 2008, p. 49). Meanwhile the increasing possibilities within the brain research such as electromagnetic (EEG, MEG) as well as imaging methods (PET, fMRI) enables researchers to observe functions of deeply located areas of the human brain. For marketing research those instruments offer a new approach to well-known questions. For instance, they allow indicate which brain areas are involved in emotional and unconscious processes, such as brand loyalty as marketing researchers were able to closely encircle a brain area which can be linked with the formation of brand loyalty. This way, effects of the measurements aiming customer loyalty can be tested in advance to prevent spending a lot of money for wrong activities (cf. Warmbier 2008, p. 55, 65).

3.2.1 Electroencephalography (EEG)

This method is one of the electromagnetic systems which enables to measure the electrical activity of the brain. By placing multiple electrodes on the scalp of the cranium spontaneous voltage fluctuations in an electric field - generated by a current around an activated cell - will be measured (cf. Libet 2004, p. 24). During a reaction to a specific stimulus those voltage changes will be recorded and displayed on the electroencephalogram. This way it is possible to determine the functional state of the brain and the chronological order of the activation of specific brain regions. While the spatial resolution is quite poor the temporal resolution is very high (cf. Warmbier 2008, p. 51).

3.2.2 Magnetoencephalography (MEG)

The MEG is also one of the electromagnetic methods used for the detection of magnetic fields evoked by electrical activities in the brain (cf. Schmidt/Schaible 2001, p. 393). The measurements and the localization of the magnetic fields (thus activation source) will be performed via sensitive detectors, so called SQUID’s (superconducting quantum interference devices). As magnetic fields are clearer than electric fields it is claimed that the spatial as well as the temporal resolution of the MEG is better than of the EEG.

However both methods are very important for the research of the correlation of human brain and its behaviour. Both offer high demand intervals what is very important for measurements of the very quickly proceeded information processes (in milliseconds) within the brain (cf. Schmidt/Schaible 2001, p. 396).

3.2.3 Positron emission tomography (PET)

The imaging technique PET is based on the nuclear medicine and will mostly be performed while the test person lies in a PET scanner. This method involves the injection of a radioactive marker which takes an active part in the metabolism. As activated neurons dissipate more oxygen than other neurons the activity of the metabolism is higher there and so is the amount of the radioactive substance (cf. Fonds “Jahr des Gehirns 1999”, p. 24; Warmbier 2008, p. 53). The rays of the substance provides a three-dimensional (pictorial instead of numerative) diagram of the organism and thus of the physiological functions of specified brain areas. Therefore the PET offers a very high spatial resolution.

3.2.4 Functional magnetic resonance imaging (fMRI)

The fMRI is the most recent developed method for brain research and is also part of the imaging techniques. It is the most used technique for marketing-oriented brain research. The principle of the tomography is based on the changing of magnetic fields through the change of the blood circulation. Like already mentioned, activated brain areas need more oxygen which will be provided by the blood flow. Hence blood in activated cells is more oxygenic than in inactivated cells. So the fMRI indicates the localization of differences of oxygen concentrations, and thus activated brain areas during an information process (cf. Fonds “Jahr des Gehirns 1999”, p. 24). With the help of the fMRI actions of nerve cell unions can be detected almost in real-time and thus cognitive functions like the recognition of pictures, processing of music, planning of activities, or understanding of language can be registered (cf. Hülshoff 2008, p. 478).

3.3 Emotions

In the history philosophers, natural scientists, and economists have neglected the meaning of emotions. A long time they have seen a human being as a sensible individual with a great ability to reason. Especially economists have understood the consumer as a Homo economicus - a rational and thoughtful person, always with the intention to improve its economic situation. However, over the years there always have been scientists who realized that emotions such as happiness, sadness, anger, fear, distaste, and surprise influence a persons’ life on a very high level. They enhance the memory and thus are an important source of information and feedback that helps to evaluate situations, motivate and direct our behaviour towards a specific goal.

Basically people rely on emotions to make fast and complex decisions, what sometimes can be protective or even essential for survival (for instance the distaste for a bad fish which keeps us from eating it or being petrified of a snake which makes us run away). So during a day thousands of positive and negative emotions arise. Some of them become noticeable in anger or sorrow. Others appear in the shape of happiness or pride. Feelings can emerge as a reaction to a current situation, out of a memory, and sometimes people even cannot explain why they just are feeling this way. It seems they are not greatly able to influence their emotions.

All these rather new findings were found out by neuroscientists through experiments using the above mentioned techniques. But philosophers and psychologists recognized the importance of emotions already before those instruments were developed respectively used.

3.4 Theoretical approaches to explain emotions

The authors of the book “Das menschliche Gehirn - Aufbau, Funktionsweisen und Fähigkeiten eines erstaunlichen Organs” released by the Fonds “Jahr des Gehirns 1999” name three historic theories in order to explain emotions.

In 1885 the psychologists Willian James and Carl Lange developed a theory which says that - on the contrary to the traditional theory in which an emotion is followed by the physical reaction - the bodily changes are decisive for the appearance of emotions. Figuratively this means that people are sad because they cry and happy because they smile. This hypothesis has however been disproved in 1927 by Cannon and Bard with the claim that emotions arise even without a physical alternation, and furthermore different emotions show the same reaction. For instance people cry because they are sad or because they are jubilant about something. Based on these theories Stanley Schachter and Jerome Singer developed the cognitive theory of emotions. According to this two-factor-observation a specific emotion arises out of an increasing physical agitation and its cognitive appraisal. Meaning the same state of arousal can lead depending on the cognitive interpretation of the situation to happiness or sadness. So the formation of a specific emotion depends on the external stimulus perceived from one or several senses, the cognitive appraisal of the current situation, and the bodily changes. (cf. Fonds “Jahr des Gehirns 1999”, p.76)

Most of the judgements cannot be carried out only with the ability to reason as the giving information usually are incomplete or ambiguous. Let’s assume the cognitive decision- concerned signals (LIP¹ ) would be crucial for all the daily decisions. This would mean that even if people just want to buy a normal hand lotion they would value all the advantages and disadvantages of every lotion out of a huge range - a quite long and exhausting process, especially if you think of all the other decisions which need to be done during a day.

There are close connections between emotional experiences and memory. Cognitive and emotional processes are linked as people unconsciously learn from experiences (cognitive) and remember things with an affective involvement (emotional) better. This fact allows people to make a fast and unconscious evaluation of a situation and still to make a rational decision. Damasio holds that people are not able to decide anything without the help of emotions, especially in case of complex situations (cf. Niewen/Zinck 2008, p. 43). This is why persons with a marred prefrontal cortex - which is closely connected with the limbic system - are not able to evoke stored emotional markings and therefore need to evaluate everything anew before choosing between two alternatives.

[...]

¹ Lateral intraparietal areal, situated in the cerebrum.