Using Cognitive Risk Engagement in Marketing Messages

Marketing is a fundamental function of any business or organization. Without a strong marketing mix and design maximization revenue will be limited. A study by Zhang & Buda (1999) tested the effectiveness of message framing and need for cognition to determine which types of people certain advertisements appeal. Most demographics are based in tangible concepts such as locality and income but the psychological depth of processing advertising has not been fully explored. 

All marketing messages are part of a communication. It follows a process where the sender encodes information, uses a medium (i.e.) media, is distorted by environmental noise (internal or external), decoded by the receiver, that elicits a response (i.e. to purchase or not purchase) (Yehsin, 1999). The depth by which person decodes and interprets information is important for determine marketing effectiveness. Those with a need for higher or lower cognitive engagement will naturally have different responses. 

Message framing is a concept that explains how the word choices are formulated to make positive or negative impressions in the listener’s minds. A positively framed message emphasizes the products advantages while a negatively framed message highlights the losses that result from not taking action. Products become evaluated on their economic gains and losses while mediated by consumer personality.

How these messages are framed has an important impact on the reaction of viewers. Prospect theory helps understand that risk aversion and risk prone behaviors are a result of how the message is framed (Kahneman and Tversky, 1979). When messages are positive viewers may think in terms of avoiding risk while when a message is negative people are likely more risk-prone in avoiding loss. Negative messages seem to have a greater influence in attracting interest. 

The need for cognition is another variable in the marketing mix. Cognition is associated with the ability to think about the message and process it deeper than those who have a lower need for cognition (Andres, et. al., 1990).  There are some people in the environment who want critical information to gain benefits and process information deeper while some process information at a lower rate and make decisions based on less logical motivations.  

Those with higher levels of education are likely to be more focused on the gains (i.e. positively framed messages) while those with less education are more respondent to negatively framed messages (Smith, 1996). Educated managers and experienced businesspersons are likely to pay attention to more critically oriented positively framed messages. A higher value product will require additional cognitive engagement when compared to lower priced convenience products. 

The researchers found through their study of 160 participants that framing has a significant influence on consumer’s response. Messages should be framed by cognitive predispositions of the target audience. Those with a lower need for cognition are more susceptible to negatively framed messages while those with a higher need for cognition are more receptive to positively framed messages. Expert opinions are supported by those who have lower cognition levels while such opinions are less useful for those with higher level cognition.  Higher cognition people focused on the message core while lower cognition people focused on the message context. 

Comment: Demographics and culture can change the way in which people understand and react to marketing messages. This leaves some difficulty finding ways to market within different cultures. Since cognitive engagement, or lack of cognitive engagement, is a universal aspect of being human it is less subject to cultural decoding bias. Business to Business marketers may want to focus on high cognition marketing (the message) while retail and convenient product markets may want to focus on low cognition marketing (the context).

Ahang, Y. & Buda, R. (1999). Moderating effects of need for cognition on responses to positively versus negatively framed advertising messages. Journal of Advertising, 28 (2).

Andrews, et. al. (1990) A Framework for Conceptualizing and Measuring the Involvement Construct in Advertising Research," Journal of Aduertmng,19 (4), 27-40.

Kahneman, Da. and TverBky, A. (1979), Prospect Theory: An Analysia of Decision Under RiBk., Econometrica, 47, 263-291.

Smith, G. (1996). Framing in Advertising and the Moderating Impact of Consumer Education. Journal of Advertising Research, 36 (5), 49-64.

Yehsin, T. (1999). Integrated marketing communications. Butterworth Heinemann, Oxford.

The Social Context and Social Cognition of Projected Strategy Formation

Strategy is not only the logical components of actions that lead to goal achievement. True strategy has significant social aspects based within the cognitive understanding of workers, stakeholders, and even customers. A paper by Vallaster and Muehlbacher (2012) outlines the social representations inherent within strategy formation and its social context of development. 

Strategic success must take into account actions, interactions, and negotiations of multiple actors. Each person realizes the strategy through his or her own vantage points and previous practices. Strategy must fit within others mental framework in order to be successful and fully implemented throughout an organization.

Strategizing takes includes 1.) narratives, 2.) actors personal interests, 3.) organizational design, culture and past practices, and 4.) market factors. Strategic development should take into account the multiple factors and their potential weight in order to be successful and navigate the social environment.

Individual context-dependent interpretations influence the way in which people make decisions. As new information is presented it changes past schemata to that which is in transition and finally to new schemata. Thus, each strategy is situation dependent on the understandings of those involved in its formation and those who are going to carry it out. It naturally changes they way they think about such strategies.

Strategy is also dependent on the internal workings and actors of an organization. Through the process of strategic development a company’s practices and cultural perceptions will affect a strategies fulfillment.  In other words, the way in which people think will influence how they see the strategy and its potential benefits for themselves. It is this self-interest that eventually produces "buy in".

As most strategies seek to find competitive advantages, the market and various outside stakeholders will create pressure on the strategy and influence its perception. As the human mind considers the effectiveness of potential strategies these external factors, will act in judgment and will naturally create pressures. Poor strategy that does not consider the external structure and pressures is likely to fail. 

The way in which society views itself and interacts with itself will influence strategy through social representations. Social representations are 1.) complex formations of knowledge that comes from social discourse, and 2.) socio-cognitive processes that come from that discourse. As something new enters into society’s awareness there is a communication process that comes to define it. In other words, society settles on meaning.

Strategies consist of core and peripheral elements. Core strategies are seen as logical and have shared cognitions based within the common perspectives of the participants (i.e. customer oriented service as a strategy).  According to the authors, the actor must believe in their realities and put those forward to others but should be willing to bend these understandings to create shared realities among a group of people. This produces higher levels of agreement. 

Each person within the strategy will have to make personal meaning from it. Therefore, each participant has sub-strategies related to their place within the strategy based within their memories and understandings (Barsalou, 1999). They use their past experiences to find meaning within the strategy and build personal sub-strategies from it. 

The peripheral aspects of the strategies include those who are not directly related to the strategy formation but may be impacted by it. For example, customers who have needs of quality and experience should have their information considered as this improves upon the strategies effectiveness. Without understanding the impact on the environment or others, it is doubtful such strategies will be fully effective. Ineffective strategies can lead to lower profits and lost marketplace. 

The authors bring forward the concept that the context strategy formation is as much social as it is logical. Logic is the center but its social aspects are the periphery. All strategic decisions must take into account the impact and perceptions of others. When stakeholders cannot make meaning or formulate a social connection to the strategy, it is unlikely to be fruitful. Without some type of personal cognitive agreement people will reject the strategy and the company's offerings.

The authors dance around the concept of social projection. Projection is a concept brought forward by Freud to describe how one unconsciously projects their traits onto another. Social projection in strategy is the idea that strategy is built from the inner and outer understandings of the maker(s) and can be projected forth into and from a group. For example, a company that is losing their financial and competitive position may rally their executives to formulate a strategy. Once that strategy has been created, it can be projected onto others within the organization in the attempt to foster action that fulfills the strategy. Social projection can lead to social behavior based upon varying factors inherent in the environment that lead to agreement or rejection.

Two Related Concepts:

Path-Goal

http://www.academic-capital.net/2013/06/using-path-goal-to-enhance.html

Organizational Alignment

http://www.academic-capital.net/2013/10/aligning-organizational-strategies-to.html

Barsalou, L. W. (1999): Perceptional Symbol Systems. Behavioral and Brain Science, 22 (1999).

Vallaster, C. and Muehlbacher, H. (2012). Strategy formation as social representation: understanding the influence of contexts on strategy formation. Betriebswirtschaft/Business Administration Review, 72 (5).

Scientists Invent the Thinking Microprocessor

Scientists from the University of Zurich, ETH Zurich and partners in Germany and the U.S. have developed a microchip that processes much like the human brain. Unlike clunky predecessors that react only to environmental stimuli these new chips use neurons that will use analytic abilities, decision-making capabilities, as well as short-term memories to react to their environment in real time. 

The key to this discovering is that it can take sensations from the environment like humans and process them to make quick paced decisions. As the machine picks up on environmental cues it is capable of processing the multiple sensations to make meaning out of these cues and in term devise a type of strategy and change or adjust its course of action. It works fundamentally the say way the human brain works. 

The science of neuroinformatics typically seeks to recreate artificial bundles of nerves on supercomputers in an attempt to determine how information is processed in much the same way as the human brain processes information. The field of neuroinformatics uses mathematical models, tools, and other systems to try and mimic the neuroscientific aspects of the human nervous system. 

You may ask yourself what would be the main point in developing a computer chip that works much like the human brain? The ultimate goal is to create independent functioning machines that have the ability to take cues from their environment, change their courses, and complete their missions. At present, machines still need to be run through remote control because humans still have the most efficient decision making processes available. 

According to Professor Giacomo Indiveri from the Institute of Neuroinformatics (INI) the goal is to, “…emulate the properties of biological neurons and synapses directly on microchips” (University of Zurich).  In essence, you would have an independent machine that can adjust course, behavior, and actions based upon environmental information. This processing would be limited by the sensory systems attached to the system. 

There are some theoretical problems with the process. Unless the system can build new connections, behavioral models, and hardware independently it would not be able to mechanically/biological adapt to its environment. It would be limited by its design. Furthermore, it would be a rational machine that wouldn’t necessarily be able to use emotion to further those connections to create new forms of knowledge such as intuition. Data is only half the equation while emotion is the other. According to the French Mathematician Descartes emotion hampers decision making but others have argued it is truly part of and enhances the decision making process. 

In either event, it certainly will be interesting to figure out where all of this leads. Such machines might be of benefit in space, underwater, combat situations, and places where communication has been cut off. The development of miniaturization in manufacturing is likely to make these processing systems more efficient and capable of use in multiple arenas. We may soon have a machine that think as fast as we do but would be limited in its ability to intuitively “feel” its environment in the way humans can. The good news is that you could probably still confuse such a computer with questions that require an intuitive answer based in emotional judgement where the pieces don’t create the solution.

Neftci, et. al (2013). Synthesizing cognition in neuromorphic electronic systems. Proceedings of the National Academy of Sciences. DOI: 10.1073

 

University of Zurich-Chips that Mimic the Brain

Descartes-Emotions