5 Consumer Stakeholders and the Environment m 333 Case 15 Neuromarketing Contemporary consumers have access to millions of products. There was a time when a consumer entered a store looking for a pair of sneakers and had only two options. Those days are over. First, markets have expanded to online as well as physical locations. Second, markets are now saturated with different brands, pric- ing, and payment options-all competing for consumers’ attention. A present chal- lenge for marketers is to determine what consumers want, need, and are likely to buy-both online and in physical locations. Since almost 90 percent of consumer purchasing decisions take place at what can be considered an “unconscious” or perhaps “subconscious” level, it has not always been easy to accurately identify the drivers of consumers’ buying behaviors-until now. Neuromarketing is a recent phenomenon that takes this ob- servation into consideration in order to develop marketing strategies corpora- tions can use. The term was coined in 2002 by professor Ale Smidts and refers to a practice that combines neuroscience and marketing to delve into the uncon- scious minds of consumers. Neuromarketing technology provides a starting point to understand how con- sumers react to marketing stimuli, how they make their decisions, and what moves them from a potential customer to a buyer. The application of neurosci- ence can result in “a better identification and understanding of the cerebral mech- anism that fundament the consumer's behavior.” It informs researchers of the strengths and weakness of marketing materials and tactics by measuring a per- son's brain activity (Odekerken, 2018). It yields new information as compared to already-known marketing tactics. That being said, “it is not about what neuromar- keting does, but what researchers, marketers, and politicians do with that infor- mation” (Odekerken, 2018). It does not force anyone to buy a product by hitting “buy” button in your brain; it increases the compatibility of products with con- sumer's preferences (Wieckowski, 2019). Neuromarketing technology is sub sectioned into “functional magnetic reso nance imaging (fMRI), electroencephalography (EEG), eye tracking, positron emission tomography (PET), and magneto encephalography (MEG)” (Market Re- search Future, 2020). A main tool used in neuromarketing is fMRI, a technology that allows tracking the brain’s responses when exposed to different stimuli Using an fMRI, brain activity can be recorded noninvasively, without any risks of radiation. This technology is anticipated to increase until 2023 in market share despite concerns of cost and mobility (Market Research Future, 2020). Another technology available to neuromarketers is the EEG test. EEG tests measure eleo- trical activity within the brain and can be used with software to produce several different views of the brain. EEG tests use flashes of red and yellow to show which area of the brain is engaged by the stimuli, This is considerably useful to research- ers and marketers, given that each different part of the brain correlates with a differ ent function, In addition to {MRI and EEG tests, neuromarketing also encompasses334 m Business Ethics eye-tracking and galvanic skin response (GSR) tests. Eye-tracking technology can determine exactly where a person is looking; it allows for the monitoring of pupil movement, which gives marketers a means to determine if users are having trouble locating information or navigating through a web page, or if they are fail- ing to see information altogether. Because of its usage by media and advertising companies, eye tracking has become an emerging trend and is anticipated to gain substantial market share in neuromarketing technologies (Market Re- search Future, 2020). GSR tests, on the other hand, measure the degree of electrical conductance across the surface of skin and can indicate emotional responses. Since neuromarketing has increased in popularity, several companies have become frontrunners in the market. NeuroFocus is one of the market leaders with a team of neuroscience and marketing experts from the University of California, Berkeley, the Massachusetts Institute of Technology (MIT), Harvard, and Hebrew University. The company was acquired by the Nielsen Company, a worldwide leader in marketing and advertising research, and has numerous Fortune 100 cli- ents ranging from manufacturers of automobiles and consumer packaged goods, as well as major cable television and motion picture studios. EmSense, another neuromarketing vendor, combines neuroscience experts from MIT, Harvard, and Stanford with marketing experience from Pepsi-Cola, Dis- ney, and Gillette. Like NeuroFocus, EmSense has worked with large companies like Microsoft. The NeuroFocus portfolio offers solutions for advertising, in-store display, videogaming, packaging, and online marketing elements. Sands Research is a company that offers neuroscience-based research. In addition to using tech- nology like EEG tests and eye tracking, Sands has developed its own system of scoring media, the Neuro Engagement Factor (NEF). The NEF ranks marketing elements, like advertisements, on a scale of 1 to 5 based on the level of con- sumer engagement. The company's technology has attracted clients like Sam's Club and Chevron and has also been used to conduct insightful studies on Su- per Bowl advertisements. Hyundai employed EEG technology to test consumer reactions toa 2011 test model of. Using a test group of 15 men and 15 women, Hyundai asked partici- pants to stare at different parts of the model, while monitoring the electrical ac- tivity in their brains. A manager of brand strategy, Dean Macko, stated, “We want to know what consumers think about a car before we start manufacturing thou- sands of them" (Keshav, n.d.). Macko expects the company to make adjustments to the model's exterior based on the EEG reports (Burkitt, 2009). The Weather Channel (TWC) has also chosen to use neuroscience. In this, case, TWC was looking to optimize its on-air promotions for one of its series, “When Weather Changed History.” To do this, the company teamed up with Neuro- Focus and used three different neuroscience technologies for the study: EEG tests, eye-tracking technology, and GSR. These methods tested viewers’ neuro- logical and biophysical responses to three different promotions. The study was aimed at answering four different questions: “Are the spots effective? What about each of them is more or less effective? How well do they convey the intended5 Consumer Stakeholders and the Environment m 335 messages? How do we build the most effective final versions of the spots?” To answer these questions, NeuroFocus recorded metrics like attention, emotional engagement, and memory retention. Each spot was scored based on these met- rics, providing valuable insights: “TWC's marketing team welcomed this research, because the information was clear, intuitive, quantitative, and objective. It was also well received because it helped pinpoint how we could improve the effec- tiveness of our promos.” Uma Karmarkar, a professor of consumer psychology and behavioral econom- ics, cites the example of junk-food giant Frito-Lay, which in 2008 hired a neuro- marketing firm to look into how consumers respond to Cheetos, the top-selling brand of cheese puffs in the United States. Using EEG technology on a group of willing subjects, the firm determined that consumers respond strongly to the fact that eating Cheetos turns their fingers orange with residual cheese dust. In her background note, Karmarkar cites an article in the August 2011 issue of Fast Company, which describes how the EEG patterns indicated “a sense of giddy subversion that consumers enjoy over the messiness of the product.” Ethical Issues Associated with Neuromarketing Since the field of neuromarketing is gaining momentum and attention, it has also experienced resistance from those who oppose this type of research based on ethical reasons. Among the most vocal of these opponents is the nonprofit con- sumer protection group Commercial Alert. This agency is raising awareness about the ethical implications of neuromarketing, namely: Is it ethical to conduct such research and development, since these techniques and activities could open the door to unprecedented and possibly abusive influence over consumers? The following five questions raise additional ethical concerns about neuromarketing, Ethical Question 1: Does the practice of “reading people's minds’-or at least observing brain scans to get clues on how consumers react to targeted buying practices and objects—give marketers an unfair and potentially harmful advantage over consumers? Neuromarketing practices could potentially give corporations an unfair advantage over consumers’ choices and buying activities. Because marketers could gain access to a consumer's inner thoughts and opinions, some of which the con- ‘sumer may not even be aware of, this power could easily be misused. However, it is important to note that neuromarketing—and perhaps most forms of marketing rely on subconsciously influencing consumers. For example “priming,” a common marketing tactic, involved subconscious reminders and was first used long be- fore neuromarketing was invented. Neuromarketing explains how and why some priming tactics are more effective influencers than others (Odekerken, 2018). In 2012, Target came under fire for its use of neuromarketing and its predicting abil- ity after it sent ads for pregnancy and baby products to a woman who had not yet told anyone about her pregnancy (Wieckowski, 2019). According to Fast Company, “Consumer advocates and other groups have claimed neuromarket- ers are exploiting people to ‘sell us crap we don't need’ and creating unhealthy336 m= Business Ethics and irresponsible addictions and cravings” (Randall, 2009). Advocacy group Commercial Alert agreed. In a letter sent to then-Senate Commerce Commit- tee chair John McCain in 2004, the group quoted Adam Koval, a neuromarketing pioneer, stating that this new technology “will actually result in higher product sales or in getting customers to behave the way [corporations] want them to behave.” These arguments raise an ethical question with regard to whether a company should have this type and amount of power over consumers’ buying behavior. Ethical Question 2: What if neuromarketing is used by politicians or groups with extreme political interests? Consider the effects of a political party using neuromarketing to influence voter decisions. If these groups have the power to learn from their constituents’ thoughts and opinions, they could also have an enormous advantage in persuading them to vote a certain way in elections. Some advocacy groups fear that this, power will be abused by politicians. In its letter to Senator McCain, the Com- mercial Alert group noted that “political consultants have already teamed up with neuroscientists... to conduct neuromarketing experiments to gauge the effec- tiveness of political advertising.” The power of neuromarketing could also potentially be exploited by extreme political or social groups to engage in dangerously effective propaganda cam- paigns. What if extremist regimes had had this technology? Could they have been even more powerful in their anti-Semitic campaign and perhaps faced less resis- tance from enemies around the world? Writers at Fast Company and Commer- cial Alert even go so far as to suggest that neuromarketing could be used by some politicians or extremist groups to “brainwash” the public into accepting their po- al or social viewpoints. During earlier uses of the neuromarketing in political campaigns, research focused more on political judgment. Recently, the appear- ance of political candidates to voters is the focus. A critical question becomes, “What happens when politicians know what ‘persona’ leads to the most votes?” Or, “How can one deliver a speech that will prime voters to strongly move a can- didate into a landslide win?” (Odekerken, 2018). Ethical Question 3: When does knowing an individual's subconscious thoughts cross the line of privacy invasion? Since the September 11, 2001, attacks and subsequent Patriot Act legislation, privacy has been a hot topic. The introduction of neuromarketing aggravates is- sues of individual privacy. People questioned whether recording a person's tele- phone conversations or tracking Internet activity was an invasion of privacy; gaining access to an individual's subconscious thoughts is far more serious. Con- sumers generally are concerned about privacy, and many of them seem to know that their purchase behavior is available to the company. Even so, many also be- lieve that their own thoughts are private and protected (Wieckowski, 2019). ‘Some marketers argue that this technology is advantageous in that it can re- veal a consumer's inner feelings or motivations that cannot be obtained through5 Consumer Stakeholders and the Environment m 337 a focus group, either because the person is unaware of them or because people lie about what motivates them. Consumers may consider neuromarketing a breach of their right to privacy, especially when a company may know more about them and their purchasing desires than companies divulge (Wieckowski, 2019). But shouldn't consumers have the right to disclose only the information that they are conscious of and deem acceptable to share with a corporation? Circum- venting the individual's judgment on these matters through the use of neuromar- keting could be considered an unfair violation of privacy. Ethical Question 4: Could increases in marketing effectiveness lead to higher levels of “marketing-related diseases" that are already having harm{ul effects on American society? Ethical Question 5: Related to question 4, could neuromarketing be used to irresponsibly target young consumers? ‘Some marketing practices often and more easily influence the youth in a society. Children and teenagers are known to be the easiest segments to target and per suade through mass-media advertising and other marketing tactics. Consumer protection groups have been formed to fight against corporations that are be- lieved to be unethically targeting children, particularly during children’s television programming. Commercial Alert has been a major player in this area, stating that “corporations regularly promote... to children and teenagers degraded values and products including materialism, addiction, violence, gambling, pornography, anti-social behavior, etc. Any increase in the effectiveness in the marketing of these values and products could impact the character of millions of Americans.” With neuromarketing technology, these organizations will have greater power to influence levels of demand among already-susceptible groups of consumers. The Stakeholders The focal stakeholders in this case are the neuromarketing companies, such as NeuroFocus, EmSense, and Sands Research. Other stakeholders include ex- perts in both marketing and neuroscience that invest in neuromarketing compa- nies; experts against neuromarketing; brands that use neuromarketing in their strategy; brands that do not use or support using a form of neuromarketing; neu- romarketing competitors (i.e., traditional marketing agencies); consumers; Com- mercial Alert and other consumer rights groups; political groups; the media; lawyers; and legislatures. Neuromarketing companies are forming coalitions with marketing and neu- roscience experts. Gaining the support of experts supports the argument that neuromarketing is an ethical, efficient, and effective practice. Neuromarketing companies are also forming coalitions with companies such as Frito-Lay, Pepsi- Cola, Microsoft, and Hyundai. However, experts and consumers who are not in agreement about the use of neuromarketing are forming their own coalitions to improve awareness of the ethical implications of neuromarketing. The New York Times and Fast Company, as noted earlier, have started covering the issue in338 = Business Ethics recent years. Blogs such as Robert Dooley's "Neuromarketing: Where Brain Science and Marketing Meet” (www.neurosciencemarketing.com/blog/) have cropped up to discuss questionable issues about neuromarketing. PBS has also run programming and hosted discussions on the issue on its website. A third- party certification could offer a solution by companies showing that that they received a quality neuromarketing product. Such a certification can also reas- sure customers that their rights are being protected (Wieckowski, 2019). Whether and to what extent neuromarketing practices are used in ethically questionable ways remains a topic of debate. Buyer beware and seller take care remain precautions. Questions for Discussion 1, Do you believe that neuromarketing is unethical or an innovative business practice? Explain, 2. 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