Ethical Responsibility of Neuromarketing Companies in Harnessing the Market Research – a Global Exploratory Approach

Pop, Nicolae Al.; Dabija, Dan-Cristian; Iorga, Ana Maria Article Ethical Responsibility of Neuromarketing Companies in Harnessing the Market Research – a Global Exploratory Approach Amfiteatru Economic Journal Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Pop, Nicolae Al.; Dabija, Dan-Cristian; Iorga, Ana Maria (2014) : Ethical Responsibility of Neuromarketing Companies in Harnessing the Market Research – a Global Exploratory Approach, Amfiteatru Economic Journal, ISSN 2247-9104, The Bucharest University of Economic Studies, Bucharest, Vol. 16, Iss. 35, pp. 26-40 This Version is available at: https://hdl.handle.net/10419/168812 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by/4.0/ AE Ethical Responsibility of Neuromarketing Companies in Harnessing the Market Research – a Global Exploratory Approach Amfiteatru Economic 26 ETHICAL RESPONSIBILITY OF NEUROMARKETING COMPANIES IN HARNESSING THE MARKET RESEARCH – A GLOBAL EXPLORATORY APPROACH Nicolae Al. Pop1, Dan-Cristian Dabija2*, Ana Maria Iorga3 1) 3)The Bucharest University of Economic Studies, Romania 2)The Babeş-Bolyai University of Cluj-Napoca, Romania Abstract A key challenge in the 21st century is identifying how to satisfy consumers’ needs in the best manner possible, whilst ensuring companies’ financial profitability. Scientists play a major role in achieving this goal, as research methods, techniques and tools have continuously evolved. In the last two decades, the development of these instruments has seen an important boost, as neuromarketing methods and techniques added depth and accuracy to traditional studies. The main aim of this paper is to highlight the role and importance of neuromarketing research techniques in the evolution of neurosciences and to explain how these techniques are used in market research. One of the most important challenges for companies who offer neuromarketing services is to stick to ethical principles when performing the investigations. This is an obligation they have both towards the beneficiaries – the companies providing products or services – and towards their consumers as well. This challenge has always been a subject of dispute between the advocates and critics of neuromarketing. Thus, this paper deals with this and other controversial topics. It starts with analysing a traditional persuasion model that has inherently been influenced by the neuromarketing research features. Then, it addresses the positive and negative aspects that subjects might have to face throughout neuromarketing studies, always bearing in mind the current Ethical Code of Conduct issued by the Neuromarketing Science and Business Association (NMSBA). An exploratory online research helped the authors test several hypotheses on ethical issues that neuromarketing companies have to handle. The research was performed on 67 neuromarketing companies from around the world that are members of the NMSBA. The findings are relevant both to researchers and neuromarketing companies, even the Romanian ones, who can use them used as insights. Keywords: neuromarketing, neuroscience, market research, ethical responsibility, experimental research. JEL Classification D87, M30, M31 * Corresponding author, Dan-Cristian Dabija – [email protected] Organizations’ responsibility to consumers AE Vol XVI • No. 35 • February 2014 27 Introduction The development of neuroimaging techniques over the last years and their application outside the medical field has opened new research opportunities with respect to consumer behaviour or the own decision-making process. Consequently, new research fields, such as cognitive neuroscience (Gazzaniga, 2004) and social neuroscience (Cacioppo and Berntson, 2005) have emerged. One of these fields, neuroeconomics, is on the border between neurosciences and economy and attempts to explain the decision-making process by developing a neural model (Egidi, 2008). Contrary to the classical economic theory which states that people generally make rational decisions to maximize their own benefit (Camerer and Fehr, 2006), present studies show that 95% of our decisions are taken at the subconscious level (Zaltman, 2003). Neuromarketing emerged as an expanded field of research on neuroeconomics. The term was introduced by professor Ale Smitds of the Erasmus University in Rotterdam (Roebuck, 2011) as a reference to the application of neuroimaging techniques in the market research. The main difference between neuromarketing research and traditional research methods lies in the fact that with the former the subjects are not asked to express their opinion regarding a particular topic. In other words, oral statements are not taken into account as results are only obtained by recording the participants’ brain activity. By getting into the human subconscious mind, the neuromarketing research allows the identification of the subjects’ direct reactions to the stimuli they are exposed to – products, packages, services signalled by logos, visual, olfactory, tactile, gustatory or auditory elements characterizing the goods that meet the consumers’ needs (Pop et al., 2009). Bright House (USA) is the first company referred to in the literature (Cacioppo, Berntson, 2005) that used the term neuromarketing. It also issued a press release to announce the creation of a market research department which uses the medical imaging technique. Its purpose was to use investigation techniques and tools to map the subjects’ brain activity in a highly empirical decision-making field, where decisions are made in highly randomized or indeterminate universes (Pop, 2008), and apply the rules of the scientific endeavour to better consolidate the structure of its offer. The most frequently cited experimental study on the application of neuromarketing to ensure demand orientation, “Cola Brains”, was published in 2004 and contained the research results of professor Read Montague at Baylor College of Medicine in Houston, Texas (McClure et al., 2004; Pispers, Dabrowski, 2011). The team headed by professor Montague used the functional magnetic resonance imaging to scan the brain of a group of subjects while they were drinking Pepsi Cola or Coca Cola. Certain brain areas were activated according to the extent to which the subjects were or were not aware of the two brands. Thus, when subjects, being aware of what they were drinking, said they preferred Coke over Pepsi Cola, an area of the frontal lobe was being activated. This is the brain area that coordinates attention, controls the short-term memory and oversees the thinking process. On the other hand, when subjects were unaware of what Cola brand they were drinking, an area of the limbic system was activated, responsible for the emotional and instinctual behaviour (McClure et al., 2004), and almost all believed the taste of Pepsi was nicer than that of Coke. The conclusion of the experiment was that Coke held a dominant position in consumers’ subconscious while the preference for Pepsi was mostly based on taste or experience felt during the consumption of the brand. The literature highlights differing views on the place of neuromarketing within the scientific spectrum. Viewed mostly as a border science or a management tool (Fischer et AE Ethical Responsibility of Neuromarketing Companies in Harnessing the Market Research – a Global Exploratory Approach Amfiteatru Economic 28 al., 2010), neuromarketing may also be approached as a valid research field, being more than the mere application of neuroimaging techniques in marketing products and services or brands (Lee et al., 2007). Professors Foscht and Swoboda state that “…neuromarketing or consumer neuroscience is the technique that investigates the reasons behind individuals’ decisions to buy various products or services, depending on which brain areas are activated” (Foscht, Swoboda, 2011). Hubert and Kenning (2008) view neuromarketing as a useful tool to conduct businesses. They go further and propose that neuromarketing should be renamed “consumer neuroscience”. On the other hand, Constensen (2011) believes that neuromarketing is a relatively new and controversial interdisciplinary research field, a component of marketing, by means of which one can properly interpret psychological and neuropsychological knowledge necessary to understand customer behaviour. According to other authors (Georges, Badoc, 2010), neuromarketing is the process that enables the knowledge and understanding of the mechanisms used by the human brain to process information. Kotler (Kotler et al., 2009; Kotler, Keller, 2012) believes that neuromarketing is a means to describe the activity of the brain under the impact of marketing stimuli, which, by means of specific tools, correlates with the psychological reaction following the subjects’ exposure to certain ads. Thus, neuromarketing helps entrepreneurs come up with basic ideas when making decisions about approaching the market and the clients and establishing communication with business partners. Labelling neuromarketing as a science per se entails designing and developing a behavioural model capable of highlighting the marketing stimuli that generate a particular behaviour. Fugate (2007) believes this would qualify as a feasible endeavour on condition that it comes from marketing practitioners rather than from theorists. One attempt to develop a behavioural model was made by Butler (2008), who believes that four different visions should be combined and interconnected within the model – reporting the results of basic research conducted by academicians, reporting the results of applied research conducted by neuromarketing companies (Doherty, 1994), media reporting of research findings from neuromarketing, and power processes, that is, decisions made on the basis of neuromarketing research. The classical behaviour research methods and techniques emphasize the visible stimuli which trigger a particular consumption and/or buying behaviour. However, due to neuromarketing investigations, researchers are now getting closer to the invisible side of neural connections (Pop, Iorga, 2012), which leads to a deepening and significant refining of market research. This should not be understood as an attempt to give up the classical market research methods and techniques but as an expansion of the scope of scientific knowledge. 1. Neuroimaging techniques used in neuromarketing Neuromarketing research is conducted with the aid of equipment that until recently was only used by the medical science. The following are the most frequently employed procedures: electroencephalography (EEG), galvanic skin response (GSR), functional magnetic resonance imaging (fMRI), magnetoencephalography (MEG) and eye-tracking (ET) (Kotler et al., 2009). Organizations’ responsibility to consumers AE Vol XVI • No. 35 • February 2014 29 Electroencephalography (EEG) records the activity of neurons under the scalp. Of particular interest for the neuromarket research are the alpha and beta rhythms. Researchers measure the level of decrease of the alpha rhythm to be replaced by the beta rhythm, a situation characteristic of the volitional cognitive activity. The underlying principle of EEG investigations is the “Frontal Asymmetry Theory” developed by Davidson (1979, 1993, 1999, 2000, 2004). Galvanic skin response (GSR) measures the variations in the skin conductance, induced by the activation of the autonomic nervous system (ANS). Since the activation of the ANS is an index of arousal, it follows that GSR measures the degree of arousal triggered by a stimulus (Ravaja, 2004), thus being a better predictor of market performance than the statement-based methods (LaBarbera et Tucciarone, 1995). One limitation of the GSR measurement is the fact that it only records the intensity of emotional reactions, but not their valence. In other words, it is impossible to determine whether the recorded reaction is positive or negative as both reactions may feature a similar GSR recording (Hopkins & Fletcher, 1994). Functional magnetic resonance imaging (fMRI) is a technology that allows, due to its very good spatial resolution, the study of the neuronal structures/networks situated deep inside the cerebral hemispheres. The operating principle is based on recording the changes in the magnetic field adjacent to the blood vessels that supply nutrition to the neuron. This change is caused by the decrease of blood oxygenation as active neurons consume an increased volume of oxygen (Huettel et al., 2009). Consequently, a new term was coined, namely, BOLD signal – Blood oxygen level dependent (Tank et al., 1992). Magnetoencephalography (MEG) records the magnetic field generated by the activity of synchronized neurons (Roullet, Droulers, 2010). Featuring a very good temporal resolution, this technique allows the analysis of brain processes almost in real time (a precision of milliseconds). Eyetrackers (ET) allow the measurement of eye fixation by recording corneal reflections determined by infrared radiations. Two kinds of equipment may be used: fixed (fastened onto the screen on which the research material is projected) and mobile (such as glasses put on the subject’s head). This device is resorted to because it is believed that the mental attention is directed toward the object on which the visual attention is focused (Kalliny, 2010). To implement the research, these techniques may be used not only separately but also in combination (for example, EEG with GSR and/or ET). Thus, information can be collected from several sources and researchers may establish correlations between the brain activity, the degree of arousal and fixation areas. For instance, a great GSR variation correlated with an individual’s positive attitude recorded by EEG describes the impact of an ad on the subject (Kotler et al., 2009). A further correlation between the individual’s reaction and the point of gaze may identify the cause of that particular reaction. This procedure also helps determine the actual elements of a video clip or message layout that triggered a particular positive and strong reaction. Although the costs associated with implementing this kind of research are relatively high – amounting to thousands of euros – the results are particularly significant. The application of the fMRI technique revealed that the subjects’ exposure to ads activates eight out of nine investigated brain regions. In other words, the subjects’ brain reacts in a particular way to the content of the ads (Butler, 2008). Another, more interesting result is the fact that, unlike what had been assumed previously, most purchasing decisions are made instantaneously, AE Ethical Responsibility of Neuromarketing Companies in Harnessing the Market Research – a Global Exploratory Approach Amfiteatru Economic 30 randomly and unwittingly (probably due to a great number of stimuli at the point of sale) (Kotler et al., 2012; Yoon et al., 2006). 2. Neuromarketing and market research ethics The ethic dimension of neuromarketing is one of the biggest and most sensitive challenges with respect to its application in the field of the market research (Jamnik, 2011). Ever since it emerged as a science, neuromarketing has raised many controversies and ethical issues among researchers (Dinu, 2008). Such reactions are triggered by the research methodology which some authors believe has a great potential for intruding into the subject’s mind (Canli, Amin, 2002; Illes, 2003; Hyman, 2004; Kennedy, 2004; New York City Bar Association, 2005). The media’s sensationalized approach to neuromarketing only enhanced people’s distrust of the new technology. Some media reports mentioned the discovery of the “buy button” in the human brain (Dias, 2006; Lindstrom, 2010). To a certain extent, this would allow people have their brain “scammed” and be manipulated to make buying decisions in favour of a particular company or product or service (Neuroscience, 2004). As is the case with any emerging field, neuromarketing has both ardent advocates and outspoken critics. Advocates of neuromarketing claim this is beneficial to both companies and buyers because it will foster the development of products that are really desired by people (Singer, 2004; Erk et al., 2005; Thompson, 2005). On the other hand, critics warn that people’s ability to make informed decisions about purchases and/or consumption will be compromised (Huang, 1998; Herman, 2005; Thompson, 2003; Lovel, 2003). Wilson (2008) and his colleagues tackle the ethical dimension of the impact exerted by marketing (and, more recently, neuromarketing) actions on the individual’s freedom of choice (Holban, 2010). They propose a persuasion model that fits both the traditional marketing actions, such as the development and implementation of promotional activities, and activities based on the neuromarketing research. The traditional persuasion model represents a theoretical framework that explains how marketers have conducted effective promotional activities in time. The model developed by Wilson consists of several sequential phases (screening, exposure, information gathering, message creation, intervention and buying). After selecting relevant individuals of the investigated target group, they are presented with a marketing stimulus and then feedback on the effect of the stimulus on the subjects is collected. Based on the collected data, the marketing message is then developed, advertising a promotional event. During the intervention phase, consumers are exposed to the resulting promotion and, depending on their reaction (rational and/or emotional), they will show a particular attitude towards the offer. This attitude will further lead the subjects to accept (purchasing decision) or reject the offer (Foscht, Swoboda, 2011). During the screening phase the subjects’ brain activity is recorded through neuromarketing techniques, thus providing information on their subconscious reactions. The data is then analysed to develop a marketing message aimed at triggering affective areas of the brain associated with pleasure and reward (Wilson, 2008). Neuromarketing research is currently conducted on well-defined samples that allow the statistical validation of results. Current research lays the ground for the application of Organizations’ responsibility to consumers AE Vol XVI • No. 35 • February 2014 31 personalized marketing that could be attained by applying individual-specific stimuli. Furthermore, researchers claim that it will soon be possible to monitor a subject’s brain activity throughout his/her visit at the store (supermarket, hypermarket, proximity store etc.) (Foscht, Swoboda, 2012). A serious dilemma faced by researchers and the companies willing to implement these models is the ethical nature of the market research conducted by means of neuromarketing techniques. With the traditional model potential intrusion on the subject’s privacy lies in the fact that s/he is not fully informed about the subsequent use of data collected during the screening phase. With the neuromarketing technique, however, the procedure is much more complex. While the confidentiality of data on the brain activity must be ensured, one has also to deal with the property rights to the recordings, the rights of subsequent use and distribution to third parties (Wilson, 2008). The neuromarketing research allows not only the identification of emotions triggered by the marketing message or a particular product but also the establishment of correlations between these emotions and the elements of the message (or the product characteristics) (Butler, 2008). The ethical issue appears when this feedback is used later to create a message aimed at boosting sales but which does not reflect faithfully the reality about the product characteristics (Wilson, 2008; Tănăsescu, Popescu, 2012). This could mislead consumers into buying goods that do not meet their needs and are not fully up to the promises made. The rules of ethical marketing reject categorically such practices. Moreover, it is believed that the economic success of such an action depends explicitly on the trust that the subjects place in the neuromarketing research and its results (Brammer, 2004). However, such trust cannot be built outside the rigour and good practices of the research ethics (Butler, 2008). Another issue worth mentioning is consumer’s consent for being continuously monitored and exposed to marketing messages. For instance, there are software programs that record and interpret an individual’s facial expression and even “read” a consumer’s emotions or reactions when in front of a product or shop shelf. This information is usually collected through video cameras installed throughout the stores (Foscht, Swoboda, 2012). Consequently, marketers collect information on consumers without asking for their prior permission or even informing them about it. The only notice that consumers are made aware of is “video surveillance”. Although the use of neuromarketing techniques and tools seems to be not only a simple task but also highly beneficial to the company that wants to promote a particular product, service or brand and thus elicit a favourable behaviour on the part of the target segment (preference, purchase, recommendation etc), a major responsibility is entailed by such an action. This is mainly due to the fact that the application of neuromarketing techniques may result in a favourable or unfavourable manipulation of the client. Therefore, the major challenge faced by neuromarketing researchers and the difficulty of ethically implementing this procedure lies in assuring the participants – the subjects, in particular – that their “manipulation” is a positive one, pursuing rational, educational objectives that are beneficial to humans and society in general, such as campaigns against drug addiction, smoking, excessive consumption of alcohol and sweets, against unhealthy, fatty diet in which nutritious, organic products are scarce (Pop, Dabija, 2013), and campaigns that promote a good physical condition and the daily consumption of a minimum quantity of water, fruits and vegetables etc. We believe that the subject’s “manipulation” through neuromarketing can and should take place when it is performed strictly for his or her AE Ethical Responsibility of Neuromarketing Companies in Harnessing the Market Research – a Global Exploratory Approach Amfiteatru Economic 32 benefit. However, we are deeply concerned with the question of who should be empowered to decide on the extent to which a subject can be influenced and/or “manipulated”. In order to prevent the appearance of situations as those described above, Neuromarketing Science and Business Association has drawn up a Code of Ethics (NMSBA, 2013) which all its members are bound to comply with. One of the rules stipulates that researchers are not allowed to mislead participants in the study by taking advantage of their ignorance or lack of information in the field of neuroscience. Likewise, companies are not allowed to lure the subjects with marketing promotions following their participation in the study. Moreover, it is imperative that the objectives of the study should be clearly communicated and the recorded data must not be kept more than it is needed to finish the research. The subjects have the right to interrupt anytime their involvement in the study and demand the recorded data to be erased if they feel prejudiced by their content. These measures should prevent the occurrence of stealth neuromarketing where the consumers’ brain activity is manipulated in such a way that they are not aware of what’s going on (Murphy et al., 2008). 3. Objectives and methodology of the experimental exploratory research The practical element of the present paper takes the form of exploratory research conducted among neuromarketing specialists throughout the world. The research objectives have to do with the evaluation of the level of interest the neuromarketing companies have in the ethical side of their activity, the identification of the most frequent ethical issues encountered throughout the research and of the corrective measures taken to prevent and solve the ethical challenges, the evaluation of the degree of transparency shown by organizations which apply neuromarketing techniques and comply with the ethical principles during the process of data collection, analysis and interpretation. The research was conducted by means of an exploratory survey among experts from all neuromarketing companies around the world, members of NMSBA. Although not all experts responded, 67 valid answers could be obtained from neuromarketing companies which use neuromarketing techniques, due to one of the author’s (Iorga) membership in the association. The investigation on the company representatives was carried out through the survey methodology, using the interviewing technique. Information was collected through an online questionnaire containing several sets of questions (classification, closed, open). The answers were measured on a five-point Likert scale, (1=total disagreement, 5=total agreement). The survey yielded a high percentage of respondents (52 out of a total of 67 companies), which, at the same time, reflected a good representativeness at international level. Answers were provided by representatives of 22 European companies (16 of which are EU countries), 10 North American companies, 13 South American companies and 5 Asian companies. Most subjects belong to the category of policy makers (1/3 are chief executive officers, 1/5 are administrative officers, 1/6 are chief neuromarketing officers and 1/6 are chief research officers). In terms of their professional training, 2/3 of respondents hold a PhD and/or MA degree and 1/5 of them have a BA degree. One quarter of respondents attended long-term programs and half of them attended short term programs in the field of neuroscience. The results of the current research are all the more interesting as the research has a comprehensive character since all companies operating in a particular field have been Organizations’ responsibility to consumers AE Vol XVI • No. 35 • February 2014 33 investigated. That is why the research required no sampling to be performed. Qualitative exploratory research is recommended (Cătoiu et al., 2002) for large and vague topics as it allows an in-depth analysis of relatively complex phenomena that later can be investigated through quantitative methods as well. When implementing the online research, attention was paid to the literature’s recommendations about the clarity and simplicity of the investigation tool, and the sequence, logic and length of the questions (Gay et al., 2009; Gronssickle, Raskin, 2001). The authors have tested the following hypotheses:  H1: There are significant differences between the relevance of ethical objections coming from clients and those coming from research subjects.  H2: The companies performing neuromarketing studies believe that they do not cause important negative moods (anxiety, fear, cognitive inhibition) to research subjects.  H3: The companies that are part of the study believe it is important to employ ethic specialists for the researchdesign.  H4: The attitude of neuromarketing companies towards ethical issues concerning the participants’ protection varies, remaining however an important concern for everybody. 4. Research results Participants’ responses enabled the authors to create a hierarchy of the most important neuromarketing services (the average - between brackets). Of course, this ranking has been issued according to the services’ request frequency. The most often requested service is video ads creation (4,21), followed by the creation of communication campaigns (4,12) and printed ads/banners creation (4,10). Then, there are: product design (3,79), packaging (3,65), online media campaigns (3,53), sales promotions (3,46) and lastentertainment (3,06). It is interesting how the first three services stand out from the list. However, we must mention that video spots rank first only in North America (4,60), while communication campaigns are leaders in Asia (4,60), print ads/banners – are leaders in South America (4,46). In the Middle East, online media campaigns (4,00) and entertainment (4,00) are most frequent. Concerning H1, neuromarketing research companies identified the following differences between clients’ and subjects’ opinions (see table 1). While respondents of neuromarketing studies are concerned with the nature of the research, content and methods, the beneficiaries of the neuromarketing studies are more concerned with protecting their company’s reputation and understanding how neuroscience techniques work. However, when it comes to data processing, neither category is believed to show any concern (nor raise any ethical issues), as they might see the process as a rather technical one. We want to emphasize that the findings reflect neuromarketing companies’ visions towards the attitudes of the two categories. The respondents believe that the media objections to the way neuromarketing studies deal with data security and subjects’ privacy issues are important and very important. Media believe that virtual communication and interaction platforms (Facebook, Youtube, blogs) are an important source for gathering subjects’ feedback. These findings reflect the function that the media are supposed to have as democracy and human rights watchdogs. As other authors previously showed (Pop, Iorga and Pelău, 2013), many journalists are misinformed on the neuromarketing research AE Ethical Responsibility of Neuromarketing Companies in Harnessing the Market Research – a Global Exploratory Approach Amfiteatru Economic 40 Pop, N.Al. and Dabija, D.C., 2013. Development of an Organic Food Mentality in Romania. In Thomas, A.R., Pop, N.Al., Brătianu, C., eds., The Changing Business Landscape of Romania. Lessons for and from Transition Economies. New York, Heidelberg, Dordrecht, London: Springer. Pop, N.Al. and Iorga, A.M., 2012. A new challenge for conyemporary marketing – neuromarketing. Management & Marketing. Challenges for the Knowledge Society, 7(4/28), pp. 631-644. 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