Neuromarketing

ТИТУЛЬНЫЙ ЛИСТ CONTENTS CONTENTS 2 KEY WORDS 3 1. Definition of neuromarketing 5 2. History of neuromarketing 5 3. The usage of neuromarketing in different areas of marketing 6 4. Neuromarketing concept 7 5. The process of applying neuromarketing 9 6. The ethics of neuromarketing 11 7. How have brands used neuromarketing 12 CONCLUSION 13 BIBLIOGRAPHY 15  KEY WORDS Neuromarketing – нейромаркетинг Advertisement / ad – рекламное объявление Enterprise – предприятие, инициатива Market research – исследование рынка Consumer experience – потребительский опыт Market insight – знание рынка Added value – добавочная стоимость Retailer – розничный продавец Eye tracking – слежение за расположением глаз Non-conscious – бессознательно Incompatibility – несовместимость Behavioural patterns – шаблоны поведения Fluctuations – колебания Consumption – потребление Feedback – обратная связь Endeavour – начинание, старание Blind taste test – «слепой» тест на пробу вкуса  INTRODUCTION Despite many common beliefs about the inherently evil nature of marketing, the main objective of marketing is to help match products with people. Marketers achieve these goals by providing product designers with information about what consumers value and want before a product is created. After a product emerges on the marketplace, marketers attempt to maximize sales by guiding the menu of offerings, choices, pricing, advertising and promotions. In their attempts to provide these types of inputs, marketers use a range of market research techniques, from focus groups and individual surveys to actual market tests – with many approaches in between. The incorporation of neuroimaging into the decision-making sciences – for example, neuroeconomics – has spread to the realm of marketing. As a result, there are high hopes that neuroimaging technology could solve some of the problems that marketers face. A prominent hope is that neuroimaging will both streamline marketing processes and save money. Another hope is that neuroimaging will reveal information about consumer preferences that is unobtainable through conventional methods. The object of this paper is to study and describe the main features of neuromarketing, a field of marketing. Hence, the subject of the paper would be neuromarketing itself. The aim of this paper is to highlight the major findings of neuromarketing and give some practical examples of its usage. The following tasks are to be solved in this paper: To give a definition of neuromarketing and describe its principles. To study the history of neuromarketing. To identify the concept and the process of applying neuromarketing. To analyze examples of the usage and ethics of neuromarketing. Definition of neuromarketing The term neuromarketing refers to the use of modern brain science to measure the impact of marketing and advertising on consumers. In other words, it is a field that claims to apply the principles of neuroscience to marketing research, studying consumers' sensorimotor, cognitive, and affective response to marketing stimuli. Neuromarketing techniques are based on scientific principles about how humans really think and decide, which involves brain processes that our conscious minds are not aware of. Therefore, the field is on the intersection of marketing, neuro-economics, neuroscience, consumer neuroscience and cognitive psychology. Neuromarketing studies which emotions are relevant in human decision making and uses this knowledge to improve marketing's effectiveness. The knowledge is applied in product design, enhancing promotions and advertising, pricing, store design and the improving the consumer experience in a whole [4]. History of neuromarketing Neuromarketing is a reasonably new field of discovery; prior research enhanced the knowledge of consumer behaviour until the concept of neuromarketing was created. Marketing professor Gerald Zaltman first explored theories behind neuromarketing in the 1990s. Zaltman and his associates were employed by organizations, such as Coca Cola ltd, to instigate brain scans and observe neural activity of consumers. Psychoanalysis techniques such as fMRI (functional magnetic resonance imagining) and other neuro-technologies are used to discover an individual's underlying emotions and social interactions as represented in the scans. Zaltman theorised a technique called ZMET; this involved using visual representations to help uncover underlying and deep thoughts within a person. With the use of ZMET, Zaltman aimed to make powerful, emotionally completing advertising. Brain activity was recorded while participants viewed the ad, ultimately to explore and discover non-conscious thoughts of consumers. His research methods enhanced psychological research used in marketing tools [10]. However the term 'neuromarketing' was only introduced in 2002, published in an article by BrightHouse, a marketing firm based in Atlanta. BrightHouse sponsored neurophysiologic (nervous system functioning) research into marketing divisions; they constructed a business unit that used fMRI scans for market research purposes. The firm rapidly attracted criticism and disapproval concerning conflict of interest with Emory University, who helped establish the division. The new enterprise disappeared from public attention and now works with over 500 clients and consumer-product businesses due to the effective method of neuromarketing. The usage of neuromarketing in different areas of marketing The vast majority of companies under the umbrella of neuromarketing are active in the market research domain. These companies are experts in evaluating commercials, ads, new products, or even measure audience responses to media like broadcasting or movies [7]. Companies also apply neuromarketing principles and testing in product design and packaging researches. How a product looks, feels and functions is affecting the consumer experience in a whole. These studies can provide insights on the emotional effects of design choices. Alongside with the mentioned areas of use, marketers also apply the neuromarketing principles in pricing. They know for a very long time, that price is an important variable in the success of product and service. Knowledge on how price information is perceived and processed is the added value of neuromarketing in this part of the marketing process. If every in-store decision was taken rationally, weekly groceries bills would be much shorter. The success of retailers depends on how consumers experience their stores and services, how easy they can navigate and how products, price and promotions are presented (and perceived). Shopper marketing can be enriched by real time measurements of participants’ emotions in a lab or in-store situation. Retailers can also apply the scientific principles of neuromarketing in their retail environments [3]. The (professional) service industry depends largely on human interactions. How (B2B) consumer experiences the quality of these services is basically an emotional process. This explains why the best offer for the best price does not always win the quote. Neuromarketing brings in some heuristics on how to act for a better quality. Or for a better perceived quality, because most of the time the decision is taken before the service is delivered. Neuromarketing applied to advertising uses neuromarketing principles to develop ads and campaigns. While advertising is mainly a creative process, neuromarketing can add value by a better understanding the effects of ads on human beings. Neuromarketing is well developed in ad-testing on effectiveness. Predicting how well it is related to likability and sales [9]. Neuromarketing consultants use their knowledge from consumer neuroscience and apply it in consultancy jobs in the different areas of marketing. It is rather unusual to state that purchase decisions in B2B environments are (at least partly) emotional. But these purchase decisions are made by the same brains as consumer decision making and it is unlikely that the principles for consumer decision making suddenly disappear once entering the office. Although there is currently not so much research around on this topic, it is expected that neuromarketing in B2B will grow in this area too. Neuromarketing concept Neuromarketing engages the use of Magnetic Resance Imaging (MRI), electroencephalography (EEG), biometrics, facial coding, eye tracking and other technologies to investigate and learn how consumers respond and feel when presented with products and/or related stimuli. The concept of neuromarketing investigates the non-conscious processing of information in consumers brains. Human decision-making is both a conscious and non-conscious process in the brain. Human brains process over 90% of information non-consciously, below controlled awareness; this information has a large influence in the decision-making process. Conventional market research, such as focus groups or surveys [11], are typically used to understand behaviour and decision-making. However, these research methods do not reach the non-conscious thinking of consumers. This results in an incompatibility between market research findings and the actual behaviour exhibited by the target market at the point of purchase. Neuromarketing rather focuses on the MRI and EEG scans which produce brain electrical activity as well as blood flow. Market researchers use this information to determine if products or advertisements stimulate responses in the brain linked with positive emotions. The concept of neuromarketing was therefore introduced to study relevant human emotions and behavioural patterns associated with new products, ads and decision-making. A greater understanding of human cognition and behaviour has led to the integration of biological and social sciences. Combining marketing, psychology and neuroscience, the concept of neuromarketing has established valuable theoretical insights. Consumer behaviour can now be investigated at both an individuals conscious choices and underlying brain activity levels. Neuromarketing displays a true representation of reality, superior to any traditional methods of research as it explores non-conscious information that would otherwise be unobtainable. The neural processes obtained provide a more accurate prediction of population-level data in comparison to self-reported data. Marketers are now able to gain insight into consumers' intentions. These tools can be administered to gain understanding on intention and emotions towards branding and market strategies before applying them to target consumers. Marketing focuses on constructing positive and unforgettable experiences in consumers minds; it is neuroscience that measures these impacts [12]. Best-known technology of neuromarketing was developed in the late 1990s by Harvard professor Jerry Zaltman (Gerald Zaltman), once it was patented under the name of Zaltman Metaphor Elicitation Technique (ZMET). The essence of ZMET reduces to exploring the human unconscious with specially selected sets of images that cause a positive emotional response and activate hidden images, metaphors stimulating the purchase. Graphical collages are constructed on the base of detected images, which lays in the basis for commercials. Marketing Technology ZMET quickly gained popularity among hundreds of major companies-customers including Coca-Cola, General Motors, Nestle, Procter & Gamble. The process of applying neuromarketing There are two basic methods of tracking prospects’ brain activity each with their own pros and cons: functional magnetic resonance imaging (fMRI), and electroencephalography (EEG). Utilizing fMRI involves using a powerful magnet to track the brain’s blood flow as subjects respond to audio and visual cues. This allows examiners to access a deep part of the brain known as the ‘pleasure center’ and lets marketers know how people are really responding to their work. The downfalls of fMRI are its price tag and inconvenience. Equipment is very expensive to operate (up to $1,000 per machine per hour) and subjects must lie completely still in a large machine. EEG, on the other hand, is much cheaper than fMRI and by using a cap of electrodes attached to the sample’s scalp, it also allows for movement. These electrodes measure electrical waves produced by the brain and allow researchers to track instinctual emotions such as anger, excitement, sorrow, and lust through fluctuations of activity. However, unlike fMRI, EEG does not grant access to deep parts of the brain where the ‘pleasure center’ is located [4]. Measurements such as willingness to pay (WTP) have only recently come under functional MRI (fMRI) examination. In one experiment, subjects bid on the right to eat snacks during the experiment. The amount they were willing to pay (a measure of decision utility) correlated with activity levels in the medial orbitofrontal cortex (OFC) and prefrontal cortex (PFC). Interestingly, similar activation in the OFC has been observed when subjects anticipate a pleasant taste, look at pretty faces, hear pleasant music, receive money and experience a social reward. Such generally close correspondence in regional brain activity between the anticipation of rewarding events, the consumption of enjoyable goods and the willingness to pay for them suggests that the representation of expected utility may rely, in part, on the systems that evaluate the quality of the consumption experience. The theme of common systems for expectation and experience also applies to things that are unpleasant or even painful (although this involves a different network including the insula). However, such similarities do not necessarily mean that brain activation is the same across different elicitation methods, and there are differences between the neural activation representing decision utility and that representing experienced utility. There are two more methods of neuromarketing research. The first if Magnetoencephalography (MEG). An expensive cousin of EEG, MEG measures changes in the magnetic fields induced by neuronal activity. Thus, MEG has the same advantage of high temporal resolution and, because the magnetic field is less distorted by the skull than is the electrical field, it has better spatial resolution than EEG. Like EEG, MEG is most sensitive to superficial cortical signals (primarily in the sulci). MEG requires a magnetically shielded room and superconducting quantum interference detectors to measure the weak magnetic signals in the brain. An MEG set-up costs approximately $2 million [10]. The second method is called Transcranial magnetic stimulation (TMS). TMS uses an iron core, often in the shape of a toroid wrapped in electrical wire, to create a magnetic field strong enough to induce electrical currents in underlying neurons when placed on the head82. TMS can be used as a single pulse, paired pulse or repetitive stimulation, and the neuronal effects range from facilitation to inhibition of synaptic transmission. As a research tool, TMS has been used to study the causal role of specific brain regions in particular tasks by temporarily taking them ‘offline’. Once appropriate information is attained regarding the proposed products, the brand manager may revise of the original product design in response to the market research. The original prototype may be modified from feedback to attract and appeal to target consumer's conscious and non-conscious thoughts. It is essential to understand consumers' true wants and underlying thoughts. This results in effective marketing and advertising communications, ultimately leading to increase in successful sales. The ethics of neuromarketing The introduction of neuroimaging into an environment in which the ultimate goal is to sell more product to the consumer may raise ethical issues. Businesses will be able to read the minds of consumers. This concern is about the privacy of thoughts. Can neuroimaging be used to gauge a person’s preferences outside of the specific task being performed? Possibly. This concern may be mitigated through transparency of purpose: subjects must know what kind of endeavour they are helping, and their data should only be used for that purpose. Private versus public information about preferences. Individuals need to be able to exercise control over what they choose to reveal about their personal preferences. A privacy breach occurs if neuroimaging reveals a private preference that is outside the scope of the neuromarketer’s research question. A lack of regulation. Traditional marketing methods, because they are not typically viewed as experimentation, have not been subject to institutional review board (IRB) oversight. MRI scans are approved by the US Food and Drug Administration (FDA) for clinical use but, because no diagnosis is being made in a marketing setting, there is the potential to circumvent both FDA and IRB requirements. The burgeoning neuromarketing industry would be well advised to adopt an industry standard of independent review. Clients should demand it [6]. How have brands used neuromarketing Brands such as Campbell’s Soup, Gerber, and Frito-Lay have used neuromarketing to restyle their packaging designs. In these instances, consumers were exposed to a product’s packaging piece by piece, and their response was recorded as positive, neutral, or negative. This information was then used in conjunction with an in-depth interview to analyze specific points that eventually resulted in changes to elements such as color, text size, and imagery. Frito-Lay, for instance, discovered matte bags with pictures of potatoes did not trigger a negative response, whereas shiny bags with pictures of chips on them did. Within months, new bags were designed and the shiny ones were scrapped. In another case, Hyundai utilized neuromarketing when they gave thirty participants EEG caps and asked them to examine a car prototype for an hour. Last, but not least, PayPal discovered that commercials focusing on speed and convenience triggered a significantly higher response than those advertising safety and security and developed an entirely new ad campaign based on the results [3]. In 2003, 67 people had their brains scanned while being given the ‘Pepsi Challenge’, a blind taste test of Coca-Cola and Pepsi. Half the subjects chose Pepsi, since Pepsi tended to produce a stronger response than Coke in their brain's ventromedial prefrontal cortex, a region thought to process feelings of reward. But when the subjects were told they were drinking Coke three-quarters said that Coke tasted better. Their brain activity had also changed. The lateral prefrontal cortex, an area of the brain that scientists say governs high-level cognitive powers, and the hippocampus, an area related to memory, were now being used, indicating that the consumers were thinking about Coke and relating it to memories and other impressions. The results demonstrated that Pepsi should have half the market share, but in reality, consumers are buying Coke for reasons related less to their taste preferences and more to their experience with the Coke brand. CONCLUSION Summing up the results of this paper, it is necessary to highlight that neuromarketing is a relatively new but quite powerful means of marketing research, which enables marketers to invade the brain and gather feelings of consumers. In short, the term neuromarketing refers to the use of modern brain science to measure the impact of marketing and advertising on consumers. Using neuromarketing, a company can rethink its strategies and create smarter marketing that will boost the effectiveness of its management’s efforts. The goal of it is to understand how a customer’s brain actually works and what affects a firm’s marketing will have on the population of consumers. Neuromarketing is a reasonably new field of discovery; prior research enhanced the knowledge of consumer behaviour until the concept of neuromarketing was created. Marketing professor Gerald Zaltman first explored theories behind neuromarketing in the 1990s. However the term 'neuromarketing' was only introduced in 2002, published in an article by BrightHouse, a marketing firm based in Atlanta. Companies use neuromarketing in various spheres, for example in market research, product and packaging design, pricing, in-shop design, B2B industry, services, advertising, consultancy. The concept of neuromarketing investigates the non-conscious processing of information in consumers brains. Human brains process over 90% of information non-consciously, below controlled awareness; this information has a large influence in the decision-making process. Consumer behaviour can now be investigated at both an individuals conscious choices and underlying brain activity levels. Neuromarketing displays a true representation of reality, superior to any traditional methods of research as it explores non-conscious information that would otherwise be unobtainable. There are two basic methods of tracking prospects’ brain activity each with their own pros and cons: functional magnetic resonance imaging (fMRI), and electroencephalography (EEG). Their concepts are quite similar, but fMRI is considerably more expensive and delivers results that are more comprehensive. For example, unlike fMRI, EEG does not grant access to deep parts of the brain where the ‘pleasure center’ is located. Another two methods of neuromarketing research are magnetoencephalography and transcranial magnetic stimulation. All in all, neuromarketing’s methods include everything from relatively simple and inexpensive approaches, such as eye tracking (measuring eye gaze patterns), analyzing facial expressions, and behavioral experiments (for example, seeing how changes in product displays affect a consumer’s choices), to more complex, sensor-based approaches. The latter include biometrics (body signal measures) that measure perspiration, respiration, heart rate, and facial muscle movement (electromyography [EMG]), as well as neurometrics (brain signal measures) that measure electrical activity (electroencephalography [EEG]), and blood flow (functional magnetic resonance imaging [fMRI]) in the brain. Once appropriate information is attained regarding the proposed products, the brand manager may revise of the original product design in response to the market research. Neuromarketing has received considerable attention in both the scientific community and the media. Although few scientific neuro marketing studies have been conducted, the existing evidence suggests that neuroimaging could be used advantageously in several domains of marketing. For a marketer, neuroimaging could be attractive because it might be cheaper and faster than current marketing tools, and because it could provide hidden information about products that would otherwise be unobtainable. Product manufacturers could use neural information to coerce the public into consuming products that they neither need nor want. However, we hope that future uses of neuromarketing will help companies to identify new and exciting products that people want and find useful.  BIBLIOGRAPHY Agarwal, S.; Dutta, T. Neuromarketing and consumer neuroscience: current understanding and the way forward / 2015, pages 78-90. Aharon I, et al. 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