Not many years ago, the concept of “neuromarketing” was presented as a revolutionary discipline. Introduced as the newest buzz word along such topics as neuroscience, emotions, sensory, unconscious, subliminal, neuromarketing was presented as the key to understanding consumer behavior. Those most passionate about the subject promised companies that it could even help them read their client’s minds.
As the concept continues to evolve, enthusiasm around neuromarketing has turned into an interesting debate regarding its reach, ethics and reliability. Now some even say it's time to give the practice its rightful place in the scientific community.
But first, what is neuromarketing? Roberto Álvarez, a researcher from the IE Business School, defines it as “the fusion of knowledge of neuroscience, economics and marketing.” In other words, it is the applied studies and technologies withiin the field of neurology -- such as functional magnetic resonance, electroencephalography and transcraneal magnetic resonance -- to determine the brain’s reactions to certain stimuli or tasks.
“From the marketing point of view, we are interested in establishing a link between the emotional reactions in the brain to stimuli or tasks," says Álvarez. "Some 95% of the decisions we take are basically emotional. Only the remaining 5% represent a rational process that takes place outside the emotional decision, often to justify it.”
Getting to know these cerebral reactions gives companies the opportunity to construct predictive behavior models for consumers, and with it allegiance to both specific products and brands. The potential economic payoff is vast.
The latest advancement in the field strives to adjust and improve the stimuli to which groups of people will be exposed, until they find the “perfect brain reaction and response to both the adequate and the ideal,” explains Álvarez. The five senses are targeted, adjusting smell, colors, sounds, textures and temperatures.
The director for the Neuroeconomics Centre in the Diego Portales University in Chile, René San Martín, notes that neuromarketing today appears more as an “entrepreneurial effort than as a scientific or academic one. It is very hard to find an academic department in a University that dedicates to neuromarketing.”
Powers of persuasion
Neuromarketing has defenders and detractors. Some have categorized it as a pseudoscience. Critics say it lacks scientific studies that validate or revise findings. Indeed, most attention to the discipline comes from the private sector, and not academia. The companies will use their findings to eventually implement them in commercial strategies. And, obviously, companies compete and don’t want the neighbor to find out. “Part of the status of science of our time has to do with passing through a process of revision. Neuromarketing doesn’t offer that,” confirms San Martín.
Álvarez counters that the discipline is in the beginning stages, and “have a very solid scientific base whose results are extraordinarily positive.” He adds that much of the negative criticism around it is due to prejudice because of lack of knowledge and reactions to fear of change.
The ethical side of neuromarketing is also up for debate. Is it ethical, for example, for a store to use stimuli in order to induce them to purchase something that otherwise they wouldn’t buy?
Miguel Muñoz, CEO of Conecta Research & Consulting, who has a PhD from the University of Edinburg warns that the ethical component arises the moment we accept to utilize knowledge of perception and decision-making in human beings.
San Martín says persuasion was not invented by neuromarketing, and historically has also been used in political campaigns in modern democracies. He does, however, acknowledge that it is hard to know how powerful such techniques could become as neuromarketing research advances.
“There must be the proper use of knowledge," he says. "It is the people’s responsibility to know about the tools that are used to persuade us."
Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.
SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.
The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.
It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.
Seoul housing prices top London and New York
In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.
According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.
Average home loans are equivalent to 270% of annual income.
One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.
According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.
Playing the stock market
At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.
A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."
In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.
42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s
Game of survival
In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.
But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.
This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.
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