Question

The creators and marketers of the Lumosity “brain training” program have agreed to settle Federal Trade Commission charges alleging that they deceived consumers with unfounded claims that Lumosity games can help users perform better at work and in school, and reduce or delay cognitive impairment associated with age and other serious health conditions. As part of the settlement, Lumos Labs, the company behind Lumosity, will pay $2 million in redress and will notify subscribers of the FTC action and provide them with an easy way to cancel their auto-renewal to avoid future billing. “Lumosity preyed on consumers’ fears about age-related cognitive decline, suggesting their games could stave off memory loss, dementia, and even Alzheimer’s disease,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “But Lumosity simply did not have the science to back up its ads.” According to the FTC’s complaint, the Lumosity program consists of 40 games purportedly designed to target and train specific areas of the brain. The company advertised that training on these games for 10 to 15 minutes three or four times a week could help users achieve their “full potential in every aspect of life.” The company sold both online and mobile app subscriptions, with options ranging from monthly ($14.95) to lifetime ($299.95) memberships. Lumosity has been widely promoted though TV and radio advertisements on networks including CNN, Fox News, the History Channel, National Public Radio, Pandora, Sirius XM, and Spotify. The defendants also marketed through emails, blog posts, social media, and on their website, Lumosity.com, and used Google AdWords to drive traffic to their website, purchasing hundreds of keywords related to memory, cognition, dementia, and Alzheimer’s disease, according to the complaint. The FTC alleges that the defendants claimed training with Lumosity would 1) improve performance on everyday tasks, in school, at work, and in athletics; 2) delay age-related cognitive decline and protect against mild cognitive impairment, dementia, and Alzheimer’s disease; and 3) reduce cognitive impairment associated with health conditions, including stroke, traumatic brain injury, PTSD, ADHD, the side effects of chemotherapy, and Turner syndrome, and that scientific studies proved these benefits. The complaint also charges the defendants with failing to disclose that some consumer testimonials featured on the website had been solicited through contests that promised significant prizes, including a free iPad, a lifetime Lumosity subscription, and a round-trip to San Francisco. The proposed stipulated federal court order requires the company and the individual defendants, co-founder and former CEO Kunal Sarkar and co-founder and former Chief Scientific Officer Michael Scanlon, to have competent and reliable scientific evidence before making future claims about any benefits for real-world performance, age-related decline, or other health conditions. The order also imposes a $50 million judgment against Lumos Labs, which will be suspended due to its financial condition after the company pays $2 million to the Commission. The order requires the company to notify subscribers who signed up for an auto-renewal plan between January 1, 2009 and December 31, 2014 about the FTC action and to provide a means to cancel their subscription. The Commission vote authorizing the filing of the complaint and proposed stipulated order was 4-0, with Commissioner Julie Brill issuing a separate concurring statement. The FTC filed the complaint and proposed order in the U.S. District Court for the Northern District of California, San Francisco Division. The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Council’s goal of increasing the number of Americans who are healthy at every stage of life. This case is part of the FTC’s ongoing efforts to protect consumers from misleading health advertising.

Question 1

Discuss THREE (3) research approaches for gathering primary data that should be used by Lumosity to better understand the targeted markets prior to offering their services. Provide examples to support your answers.

Question 2

Evaluate the ineffectiveness advertising message strategies of Lumosity and suggest any TWO (2) ways on how the company should improve on advertising appeals in message strategy for their services.

Question 3

Discuss FIVE (5) sustainability marketing principles that Lumosity can practice to solve their unethical marketing practices. Provide clear examples to support your answers.

Answer 1

1: The three research approaches that can be used by Lumosity to gather the primary data are:

a) Field Observation: As an example, Lumosity developers can study about their proposed clients; their social awareness and logical reasoning ability before making promises.

b) Surveys: Through surveys, Lumosity team can understand the needs of the targeted people so that they can frame the games to their needs.

c) Giving Trials : Lumosity may publish the beta versions of the games before its mass publication to ensure its compatibility with people's mindset.

2: The adverstisement of Lumosity was ineffective only because it lacks scientific support. Besides that, their objective was quite admirable. It was to delay the age related disabilities or mental diseases for couple of time through effective gaming.

In future, the company may improve its advertisements by updating its strategies which can be explained in two examples below:

a) Only publish advertisements which have scientific proof. For that, the company should approach experts to study about their games and its outcomes

b) Advertisements should met the guidelines of the government and rspective agencies in order to avoid any future complications.

3: Five marketing principles which Lumosity can practice:

a) Be consumer oriented: Company should work hard to understand the needs its subscribers by various means and plan strategies to fulfill their ambitions. Fr example, Lumosity may draft a music oriented game to give a mental rest and motivation to middle aged business people.

b) No compromise in quality: Company should meet a minimum quality level in its products and should make that level rise at each stage stage. That is, Company should not do plagiarism or any another malpractices in designing their games.

c) Innovative Marketing: Company should seek innovative marketing tips to make more reach and solve the drawbacks caused by the judgement. This may include discounts, Validity extensions, coupons, gifts, etc..

d) Planning aims and objectives: After studying the society the company should draft its objectives behind each products considering the target people. These objectives should be scientific and permissible.

e) Continous research and study: The company should develop a research team to study about the productions, its acceptance, clent's rating, scientific outcomes, etc.. The scientific outcomes can be published in journals to get a scholastic support.