Friday, February 15, 2008

Price is Perception ... REALLY!

The Economist recently posted this article claiming that eople do not just say they enjoy expensive things more than cheap ones. They actually do enjoy them more. THis give an interesting scientific point of view on the old adage that price is perception.

EVERYONE loves a bargain. But retailers know that people will sometimes turn their noses up at a cheap version of a more expensive item, even if the two are essentially the same. That suggests something is at work in the mind of the consumer beyond simple appreciation of a product's intrinsic qualities.

The something in question is expectation, according to research published this week in the Proceedings of the National Academy of Sciences by Antonio Rangel of the California Institute of Technology. Dr Rangel and his colleagues found that if people are told a wine is expensive while they are drinking it, they really do think it tastes nicer than a cheap one, rather than merely saying that they do.

Dr Rangel came to this conclusion by scanning the brains of 20 volunteers while giving them sips of wine. He used a trick called functional magnetic-resonance imaging, which can detect changes in the blood flow in parts of the brain that correspond to increased mental activity.
Dr Rangel's research also has implications for retailers, marketing firms and luxury-goods producers. It suggests that a successful marketing campaign can not only make people more interested in a product, but also, truly, make them enjoy it more.

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