Pricing and the Brain

There has been an interesting article in the recent issue of The Ecomomist on the effects of pricing on consumer behavior and judgement making. According to a study conducted by Antonio Rangel, a scientist with the California Institute of Technology, people do not just say they enjoy expensive things more than cheap ones, they actually do enjoy them more.

Rangel and his research team told 20 volunteers a wine is expensive while they were drinking it. Meanwhile scanning their brains using functional magnetic-resonance imaging. Doing so Rangel and his colleagues found that people really do think expensive wine tastes better than cheap one, rather than merely saying so. The entire study is published in the Proceedings of the National Academy of Sciences.

Rangel´s study shows us that consumer do not only use price as a cue for higher expected quality, they actually perceive a higher quality associated with the higher price. These findings confirm the well-established price-quality relationship in the marketing literature and show the future potential of magnetic-resonance imaging in the social sciences. A research stream also known as Neuroscience or Neuromarketing. It will be interesting to see how this literature will further develop.

About the author: Klaus Miller is PHD candidate and working as research assistant at the Institute of Marketing of the University of Bern