Cheaper is Not Better
When competition increases or times get tough, many marketers default to competing through lower prices or adding tons of ‘added value’.
Much has been written and documented about the effect of pricing on customer attitudes and perceptions. Thanks to my friend, Kennen Williams at Noll and Associates, for forwarding this recent article to me;
CHICAGO (AFP) — Antonio Rangel, associate professor of economics at the California Institute of Technology, led a team to test how pricing shapes consumers’ perceptions and whether it also enhances their enjoyment of a product.
They asked volunteers to sample five different bottles of Cabernet Sauvignon and rate their taste preferences.
The taste test was blind except for information on the price of the wine. Without telling the volunteers, the researchers passed off a 90 dollar bottle of Cabernet Sauvignon as a 10 dollar bottle, and presented a five dollar bottle as one worth 45 dollars.
The researchers scanned their brains to monitor the neural activity in the medial orbit frontal cortex — an area of the brain which to encodes pleasure related to taste, odors and sound.
They found that inflating the price of a bottle of wine enhanced a person’s experience of drinking it, as shown by the neural activity.
The volunteers consistently gave higher ratings to the more "expensive" wines.
Brain scans also showed greater neural activity in the pleasure center when they were sampling those "pricey" wines, indicating that the increased pleasure they reported was a real effect in the brain.
Professor Rangel concluded, "People’s beliefs about the quality of a wine affect how well it tastes for the brain,"
How well does your station ‘taste’ in your clients’ brains? At ENS Media Inc., we have countless media success stories by creating a sales culture where Account Executives believe, “We’re more expensive, proud of it, and worth every penny!”
Maybe this research explains why our stations experience higher sales than the industry norm and above average renewal rates.
*The study appears in the Proceedings of the National Academy of Sciences.