Neuroscience Marketing:
Is the Product
Worth the Price?
Are
consumers more likely to buy if they see the price before the
product, or vice versa? Uma
Karmarkar and
colleagues scan the brains of shoppers to find out.
Think
of the last time you went shopping.
By
the time you decided to buy a product, you knew both what you were
buying and how much it cost. But was your decision affected by
whether you saw the price or the product first? That's the question
at the heart of new experimental research that uses neuroscience
tools to shed light on how our brains make purchasing decisions.
"We
were interested in whether considering the price first changed how
people thought about the decision process, and whether it changed
the way the brain coded the value of a product," says Uma R.
Karmarkar, a neuroscientist and assistant professor in the Marketing
unit at Harvard Business School, who conducted the research with
Baba Shiv, a marketing professor and neuroeconomics expert at
Stanford University's Graduate School of Business, and Brian
Knutson, an associate professor of psychology and neuroscience at
Stanford. "Because we had neuroscience tools at our disposal,
we had the benefit of exploring both those questions,"
Karmarkar says.
The
researchers found that price primacy (viewing the price first) makes
consumers more likely to focus on whether a product is worth its
price, and consequently can help induce the purchase of specific
kinds of bargain-priced items.
Their study, Cost
Conscious? The Neural and Behavioral Impact of Price Primacy on
Decision-Making,
will appear in a forthcoming issue of the Journal
of Marketing Research.
The
research could help retailers and marketers
decide when it's best to lead with price, which products work best
with that strategy, and how to frame sales messages to consumers.
THE BRAIN SHOPPING EXPERIMENT
In
a series of experiments, participants went shopping—while lying on
their backs inside a functional magnetic resonance imaging (fMRI)
machine. The fMRI uses a giant electro-magnet, often 3 teslas
strong, to track the blood flow throughout the brain as test
subjects respond to sensory cues. In this case, participants were
responding to pictures of products and their prices.
In
the first experiment, conducted at an imaging center on the Stanford
University campus, each participant was given $40 of shopping money
before viewing a series of 80 products and their prices on a screen
inside the fMRI machine. "This made the shopping experience
more real," Karmarkar says.
To
encourage purchasing, the products were offered at sub-retail
prices. Sometimes participants saw the price first, and sometimes
they saw the product first. But in every case, they eventually saw
an image of both the product and the price presented together. At
that point, they chose whether to purchase the product, indicating
yes or no with the push of a button. After exiting the machine,
participants filled out a survey to rate how much they had liked
each product, on a scale of 1 to 7.
The
researchers focused on brain activity at the moment participants saw
the product and price presented together. They were most interested
in the medial prefrontal cortex (the area in the brain that deals
with estimating decision value) and the nucleus accumbens (an area
that's been called the pleasure
center,
and whose activity is correlated with whether a product is
viscerally desirable). "What we cared about was whether the
neural patterns in these areas looked different at the point when
the information on the screen was eventually the same,"
Karmarkar says.
The
results showed that the brain activity varied according to whether
the participant had seen the price or product first. "The
pattern of activity in the prefrontal cortex suggested to us that
sequence matters: At the very simplest, the neural signals looked
different when the price came first versus when the product came
first," Karmarkar says. "When the product came first, the
decision question seemed to be one of 'Do I like it?' and when the
price came first, the question seemed to be 'Is it worth it?' "
That
said, price primacy didn't have much of an effect on actual
purchasing behavior. Participants bought about the same number of
items and reported similar "liking" ratings regardless of
whether they had seen a product or price first. The researchers
suspected that even if participants were more critical of a
product's value in the price primacy condition, the products were
equally attractive under both conditions.
Most
of the participants were in their 20s, and most of the products in
appealed to their demographic—movies, clothing, noise-canceling
headphones, and so on. "If you really love something, and you
can afford it, you're going to buy it," Karmarkar says. "For
those kinds of 'easy' decisions, it doesn't matter much whether the
product or the price comes first."
And
while the results of this initial experiment had been significant to
neuroscience, Karmarkar's team also wanted to show that their
research could have real-world implications for retailers—a direct
effect on whether a consumer decided to buy a product. They
hypothesized that price primacy might actually increase the
likelihood of buying products, but only if the decision was related
more to the product's usefulness than to pure emotional desire.
WATER FILTRATION PITCHERS AND BATTERIES
To
that end, the researchers designed a follow-up study in which 83
participants sat at their computers, evaluating arguably boring but
utilitarian products: a water filtration pitcher, a pack of AA
batteries, a USB drive, and a flashlight. Similar to the fMRI study,
the products were offered at a discount.
For
all four products, participants viewed only a price or only a
picture of the product for eight seconds, followed by a decision
screen displaying both price and product. They then indicated the
extent to which they wanted to buy the items on a scale from 0 to
100, with anything above a 50 categorized as intent to purchase the
product.
This
time, price primacy had a direct effect on purchasing decision.
Participants were significantly more likely to purchase a product if
they saw the price first than if they saw the product first. For
retailers this indicates that it makes sense to lead with the price,
at least when advertising utilitarian items. At the same time, in
cases where they advertise prices first, retailers may want to go
out of their way to highlight a product's functionality over its
form.
"The
question isn't whether the price makes a product seem better, it's
whether a product is worth its price," Karmarkar says. "Putting
the price first just tightens the link between the benefit you get
from the price and the benefit you get from the product itself."
But
the research also revealed a notable caveat: After participants
indicated whether they wanted to buy a product, they reported
exactly how much they'd personally be willing to pay for the item,
typing a dollar amount into an online form. Surprisingly, the
average willingness-to-pay amount was slightly lower in cases where
they had viewed the price first. This indicates that if retailers
want to take advantage of price primacy, they need to advertise true
bargains. So, for insance, a gigantic neon sign advertising $5 off a
$20,000 car? That's going to turn customers away.
"If
it's an insignificant discount, then you're actually putting
yourself at a disadvantage by highlighting the price first, because
people are now cognitively scrutinizing the price and making sure
it's worth it," Karmarkar says. "You can't just try to
fool people into thinking it's a great price."
by
Carmen Nobel
http://hbswk.hbs.edu/item/7651.html
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