Price and perception

Baba Shiv, a professor of marketing at Stanford University has shown that price can alter a consumer's perception of a products ‘performance’ in a very real sense. In the research paper, Marketing Actions Can Modulate Neural Representation of Experienced Pleasantness he describes how a group of subjects had better taste experiences from a bottle of wine when told it was expensive. This was measured through magnetic resonance imaging showing that there was more neural activity in the pleasure centres of the brain as well as using the subject's reports.

Much of his research has leant weight to the notion that low price equates to low quality. This is backed up by other research which shows that the trappings of quality in packaging change the customer experience and so their perception of the brand. In one example Brandy was found to taste better out of a more up market (read expensive) bottle

Extrapolating this thinking might lead to the idea that product stickiness i.e. the loyalty that customers show to products increases with price – on a relative basis within a category.

So does this mean that categories with high in-store promotional activity tend generally to have customers who are less committed to particular brands? Shampoos and carbonated drinks spring to mind as two categories which seem to be on almost constant promotion. My personal favourite seems to cross the lines being an up market biscuit which I only buy when it is on a two for one offer as it has a high price. It is on bogof sufficiently often that I can reliably purchase at the lower price point.

There’s no certain answer currently but perceived wisdom says that yes cheaper items go to less brand committed buyers. I am not sure, but I like to think that my behaviour buying the biscuits means that they have not yet eroded their brand perception to this extent.

Rufus Evison