How our brain determines if the product is worth its price

Remember the last time you went shopping?

You knew the product you wanted to buy and how much the product would cost you. Was your decision affected by whether you saw the price or the product first?

According to Uma R Karmakar”considering the price first changed how people thought about the decision process and whether it changed the way the brain coded the value of the product” Karmakar says as they have neuroscience tools at their disposal they had the benefit of exploring both the questions.

Researchers say viewing the price first(price primacy)makes the customers think whether the product is that useful and really needed to be bought. Researchers would help marketers “decide when it is the best to lead with price, which products work best with that strategy and how to frame sales messages to customers

THE BRAIN SHOPPING EXPERIMENT

In a series of exercises, participants were made to lie down on an fMRI “(Functional Magnetic Resonance Imaging) machine and were taken shopping. The fMRI uses a giant elect magnetic and often 3teslas strong which can be used to track the blood flow throughout the brain as subjects respond to sensory cues. Here, participants were responding to both pictures of the object and their prices.

The first experiment was conducted at an imaging centre at the Stanford University campus, participants were given $40 before viewing a series of products and their prices on a screen inside the fMRI. According to Karmaker,this technique made the shopping experience more real. 

Some participants saw the product first while a few saw their price first, but they saw an image of both the product and price together. At this particular point they choose whether they need the product or no, with a push of a button.

Researchers were more interested in the “medial prefontal cortex which id the area in the brain that deals with estimating decision value and nucleus accemben area that is the pleasure centre, and activity is correlated with whether a product is desirable.

Researchers tell us that the brain activity varied to whether the subject had seen the price or the product first. According to Karmaker”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,” When the subject sees the product first the question in his mind is “Do I like it” and when he sees the price first the question is to be “Is it worth it”

This tells us that price viewing first does not have a effect on actual purchasing behaviour. Subjects bought the same number of items and reported similar “liking” ratings whether they had seen a product or the price first.

Karmaker says “If you really love something and you can afford the product you are going to buy it” and those kinds of easy decisions it does not matter whether the product or the price comes first. Karmaker team wanted to show that their “research could have real world implications for retailers” direct effect on whether a consumer decided to buy the product.

Karmaker says “The question is not whether the price makes a product seem better, it is whether product is worth the price”

Carmen Nobel is senior editor of Harvard Business School Working Knowledge.

http://www.hbs.edu/faculty/Pages/profile.aspx?facId=588196&click=bestbet

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15 thoughts on “How our brain determines if the product is worth its price

  1. Customer behaviour is a really interesting yet complex topic,and conusmers are human beings and are also sometimes simple and predictable.Price is one of the most strategies for managment team to make its product’s market identification.Also consumers tend to make decisions by price and production,however,in my views,price view does not always first affect on actual purchasing behaviour.More specifically,the core factors that affect consumers’ behaviour are determined by other important factors such as brands and demand that are divided by products’ characters.Consumer psychology,examining sensation and perception,learning and memeory,motivation attitudes and cultural difference are all key factors on customers’ behavious,thus,it is necessay to make different marketing strategies based on different products and customers’ need.

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  2. If all you have to focus on is price or product such as in this research there is no doubt one or the other will prevail…..such is research. However this post ignores the ‘experience’ of shopping retail or ‘going shopping’ as they suggest here. In my view it undervalues the high level marketing strategy of the retail experience but also the social experience of ‘going shopping’. I believe on many occasions social pressure would override both cost and product desire, or at least heavily influence purchasing decisions in a retail environment.
    However when this environmental aspect is removed, such as online shopping, you can see how a research project like this could have ‘real world’ implications on buyers decision making as largely their focus is reduced to desire of product or price.

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  3. Product differentiation is main thing and checking for alternatives in our budget is what we Consumers do .Generally although price is high its not easy to purchase the new alternate product,because its new and not tried before.For example Vegemite, we can see many alternatives for this in major supermarkets but we still purchase Vegemite because of its brand name and quality it has maintained over Years. Hence knowing the new high price Vegemite is still purchased where brain acts as strong influnce in selecting it . Most buyers do the same for some of the daily use products .

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  4. It is clear that every purchasing decision does NOT go through the same number of steps or reasoning or evaluation process even within the same person; it is driven by many factors within us, around us and our past experiences and our beliefs and values in that particular product’s/service’s context.

    On a personal note, sometimes I have a question of whether every decision is processed & made by the Brain (logical thinking, proper assessment, financial justifications, etc.) or Heart (Kindness, Love, attraction towards something, feelings, belongingness, etc.). In most of the cases these two will synchronize and makes the final decision.

    Whether you look at the product or price, the final decision is based on the factors such as whether you really need it or want it? Can you control yourself? Whether your inner feelings & emotions can override the logical thinking & financial impact?
    In certain cases you really love the product and you know the product very well, so the first thing you might do is quickly check the price to see whether you can afford it at that point. But in certain cases you look at the price to decide whether it is worth going to the next step and looking at the product.

    To discuss another aspect of this process, I will bring in a personal example that I have noticed, my wife does her numbers, go through the catalogues and make a note of all the special offers, make a comprehensive list of all items that needs to be bought and highlight the once on special at different supermarkets, etc. and do a real good job in making sure we get the best value for money on the weekly grocery shopping, which is very logical and makes real financial sense. In certain cases we postpone some purchases until we come across a special. But suddenly she might see something nice on the way to Supermarket; a Top, Dress or a hand bag, which was not in the shopping list and there is no real need at that point of time; but ends up buying that also. At that moment it was not about the budget, cost or whether it is a real need, etc. but about her emotional attachment to that product or item she came across, which happens in a fraction of a second. In this example I don’t believe that the brain had enough information or time to determine if the product is worth its price.

    In Summary, the worthiness of different products or services is assessed differently in our brain/heart and it is not purely about the price of the product. But it involves the emotional attachment, how/what we feel about it, our beliefs, social status, belongingness, brand preference and so many other factors. That’s why sometimes we don’t have a justification for some of the purchases we make and/or end up buying certain things that we can’t afford to and fall into debts.

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  5. This is an interesting post. Something I have not thought about before probably as it feels so natural when you purchase something. I would say that emotion plays a large role in this deciding factor irrespective of price. According to one author below – emotion pushes us towards action, it is also very subjective based on what the consumer plans to purchase, some items of low value (everyday items) would be purchased without a real reflection on price. Items with higher values would require much more thought and effort.

    https://www.psychologytoday.com/blog/inside-the-consumer-mind/201302/how-emotions-influence-what-we-buy

    Low value products are also referred to as convenience purchases and consumers don’t expel much time thinking about them as apposed to shopping and specialty purchases where conscious decisions about price may be more relevant.

    How many times have you come away from a grocery store, where you don’t validate the prices on the receipt? Is there a level of trust there that what you put in the trolley is expected to be a certain level of cost.

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  6. Although the participant sampling procedure is not discussed, it seems that the environmental and cultural aspects that influence the purchase behaviour are somewhat disregarded. Such factors influence every purchase decision, thus the study of individual factors in the absence of environmental/cultural factors could be an oversimplification. For instance, one can assume in a country with a low economic growth and rising inflation, the perceived value (the question: “Is it worth it”) should most frequently precede the question: “Do I like it?”

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  7. This is a very interesting post. Using an fMRI to compare how much does customers interest about product itself or price that related to the product. The reaction from the brain can prove which part of it is the most concerned to customers. If I as a volunteer to this experiment, I must admit that the question from myself would be the same as other customer from “Do I like it” to “Does it worth its price?”. However, every consumer has unique purchase decision. And the purchase decision are influenced by, first of all, individual and psychological which are motivation, perception, learning and memory,attitude,personality, self-concept, and lifestyle, plus, culture, social class, social groups, family even country from the environment factors. In my opinion, I believe consumers behavior can not figure out clearly by doing scientific experiment. Although it is useful for researcher. This topic should study widely because human mind is changing forever. And that why consumer behavior is interesting.

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  8. I think that price is a mechanism in marketing of establishing value for the consumer. I think though that the concept of value extends past price. I consider that I make my purchases based on the value I perceive I will receive from the intended purchase and how much I value the activity that I am utilising the purchase for. Recently I needed a new vacuum cleaner and I visited a store that specialised in vacuum cleaners. There must of been 70 models available. A shop assistant asked to assist me and then proceeded to show and demonstrate a vacuum cleaner that was amazing. I knew it would be expensive so i was not shocked when I was told $2500 with ongoing costs for yearly maintenance and accessories. Whilst the vacuum was amazing and I could afford the $2500 there was no way that I was going to pay $2500 for a vacuum because I just did not value the product. I probably would not of paid $1000 for that product again because a vacuum is just not that valuable to me. What I wanted was a product that would be durable,and would meet my expectations without exceeding my concept of value for that product and the associated activity. The chosen vacuum was a European brand that was on sale for $460.

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    • That’s true and even I would think like that if I were you. But, when it comes to buying regular households from a supermarket the above mentioned factors come into play. The main advantage of business through supermarkets is you get customers to see every product you are selling and if you could recollect your last shopping you must have purchased atleast one product which you don’t need at all, but just because it’s on sale or offer.

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  9. That’s an interesting article but, the study is very limited in terms of conditions. Apart from price and requirement, there are a couple of factors which influences the customer. Considering the conditions provided, it’s interesting to see the varying biological response to the two factors mentioned in the article. I couldn’t say whether i look at prices or products first but i tend to get attracted when i see a product on sale even though i don’t need it and i assume that’s pretty much same in everyone’s case. If looking at price first has no influence on customer i couldn’t understand the impact, this study is going to make because in the current markets the chances of looking at products is higher as the prices are always mentioned at the lower part of racks in small fonts. This research may have implications if it is coupled with other factors that could influence the customer.

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  10. “The question is not whether the price makes a product seem better, it is whether product is worth the price”. Price is the important factor that can impact consumer behaviour, however it is depends on the perception of “worth” to different consumers. Despite some products have really high price, but for those consumers who can afford it and think it is worth, they still will buy it. That’s the reason why one product can divide to different level or series, it is depend on how the company segment their market for customers or potential customers.

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  11. An interesting “study” but, as noted in previous posts, it appears to over-simplify the product-price decision making process.

    There is no doubt that price plays a crucial role in deciding whether or not to purchase a product, however, I am not convinced that one can draw any firm conclusions that price, if agreeable and when viewed first, substantaily increases the likelihood of purchase.

    Brand association & loyalty, the consumer’s need/s to be met, perceived product quality, previous buying habits, general persuasiveness of the associated marketing strategy, comparator products on the market PLUS all the other sociocultural factors associated with cosumer decision making all play a fundamental (and overlapping) role – this is why consumer decision making in relation to purchasing is such a complex area and one driven largely by modern psychology i.e. the “black box”.

    C.Banks

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  12. The experiment shows that subjects bought the same number of items and reported similar “liking” ratings whether they had seen a product or the price first. So while the decision making process starts at different points depending on which is seen first (price or product); the decision taken is the same. This would make it difficult if not impossible to exploit these results to improve sales.

    There are those purchases that buyers regret purchasing even immediately after the purchase – a phenomenon known as “Buyer’s remorse”. I wonder what failures in the decision making process cause buyers to make purchases that they later regret?

    How can we as consumers make better decisions and avoid these pitfalls?

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  13. This is an interesting article, however i feel that there are other variables that would also affect the decision to buy, depending on whether one saw the price or the product first. Similar to brand association and loyalty, I think the type of product, whether it be an inferior, normal or luxury good, would also be a deciding factor, of course based on income levels. I think the study would have had a different outcome if participants would have been divided into low, medium and high income earners.

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  14. Hi Seju Shiv Shankar!
    An intersting take on consumer behaviour but its too a simplified version of a highly complex organ i.e. brain. MRI studies are affected by various other factors i.e. sleep, hunger, energy level so there is no way anyone can prove the authencity of such a research. Similarly human behaviour is too complex and while viewing a price tag and a product a lot of thoughts go through our mind. If I really need a product or I really like something I perhaps would buy it even at an obnoxious price but a price worthy object at times is left at the shelf.

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