Can incorrect beliefs and expectations about effects of marketing actions influence the actual efficacy of the marketed product? For example, because consumers believe that lower prices reflect lower quality, can drinking an energy beverage believed to help mental acuity and bought at a discount lead to poorer performance in solving word-jumble puzzles versus when the same drink is purchased at its full price?
In the lead article of the November issue of the Journal of Marketing Research, INSEAD Associate Professor of Marketing Ziv Carmon, and co-authors Professors Baba Shiv and Dan Ariely document this phenomenon. They demonstrate that price discounts can hurt the efficacy of products, and that advertising messages can also affect actual product efficacy.
The researchers show that people paying the full price of a product (an energy drink believed to increase mental acuity) can benefit more from consuming it (are able to solve more puzzles) than people who purchase the exact same drink at a discounted price. They also demonstrate that people drinking a beverage advertised as being very effective derive more benefit from it (able to solve more puzzles) than consumers drinking the very same beverage but see an ad claiming that the drink is somewhat effective at enhancing performance.