You May Get No More Than You Pay For - Ruminating About Placebo Effects of Marketing Actions

Can the effectiveness of a product for an individual be largely "psychosomatic"? For example, can erroneous beliefs and expectations about an energy-giving beverage -- marketed as giving a mental boost, as well - be less beneficial if the consumer knows its been bought at a discount? Associate Professor of Marketing Ziv Carmon, and co-authors professors Shiv and Ariely document a robust, newly discovered "placebo effect", in which customers can -- however subconsciously -- mentally link lower prices with lower quality to their own detriment.

by Ziv Carmon, Baba Shiv,Dan Ariely

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.

Sign in to continue

Sign in

Trouble signing in?

Reset password: Click here

Email: mtsupport@haymarket.com

Call: 020 8267 8121

Register

FREE

  • Up to 4 free articles a month
  • Free email bulletins

Register Now

Become a subscriber

From £66 a quarter

  • Full access to managementtoday.co.uk
  • Exclusive event discounts
  • Management Today's print magazine
  • Plus lots more, including our State of the Industry Report.

Choose a Package