Price tag fools brain

It's a little secret that many marketers would rather keep secret: people often think that if something costs more, it's got to be worth it.

But that's not always true, suggests a new study that used high-tech brain imaging to illustrate its point.

Researchers from Stanford University and California Institute of Technology found that inflating the price of a product - in this case red wine - led to increased activity in a region of the brain that "encodes" subjective pleasantness. The study results offer insights into the "neural" effects of marketing, suggesting that the perceived price of a product affects a person's enjoyment of that product, the scientists said.

Using functional magnetic resonance imaging (fMRI), the researchers found the specific area of the brain - the medial orbitofrontal cortex - where that perception of enjoyment lies. This ability to manipulate basic biology to increase perceived pleasure is an example of what is called "neuromarketing," the researchers said.

"We find the more expensive the wine, the more activity in the medial orbitofrontal cortex of the brain," said Antonio Rangel, an associate professor of economics at Cal Tech.

Price tied to brain activity
"I can change the activity in the part of the brain that encodes for subjective pleasantness by changing the price at which you think the product is sold, without changing the product," he added.

The findings are published in this week's online edition of the Proceedings of the National Academy of Sciences.

In the study, Rangel and his colleagues had 20 people rank their enjoyment of differently priced red wines while undergoing functional magnetic resonance imaging. But there was a catch: two of the wines were presented twice, once with a high price tag and once with a low price tag.

The researchers found that people said they liked the "expensive" wine more than the "cheaper" one. And the fMRI scans showed that when people drank the "expensive" wine, they had more activity in the medial orbitofrontal cortex, which reacts to experienced pleasantness for odours, taste and music.

There has been a belief that the pleasantness associated with a product depends solely on the product, Rangel said. "This suggests that this is not the case. The beliefs about what you are experiencing also affect how pleasant that experience is," he said.

Part of human nature
Rangel thinks that incorporating factors other than the product itself into the experience of that product is part of human nature. "It is something that can be exploited by marketing but has not been created by marketing," he said.

For Rangel, neuromarketing is a scientific - not a commercial - pursuit. "We want to understand how environmental variables such as pricing affect the computations that the brain makes to make decisions," he said.

Jon Hanson, a professor of law at Harvard Law School, said the new study spotlights the way marketing can manipulate feelings about a product to influence buying choices, "which we tend to defend as rational and reasoned."

"This new study seems to shed some valuable light on some of the neural mechanisms behind what makes something seem attractive, flavourful, or pleasant, and may be important in providing additional evidence of just how the Herculean investments in marketing pay off by operating beneath the radar of the more conscious, reasoning components of our minds," Hanson said.

"In addition, it may suggest one of the ways in which consumers deal with the cognitive dissonance of paying a steep price for something - 'We enjoy our purchase, more precisely, because we paid more,' " he said.

More efficient marketing
Another expert sees neuromarketing as a way to understand how people think and to make marketing more efficient.

"The use of neuroscientific methods and paradigms to help answer questions of marketing theory has the potential to revolutionise our understanding of the relationship between organisations and consumers," said Nick Lee, a senior lecturer in the marketing group at the Aston Business School in Birmingham, England.

"This revolution is not necessarily about helping firms to sell more products or control the mind of the consumer but to help scholars understand how marketing works," Lee added. "Of course, it will also enable firms to market more efficiently, hopefully reducing wasted revenues and further benefiting economic performance."

Not a benign science
But another expert doesn't see neuromarketing as a benign science.

"Marketing can trump our senses," said Susan Linn, an instructor in psychiatry at Harvard Medical School and associate director of the Media Centre of Judge Baker Children's Centre. "Using medical equipment and medical technology to help marketers do their job better is very troubling."

Linn thinks the study findings could help marketers find new ways to manipulate consumers by pinpointing their marketing more accurately. "This is particularly troubling with children," she said.

"The marketing industry has done a good job convincing people about their free will and that they are making logical, well-thought-out decisions about the things that they buy," Linn said. "Studies like this suggest that, in fact, there are lots of things that influence our responses to marketing and our choices of products that are completely irrational that we might not be aware of." – (HealthDayNews)

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January 2008