Eighth Law of Branding (Price as an influence and trigger)
High High Price (trigger) ==== > Must be Good
A well known principle of human behavior says that when we ask someone to do us a favor, we will be more successful if we provide a reason (reason = trigger).
People, however, are more likely to deal with information in a more controlled fashion. They take their time to analyze. When an issue is important, people give themselves a safety net. There is a resistance to only one trigger.
In some cases people don’t take their time to measure and analyze. The complexity of modern life hinders us from making fully thoughtful decisions. It is just not the complexities; it could be distraction, emotional arousal, mental fatigue, and/or time issues. Or even other cases:
Most Japanese jujitsu fighters are capable of beating stronger opponents. They exploit natural forces such as gravity, leverage, momentum, and inertia without using much of their own personal power.
That is what High Price does. It makes us buy because of natural forces such as perception and contrast.
A very expensive diamond sitting next to moderately priced diamond which is of lower quality, influences you to buy the expensive one.
Rule 1) = Use perceptual contrast to uplift the quality of Branded Product
Clothing stores have an interesting way of doing business. If you ever shop at one, you will notice that sales personnel are instructed to sell you the more expensive items first.
Even though common sense might tell us if we just spent lots of money on a suit, there is a less chance we spend more on other items. But, they know better. The contrast theory says, after you bought the more expensive item, the lower price item has little chance of changing your mind.
Real estate people know that if the buyer has already looked at couple of dumps, they are more tuned in buying the more expensive houses.
Effectiveness Of Placebo Depends On Price Perception
A 10-cent pill doesn’t kill pain as well as a $2.50 pill, even when they are identical placebos, according to a provocative study by Dan Ariely, a behavioral economist at Duke University.
“Physicians want to think it’s the medicine and not their enthusiasm about a particular drug that makes a drug more therapeutically effective, but now we really have to worry about the nuances of interaction between patients and physicians,” said Ariely, whose findings appear as a letter in the March 5 edition of the Journal of the American Medical Association.
Ariely and a team of collaborators at the Massachusetts Institute of Technology used a standard protocol for administering light electric shock to participants’ wrists to measure their subjective rating of pain. The 82 study subjects were tested before getting the placebo and after. Half the participants were given a brochure describing the pill as a newly-approved pain-killer which cost $2.50 per dose and half were given a brochure describing it as marked down to 10 cents, without saying why.
In the full-price group, 85 percent of subjects experienced a reduction in pain after taking the placebo. In the low-price group, 61 percent said the pain was less.
The finding, from a relatively small and simplified experiment, points to a host of larger questions, Ariely said.
The results fit with existing data about how people perceive quality and how they anticipate therapeutic effects, he said. But what’s interesting is the combination of the price-sensitive consumer expectation with the well-known placebo effect of being told a pill works. “The placebo effect is one of the most fascinating, least harnessed forces in the universe,” Ariely said.
Ariely wonders if prescription medications should offer cues from packaging, rather than coming in indistinguishable brown bottles. “And how do we give people cheaper medication, or a generic, without them thinking it won’t work?” he asks.
At the very least, doctors should be able to use their enthusiasm for a medication as part of the therapy, Ariely said. “They have a huge potential to use these quality cues to be more effective.”
The study was funded by MIT.
Source: Karl Leif Bates