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May 1, 2006

You really do get what you pay for!

(Posted by francois to: marketing )

placebo sm.jpgOther fascinating research by Stanford Professor Baba Shiv includes this study which essentially finds that discounts can actually change consumer behavior - not just buying behavior.

So say that you are buying a drug at a 25% discount - you could actually end up having less effect from using the discounted drug then if you would have bought the drug at full price! So not only do we associate a lower price with lower quality - which result in specific expectations about a product - we actually activate these expectations, which then translate into self-fulfilling prophecies that actually impact our behavior.

The same study found that advertising has the same effect. If a drug is promoted as being very efficient, then the effect of using the drug will be better than if it were not advertised that way. The implications of this finding are actually far reaching - as they affect overall consumer health.

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Posted by francois at May 1, 2006 6:28 AM | Bookmark This

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