The Higher the Price the Better the Result? The Placebo-Like Effects of Price and Brand on Consumer Judgments

I-Ling Ling,Jun-Fang Liao,Chih-Hui Shieh

doi:10.4236/tel.2012.23048

Abstract

This research investigates the placebo effects of price and brand on consumer judgment and focuses on how two psychological moderators, deliberation thinking and self-confidence, influence the placebo-like effects. Two experiments were conducted. The results show that although different prices and brands on the same product would not influence consumers’ taste evaluation, they would affect participants’ grades in the memory test. That means there is a placebo effect on price/brand cues. The results also indicate that the placebo effect of price is more influenced by the discounted price than the regular price when people have low deliberation thinking. Furthermore, the findings show that the effects of brand and self-confidence create an interaction effect. Self-confidence moderates the placebo effect of brand on consumers’ judgment. Theoretical and managerial implications of the findings are provided.

Highlights

Traditional models of economics presume that consumer utility for goods/services is determined by how much utility they will receive from a product, and consumer accepts the transaction if the selling price is below his/her baseline price
Because the placebo response is an important component of many medical outcomes, it is logical to postulate that a manipulation of price or brand could have a direct effect on medical outcomes by modifying it
The findings provide compelling evidence that marketing activities can lead to substantial placebo effects

Summary

Introduction

Traditional models of economics presume that consumer utility for goods/services is determined by how much utility they will receive from a product, and consumer accepts the transaction if the selling price is below his/her baseline price. Price information may be used as a heuristic by which people infer the relative merit of a product or service [1]. Relevant to the current research, if price can increase expected value, in the case of products it may be able to modify not merely perception but the actual product performance via the placebo effect. The placebo effect has been investigated to be enduring and even capable of reversing the effects of active medications. Marketing factors, such as pricing and branding, are known to influence perception and expectation. Because the placebo response is an important component of many medical outcomes, it is logical to postulate that a manipulation of price or brand could have a direct effect on medical outcomes by modifying it

Objectives

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Conclusion