How does our mind determine the price the product deserves?

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How does our mind determine the price the product deserves?
How does our mind determine the price the product deserves?

Think about the last time you went shopping. Often when you go shopping, you think of certain goods you have decided to buy in advance and know how much they cost. Or the commodity itself? Who has the biggest impact on your decision?
This is the fundamental question in experimental research that uses neuroscience tools to highlight how our brains make purchasing decisions, which are: “Cost Awareness – The Nerve and Behavioral Impact of Price Priority on Decision Making”.

“We were interested in knowing whether the price is playing the key role in the market,” said Uma R. Carmarkar, a neuroscientist and assistant professor of marketing at Harvard Business School who conducted research with Baba Shiv, a marketing professor and neuroscientist at Stanford. Making decisions, and whether it has an impact on the way the brain assesses the product, that having the tools for nerve testing opened the way for us to answer these two questions. “

The researchers found that the price quote first makes consumers think about whether the product worth its price or not, and as a result, it opens the way for the bargaining element to enter the price of the commodity. Research may help retailers identify important things such as the right time to raise prices, determine which products work best with this strategy, and how to better promote products to consumers.

Brain shopping experience:

In a series of tests, the participants went shopping while lying on their backs inside a functional magnetic resonance imaging device. This device uses a giant electric magnet, usually a Tesla 3, that follows blood flow throughout the brain when the test subject responds to sensory alerts. Participants respond to product images and prices.

In the first experiment at a photography center on the Stanford campus, each participant was given $ 40 for shopping before seeing a range of 80 products and their prices on a screen inside the MRI. “This has made the shopping experience more realistic,” says Karmarkar. , The products were offered at discounted prices, and the participants sometimes saw the price first and at other times they saw the product first, but in each case they eventually saw a picture of both the product and the price being put together.

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At that point they choose to buy the product or not by pressing the button (yes, or not).

After leaving the machine, participants filled out a survey to assess their love for each product on a scale of 1-7. The researchers focused on brain activity at the moment when the participants saw the product and the price displayed together, and were more interested in the human cortex in the frontal lobe (the region of the brain that deals with estimating the value of decisions) and the recombinant nucleus (an area called the center of pleasure) Strongly desired).

“What we cared about was whether the neural patterns in these areas looked different at the point where the information on the screen in the end was the same,” says Karmarkar.
The results showed that brain activity varies depending on whether the participant saw the product or price first.
“The pattern of activity in the prefrontal cortex assumes that sequencing is important, and simply the nerve signals looked different when the price first appeared versus the product first. When the product first appeared, the question about the decision seemed to be: Do I like the product? When the price first appeared, the question seemed: “Is the product worth this price?”

Note that price priority did not have a significant impact on actual purchasing behavior. Participants bought almost the same number of items and the survey showed similar likes ratings regardless of whether they had seen the product or the price first.
The researchers suspected that even if participants were more critical to the value of the product in case of price priority, the products were equally attractive in both cases.
Most of the participants were in their twenties, and most of the products were suitable for their tastes, such as movies, clothes, noise-canceling speakers, etc.
“If you really liked something and you could afford it, you would buy it, and for that kind of easy decision, it does not matter whether you know the price or the product first,” says Karmarkar.

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Although the results of this initial experiment were clear for neuroscience, the Karmarkar team also wanted to show that their research could have real-world effects for retailers (a direct effect if the consumer decided to buy the product).
Suppose that price priority may actually increase the likelihood of purchasing products, but only if the decision is more about product interest than purely emotional desire.
To this end, the researchers designed a subsequent study of 83 participants on their computers and evaluated products that could be said to be tedious, but useful: a water purifier, a set of AA batteries, a USB drive and a flashlight.
Like the MRI study, products were offered at a reduced price.
For the four products, participants saw either a price or a picture of the product for 8 seconds followed by a resolution screen showing both price and product.
The participants then indicated the extent to which they wanted to buy the items on a scale of 0-100, and each number was considered higher than 50 that there was an intention to buy the product.
At this time, the price priority had a direct impact on the purchase decision, and it was clear that participants were more likely to buy the product if the price was seen before the product.
For retailers, this indicates that it makes sense to advance prices, at least when advertising utilitarian elements.
At the same time, in cases where the price is initially announced, retailers may want to change their way and highlight the function of a product in more than one way.
“The question is whether the price makes the product look better,” says Karmarkar. “If the product is worth the price, the bid initially reduces the link between the benefit from the price and the interest from the product itself.”
But the search also revealed a noticeable warning: After participants indicated whether they wanted to buy the product or not, they printed out how personally they were willing to pay dollars on this product in an online form.
Surprisingly, the average amount that participants were willing to pay was lower in cases where the price was initially raised, indicating that if retailers wanted to take advantage of the price priority, they would have to announce real deals.
For example: if a gigantic neon sign advertises a $ 5 discount from a $ 20,000 car, this will inevitably drive customers away too much.
“If the discount is not remarkable, you are actually putting yourself at a disadvantage by first highlighting the price, because people are checking the price now for knowledge and trying to make sure that the product is worth the price. You can not simply try to deceive people by persuading them, This price is perfect. “

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