In my last two posts, I referenced the Marketing Placebo Effect (also known as The Pricing Placebo Effect, or The Placebo Effect of Price).
This phenomenon often makes us think an item is better simply because it’s more expensive.
In today’s post, we are going to dive deeper into this phenomenon, with the intent to recognize, and hopefully break, it’s power over us.
Spoiler alert! After reading this post, you may no longer trust your brain!
The Marketing (or Pricing) Placebo Effect makes us “tend to value expensive items over their cheaper counterparts”.1
We’ve all experienced it. We are in a store or on-line looking at different brands; perhaps in the liquor store, hunting for a bottle of wine. That $20 bottle must be better than the $10 bottle, and the $75 bottle must be the best!
Maybe the pricier bottles are actually better, but if we were able to try each, I would hope that my personal taste and preference will determine which one I think is ‘better’, or which I like the most, regardless of the price.
But what if I told you that while our brain does make that decision, it’s not necessarily the decision you would think it would make?
This Business Insider article talks about how your “brain ‘tricks’ you into liking expensive things…we associate higher price with higher quality”1
Our brain ‘tricks’ us?!?
What do you mean? Don’t we have control over liking something because we like it, regardless of the cost?
Sure, we may buy a more expensive item because we can, or to show off, keep up with our neighbours, etc., but it’s still a conscious choice, isn’t it?!?
If you’ve read previous Doing More with Our Money posts, you may recall discussions about other ways our brain can work against us (and our pocketbooks!), often without us consciously realizing it.
- The Diderot Effect – The social phenomenon that can cause a single new item to produce dissatisfaction with other things we own, leading to further purchases. For me, it was buying a new suit; I then had to buy new shoes, a new belt and 4 new shirts, doubling the amount spent.
- ‘Keeping up with the Joneses’ – Discussed in ‘Living Beyond our Means’. It’s common to feel societal pressure to spend money on cars, houses, vacations, etc. so we can keep-up with our friends, family and colleagues.
- ‘Retail Therapy’ – We can consciously or unconsciously derive comfort from purchasing goods, leading us to spend more!
With our little brains leading us to do those things, why be surprised that we can trick ourselves into liking something just because it’s expensive?
But how and why?
This article explains it very simply. “…if you have two products and one is marked as being more expensive, it will be perceived as the better product, even if it’s identical to the other….[then] our expectation of something being better influences our brain’s perception of quality, even if it’s not a better product.”2
So that means we think it’s better because it’s more expensive, and because we already think it’s better, our brain re-enforces that by making it actually seem better when we use it.
In that study, they didn’t just rely on asking people which they preferred, they actually hooked them up to an MRI scanner to measure brain activity. They specifically focused on the area of the brain “associated with reward and motivation, which directly affect the taste experience”1
The people in the study “all tasted the same wine, but were given different information about it’s price. The subjects thought the wine they were told was more expensive tasted better than the cheaper one”, again, even though it was the exact same wine!
The writer of that article did their own test, this time having their colleagues try two bottles of wine, one cheap one expensive, but then switched the labels so the cheap one seemed expensive and vice-versa. In that test “almost 80%…preferred the more expensive wine – no matter which bottle they were tasting”1
So our little brains trick us into thinking that something that is more expensive is not just better, but even tastier?!
I don’t think I like my brain betraying me like that!
Or do I even know what I think anymore?!
So, if we know our brain can trick us into thinking more expensive items are better, how do we get around it?
- Remember, understand and think about it – When comparing items, actively think about the Marketing Placebo Effect and how it may be influencing your purchase decisions. Understanding how we are influenced is the single biggest way to avoid it!
- Purposely buy less expensive items – to try to find more that you enjoy, and buy those regularly.
- Sense of Satisfaction – Try to develop a sense of satisfaction in buying less expensive items. It can take time but keep reading this blog and we’ll get there!
BTW the Marketing Placebo Effect is applicable when we buy gifts for others as well. When buying gifts, make sure not to let your brain trick you into thinking the more expensive item is better!
That can make for very expensive holidays!
I hope this post has given you a good sense of how our brains can trick us into believing pricier means better, and more importantly, how we can recognize and counter it.
Understanding the ways our own brains can influence our purchasing behaviours is a great way to ensure we are all Doing More with Our Money.
Thanks for reading!