I heard an interesting story on NPR a couple of days ago. You’ve probably all heard about how doctors conduct field tests, often by giving half of the respondents a placebo (sugar pill) in “double blind” research studies. The point is simply to ensure that even the researchers don’t know who is getting the real drug and who is getting a placebo (a pill with no active ingredients).
Researchers at MIT decided to conduct research with an interesting twist that put the emphasis on the perceived price of the drugs that the study subjects were receiving. In this study respondents were recruited to assess the pain-reduction qualities of a new drug and were given shocks fifteen minutes after receiving a dosage of that drug to determine which version was more effective. One version, they were told, cost 10 cents per pill and the other version they were led to believe cost $2.50 per pill. In spite of the fact that the respondents were told that the pills had the same active ingredients, they still perceived the more expensive pill as having a significantly greater reduction in the pain reduction. So, although both groups were given pills with identical contents (sugar) the ones who were led to believe that their pills were more expensive reported a greater decrease in pain! Maybe the placebo effect will have to be adapted to the placebo-cost-effect?
Unfortunately, for most products, communicating value to the customer is much more complicated than simply raising prices and repeating “you get what you pay for”. However, this research sheds some light on the belief that there is a connection between the price paid and the value, at least in instances where there are not other cues to help aid in value assessment (size , weight or other subtle indications of quality.)
Know Thy Customer!
Chris Hawkes
http://www.npr.org/templates/story/story.php?storyId=87938032
