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A product’s price tag defines its value—at least that’s what recent studies have found.

According to a wine test conducted by researchers at the Stanford School of Business and California Institute of Technology, a wine’s taste improves as its price increases.

The Study
Eleven male Caltech graduate students were recruited for the bottled wine study. They were informed they’d be sampling five different wines to study the effect of sampling time on flavor. Only three wines were actually used—two were given twice with different price tags. The participants said they could taste five different wines, even though there were only three and added that the wines identified as more expensive tasted better (reported by ScienceDaily).

‘Perceived’ value
There is a medical explanation for ‘perceived’ value provided by a doctor who lead a similar study on differently priced prescription pain relievers and their effects.

“When you’re expecting pain relief, you’re secreting your own opioids. When you get it on discount, you doubt it, and your body doesn’t react as well.” said Dr. Dan Ariely, as reported by the New York Times.

In the wine study, the part of the brain that experiences pleasure will become more active when the drinker thinks he is enjoying the more expensive vintage, thereby creating a situation where he thinks he’ll experience more pleasure from an expensive bottle of wine rather than a cheaper one.

So, are these participants really experiencing increased pleasure, or do they merely think they are because they’re anticipating it?
Due to perceptions about quality positively correlating with price, scholars argue that people might expect an expensive wine or prescription pain reliever to taste better and work better than a cheaper version because of their anticipation.

But today’s consumers don’t seem to be swayed so easily. Even if a heavy price tag increases the ‘perceived value’ of a product, we’re not too quick to spend. Why?

‘Real’ value
A product must appeal to consumers’ emotions. In order for a product to sell, the price must justify the cost. That’s where marketing comes in. People do not buy a prescription pain reliever because it is the most expensive on the shelf. Consumers purchase pain relievers to—you guessed it—relieve bodily pain. In this example, price and pain reduction play supporting roles. Being pain-free is the primary motivating factor for the purchase because it connects with the consumer emotionally.

It’s the same thought process behind today’s luxury brands. Price justification via brand name and reputation will allow consumers to connect with the brand, subsequently encouraging them to buy.

‘Real’ value is the ‘real’ motivating factor
Although a higher price can help increase a product’s desirability, utilizing marketing to increase brand name, brand reputation and a healthy price/value relationship, will not only increase a product’s ‘perceived’ value, but also its ‘real’ value. This translates into sales.

The exorbitant popularity of social media has given people all over the world a voice like never before. As demonstrated by the face off between Ashton Kutcher and CNN for the most Twitter followers, one individual can literally have more perceived influence than an entire news organization. As such, it seems as if virtually overnight the traditional media and marketing landscape has been indefinitely altered.

For some brands, the transparency which social media requires can be downright alarming. But for those brands that embrace the online conversation, social media can become a marketing tool that vastly strengthens a brand and its mission.

Below are K&A’s top 12 reasons why a social media marketing campaign is valuable to your brand:

1. Increases brand awareness
2. Helps manage brand reputation/aids in crisis communications
3. Increases customer service ability
4. Creates brand evangelists
5. Betters your brand’s Internet search ranking
6. Generates qualified leads
7. Helps monitor competitors
8. Promotes new brand product or service offerings
9. Enhances interaction and engagement with customers
10. Helps monitor news and trends in your industry
11. Provides enhanced media opportunities
12. Increases brand networking and partnership opportunities

The bottom line is that the online conversation will go on — with or without your brand. Now is the time to evaluate your marketing program, and to ensure social media is an integral part of your brand’s overall marketing strategy for the future.

Tweet @stevekleber and tell us why or how your brand has joined the online conversation. Or contact Steve Kleber at sk@kleberandassociates.com to find out more about what K&A’s new Social Media Department can do for your company.

Despite popular belief and the barrage of negative media reports, the luxury housing market remains strong. The wealthy are rather unaffected by the housing slump as they are less concerned with mortgage and interest rate issues.

Negative media reports surrounding the condition of the economy and overall housing market have today’s luxury consumers putting away their credit cards. This calls for adaptive marketing tactics from those in the home and building channel to boost consumer confidence. Focusing on ‘real’ value is more important than ever in the high-end market.

Below are five key marketing tactics essential to maintaining a luxury brand in today’s economy.

1.  Employ relevant advertisements
The key word here is relevant. Design ads with the consumer in mind. Tell a story that resonates with the target audience. Advertising is crucial to enhanced brand awareness and also allows consumers to connect with your product on a more personal level.

2.  Evolve the brand
The luxury brands that have succeeded for decades are constantly re-inventing themselves. Take Burberry, Cadillac and Chanel, for example. To appeal to luxury consumers, it’s not just about price point or brand name, but how the product fits into consumers’ ever-evolving lifestyles. High-end consumers will pay a higher price for any number of benefits, but it’s all about appealing to their expansive lifestyle views that allows the brand to adapt to change and style preferences.

3.  Know what makes consumers buy
Price/value relationship, product and brand reputation, and store/dealer reputation are essential in creating and maintaining a luxury brand. Additionally, word-of-mouth, articles and reviews in magazines and newspapers, the Internet and the overall impression and ease of use of the company’s Web site are key influencers.

4.  Develop a strong brand relationship with consumers
Consumers must feel connected to the brand itself. A generic prescription drug may work better than a name brand, but if it’s relatively unknown throughout the marketplace, consumers will purchase one that they may have a pre-established relationship with. Having a consumer connection via customer testimonials, strong media reviews and a user-friendly Web site will enhance the relationship among the brand and the luxury consumers it targets.

5.  Balance performance and the way the product makes the consumer experience luxury
Every consumer experiences luxury differently. There must be equilibrium between uniqueness and exclusivity. The bulk of luxury consumers do not buy a product because others don’t have it or can’t afford it. They buy it because of the way it makes them feel–special and unique.

Despite negative reports, there is a large luxury consumer base to tap into. Today’s discerning consumers need to feel a connection with their luxury brands. The most important aspect of marketing to today’s luxury consumers is to keep their emotions at the forefront of all initiatives to remain a presence within the competitive luxury marketplace.