‘Perceived’ vs. ‘Real’ Value: Which Makes Consumers Buy When Marketing Home Products?

Posted by Steve Kleber on May 16, 2009

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.

This entry was posted by Steve Kleber on Saturday, May 16th, 2009 at 10:15 am and is filed under Marketing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.