1. Study suggests eye-catching labels may stigmatize many healthy foods

    October 20, 2017 by Ashley

    From the University of Delaware press release:

    When customers walk down aisles of grocery stores, they are inundated with labels such as organic, fair-trade and cage free, just to name a few. Labels such as these may be eye-catching but are often free of any scientific basis and stigmatize many healthy foods, a new University of Delaware-led study found.

    The paper published recently in the journal Applied Economics Perspectives and Policy examined the good, the bad and the ugly of food labeling to see how labels identifying the process in which food was produced positively and negatively influenced consumer behavior.

    By reviewing over 90 academic studies on consumer response to process labels, the researchers found that while these labels satisfy consumer demand for quality assurances and can create value for both consumers and producers, misinterpretation is common and can stigmatize food produced by conventional processes even when there is no scientific evidence those foods cause harm.

    For the poor, in particular, there is danger in misunderstanding which food items are safe, said Kent Messer, the study’s lead author and the Unidel Howard Cosgrove Career Development Chair for the Environment.

    “That has me worried about the poor and those who are food insecure,” said Messer, who is also director of the Center for Experimental and Applied Economics in the College of Agriculture and Natural Resources. “Because now you’re trying to make everything a high-end food choice and frankly, we just want to have healthy food choices, we don’t need to have extra labels that scare away people,”

    Process labels, by definition, focus on the production of a food, but largely ignore important outcomes of the process such as taste or healthiness. According to Messer and his study co-authors, policy changes could help consumers better understand their choices. They argue governments should not impose bans on process labels but rather encourage labels that help document how the processes affect important quality traits, such as calorie count.

    “Relying on process labels alone, on the other hand, is a laissez faire approach that inevitably surrenders the educational component of labeling to mass media, the colorful array of opinion providers, and even food retailers, who may not always be honest brokers of information,” the researchers wrote.

    The Good

    With regards to the positive impact process labels have on consumers, Messer said that consumers are able to more freely align their purchasing decisions with their values and preferences.

    If, for example, a consumer wants to buy fair trade coffee, they are able to do so with greater ease.

    “The good part is that process labels can help bridge the trust between the producer and the consumer because it gives the consumer more insight into the market,” said Messer. “New products can be introduced this way, niche markets can be created, and consumers, in many cases, are willing to pay more for these products. It’s good for industry, consumers are getting what they want, and new players get to find ways of getting a higher price.”

    The Bad

    The bad part is that consumers are already in the midst of a marketplace filled with information that can be overwhelming because of the sheer amount of product choices and information available.

    In addition, when most consumers go to buy food, they are often crunched for time.

    “Human choice tends to be worse when you put time constraints on it,” said Messer. “Maybe you’ve got a child in the aisle with you and now you’re adding this new label and there’s lots of misinterpretation of what it means. The natural label is a classic one which means very little, yet consumers assume it means more than it does. They think it means ‘No GMO’ but it doesn’t. They think it means it is ‘organic’ but it isn’t. This label is not helping them align their values to their food, and they’re paying a price premium but not getting what they wanted to buy.”

    Messer said that another problem are “halo effects,” overly optimistic misinterpretation of what a label means.

    “If you show consumers a chocolate bar that is labeled as ‘fair trade’, some will tell you that it has lower calories,” Messer said. “But the label is not about calories. Consumers do this frequently with the ‘organic’ label as they think it is healthy for the consumer. Organic practices may be healthier for the farm workers or the environment, but for the actual consumer, there’s very little evidence behind that. You’re getting lots of mixed, wrong messages out there.”

    The Ugly

    Like halo effects, the ugly side of food processing labels comes into play when labels sound like they have a positive impact but really have a negative one.

    A label such as “low food miles” might sound nice but could actually be causing more harm than good.

    “Sometimes, where food is grown doesn’t mean that it’s actually the best for climate change,” said Messer.

    Hot house tomatoes grown in Canada, for example, might have low food miles for Canadian consumers but it’s probably far better environmentally — because of all the energy expended in creating tomatoes in an energy intensive hot house in Canada — to grow the tomatoes in Florida and then ship them to Canada.

    “If you just count miles and not true energy use, you can get people paying more money for something that’s actually going the opposite of what they wanted which is to get a lower carbon footprint,” said Messer.

    He added that the ugly side of food labeling is that a lot of fear is being introduced into the marketplace that isn’t based on science.

    “When you start labeling everything as ‘free of this’ such as ‘gluten free water,’ you can end up listing stuff that could never have been present in the food in the first place,” Messer said. “These ‘free of’ labels can cause unnecessary fear and cast the conventionally produced food in a harsh, negative light.”

    Since the vast majority of the food market is still conventionally produced and is the lower cost product, there is a danger in taking that safe food and calling it unsafe because of a few new entrants into the food market.

    Messer also said that there is evidence that food companies are getting worried about investing in science and technology because they don’t know how the consumer is going to respond or how marketers are going to attack their food product because it’s new and different and therefore, can be labeled as bad or dangerous.

    “We’ve got a lot of mouths to feed in our country and around the world,” Messer said. “We are currently able to feed so many because of advances in agricultural science and technology. If we’re afraid of that now, we have a long-term impact on the poor that could be quite negative in our country and around the world. That’s when I start thinking these process labels could really be ugly.”


  2. Marketing study examines what types of searches click for car buyers

    October 19, 2017 by Ashley

    From the University of Texas at Dallas press release:

    When making important purchase decisions, consumers often consult multiple sources of information.

    A new study from The University of Texas at Dallas examines how consumers allocated their time when searching offline and on the internet as they shopped for a new automobile, and what the outcomes were for price satisfaction.

    Dr. Ashutosh Prasad and Dr. Brian Ratchford, marketing professors in the Naveen Jindal School of Management, recently published the study online in the Journal of Interactive Marketing. It will appear in the journal’s November issue.

    “Our data says that it’s very common for a person to spend time searching online and offline prior to making a big purchase,” said Ratchford, who holds the Charles and Nancy Davidson Chair in Marketing.

    “The same information is available both places for the most part — whether it’s a manufacturer’s website or a brochure at the dealer. It’s just a matter of which one a person is more comfortable accessing.”

    Over the long term, consumer searches have been moving online, Ratchford said. It’s more convenient, and consumers can do more on the internet than before, such as take a virtual test drive or configure a vehicle according to their preferences.

    By analyzing survey data on automobile purchases between 2002 and 2012, the researchers compared time spent on internet sources with time spent on offline sources, such as car dealerships.

    Generally, those who search more online tend to spend more time with offline sources, the study found. In contrast, previous studies looked at the internet as a substitution for offline sources.

    The analysis also revealed insights into buyer demographics and the impact of national brands, Prasad said.

    Consumers older than 50 spend less time searching, both online and offline, before making a vehicle purchase, according to the study. Many people don’t search at all. They merely buy the same type of automobile they already had.

    “Men were more likely to search online comparison websites than women,” Prasad said. “Married consumers spent more time at dealerships and were more likely to be satisfied with the price paid. The time spent at dealerships was significantly more for buyers of Korean brand cars versus U.S. brands. Knowing even minor differences in behavior can help fine-tune marketing campaigns.”

    Generally, longer search times were associated with higher price satisfaction — except for time spent at the dealer, the researchers found.

    Ratchford said that finding is possibly related to the price negotiation process.

    “We don’t know exactly why, but chances are they’re spending time trying to get a better deal, and they are getting frustrated,” he said.

    The study also found that time spent on manufacturer websites was less effective at generating price satisfaction, possibly because offline manufacturer and dealer sources, such as advertisements and brochures, perform similar functions. Dealer websites remain important because they list inventory and provide online price quotes, researchers said.

    The study’s results may have practical implications for manufacturers and dealers.

    For example, the use of independent websites was associated with reduced time at the dealer. If dealers could identify those who obtain information online, they could save considerable demonstration time, lowering costs as a result.

    Manufacturers also may want to rethink the content of their websites. According to the study, consumers who searched longer on manufacturer websites reduced their time on independent websites but increased their time on dealer websites. This suggests that more informative manufacturer websites can deter consumers from visiting comparison websites to get information.


  3. Appetizing imagery puts visual perception on fast forward

    October 11, 2017 by Ashley

    From the Association for Psychological Science press release:

    People rated images containing positive content as fading more smoothly compared with neutral and negative images, even when they faded at the same rate, according to findings published in Psychological Science, a journal of the Association for Psychological Science.

    “Our research shows that emotionally-charged stimuli, specifically positive and negative images, may influence the speed, or the temporal resolution, of visual perception,” says psychological scientist Kevin H. Roberts of the University of British Columbia.

    The idea that things in our environment, or even our own emotional states, can affect how we experience time is a common one. We say that time “drags” when we’re bored and it “flies” when we’re having fun. But how might this happen? Roberts and colleagues hypothesized that the emotional content of stimuli or experiences could impact the speed of our internal pacemaker.

    Specifically, they hypothesized that our motivation to approach positive stimuli or experiences would make us less sensitive to temporal details. Change in these stimuli or experiences would, therefore, seem relatively smooth, similar to what happens when you press ‘fast forward’ on a video. Our desire to avoid negative stimuli or experiences, on the other hand, would enhance our sensitivity to temporal details and would make changes seem more discrete and choppy, similar to a slow-motion video.

    To test this hypothesis, Roberts and colleagues used an approach common in psychophysics experiments — estimating relative magnitudes — to gauge how people’s moment-to-moment experiences vary when they view different types of stimuli.

    In one experiment, 23 participants looked at a total of 225 image pairs. In each pair, they first saw a standard stimulus that faded to black over 2 seconds and then saw a target stimulus that also faded to black over 2 seconds. The frame rate of the target stimulus varied, displaying at 16, 24, or 48 frames per second.

    Participants were generally sensitive to the differences in frame rate, as the researchers expected. Participants rated the smoothness of the target image relative to the standard image using a 21-point scale: The higher the frame rate of the target image, the smoother they rated it relative to the standard image.

    The emotional content of the images also made a difference in perceptions of smoothness. Regardless of the frame rate, participants rated negative images — which depicted things we generally want to avoid, including imagery related to confrontation and death — as the least smooth. They rated positive stimuli — depicting appetizing desserts — as the smoothest, overall.

    Most importantly, the researchers found that people perceived images that faded at the same rate differently depending on their content. Positive target images that faded at 16 fps seemed smoother than neutral target images that faded at the same rate. Positive images that faded at 24 fps seemed smoother than both negative and neutral images with the same frame rate. And positive images that faded at 48 fps seemed smoother than negative images at the same rate.

    Further analyses suggest that this effect occurred primarily because positive images elicited higher approach motivation.

    Because the words “smooth” and “choppy” could themselves come with positive or negative connotations, the researchers replaced them with “continuous” and “discrete” in a second experiment. Once again, they found that the emotional content of the images swayed how participants perceived the frame rate of the fade.

    Brain-activity data gathered in a third experiment indicated that the blurring of perceptual experience associated with positive images was accompanied by changes in high-level visual processing.

    “Even when we made adjustments to the instructions and the task structure, the overall effect remained — people subjectively reported seeing less fine-grained temporal changes in positive images, and they reported seeing more fine-grained temporal changes in negative images,” says Roberts.

    Together, these findings suggest that the emotional content of the images affected how participants experienced what they were seeing.

    “What remains to be seen is whether emotional stimuli impact objective measures of temporal processing,” says Roberts. “In other words, do individuals actually perceive less temporal information when they view positive images, or do they just believe they perceive less?”


  4. Study suggests flexibility of mindset determines whether someone judges other based on brands they use

    October 10, 2017 by Ashley

    From the Society for Consumer Psychology press release:

    While it may seem like a given that people judge others by the brand of clothes they wear, the cars they drive and electronic gadgets they use, new research suggests that this may not be the case as often as we think.

    In a study recently published online in the Journal of Consumer Psychology, researchers discovered that people who have what is known as a “flexible mindset” are less likely to judge people based on the brands they use. Individuals with this mindset believe that behavior varies significantly over time and across different situations, so they are less inclined to make assumptions about someone’s character based on brand choice at one point in time.

    “Previous research has supported the idea that people universally form perceptions about others based on brands, but we have shown that it depends on an individual’s mindset about behavior,” says Ji Kyung Park, lead author and a marketing professor at the University of Delaware. Park worked with Deborah Roedder John, professor of marketing at the University of Minnesota, on the study.

    As opposed to those with a flexible mindset, people with more of a “fixed mindset” tend to believe that one’s behavior is consistent over time and across situations, and thus predicts the person’s personality. Park found that people with this mindset were much more likely to make judgements about people based on the brands they used. In one of the experiments, participants viewed a picture of a man driving a car that was either a Mercedes Benz or a car without a visible brand name. They were asked to rate the person on a list of personality traits. Then the participants answered a series of questions that were used to evaluate whether each participant was more partial to a fixed or a flexible mindset.

    The study revealed that participants with a fixed mindset rated the man driving the Mercedes as more sophisticated than the man driving a car without a visible brand name. But the participants with the flexible mindset rated the two men as equally sophisticated. The researchers showed the same effect when participants viewed a picture of a woman eating a box of Godiva chocolates versus a box of chocolates with no visible brand name.

    In a culture that is filled with opportunities to judge social status and character based on brands, these research results offer hope that not everyone lives by that standard, Park says. Yet there are still people with a fixed mindset whose perceptions of others are influenced by brand choices. To appeal to consumers who do not want to be judged by the fixed mindset population, marketers could offer certain products that minimize the display of the brand’s name on the item, Park explains.


  5. Study assesses effectiveness of deep promotional discounts

    October 5, 2017 by Ashley

    From the University of Arkansas, Fayetteville press release:

    Many retailers employ discounts to attract customers, but it can be difficult for businesses to know what effect these discounts have on overall store performance, and few studies have analyzed store-level data to know for sure whether this strategy works.

    A new study published in the Journal of Retailing shows that promotional discounts increase store traffic and lead to higher overall profits, especially if the advertised products are staples — items such as meat and produce that are purchased frequently and by many customers.

    “Our results validate the widespread use of price promotions supported by feature advertising, such as those found in newspaper circulars,” said Dinesh Gauri, professor of marketing in the Sam M. Walton College of Business. “These featured promotions provided a beneficial impact on several key performance metrics, including store traffic, sales and profits.”

    Over a 49-week period, Gauri and co-authors Brian Ratchford at the University of Texas at Dallas, Joseph Pancras at the University of Connecticut, and Debabrata Talukdar at the University of Buffalo analyzed data on 27 product categories from 24 branches of a popular Northeastern grocery chain. Each week, the authors compiled data on overall traffic, sales per transaction, and profit margin for each store.

    They examined the impact of so-called “loss leader” strategies — the practice of deep promotional discounts to attract customers who will buy other items — on several product categories, including penetration (items bought by many people), frequency (frequently purchased items), storability (items that can be stored, such as paper napkins or plates), impulse items and national brand items.

    Their analysis of about 677,000 transactions, with an average value of $15.44 per transaction, showed that deep discounting, accompanied by a blitz of advertising promotions, achieved retailers’ goal of attracting more customers into stores and increasing overall profits. But the researchers’ main finding came with several caveats, Gauri said.

    Promotional discounts on both high-penetration, high-frequency items (staples such as meat and produce) and low-penetration, low-frequency items (beer and condiments) led to increased traffic but lower sales per transaction.

    “This suggests that these promotional discounts tend to attract small-basket customers,” Gauri said.

    However, discounts in these same categories were associated with higher overall profit margins, especially in the low-penetration, low-frequency category. Gauri said this suggests that the smaller transactions generated by the discounts contained an above average number of high-margin items, in addition to the discounted items.

    “We think this result was driven mainly by beer, which was featured almost every week,” Gauri said.

    These other findings can also give retailers an edge, the researchers said:

    • Broad discounting in one category may lead to diminishing returns.
    • On average, discounts on national brand items had a stronger impact on per-transaction sales than discounts on non-brands.
    • Consumers who took advantage of deep discount promotions on impulse products tended to buy products in more profitable categories.

  6. When hoping to be seen as powerful, consumers prefer wider faces on watches, cars

    September 5, 2017 by Ashley

    From the University of Kansas press release:

    People are typically averse to wider human faces because they elicit fears of being dominated. However, consumers might like wider faces on some products they buy, such as watches or cars, when they want to be seen in a position of power in certain situations, according to a new study led by a University of Kansas marketing researcher.

    “When consumers are motivated to dominate others, or when they use the product in public, their liking will be heightened toward high-ratio product faces,” said Ahreum Maeng, assistant professor in marketing at the KU School of Business.

    Maeng’s study she co-authored with Pankaj Aggarwal, professor of marketing at the university of Toronto, was published recently in the Journal of Consumer Research, one of the leading journals on marketing academic research.

    In five experiments, respondents examined photos of human faces that varied from low width-to-height ratio (narrow) to ones with a higher ratio (wider) to establish the perception of dominance when seeing higher-ratio faces. The researchers also had respondents view photos of products that might have a design resembling a human face, such as watch and clock faces and automobiles, from low to high width-to-height ratios.

    “These kinds of things are automatically going on in people’s brains,” Maeng said. “When we see those shapes resembling a human face in the product design, we can’t help but perceive it that way.”

    Researchers have established that people are evolutionarily adapted to read facial cues, especially those signaling dominance, and the width-to-height ratio of face is a cue to attribute dominance to the face. In the notion of anthropomorphism, scholars have found people often attribute human traits to non-human entities, such as products.

    In addition, the researchers had participants view the images while they thought about different scenarios, such as preparing to encounter either an old high school bully or a former sweetheart at a 10-year-old high school reunion or a business trip that might require a difficult negotiation.

    Their main finding was that when people felt they were in a situation where they might want to be perceived as dominant — such as that business negotiation or when seeing an old bully at a high-school reunion — people were inclined to select the wider product design for a watch or car they might be renting for the trip.

    Maeng said this differs from how people tend to see dominance in the human face. They typically become averse to a higher width-to-height ratio because they feel threatened or intimated.

    “But when it comes to a dominant-looking product face, they really like it,” she said. “It’s probably because people view the product as part of themselves and they would think, ‘it’s my possession. I have control over it when I need it, and I can demonstrate my dominance through the product.”

    In scenarios where participants did not feel the need to project any dominance, such as a more laid-back time with their children or family, the width-to-height ratio of the products became less important, the researchers found.

    Maeng said the findings have important implications for marketers of products that might resemble a human face, such as watches with a circular face and cars. They found consumers’ preferences for dominant-looking product faces is not the same as people’s preference simply for luxury or expensive items.

    Also, typically, product-design efforts have focused on visual aesthetics and ergonomics, an assumption that beauty and functionality covers the entire canvas of product design. However, more recent contrary findings by marketing researchers suggest that product design can signal a specific personality trait about the product.

    Maeng said this type of preference means that manufacturers and marketers would be able to charge higher prices for products that have wider faces. They have already found a positive relationship in examining 2013 prices of automobiles based on the width-to-height ratio, and their study likely supports those types of decisions.

    “Brand managers and product designers may be particularly interested in these findings,” the researchers said, “because a simple design feature, namely product face ratio, can have marketplace impact — by significantly improving the company’s bottom line.”


  7. Study suggests way to success for sales newbies

    by Ashley

    From the Michigan State University press release:

    Good news for novice salespeople worried about becoming successful: Expressing your gratitude to customers by going above and beyond your job description may be as effective as developing long-term relationships with them, indicates a first-of-its-kind study.

    The scientific investigation into both customer and salesperson gratitude, led by Michigan State University business scholar Stephanie Mangus, is particularly relevant as Millennials enter the workforce and become major consumers. Substantial evidence shows that Millennials, or those born between about 1980 and 2000, are emotionally driven buyers.

    Salespeople who control the emotional tone of their buyer-seller relationship tend to have an upper hand, Mangus said. And one way of controlling that emotional tone is for salespeople to express their gratitude to the customer in positive ways, which in turn can foster customer gratitude and loyalty.

    “We’re not saying you have to go out and hug your customer,” said Mangus, an assistant professor of marketing and an expert in business relationships. “All we’re saying is that you should take action on that emotion in a positive way, to put that emotion into practice. Maybe that’s one extra phone call to share a piece of information with your customer, or maybe that’s one extra call to the service department to make sure that customer doesn’t fall to the end of the list.”

    Mangus and colleagues studied salesperson and customer surveys in a business-to-business setting from a large transportation logistics firm. The study found that when salespeople did not go above and beyond, customer gratitude was low overall – and even lower in new relationships between salesperson and client (compared with long-term relationships).

    But when the salesperson did go above and beyond by expressing their gratitude through action, which the researchers call “extra-role behaviors,” customer gratitude shot up to the same high level for both new and long-term relationships.

    “There’s a general acceptance that the longer you’ve been in a business relationship, the more loyal that customer is to you and the more they’re going to buy from you,” Mangus said. “But what we found is that extra-role behaviors can sometimes take the place of that. So if you’re going above and beyond, it may not matter that it’s a newer or developing relationship.”

    And that’s great news for new and aspiring salespeople.

    “One of the big fears of our sales students is that, ‘Oh man, sales jobs are scary because I’m going to go out there and not have customers and not be able to make any money,” Mangus said. “But what new salespeople have is excitement, energy and passion to prove themselves. So if they are grateful for someone just willing to let them come in the door, and they engage in these extra-role behaviors, they can potentially get over the fact that they haven’t been a salesperson for 20 years and that they don’t have an ongoing relationship with this customer.”


  8. Personifying places can boost travel intentions

    September 3, 2017 by Ashley

    From the Queensland University of Technology press release:

    People who see animals as people and assign human traits to non-human objects are more likely to travel to destinations that are presented as being human-like, according to Queensland University of Technology (QUT) research.

    Dr Kate Letheren, Professor Brett Martin and Dr Hyun Seung Jin, from QUT Business School, found that writing about a destination as if it were human could boost its appeal as a travel destination.

    The research, published in Tourism Management, looked at personality dimensions and the impact on destination choices.

    Participants were shown a travel advertisement for either Paris or Rome. Half of the participants saw an ad where the destination was personified, referring to the city as “she,” while the other half saw an ad that referred to the city as “it.”

    “One of the ads used typical copy for a travel destination advertisement, for example, facts about the city and its attractions. The other used language that humanised the destination, like ‘Paris welcomes you’,” Dr Letheren said.

    “We found people higher in anthropomorphic traits were more likely to respond with feel-good emotions and have a positive view of the destination after reading the personified ad.

    “This suggests people with this trait who see human characteristics in tourism destinations are more likely to want to visit those destinations.”

    The researchers said that levels of anthropomorphic traits varied by person, but some common examples of anthropomorphism at work include people assigning human emotions to a pet dog or referring to a car or ship as “she.”

    Professor Martin said it was a normal tactic for destination and major event marketers to try to make a connection with consumers.

    “Humanising a destination or event can help place it in a positive light and give the audience a warm, fuzzy feeling. This is why cute cartoon animals are often chosen as mascots for the Olympics, for example.

    “Large sums of money are spent on campaigns to try to attract tourists and destinations need to appear warm and welcoming.

    “Tourism campaigns often focus on attracting specific demographics, for example Chinese tourists or luxury holiday-makers, and our research shows that if you have a tourist who naturally humanises, you can tailor the message to appeal to this aspect of their personality.

    “If you can successfully identify what traits people have, you can send them customised messages. Ten to 20 years ago that wasn’t possible, but now it is.”


  9. Why expensive wine appears to taste better: It’s the price tag

    August 26, 2017 by Ashley

    From the University of Bonn press release:

    Previous work from INSEAD Associate Professor of Marketing Hilke Plassmann’s research group did show that a higher price, for instance for chocolate or wine, increased the expectation that the product will also taste better and in turn affects taste processing regions in the brain. “However, it has so far been unclear how the price information ultimately causes more expensive wine to also be perceived as having a better taste in the brain,” says Prof. Bernd Weber, Acting Director of the Center for Economics and Neuroscience (CENs) at the University of Bonn. The phenomenon that identical products are perceived differently due to differences in price is called the “marketing placebo effect.” As with placebo medications, it has an effect solely due to ascribed properties: “Quality has its price!”

    The researchers assessed how different prices are translated into corresponding taste experiences in the brain, even if the wine tasted does not differ. 30 participants took part in the study, of which 15 were women and 15 were men, with an average age of around 30 years.

    Wine tasting while lying down

    The wine tasting took place lying down in an MRI scanner, allowing brain activity to be recorded “online” while participants were tasting the wines. Each time, the price of the wine was shown first. Only then around a milliliter of the respective wine was administrated to the test person via a tube in their mouths. The participants were then asked to rate via a button on a nine-point scale how good the wine tasted to them. Their mouths were then rinsed with a neutral liquid and the next identical wine sample was given for tasting. All of the experiments were performed in the brain scanner at the Life & Brain Center at the University of Bonn.

    The marketing placebo effect has its limits: If, for example, a very low-quality wine is offered for 100 euros, the effect would predictably be absent,” says Prof. Weber. This is why the researchers conducted the tests using an average to good quality red wine with a retail bottle prize of 12 €. In the MRI scanner, the price of this wine was shown randomly as 3, 6 and 18 €. In order to make the study as realistic as possible, the participants were given 45 euros of initial credit. For some of the tastings, the displayed sum was deducted from this account in some of the trials.

    “As expected, the subjects stated that the wine with the higher price tasted better than an apparently cheaper one,” reports Professor Hilke Plassmann from the INSEAD Business School, with campuses in Fontainebleau (France), Singapore and Abu Dhabi. “However, it was not important whether the participants also had to pay for the wine or whether they were given it for free.” Identical wine leads to a better taste experience when a greater quality expectation is associated with the wine due to its price.

    The measurements of brain activity in the MRI scanner confirmed this. The research team discovered that above all parts of the medial pre-frontal cortex and also the ventral striatum were activated more when prices were higher. While the medial pre-frontal cortex particularly appears to be involved in integrating the price comparison and thus the expectation into the evaluation of the wine, the ventral striatum forms part of the brain’s reward and motivation system. “The reward and motivation system is activated more significantly with higher prices and apparently increases the taste experience in this way,” says Prof. Weber.

    How can placebo effects be inhibited?

    “Ultimately, the reward and motivation system plays a trick on us,” explains INSEAD post-doctoral fellow Liane Schmidt. When prices are higher, it leads us to believe that a taste is present that is not only driven by the wine itself, because the products were objectively identical in all of the tastings. “The exciting question is now whether it is possible to train the reward system to make it less receptive to such placebo marketing effects,” says Prof. Weber. This may be possible by training one’s own physical perception — such as taste — to a greater extent.


  10. Understanding how persuasion works can make consumers more savvy

    August 23, 2017 by Ashley

    From the American Psychological Association (APA) press release:

    When someone offers a free sample, it’s not really free. It comes with the implied expectation that if a person accepts it, he or she will feel obligated to return the favor and eventually pay for the full product. That’s just one of the many insights psychology has uncovered about the subtle mechanics of persuasion and how people can recognize and respond to attempts to influence their behavior.

    “Persuasion is no longer just an art, it’s an out-and-out science,” said Robert Cialdini, professor emeritus of psychology and marketing at Arizona State University, speaking at the 125th Annual Convention of the American Psychological Association. “Indeed, a vast body of scientific evidence now exists on how, when and why people say yes to influence attempts.”

    Considered by many to be the expert in understanding social influence, Cialdini has conducted decades of research to formulate his six universal principles of influence.

    The first principle is reciprocity, Cialdini said. This is a simple quid-pro-quo relationship where people feel the need to return a favor. Everyone has encountered this with the “free sample” marketing campaigns or the “free trial.”

    Logically, that leads into the next principle, commitment, according to Cialdini. Once someone is hooked on a product, it’s easier to get him or her to commit to paying for it. When people decide or promise, they tend to stick to their word, according to this principle. If that commitment ends up being out of line with their internal beliefs, people tend to rationalize or change their beliefs to be in alignment with that choice, he said. This is also the basis of the low-ball approach favored by car salespeople, according to Cialdini, who conducted research early in his career suggesting that a preliminary decision to take an action tends to persist even after the costs of performing that action have been increased.

    Humans also have an innate pack mentality, which Cialdini calls social proof, citing research he conducted with hotel guests who were asked to reuse towels to save the environment. His study found that guests were 29 percent more likely to reuse their towels if they were told that most other guests chose to reuse the towels. The percentage went up to 39 percent when they heard the majority of guests who had stayed in that room reused their towels.

    Authority is another very powerful principle in play in almost all efforts at persuasion. If someone is an expert in a field, people often believe he or she is more likely to be effectively persuasive, according to Cialdini.

    “When it comes to world economics, who are you more likely to listen to for advice: a Nobel laureate in the field or some random commenter on Facebook?” he asked.

    People are also more likely to listen to others who are complimentary and similar to them. This is known as the principle of liking, according to Cialdini.

    Finally, people are more likely to want what they think they can’t have. This is Cialdini’s principle of scarcity, which works through the concept of anticipated regret, where people look to the future and regret the possibility that the option of a decision might be taken away from them, according to Cialdini. One example of this is when stores offer a sale with limited availability.

    These principles are so powerful, they generate desirable change in the widest range of circumstances, he said.

    But influencing others is not the same as manipulating, he said. To ensure that changing other’s behavior is effective and long-lasting, it is imperative to use the principles ethically, he said. For example, he cited numerous studies that showed companies using dishonest hiring practices are more likely to have stressed employees, which leads to higher absenteeism, higher medical bills and higher turnover.

    “People, companies and marketers need to ask themselves whether the principle of influence is inherent in the situation — that is, do they have to manufacture it or can they simply uncover it? That is important. No one wants to be a smuggler of influence,” he said. “Claiming to be an expert when they’re not, exploiting power, those eventually will have negative consequences.”

    People can also develop resilience to manipulation by others. By taking time to become familiar with and understand when these principles are being used, individuals can spot the influence attempt. Does the person trying to influence really have authority? When someone says something is rare or scarce, is he telling the truth?

    “We can focus too heavily on economic factors when seeking to motivate others toward our offerings and ideas,” he said. “We would do well, as well, to consider employing psychological motivators such as those we have covered here.”