Price and MarketingHow influenced are consumers by price and marketing? If something costs more, do our expectations lead us to believe it is better?Because expectations play such a large role in reality, can a product that čosts more (but is in reality identical) actually be moreeffective? Baba Shiv, a neuroeconomist at Stanford, conducted a study involving 204 undergraduates. In the study, all studentsconsumed a popular energy drink which claims on its packaging to increase mental acuity. The students were then asked to solve aseries of puzzles. The students were charged either regular price ($1.89) for the drink or a discount price ($0.89). The studentreceiving the discount price were told that they were able to buy the drink at a discount since the drinks had been purchased in bulk.The authors of the study describe the result: "the number of puzzles solved was lower in the reduced-price condition (M = 4.2) thanin the regular-price condition (M 5.8)...p < 0.0001".Shiv B., Carmon Z., Ariely D., "Placebo Effects of Marketing Actions: Consumers May Get What They Pay For," Journal of MarketingResearch, 2005; 42: 383-393.(a) What can you conclude from the study?There is no evidence at all that the price of a product influences its effectiveness.O There is very strong evidence that price influences the effectiveness of a product.O There is only moderately strong evidence that price influences the effectiveness of a product.63°F Sunnycarchhp Write one or two sentences to answer the question.(b) These results have been replicated in many similar studies. As Jonah Lehrer tells us: "According to Shiv, a kind of placebo effectis at work. Since we expect cheaper goods to be less effective, they generally are less effective, even if they are identical to moreexpensive products. This is why brand-name aspirin works better than generic aspirin and why Coke tastes better than cheapercolas, even if most consumers can't tell the difference in blind taste tests." Discuss the implications of this research in marketingand pricing..2= E|ョ |E三99áB IU T;T IOWord(s)2 Lehrer, J., "Grape Expectations: What Wine Can Tell us About the Nature of Reality," The Boston Globe, February 28, 2008.eTextbook and Media63 F SunnyhpII

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Answered: (a) What can you conclude from the…

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Price and Marketing
How influenced are consumers by price and marketing? If something costs more, do our expectations lead us to believe it is better?
Because expectations play such a large role in reality, can a product that čosts more (but is in reality identical) actually be more
effective? Baba Shiv, a neuroeconomist at Stanford, conducted a study involving 204 undergraduates. In the study, all students
consumed a popular energy drink which claims on its packaging to increase mental acuity. The students were then asked to solve a
series of puzzles. The students were charged either regular price ($1.89) for the drink or a discount price ($0.89). The student
receiving the discount price were told that they were able to buy the drink at a discount since the drinks had been purchased in bulk.
The authors of the study describe the result: "the number of puzzles solved was lower in the reduced-price condition (M = 4.2) than
in the regular-price condition (M 5.8)...p < 0.0001".
Shiv B., Carmon Z., Ariely D., "Placebo Effects of Marketing Actions: Consumers May Get What They Pay For," Journal of Marketing
Research, 2005; 42: 383-393.
(a) What can you conclude from the study?
There is no evidence at all that the price of a product influences its effectiveness.
O There is very strong evidence that price influences the effectiveness of a product.
O There is only moderately strong evidence that price influences the effectiveness of a product.
63°F Sunny
carch
hp

Transcribed Image Text:Write one or two sentences to answer the question. (b) These results have been replicated in many similar studies. As Jonah Lehrer tells us: "According to Shiv, a kind of placebo effect is at work. Since we expect cheaper goods to be less effective, they generally are less effective, even if they are identical to more expensive products. This is why brand-name aspirin works better than generic aspirin and why Coke tastes better than cheaper colas, even if most consumers can't tell the difference in blind taste tests." Discuss the implications of this research in marketing and pricing. .2 = E|ョ |E三 99 á B IU T; T I OWord(s) 2 Lehrer, J., "Grape Expectations: What Wine Can Tell us About the Nature of Reality," The Boston Globe, February 28, 2008. eTextbook and Media 63 F Sunny hp II

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