Effects of Marketing

The higher the price, the more we like it

Researchers use wine tasting to show how marketing tactics can trick the brain to find more enjoyment in costlier products.

By Denise Gellene, Los Angeles Times Staff Writer
January 15, 2008

When it comes to wine tasting, pleasure is in the price.

Using brain scanners to monitor the minds of wine drinkers, scientists found that people given two identical red wines got more pleasure from tasting the one they were told cost more.

The study, reported Monday in Proceedings of the National Academy of Sciences, demonstrated for the first time how marketing tactics — such as raising the price of a product — can cause the brain to play tricks on itself.

Researchers led by Antonio Rangel, associate professor of economics at Caltech, asked 20 volunteers to rank their enjoyment of small sips of five differently priced Cabernet Sauvignon wines while a functional MRI machine monitored the brain response. Volunteers also were asked to rate the flavor intensity of the wines.

Unbeknown to volunteers, two sets of wine samples were identical: the $5 and $45 wines ($5 actual price) and the $10 and $90 wines ($90 actual price). The fifth wine was identified by its actual $35 price.

Volunteers were asked to rank the pleasantness of the wines. They liked the $90 wine best and the $5 wine least.

[This chart shows that people ranked taste of a $45 wine higher than the same wine priced at $5, and the same for a different wine marked $90 and $10. (Credit: CalTech, Stanford)]

Brain scans showed that activity in the part of the brain that detects pleasure also moved in lock step with price. The medial orbital prefrontal cortex, which is located behind the eyes, showed the greatest activity when volunteers drank the wine marked $90 and the least activity when they sipped the wine priced at $5.

[This graph shows the activity in the brain’s pleasure center; there’s more activity with wine subjects think costs $90 a bottle (top line) than the same wine priced at $10. The arrow shows the moment when the subjects started tasting the wine. (Credit: CalTech, Stanford)]

Prices had no effect on flavor intensity ratings. Volunteers said the $5 and $45 wines and the $10 and $90 wines were identically sweet.

Rangel said the findings showed that pleasantness of consuming a product relied not only on the product’s intrinsic properties, such as flavor in the case of wine, but also on certain beliefs, such as the notion that expensive wines will probably taste better, he said. By manipulating prices “we can change how wine tastes without changing the wine,” Rangel said. “It’s mind-blowing.”

Two weeks after the experiment, volunteers were asked to rate the wines in the absence of price data. They liked the wines originally marked $5 and $45 best and the samples labeled $10 and $90 second best.

George Loewenstein, professor of economics and psychology at Carnegie Mellon University in Pittsburgh, who was not involved in the study, said the findings supported research on consumer behavior.

“People pay high prices for water from Italy, and we know that water tastes about the same wherever it comes from,” he said. “Price is one of the many attributes that people pay attention to, and it affects how we perceive things as a consumer.”

Source: http://www.latimes.com/news/science/la-sci-wine15jan15,1,4840506.story

First Order Intelligence detects the intrinsic factors in this wine tasting test; these are the actual taste experiences such as the sweetness and dryness of the wine. Second Order Intelligence judges the pleasantness of the wine based on extrinsic factors like price and packaging which have nothing to do with the intrinsic taste of the wine. The extrinsic factors are used to construct our ‘story’ about the wine.
What’s going on when we judge an identical wine to have a more pleasant taste when the difference is NOT in our experience (intrinsic factors) of the wine but in our ‘story’ (extrinsic factors) about the wine – specifically its price?
Does our perception (or our ‘story’ or ‘belief’ or ‘judgment’ about the wine) actually alter the wine?
Does our judgment about the wine conform to extrinsic social expectations that ‘more expensive is better’ rather then to the intrinsic facts of the wine?
To what extent do other judgments we make have no basis in intrinsic experience?
To what extent do people now use marketing instead of their intrinsic experience as the basis of their judgments?
Just how much might consumers who judge a wine by its price instead of its actual taste be willing to pay?