As the price of a product is directly related to a company’s profit, pricing is especially important in mature markets where countless products are competing for consumer preference. Findings suggest that people often cannot recall prices for products (Hubert and Kenning: 2008)147 but – influenced by marketing – develop a sense of value for them (Poundstone: 2010)148. BDT researchers Kahneman and Tversky (1974)149 describe when it comes to decision-making, people use heuristics to overcome limited knowledge in uncertain situations. They termed this effect anchoring and
adjustment explaining anchors serve as starting points being adjusted by an individual to come to purposeful estimates. In fact, anchoring is already used as an initial marketing-tool at the PoS, when consumers enter a shop considering the initial price as a benchmark for the evaluation of other prices. Without doubt, this may help to obscure price sensitivity to a certain extent but does this provide insight on consumers’ actual ‘willingness to pay’ (WTP)? An fMRI study from Knutson et al (2007)150 supports the idea that WTP can be examined. The experiment consisted of three stages: 1. Product presentation, 2. Price presentation, 3. Selection task. FMRI scans measured three main areas involved during the stages: 1. the nucleus accumbens (NAcc) indicating product preference (anticipation of gains), 2. the medial prefrontal cortex (MPFC) for estimation of the difference between WTP and displayed price (processing of gains and losses), and 3. the activation of the insula (anticipation of pain) in case of excessive prices (no purchase) or its deactivation in case of WTP matched/reduced prices (purchase). This induces Knutson et al (2007: p. 148)151 to say “Preference may lead to purchasing, but only if
prices are right.” Interestingly, the study revealed that “Activity from each of these regions independently predicted immediately subsequent purchases ... .” (Knutson et al (2007: p. 147)152. The results suggest that consumers’ WTP can be determined by scanning brain activity. Hence fMRI studies could be of help in calibrating prices to the extent that they are most profitable for a company and minimum painful for the consumer, thus reaching an optimal ‘level of acceptance’ for both sides.
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Hubert, M., Kenning, P., A current overview of consumer neuroscience, Journal of Consumer Behaviour, July-October 2008, Vol. 7, Issue 4/5, (p. 281) Poundstone, W., Priceless: The Myth for Fair Value (and How to Take Advantage of It), Hill and Wang, New York, 2010, (p. 9) 149 Tversky, A., Kahneman, D., Judgement under Uncertainty: Heuristics and Biases, Science, New Series, September 1974, Vol. 185, No. 4157, (pp. 1128) 150 Knutson et al, Neural Predictors of Purchase, Neuron 53 (1), January 2007, (pp. 147-156) 151 Ibid 152 Ibid 148
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