Buying a high Your emotions could cost you dearly, writes Kirsten Levermore
You buy a new car. If you want a reliable vehicle to transport you from A to B that is built to last, you could pay $2,000 and select the first functioning set of wheels you see. This is a rational decision. So why do some car shoppers pay hundreds of thousands of dollars more? What outweighs their rational thinking? What do they think they are buying? Negotiation psychologist Dr James R Alvarez says: “When hostage takers set a ransom, their valuation of the hostage is based entirely on perception, i.e. what does this person represent?” This same principle applies to spending money on products, brands and services. Superstar consumer psychologist Dr Linda Papadopoulos explains this best with the example of tuition fees. “The value of something – whether the price is ten times, 100 times or 1,000 times that of
an equivalent – depends entirely on how the buyer decides to value it,” she says. “Take university courses – there are a handful of top universities that everyone wants to go to. Is what is taught there significantly different to what’s taught everywhere else? To some extent, yes, but probably not to the extent that would seem to justify the mark-up in the pricing. Yet what that mark-up implies is the projected value that we place on it.” In short, we put a price on a perceived, projected value that is based on nothing.
It is entirely irrational. And irrationality is marketing’s best friend.
How does it work?
We have long believed humans are rational creatures who are occasionally emotional. But now, explains Dr Carl Marci, chief neuroscientist at Nielsen Consumer Neuroscience, we know that in fact the opposite is true: we humans are emotional creatures, who are occasionally rational. We are taught in school that we make decisions
The emotional brain doesn’t care whether the love stories come from human beings, pets, the pages of a good book, a Walt Disney cartoon, a car, a soda or a detergent Javier Sanchez Lamelas
Dialogue Q4 2017