The placebo effect of marketing. Investigating the effect of price on consumption experience

Scientific Essay, 2020

17 Pages, Grade: 1,0


Table of Contents

Table of Contents


Theoretical Review

Neuroscientific Contributions

Conclusions and Limitations



Exam case 3: PEM


Grocers' assortment is usually a mix of more expensive national food brands (NB) and cheaper private label brands (PL). The latter so-called “lookalike” (Benito et al., 2014, p. 17) products represent imitations of popular brands, often of equivalent quality.

In developing these PL products, retailers conduct blind tastings to obtain objective evaluations of quality in terms of smell, texture, and taste, irrespective of external attributes such as packaging, brand, or price. In these sessions, PLs frequently outperform their better-established substitutes which in many cases contradicts consumers' self-reported quality perceptions. Once respondents can observe all product features, they often state preferences for the higher-priced NB (Breneiser & Allen, 2011).

This demonstrates the effect of external criteria on consumers' evaluation and leads to this paper's point of interest: the placebo effect these features evoke on their taste experience. Due to the limited scope, the paper will focus on the influence of the different price levels of NBs and PLs.

The placebo effect has its origin in medicine where it was defined as a beneficial effect “which is attributable to receiving a substance or undergoing a procedure, but is not due to the inherent powers of that substance or procedure” (Stewart-Williams & Podd, 2004, p. 326). Similar to this, in the area of marketing, it was observed that “consumers' beliefs and expectations (...) often influence their judgments of products and services” (Shiv et al., 2005a, p. 383) and their subjective product perception. In this context, perception has been defined as “the subjective process by which individuals select, organize and interpret stimuli into a coherent picture” (Benito et al., 2014, p. 62).

Drawing on this, several studies investigated how marketing actions can affect consumers' product perception and thereby evoke a placebo effect. Notably, Irmak et al. (2005) were able to trigger identical objective body reactions for a product and its placebo. This suggests that manipulating marketing stimuli can not only alter subjective perceptions but also objective physical product responses. This is in line with the inconsistent quality perceptions of NBs and PLs and leads to this paper's research problem:

What are the subconscious processes that explain how price impacts subjective taste experiences?

Exam case 3: PEM

Taste experiences are closely linked to quality assessments which are both crucial for purchase decisions, thereby impacting a company's financial outcomes. It is thus relevant for marketers to understand how consumers derive their evaluations and how external attributes can affect them in a placebo-like manner. For this reason, the research question will be accompanied by a review of how neuroscientific approaches can add to the understanding of the placebo effect and how it can be leveraged by marketers.

Theoretical Review

Standard economic theories reflect the assumption that “consumers choose the utility­maximizing alternative without ascribing that utility to quality or taste” (Spiller & Belogolova, 2016, p. 971). Against this backdrop, observing consumers' decision behavior led to the suggestion of a price-quality relationship. As quality is product-inherent, consumers rely on observable product cues - such as price - to make inferences about how good a product is (Beneke & Trappler, 2014). These predictions are assumed to translate into beliefs that activate expectations (Shiv et al., 2005b). Studies indicate that expectations do not only prejudice consumers' idea of the taste but even overshadow the sensory aspects in the overall experience (Benke & Trappler, 2014).

In the medical domain, two psychological models have been used to explain the placebo effect. The first one is expectancy theory which views the effect produced by a placebo as the product of an individual's conscious expectations (Stewart-Williams & Podd, 2004). In the same vein, Kirsch (1997) outlines that perceptual experience is partly constructed by expectations. He refers to Ajzen and Fishbein's (1980) Theory of Planned Behavior to compare the immediate relation between intention and behavior to the one between “response expectancy and the expected response” (p. 76).

The second theory referred to is classical conditioning. It views the effect as a conditioned response that results from an unconscious learning mechanism. Pairing an unconditioned stimulus with a neutral stimulus can condition the latter to cause the response on its own (see illustration 1; Plassmann & Weber, 2015). Conditioning explains how expectations are acquired but just as expectancy theory does not clarify how they produce the placebo effects that cannot be traced back to inherent attributes.

Exam case 3: PEM

Illustration 1 price (unconditioned stimulus) quality (unconditioned response) national brand (neutral stimulus) association of neutral stimulus and unconditioned stimulus: national brand price national brand (conditioned stimulus) national brand (conditioned stimulus) quality (conditioned response)

While expectancy theory and classical conditioning have frequently been juxtaposed, Stewart­Williams & Podd (2004) have integrated both into a combined framework. It views conditioning as one potential form of learning (just as advertising or prior experiences) which triggers an expectancy that in turn affects the experience and leads to the placebo effect. The conceptualization reinforces the mediating role of expectancies and illustrates placebo effects as “marketing-based expectancy effects” (Plassmann & Weber, 2015, p. 494). This would mean that consumers' better perception of NBs results from increased expectations that have been acquired through a learning mechanism.

Despite this framework brings together the main theoretical and empirical insights, it cannot explain the exact mechanisms that produce the placebo responses. It therefore conveys the image that placebo effects represent subjective reporting biases driven by expectations (Plassmann & Weber, 2015). However, this conflicts with findings that show body reactions to placebos that are similar to those to active substances, thereby indicating the involvement of neurobiological processes.

Besides, traditional methods are limited to self-reports which can only access consumers' conscious reflections about expectations they can verbally express (Harris et al., 2018). However, research presumes that expectancies may also be unconscious, particularly in the context of the price-quality relationship (Adaval & Monroe, 2002). Because of this obscureness, traditional theories cannot provide marketers with a holistic understanding of consumers' taste experiences which highlights the research question's relevancy. It draws attention to the underlying subconscious processes and thereby directs towards neuroscientific approaches.


Excerpt out of 17 pages


The placebo effect of marketing. Investigating the effect of price on consumption experience
Copenhagen Business School
Catalog Number
ISBN (Book)
neuroscience, branding, placebo, private label, price
Quote paper
Eva Lang (Author), 2020, The placebo effect of marketing. Investigating the effect of price on consumption experience, Munich, GRIN Verlag,


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