Researchers in Germany are using brain waves to test how different pricing schemes impact the emotional state of consumers.
“Everyone thinks that they’ve truly figured out how to sell a relatively inexpensive product for a lot of money. But the odd thing is that even this company doesn’t understand it,” notes Kai-Markus Müller, a neurobiologist and sales consultant. In remarks shared with the press, he notes that Starbucks may be victim to significant underpricing of its goods.
According to Kai-Markus Müller, Starbucks customers might be willing to pay even higher prices for some coffee, milk, sugar and flavoring than they already pay. His previous work includes a stent at Simon, Kucher and Partners, a consulting firm that helps companies in deciding optimal pricing for products and services. However, he believes that classic market research can’t be used to determine optimal pricing.
Müller studies neuronal mechanisms in the brain that are independent of reason. For example, EEG recordings show that the brains of consumers respond in different ways to proposed Starbucks prices. In particular, some EEG waves indicate an unconscious defensive reaction that could drive consumers away from a purchase.
In the study, Müller showed subjects a pot of coffee with a series of different prices. Each pot of coffee showed a different price tag. When prices were extreme, strong reactions took place in the brain in seconds. In other cases, prices that were too low or too high were noted as “unacceptable” to the control mechanism of the brain.
“When the brain was expected to process unexpected and disproportionate prices, feelings of shock, doubt and astonishment manifested themselves,” he notes.
Source: www.qmed.com; October 15, 2013.