What’s It Worth to You?
I recently listened to NPR’s TED Radio Hour podcast where Paul Bloom, a Yale Psychologist, referenced a scientific experiment which revealed that our brains respond more favorably to things we perceive to have greater worth. For example, if we are told that we are drinking from a rare and very expensive bottle of wine, we enjoy it more than the cheap stuff. We don’t just think we like it better because someone told us we should, our brain actually registers greater pleasure as we drink it.
So what does this mean? Well, it could mean that the worth something holds for you, isn’t completely up to you. Many of us fancy ourselves to be pretty savvy shoppers, especially in categories we buy most often, so it may be difficult to accept that manufacturers could make us like something more just by increasing the price. Does this sound counter-intuitive? Deceptive? Perhaps, but is it deception if, in fact, your brain registers greater pleasure from said higher price tag? We may feel resistant to this idea because we know the manufacturer benefits from selling at higher prices, but according to scientific research, so do you.
Now, this isn’t cut-and-dried. There are plenty of products out there that each of us have firmly decided are not worth the price. Many of us would never consider purchasing an $18 cocktail, much less a $10,000 purse, even if we could afford it. But, consciously thwarting luxury goods and premium products doesn’t provide immunity from this effect. For each of us, no matter how thrifty we may try to be, there are goods and services that we choose to pay more for, and we do so largely because we believe that we are getting our money’s worth, that the higher price is justified. We pay more for an item or experience we expect to enjoy more, and then, as it turns out, we do enjoy it more.
Let’s Take a Closer Look
Before leaving for college, a friend of my parents gave me an expensive designer purse as a graduation present. I had never heard of the brand, but I liked the purse. The material was soft and sturdy, and I liked the shape of it. Towards the end of my freshman year, a classmate clued me into the designer label. I can’t deny it; it did change my perception of the purse. I was certainly more careful with it, and I had a greater appreciation for the generosity of the gift giver. According to this research, despite already liking the purse well enough, I actually would have enjoyed it more if I had learned its market value sooner.
Many high-end goods manufacturers are keenly aware of the impact their premium brands have. They foster increased interest in rare and expensive products, and companies like Rent the Runway take advantage of that. They give us commoners a chance to wear luxury designer dresses for a fraction of the price. They build a business on the notion that enough people will be willing to pay to wear a designer label, even if just for one night.
So, what are the implications here? Does this mean we should we save up our pennies and justify splurging more often? Can money actually buy happiness? Should we be leaving price tags on our gifts when we buy a premium brand for someone else?
Obviously, we still need to make strategic choices about where to spend our money based on our own personal benchmarks and value markers. For most of us, we will always need to make tradeoffs. But this research tells us that when we do decide to pay more, we should stop and appreciate it. We should slow down, savor and delight in these luxury items, because our brains believe they’re worth it.
To learn more about how people make brand choices, read Ipsos’ latest paper here.
For more information on Ipsos and our solutions, click here.