Think of the last time you went shopping.
By the time you decided to buy a product, you knew both what you were buying and how much it cost. But was your decision affected by whether you saw the price or the product first? That's the question at the heart of new experimental research that uses neuroscience tools to shed light on how our brains make purchasing decisions.
"We were interested in whether considering the price first changed how people thought about the decision process, and whether it changed the way the brain coded the value of a product," says Uma R. Karmarkar, a neuroscientist and assistant professor in the Marketing unit at Harvard Business School, who conducted the research with Baba Shiv, a marketing professor and neuroeconomics expert at Stanford University's Graduate School of Business, and Brian Knutson, an associate professor of psychology and neuroscience at Stanford. "Because we had neuroscience tools at our disposal, we had the benefit of exploring both those questions," Karmarkar says.
The researchers found that price primacy (viewing the price first) makes consumers more likely to focus on whether a product is worth its price, and consequently can help induce the purchase of specific kinds of bargain-priced items. Their study, Cost Conscious? The Neural and Behavioral Impact of Price Primacy on Decision-Making, will appear in a forthcoming issue of the Journal of Marketing Research.
The research could help retailers and marketers decide when it's best to lead with price, which products work best with that strategy, and how to frame sales messages to consumers. (HBS related research on how consumers view pricing can be found in the article Deconstructing the Price Tag.)
The brain shopping experiment
In a series of experiments, participants went shopping—while lying on their backs inside a functional magnetic resonance imaging (fMRI) machine. The fMRI uses a giant electro-magnet, often 3 teslas strong, to track the blood flow throughout the brain as test subjects respond to sensory cues. In this case, participants were responding to pictures of products and their prices.
In the first experiment, conducted at an imaging center on the Stanford University campus, each participant was given $40 of shopping money before viewing a series of 80 products and their prices on a screen inside the fMRI machine. "This made the shopping experience more real," Karmarkar says.
To encourage purchasing, the products were offered at sub-retail prices. Sometimes participants saw the price first, and sometimes they saw the product first. But in every case, they eventually saw an image of both the product and the price presented together. At that point, they chose whether to purchase the product, indicating yes or no with the push of a button. After exiting the machine, participants filled out a survey to rate how much they had liked each product, on a scale of 1 to 7.
The researchers focused on brain activity at the moment participants saw the product and price presented together. They were most interested in the medial prefrontal cortex (the area in the brain that deals with estimating decision value) and the nucleus accumbens (an area that's been called the pleasure center, and whose activity is correlated with whether a product is viscerally desirable). "What we cared about was whether the neural patterns in these areas looked different at the point when the information on the screen was eventually the same," Karmarkar says.
The results showed that the brain activity varied according to whether the participant had seen the price or product first. "The pattern of activity in the prefrontal cortex suggested to us that sequence matters: At the very simplest, the neural signals looked different when the price came first versus when the product came first," Karmarkar says. "When the product came first, the decision question seemed to be one of 'Do I like it?' and when the price came first, the question seemed to be 'Is it worth it?' "
That said, price primacy didn't have much of an effect on actual purchasing behavior. Participants bought about the same number of items and reported similar "liking" ratings regardless of whether they had seen a product or price first. The researchers suspected that even if participants were more critical of a product's value in the price primacy condition, the products were equally attractive under both conditions.
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[This article was provided with permission from Harvard Business School Working Knowledge.]