Placebo Effects of Marketing Actions: Consumers May Get What They Pay For
Published 11/1/2005
Author: Baba Shiv, Ziv Carmon, and Dan Ariely
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Executive Summary
Consumers’ beliefs and expectations, as they are shaped by marketing actions, have been shown to influence consumers’ perceptions about and experiences with products. In this research, the authors present results suggesting that beliefs and expectations evoked by marketing actions, such as price changes and advertising claims, can give rise to behavioral (placebo) effects that alter the actual efficacy of products. In three experiments, the authors show that consumers who pay a discounted price for a product (e.g., an energy drink thought to increase mental acuity) can end up deriving less actual benefit from consuming the product (e.g., they are able to solve fewer puzzles) compared with consumers who purchase and consume the exact same product but pay its regular price. Similarly, the authors show that consumers exposed to strong (versus weak) advertising claims about the efficacy of the energy drink end up deriving more actual benefit from consuming the drink (e.g., they are able to solve more puzzles). The authors propose a framework that describes the determinants of such placebo effects. In line with this framework, the findings suggest that these placebo effects stem from activation of expectancies about the efficacy of the product, a process that appears not to be conscious.
The phenomenon documented in this research, placebo effects of marketing actions, has broad implications for marketers. For example, a common tactic that marketers use to improve sales at retail stores is to offer their brands on sale. However, the findings of this research show that such tactics might hurt brands, because consumers may experience less actual benefits from consuming them. Another common tactic that marketers use is to present strong claims vis-à-vis their products. Such tactics may have the added benefit of not only changing consumers’ perceptions of products but also altering the actual efficacy of these products.
Biography
Baba Shiv received his doctoral degree from Duke University. He is an associate professor in the Graduate School of Business at Stanford University. His current work focuses on the role of affect in decision making, the neurophysiological bases of emotions, and nonconscious mental processes. His articles have been published in Cognitive Brain Research, Journal of Consumer Psychology, Journal of Consumer Research, Journal of Marketing Research, Marketing Letters, Organizational Behavior and Human Decision Processes, and Psychological Science. He serves on the editorial boards of Journal of Consumer Psychology and Journal of Marketing Research, and he is Associate Editor of Journal of Consumer Research. He was invited to the first Marketing Science Institute Young Scholar program in 2001. He was named Outstanding Faculty in the Business Week Guide to the Best Business Schools (6th, 7th, and 8th eds.) and was voted by MBA students at the University of Iowa as the best teacher of the year for seven consecutive years (1999–2005).
Ziv Carmon received his doctoral degree from the University of California at Berkeley. He is Associate Professor of Marketing at INSEAD. His research focuses on unintended effects of marketing actions, how consumers perceive their experiences, and how consumers assess value. His research has been published in Journal of Consumer Research, Journal of Marketing Research, Marketing Science, Management Science, Annual Review of Psychology, Journal of Behavioral Decision Making, and Journal of Consumer Psychology. He serves on editorial boards of Journal of Consumer Research and Journal of Marketing Research. For more information about Ziv, see www.insead.edu/facultyresearch/marketing/carmon.
Dan Ariely received his doctoral degrees from the University of North Carolina, Chapel Hill, and from Duke University. He is Luiz Alvarez Renta Professor of Management Science at the Massachusetts Institute of Technology (MIT). Dan’s current research focuses on day-to-day irrationalities and on market mechanisms to try to overcome these irrationalities. Dan founded the eRationalty research initiative at the media laboratory at MIT and the Center for Advanced Hindsight at MIT. Dan has never won any teaching awards and is unlikely to win any in the future. For more information about Dan, see http://web.mit.edu/ariely/www.
J Marketing Research, Volume 42, Number 4, November 2005
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