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What Neuroscience Tells Us About ‘Showing the Money’

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show_money_440x660If consumers followed rational paths to make purchase decisions, it wouldn’t matter whether they saw a price before a product or the product before the price. But consumers—and people in general—don’t behave rationally. Instead, we’re ruled by subtle cues and innate biases. This sounds bad but really it’s the result of a clever evolutionary adaptation—our brains have found a way to use shortcuts to process the complex information of an always-changing world quickly and efficiently.

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This means that certain factors have a powerful influence on the decisions we make. In recent research conducted by Uma Karmakar, a professor at Harvard Business School, the influence of “price primacy”—or the prominence of product prices—was explored. Participants in the study were split into two main conditions. In the first, a price was viewed first, followed by a product and the price together. In the second condition, the product was viewed first, followed by the product and the price together. Participants then had the option to decide whether they wanted to purchase the product or not.

Overall, the study found that participants in both conditions purchased the same number of products and reported a similar degree of “liking” for the products they purchased. However, the perceived value of the products was lower among participants that viewed price first. This suggests that while price primacy may not impact purchase behavior, Tweet_this it does make consumers more critical of a product’s price.

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At the same time, functional MRI scanning was used to map brain activity during the product evaluation and purchase decision process. This data directly supported the behavioral results, finding that brain activity associated with price evaluation and critical information processing was increased during purchase decisions. Interestingly, under price primacy conditions, this activity increased during purchase but didn’t decrease when consumers decided to not purchase an item. For those that saw product first, this brain activity increased when a purchase was made but decreased when consumers decided not to purchase.

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This research suggests that when price is introduced before the product—or with greater prominence than the product itself—consumers focus on the value of the product, Tweet_this possibly at the exclusion of other factors. When the product is introduced first, however, consumers focus on product characteristics with similar intensity. Put more simply, the order of price and product has the power to shift consumers between the questions of “do I like this product” to “is this product worth it?”

For marketers and retailers, this information could be valuable—and it points directly to testable ideas. Utilitarian products—those that are purchased to serve a specific function—could become more appealing when price is presented first, especially when a discount or bargain is offered. For products that satisfy a more emotional or psychological need, however, reducing the prominence of price may encourage consumers to evaluate the item more closely and, ultimately, make it more appealing.

Testing these two presentations could help you identify the most productive approach for your business. But beyond this, a test focused on price primacy versus product primacy offers insight into the way in which consumers think about your brand and its products or services. Knowing this could inform a more comprehensive strategy, leading to a series of tests that could increase the relevancy and performance of your digital business.

Brooks Bell helps top brands profit from A/B testing, through end-to-end testing, personalization, and optimization services. We work with clients to effectively leverage data, creating a better understanding of customer segments and leading to more relevant digital customer experiences while maximizing ROI for optimization programs. Find out more about our services.