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A-Ha Moments

Pain and Pleasure: Perceived Value

Written by: Bill Sherman on Friday, 7 March 2008, 9:23 PM

Yesterday, I was speaking with a client at one of Interbrand’s top 50. There are two internal groups currently offering very similar training programs to the company’s channel partners.

One course is offered by an high-profile/high-prestige internal consulting group. The other is offered by the company’s corporate university. My client mentioned that she regularly hears that the consulting group’s course is better, and she wondered why. Was it a matter of content, facilitator, or locations?

I answered that the difference was probably much more subtle. Learners had a different experience because different groups presented the course. In fact, I’m willing to bet that you could take the same facilitator, same content, and same location and get different responses depending on the course’s sponsor and price.

Let’s look at an article recently published in the Journal of the American Medical Association. Researchers created a fictitious opiate painkiller and created marketing copy about this newly-approved FDA drug. They even printed up the tchotchke–the pens and notepads you see in a doctor’s office. The pills were all placebos. Half of the participants were told this drug would cost $2.50 per pill, while the other participants were told it was a bargain at 10 cents per pill. They were given the pill, waited 15 minutes and then received mild electrical shocks. Participants were asked to rate the pain they experienced. The full-price group reported a significant mean pain reduction (85% vs. 61%). Higher priced drugs seemingly work better because we have more invested more into them monetarily.

Pause on that thought for a moment. How does this aha-moment impact your business and your company’s pricing strategies?

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