Photo Source: Public Domain Pictures
Whenever I want a study break, one of my favorite Youtube series to watch is called “Price Points” from Epicurious. Each episode, a food expert tastes two samples of different types of the expert’s wheelhouse. For example, a chocolate expert will taste two types of dark chocolate, white chocolate, and milk chocolate and will guess which of those samples between them is more expensive. I’ve only seen someone be wrong once. It’s an extremely informative show if you’re interested in food production and what goes into the food on your store shelves. For me, I always think it’s interesting how we assign value to different things and how we decide which of something is more valuable than the other. Sometimes the same kind of food can be up to nine or ten times more expensive, even though it’s still functionally the same thing. How is it that we can somehow assign values to goods and scale them?
One of the ways marketers theorize we assign value is through a concept called perceived value. Perceived value goes beyond actual cost. Perceived value assesses the amount of benefit that the consumer is getting out of a product versus how much they have to pay for it. For instance, when someone is getting a shirt, they aren’t simply buying the product to have something to cover up (though on some level, that is part of it). They are also looking for how long it might last or whether or not that shirt matches their style. If it’s on sale, a customer might perceive extra value from not having to pay more. In the case of “Price Points,” in the bacon episode, the bacon expert gets the Canadian bacon blind taste test wrong not because of a lack of knowledge about meat, but because of his knowledge of how perceived value works. He incorrectly notes that one Canadian bacon slice is more expensive because more has to be done to the product, while the other is more natural, so the one that took more processes must be more expensive. However, he fails to realize that consumers will often perceive more value in more natural products than processed counterparts and are willing to pay more (Forbes). In fact, across the generational board, people are willing to pay more for foods that they think are healthier or more natural.
Another way perceived value works its way into how we see a product is through its price. In a study conducted by Stanford, test subjects were given samples of the same wine but were told that each wine cost something different (BBC). Even though the wine was the same, people reported that they enjoyed the higher priced wine much more. When we think we are paying out for something premium, we are more likely to think that it’s of higher quality. The fact that we are more likely to enjoy a more expensive item sort of adds an interesting loop when it comes to perceived value and expensive items. If a person buys an expensive item (thus deciding that this product has the highest perceived value), the person will also be much more likely to believe that they got more value out of that product than if they had gone for the cheaper item.
The way we see pricing is fascinating. When a consumer goes to buy something, they are not simply looking to buy a product; they are assessing what benefit that product can get them. There are ways to try to add perceived value, such as making a food seem more natural or locally sourced. On the non-food side, people are willing to also pay more when they recognize a reputable brand or if a product saves people time. That said, if a person does try or buy a more expensive product, they will often view it as higher quality. The way we see value is exceedingly interesting, and marketers are always working to find new ways to create more perceived value. As a consumer, it is important to understand the kinds of biases we have so that we can make clearer decisions regarding the quality of what we’re buying. With that, I’ll leave you with a taste of one of my favorite “Price Points” episodes. Happy shopping!