On a recent podcast by Freakonomics radio the presenters discussed the how consumers allowed the price of a bottle of wine to affect their perceived taste. The best example of this was in a survey featured on the podcast.
A group of wine experts were given a taste test. They were told one bottle of wine cost $10 and one bottle cost $50. The price of each bottle was marked on it. The majority of tasters agreed that the $50 wine tasted better. Those giving the survey had lied bottles had cost $20. To further quantify this test the bottles of wine were switched and a new group of tasters brought in. Again they agreed that the $50 wine tasted better.
This survey shows in no uncertain terms that given the absence of other information consumers will use price as a measure of quality. An extremely important factor to consider when setting prices.
I’ve repeated that story from memory so the facts may vary slightly but the fundamental points are correct.
