Those who watched Rio Olympics 2016 would have noticed Michael Phelps and other Olympians sporting deep-purple circles on their limbs and midsections. Some of the audience might have thought this to be some injury marks. Whereas in reality these Purple circle marks were signs of “cupping,” an ancient Chinese healing practice used to cure muscle pains.
Phelps, whose shoulders were dotted with the purple marks won gold medal in 4×100 freestyle relay. There is no scientific evidence that these dots actually helped him win the race but athletes feel that their performance enhances after the use of this treatment.
This Phenomenon is known as Placebo effect, Layman’s definition of this effect is :
“A placebo is, by definition, a substance that doesn’t actually provide the promised benefit — it’s not real. The placebo effect, however, is very real”.
We have grown up hearing this adage, “you get what you pay for”, our mind is tuned to Price equal to quality.
Research shows that in some countries like Japan, France, China and Germany being expensive is the first criteria of luxury. The price in these countries is an indicator of quality, legend, prestige – often illusory concepts that have a lot to do with the placebo effect.
Lots of brands make use of this concept, Rolex increases its prices every year and that too without any reason. This has an impact on customers and creates an image of premium product positioning.
Another classic case of Placebo Effect is an experiment done in 2017,when some people (divided in 2 groups) were asked to taste a wine. Both the groups were given different prices for the same wine. The group that tasted wine with higher prices had a greater percentage ratio of positive feedback over the other group.
Generally it’s a bad idea to announce discounts on luxury goods as they have a negative effect on the business; In fact increasing prices works as a positive impact. This is mainly because of the Placebo Effect.
Dealers and Channel partners can use this effect for products that have a premium and unique positioning. Try this out, it actually works !!
