The placebo effect in marketing: Unexplored influence of brand name Daria Chigirinova University of Kassel
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The placebo effect in marketing:
Unexplored influence of brand name
Daria Chigirinova
University of Kassel
1Abstract
The given study investigates the influence of brand name on the actual efficacy of the
products. It was noticed long ago that marketing actions could affect the perception of a product
and even the subjective experiences of a consumer such as taste or quality. However, recently it
was proved with a series of experiments that marketing actions are able to influence the actual
effectiveness of a product. Such effect was linked with theoretical background and processes of
placebo phenomenon from medical sphere and received the same name – placebo effect. This
phenomenon is quite new and thus has numerous gaps in the research, one of which is intended
to be filled by the given study. The first research question investigates the possible influence of a
brand name on the effectiveness of a product, whereas the second research question is designed
to understand the effect of expectancies on the magnitude of the placebo effect produced by the
brand name. The empirical part of the given research presents a crossover between-subject
experiment, aimed at evaluating the influence of Red Bull® brand name on the effectiveness of
the energy drink.
2Introduction
Stewart-Williams and Podd (2004) describe placebo effect as a genuine psychological or
physiological effect produced by a substance or a procedure that has no inherent power to create
that effect. Placebo is a phenomenon that has been broadly studied in the field of medicine and
psychology. Substantial results were achieved in studies regarding the placebo effect in curing
pain (e.g., Montgomery & Kirsch, 1996).
Recently the placebo effect has also received much attention from the side of marketing
researchers that strive to deepen their knowledge about the influence of various psychological
concepts on consumers’ behavior. It is well known that manipulations with various marketing
variables (e.g. price changes, packaging, distribution channels) can significantly influence
consumer’s beliefs and expectations and hence change their perceptions of a product, their
consumption experiences and even purchase behaviors (Shiv, Carmon, & Ariely, 2005a). Even
though the placebo effect has been studied a lot in the past 60 years (Beecher (1946) was one of
the pioneers studying placebo effect as an important medical phenomenon), there are still gaps in
the research that need to be filled. Due to the difference of scientific contexts exploring this
phenomenon from a marketing point of view could help reveal new factors that mediate the
placebo effect.
Shiv, Carmon, and Ariely (2005a) conducted a researched aimed at extending the scope
of effects that marketing actions are capable of evoking. They found out that speculation with
different marketing variables (in particular, price promotions) can not only influence the
subjective experience of a customer but even alter the actual efficacy of a product. Placebo effect
in marketing has not been studied through yet and hence there are a lot of directions of research
that could be developed. One of possible directions that I’m going to develop in the given paper
is the influence of brand name on the actual efficacy of products.
3Theoretical background
According to numerous researches the main two concepts that lie in the basis of placebo
effect are expectancy theory and classical conditioning (e.g., Montgomery & Kirsch, 1997).
Classical conditioning is defined as a particular form of learning when an organism is being
exposed to conditioned and unconditioned stimuli which results in relevant change in organism
state or behavior (Stewart-Williams and Podd, 2004). According to the expectancy theory,
placebo substance produces effect because recipient expects it to have an effect. (Stewart-
Williams and Podd, 2004). Usually these two theories are treated as competing approaches. For
instance, Kirsch (1991) argues that expectancy theory can explain the process of placebo
response whereas classical conditioning is unable to fully account for placebo effect. On the
other hand, Voudouris et al. (1990) tried to prove that classical conditioning processes are
superior when explaining the framework of placebo effect.
Stewart-Williams and Podd (2005a) suggest that classical conditioning and expectancy
theory shouldn’t be viewed as opposite approaches, but as two theories that support each other
when creating placebo effect. They propose that classical conditioning processes shape placebo
effect and expectancies help to mediate it. Based on this assumption the following framework of
placebo effect is used in the given research. Salient beliefs that (both intrinsic and extrinsic)
activate response expectancies together with expectations related to other factors (e.g. self-
efficacy beliefs) produce subjective and behavioral outcomes (Shiv, Carmon, & Ariely, 2005b).
4Research question
The influence of marketing actions on consumers’ behavior has been discovered long
ago. Numerous studies provide evidence that brand name (Allison & Uhl, 1964), advertisement
claims (Lane, 2000) or other marketing attributes could affect consumers’ perceptions of
products. On the one hand, as already mentioned above, the phenomenon of placebo effect in
medicine is a well-elaborated notion. Nevertheless recently, these two concepts have been
merged relatively and there is not much research regarding the influence of marketing actions
not only on subjective experiences but on physical effectiveness of products to which they are
being applied. Research conducted by Shiv, Carmon, and Ariely (2005a) provided evidence that
advertisement is able to reinforce price-quality attitude which could lead to actual change in
effectiveness of a product.
However there is no profound research that examines the possible influence of a brand
name on objective changes in effectiveness of a product. Thus the significance of the given
thesis derives from the variety of gaps in research of the problem stated above and the necessity
of exploring the new area of connection of psychology and marketing sciences.
To conclude the purpose of this research is to understand the influence of brand image
and brand perception on the effectiveness of a product. Hence, the main hypothesis of the thesis
is:
H1: The level of brand awareness of a product influences the actual effectiveness of this
product.
Moreover, expectations that act as one of the factors triggering the placebo effect and
their influence on the changes in actual efficacy of products is another problem that I am going
to examine in this paper. It is hard to underestimate the role of expectations in governing placebo
effect. Even researches that argued that classical conditioning theory accounts for placebo affect
(e.g., Voudouris et al., 1990) stated that expectancies played a certain role as well. The possible
significance of the development of this problem lies in the practical relevance: expectations of a
customer regarding the effectiveness of a product can be easily stimulated by the marketing
actions. On the one hand, customer could receive the stimuli that encourage expectations
unconsciously (e.g. through well-established brand-name) or consciously (e.g. via advertisement
claims).
5To sum up, the second goal of the given research is to understand and examine the
influence that expectancies have on the magnitude of placebo effect. Hence the second
hypothesis of this study is the following:
H2: The level of expectations about the effect of the product influences the magnitude of
placebo effect.
6Literature review
TOPIC TITLE AUTHOR JOURNAL CONTENT
The authors conducted a series of
experiments to prove the
influence of marketing actions
(in particular, price promotions)
on the actual efficacy of
products. Moreover the research
focuses on the role of
expectations in mediating
placebo effect (higher
expectancy level lead to greater
placebo effect). One of the main
findings is that non-conscious
Placebo Effects expectations about the price-
Journal of quality relation can influence
Placebo of Marketing
Shiv, B., Marketing consumers and encourage
effect in Actions:
Carmon, Z., Research, 2005, placebo effect.
marketing Consumers May The authors also revealed a
& Ariely, D XLII (November),
actions Get What They number of important statements
383–393.
Pay For regarding the placebo effect in
marketing:
- buying product with a discount
produces greater placebo effect
than paying more for a product
-favorable ads can reinforce
negative price-quality
perceptions
-drawing attention to positive
marketing claims (encouraging
expectations) stimulates the
amplitude of the placebo effect.
Becerra and Borsook develop
the idea presented by Shiv,
Carmon and Ariely (2005) by
linking the effect that price
changes can produce on the
Placebo: From Journal of
Placebo actual efficacy of a product
Pain and Becerra, L., Marketing
effect in and the pricing strategies for
Analgesia to & Borsook, Research, (2005),
marketing medications. An interesting
Preferences and D. XLII (November),
actions idea of interdependence
Products. 394–398.
between whether the medicine
is generic or branded and the
efficacy of this drug is
suggested. However, no actual
experience is performed.
Placebo Journal of Rao (2005) comments on the
The Quality of
effect in Marketing research of Shiv, Carmon, and
Price as a Rao, A. R.
marketing Research, (2005), Ariely (2005) and develops
Quality Cue
actions 42(4), 401–405. the concept of placebo effect
7in marketing by focusing on
the price-quality relationship.
The Placebo Authors conducted an
Irmak, C., Journal of
Placebo Effect in experiment with energy drink
Block, L. G., Marketing
effect in Marketing: revealing the importance of
& Research, (2005),
marketing Sometimes You motivation as an important
Fitzsimons, XLII (November),
actions Just Have to factor contributing to placebo
G. J. 406–409.
Want It to Work. effect in marketing.
Berns (2005) provides an
Journal of
Placebo overview of the results
Marketing
effect in Price, Placebo, achieved by Shiv, Carmon,
Berns, G. S. Research, (2005),
marketing and the Brain. and Ariely (2005) focusing on
XLII (November),
action the processes in brain that
399–400.
contribute to placebo effect.
The authors conducted an
experiment with placebo
anesthetic cream in order to
investigate the placebo effect
in pain reduction. The results
suggest that placebo of local
Mechanism of anesthetics are not mediated
Placebo placebo pain Montgomery, Psychological by global mechanisms of
effect in reduction: An G., & Kirsch, science, (1996). placebo effect. Global
medicine empirical I. 7(3), 174–176. mechanisms (such as anxiety
Investigation. reduction and endogenous
opioids) are opposed to the
second group of factors
contributing to placebo effect
– flexible mechanism
(classical conditioning and
expectancies).
The author provides evidence
of high degree of therapeutic
effectiveness of placebo
(produced in 35.2% of cases)
by investigating 15 studies in
various areas from pain
The Powerful
reduction to simple cold with
Placebo
Placebo J.A.M.A., (1955), over 1000 participants
Beecher, H.
effect in 159(17), 1602– involved. Beecher (1955)
K.
medicine 1606. stresses the importance of
“double blind” technique
(when neither the subject nor
the observer is aware of the
agent that is being used) and
other requirements for a
successful use of placebo in
medical trials.
Is the placebo Hróbjartsson, The New England The article provides an
Placebo
powerless? An A., & journal of overview of 130 clinical trials
effect in
analysis of Gøtzsche, P. medicine, (2001), investigating the effect of
medicine
clinical trials C. 344(21), 1594– placebo in medicine. The
8comparing 602. authors conclude that placebo
placebo with no has no significant effects.
treatment.
The article provides an
overview of the relevant
literature with an objective to
Turner, J. A., identify the importance of
The importance Deyo, R. A., placebo effects in the
Placebo of placebo Loeser, J. D., J..A.M.A., (1994), treatment of pain. The authors
effect in effects in pain Von Korff, 271(20), 1609– examine placebo effects of
medicine treatment and M., & 1614. medical treatments and sham
research. Fordyce, W. surgeries. The factors
E. influencing the placebo
responses both form the
patient and provider sides are
examined and assessed.
The authors conducted an
experiment to examine the
relationship between the
Effect of caffeine participant’s expectations
on motor regarding the effect of
Placebo Fillmore, M., Psychopharmacolo
performance caffeine on a motor skill and
effect in & Vogel- gy, (1992), 106(2),
predicts the type the type of placebo response.
medicine Sprott, M. 209–214.
of response to The results stress the
placebo. importance of expectancies in
terms of learned association
in the direction of placebo
effect.
The authors conducted three
experiments with 36
participants in total in order to
The effects of
test an effectiveness of Red
Efficiency Red Bull Energy Alford, C., Amino Acids,
Bull® energy drink. The drink
of energy Drink on human Cox, H., & (2001), 21, 139–
improved aerobic endurance,
drinks performance and Wescott, R. 150.
anaerobic performance and
mood.
such mental performance
indicators as choice reaction
time, memory, concentration.
The authors conducted an
experiment in order to
measure the effectiveness of
three main ingredients of
A taurine and
energy drinks: caffeine,
caffeine-
Seidl, R., taurine, glucuronolactone. The
Efficiency containing drink Amino Acids,
Peyrl, A., effectiveness was assessed by
of energy stimulates (2000), 19, 635–
Nicham, R., measuring motor reaction
drinks cognitive 642.
& Hauser, E. time, attention capacity, mood
performance and
changes and subjective feeling
well-being.
of well-being. The results
suggest that energy drinks
containing above mentioned
ingredients have positive
9effect on cognitive
performance and mood.
The authors provide an
extensive overview of the
literature regarding the
placebo effect. They define
and separate such notions as
placebo, placebo effect,
nocebo. The main focus of
Stewart-Williams and Podd
The placebo (2005) is to understand which
Theoretical effect: dissolving of two main theories that are
Stewart- Psychological
background the expectancy believed to contribute to the
Williams, S., bulletin, (2004),
of placebo versus placebo effect – classical
& Podd, J. 130(2), 324–340.
effect conditioning conditioning and expectancy
debate. theory – is the basis of
placebo processes. The main
conclusion is that one
shouldn’t separate these two
theories when finding the
basis of placebo effect. On the
contrary, the relationship of
two theories gives rise to
placebo effect.
The author gives an overview
of four concepts that are
Theoretical The placebo
Health psychology, hypothesized to contribute to
background puzzle: putting Stewart-
(2004), 23(2), placebo effect: expectancy
of placebo together the Williams, S.
198–206. theory, emotional change
effect pieces.
theory, classical conditioning,
and the biological approach.
The article examines the
contribution of classical
The role of conditioning and verbal
Theoretical conditioning and Voudouris, expectancies for placebo
background verbal N. J., Peck, Pain, (1990), 43, effect. The authors came to
of placebo expectancy in the C. L., & 121–128. the conclusion that
effect placebo Coleman, C. conditioning might produce
response. greater placebo response than
expectancies created by verbal
stimuli.
The authors conduct an
experiment in order to test two
opposing models of the
Theoretical Classical
Montgomery, process of placebo response:
background conditioning and Pain, (1997), 72,
G. H., & expectancy theory and
of placebo the placebo 107–113.
Kirsch, I. stimulus substitution model.
effect effect.
The author also answers the
question of how conditioning
affects analgesia.
Influence of Influence of Beer Allison, R. I., Journal of The authors conducted an
Marketing Brand & Uhl, K. P. Marketing experiment aimed at
10Actions Identification on Research, (1964), identifying the influence of
Taste Perception. 1(3), 36-39. brand name on taste
perception. The market of
beer has been chosen as an
example. The results suggest
that taste perception arise
primarily with the help of
marketing actions rather than
from physical product
differences. From a
managerial point of view it
means that physical product
differences had little to do
with the various brands'
relative success or failure in
the market.
The authors examine the
The Double- influence of price and brand
Edged Sword of name on the customer’s
Journal of
Signaling Zhu, M., evaluation of the product
Influence of Marketing
Effectiveness : Billeter, D. using meta-analysis. The
Marketing Research, (2012),
When Salient M., & Inman, results suggest that the
Actions XLIX(February),
Cues Curb J. J. dependence between
26–38.
Postpurchase price/brand name and
Consumption. perceived quality is positive
and statistically significant.
Authors investigate the
influence on highlighting the
effectiveness of a product
The Effect of using various marketing tools.
Price, Brand On the one hand, it stimulates
Name, and Store initial purchase but might
Influence of Name on Journal of have a negative post-purchase
Rao, A. R., &
Marketing Buyers’ Marketing, (1989), experience that would hurt
Monroe, K. B.
Actions Perception of 26(3), 351–357. pong-term sales. However
Product Quality: Rao and Monroe (1989) argue
an Integrative that this happens only if the
Review. effectiveness cues are salient
in the consumption context
and are removed in the
consumption context.
11Methodology
Research design
The given research presents a confirmatory study. The hypotheses stated above will be
tested through an experiment using crossover between-subjects design. The questionnaires
designed to measure the brand awareness and expectations level are analyzed using descriptive
statistics techniques.
Selection of participants.
120 participants voluntarily agreed to participate in the experiment. All of them are
students of University of Kassel of different specialization. The average age is 25 years. All
participants are informed that they are contributing to a research about energy drinks and are not
informed in any way regarding the true research purpose of the study so that their expectations
are not affected. Participants are randomly divided into four groups: three treatment groups and
one control group.
Participants were asked to confirm their good health state by admitting not having heart
problems. Female participants were asked to confirm that they are not pregnant. Participants
were asked to abstain from caffeine consumption earlier that day.
Procedure
Each group is tested during four separate sessions during two days in one of the
classrooms at University of Kassel campus. All four groups are asked to consume a beverage and
then to solve a series of puzzles. There are three types of beverages consumed in the experiment:
three treatment groups consume either Red Bull® or another energy drink that has similar
amount of active components but doesn’t have a well-established brand name and the control
group consumes water. The second energy drink is supposed to produce the same effect due to
the similar components. Moreover the taste of two energy drinks is similar so that the
participants could not distinguish between two energy drinks only by tasting them.
The first treatment group consumes Red Bull® from an original bottle. I chose Red
Bull® since it is the leading brand of energy drinks in Germany accounting for 44% of market
share in 2011. (Euromonitor). Thus it has the strongest brand awareness. The second treatment
group consumes another energy drink that is put into a Red Bull® bottle. The third treatment
12group consumes the second energy drink from an original bottle. Finally, the control group
consumes water.
In order to measure the physical effectiveness of energy drink, all four groups are asked
to solve a series of puzzles that measure mental alertness, concentration, memory and reasoning.
The puzzles include letter cancelation task, a task that involves remembering a number of
numbers and two negotiation tasks adapted to be conducted on one participant only. After
solving the puzzles all three treatment groups are asked to fill in a questionnaire regarding their
feelings after the consumption of the energy drink. The answers will help to evaluate subjective
experience of participants after consuming an energy drink.
Before consuming the beverage the first two treatment groups are asked to fill in a
questionnaire that contains questions regarding the brand awareness and the expectations of
participants for their performance and feelings after consumption of a given energy drink. By
doing this, participants’ expectations are being enhanced. Moreover in order to encourage
expectations, before the consumption of the drink, the first two groups are shown a number of
videos regarding the extreme sports competitions that Red Bull is sponsoring.
Before the main experiment a pre-test is run in order to assess possible pitfalls and
limitations. Pre-test presents the same experiment design and procedures with reduced number of
participants.
13Overview of Chapters
Topic: Placebo effect in marketing: unexplored influence of brand name.
Title page
Abstract
Table of contents
List of figures
List of tables
List of abbreviations
1. Introduction to the research
1.1. Introduction
1.2. Problem statement
1.3 Research question
2. Theoretical background of placebo
2.1. Classical conditioning and its contribution to placebo process
2.2.Exectancy theory in shaping placebo effect
2.3.Other theories contributiong to placebo effect
2.4.Possible models of placebo effect process
3. Placebo effect in marketing
3.1. Overview of the previous research conducted in the given area
3.2. Various marketing actions and its effect on product perception and efficacy
4. Influence of brand name on consumer’s perception of a product
4.1. Marketing theories of brand perception
4.2. The influence of brand name on various product
5. Experiment
5.1. Experimental design
5.2. Experimental procedure
5.3. Results
5.4. Discussion
6. Conclusion
6.1 Conclusion
6.2 Managerial implication
6.3 Limitations and future research
14Bibliography
Appendices
15Schedule
May 2012 – 3 Sep 2012 Developing topic proposals
3 Sep 2012 - DEADLINE FOR SENDING TOPIC PROPOSAL
3 Sep 2012 – 17 Sep 2012 Time lag
17 Sep 2012 – 21 Sep 2012 Choosing the topic
21 Sep 2012 – 17 Oct 2012 Reading related literature
17 Oct 2012 – 31 Oct 2012 Writing expose
31 Oct 2012 – DEADLINE FOR SUBMITTING THE EXPOSE
31 Oct 2012 – 11 Nov 2012 Time lag for improving the expose
11 Nov 2012 – 1 Dec 2012 Writing the draft of theoretical
background
1 Dec 2012 – 11 Dec 2012 Preparing for the experiment
11- 13 Dec 2012 Conducting the experiment
13 Dec 2012 – 16 Dec 2012 Analyzing the results of the experiment
16 Dec 2012 – 18 Dec 2012 Preparing a draft of intermediate report
18 Dec 2012 – 20 Dec 2012 Time lag for finishing up the draft of
intermediate report
20 Dec 2012 – DEADLINE FOR SUBMITTING THE DRAFT OF INTERMEDIATE
REPORT
20 Dec 2012 – 8 Jan 2012 Writing Chapters 1-4
8 Jan 2012 Feedback on the draft of intermediate
report
8 Jan 2013 – 18 Jan 2013 Improving the intermediate report +
finishing up the draft of chapters
(1+2+3+4)
18 Jan 2013– 22 Jan 2013 Time lag + making of Intermediate
presentation
22 Jan 2013 –DEADLINE FOR SUBMITTING INTERMEDIATE REPORT
23,24,25 Jan 2013 Intermediate presentations
25 Jan 2013- 18 Feb 2013 Analyzing the results of the
experiment/Writing Chapter 5
18 Feb 2013 – 18 Mar 2013 Writing Conclusion
18 Mar 2103 – 8 Apr 2013 Finishing up the thesis
8 Apr 2013 – 6 May 2013 Time lag
6 May 2013 – 13 May 2013 Proofreading
13 May 2013 – 27 May 2013 Working on the final presentation of the
thesis
27 May 2013 – 31 May 2013 Final presentations
16Bibliography
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