Researchers at the Stanford Graduate School of Business and the California Institute of Technology found that because people expect wines that cost more to be of higher quality, they trick themselves into believing the wines provide a more pleasurable experience than less expensive ones.
The researchers said that when 20 adult test subjects sampled the same wine at different prices, they reported experiencing pleasure at significantly greater levels when told the wine cost more. At the same time, the part of the brain responsible for pleasure showed significant activity.
people are hard-wired to believe that things that cost more MUST be better. like a Rolex watch must be better than a Seiko watch (it isn’t) or a low-end Mercedes must be better than a Toyota (it isn’t either). but the brand makes you feel better. and that’s what people are paying for.
I have a friend who owns a very successful club in San Francisco. The number one drink ordered is a Kettle One (high end vodka) and Red Bull. Now most vodka come from the same stock and there isn’t any proof that one vodka is more likely to prevent hangovers than another vodka (unless maybe if it is infused with vitamins). So I can understand if you are going to buy a high-end vodka if you claim it tastes better … but you can’t actually taste the vodka when mixed with Red Bull. So people are buying the brand, the “experience” (whatever that means), the split second when they order that it makes them feel rich and can try to impress the bartender that they are willing to spend 50% more for the same experience.
i admit that i fall for these things all the time.
people bank on price. because price is usually a good predictor of quality and if you don’t know any better, that’s all you have to go on. it makes sense.
in a hotel, price often equals quality (except in an Ian Shrager hotel where the quality and service is quite bad but the brand is strong). in a vodka, people pay more because they feel better … they feel they have a nicer experience (even though Absolute probably ranks just as high as the 2x priced Grey Goose). in a wine, people truly believe a $200 bottle bests a $20 bottle (i’ve done tons of taste tests that showed people cannot tell the difference) .. and they like the experience of buying the best stuff.