JuP article thumbnail 180x180 - Reward and pain: How the brain decides what to purchase

The human brain is still struggling, in evolutionary terms, to master the notion of money. In the absence of a more sophisticated management system, it uses its ancient pain and reward mechanisms – with some interesting consequences for those of us charged with selling wine

If we think about it from a human perspective, trading with money is quite a recent cultural phenomenon. Humans have traded for a long time, but the use of money to do so is something that has only been known since the appearance of the Mesopotamian shekel about 5,000 years ago, or approximately 10% of the time “modern humans” as we know them have been occupying the planet.

Since ‘buying’ with ‘money’ is a relatively recent cultural phenomenon (at least in evolutionary terms), the brain has to improvise the way we make a sensible decision since it is not instinct. Therefore, it borrows from existing evolved mechanisms available to it: pain and reward.

  • Pain mechanism: The brain warns the body of potential problems that might affect our wellbeing in order to protect itself. For instance, this is activated when we cut ourselves accidentally (original purpose for pain mechanism) but also when we see the price of an item (new, adapted mechanism).
  • Reward system: The reward system is the mechanism by which the brain tells us to want something. By releasing dopamine, the brain suggests that there is something for us worth pursuing. This is activated when we see a picture of our child (original purpose for reward mechanism) or if we see a product we really want (new, adapted mechanism).

Studies by Stanford University´s Professor Brian Knutson suggest that deciding whether or not to purchase an item is the result of the interaction between both mechanisms: if reward is more activated than pain, then we buy. On the other hand, if pain is more activated than reward, we don’t buy it. It’s a question of whether the pain-reward scales are tipping the right way or not.

This sounds simple, but it is fascinating as it provides us with two levers to use when we think about selling:

  1. Reducing pain: Can we reduce the ‘pain’ the brain experiences when evaluating the cost of a product without just lowering the price?

There are actually different ways to do so. One of the most well used is deferral of pain. Buy now, pay later seems to be a reliever of ‘pain’. The most obvious is the use of a credit card rather than cash. Buying with a credit card feels less painful than paying with coins and notes for the brain, in part because a card transaction versus handing over the folding notes doesn’t feel as ‘real’. Not showing the €/$ on a wine list performs similarly by reducing the pain experienced by seeing the currency sign. Adding a very expensive wine to the list might make all other wines feel more reasonably priced by comparison.

Waiting time is another inducer of ‘pain’, interestingly our brain doesn’t just dislike waiting time in absolute terms but rather the uncertainty of outcome that waiting brings. How different it feels to wait for a train you know will arrive in eight minutes compared to waiting for a train you don´t know when it´s arriving if at all. Being informed is more important than how fast we deliver something.

 

  1. Reward: How can we increase the reward of buying without changing the product? Here we can think of ways to increase the reward the brain feels (without necessarily increasing the cost of production). In order to do this, we need to know what the buyer needs and what the product signifies.

For example, we might want to spend more for a product that we associate as appropriate to take to a dinner with friends (social reward: will make me look good) or that would help us in a date (courtship: will increase my chances). Or we could emphasize the pleasure given by the product when consumed (self-reward: treat myself).

Interestingly, none of the above have to do with the product itself, but with how we experience it. How we experience paying could be something that changes our perception of the price. What reward we are getting from a product could be as important as the quality of the product itself. Therefore, context matters, and brands should work on building the associations with these rewards.

 

juan 1 180x180 - Reward and pain: How the brain decides what to purchaseAuthor: Juan Park  

Email: Juan@wineintelligence.com

 

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply