New Delhi: “To make a purchase or not to make a purchase?” that is the question. Daily life is filled with everyday decisions to make a purchase or not. Producers are always in high demand of money and consumers have a comparatively low possession. However, it is the subject’s willingness to pay that decides how much the consumer wants to pay. In one of the studies by Harvard, “willingness to pay” simply means a maximum amount any consumer is willing to pay to purchase any product. Price decisions can vary from individual to individual while many factors come into play when consumers decide not to pay more than x price for a preferred product they want to own. These factors include race, gender, age, education, and most importantly, income. It is surprising that the price choices consumers make while making a purchase is related to neural activity [happening in the brain]. One may think the act of making a purchase as abrupt but neural activity tends to get affected by the price as also the product choices consumers make. Frontal brain asymmetry is related to product choice and willingness to pay. The study observed neural mechanisms of subjects under a neuroimaging apparatus while they were making a purchase. The decisions they made related to product purchase and price decisions were directly linked to the activity happening in the frontal cortex of the brain. Frequency bands showed different results, where alpha and beta frequency bands were not related to willingness to pay decisions; however, frontal asymmetry in the gamma frequency band was linked to willingness to pay. The higher the frequency of the prefrontal gamma band asymmetry, the higher the effectuation of choice. On the other hand, for packaged goods or fast moving consumer goods (FMCG), the left prefrontal gamma asymmetry showed a negative relationship, where willingness to pay for FMCGs was low. So, neural activity is clearly affected by the decision of the willingness to pay.
Rather a milestone of neuroscience by showing what actually goes on in a brain, neuro scientists, researchers and marketers can gain much benefit from this finding; because, product consumption heavily depends upon the customer’s willingness to pay for a specific product. Also, specifications related to products come into play as customers may not pay higher prices for low quality goods. On the other hand, customers may be willing to pay higher prices when the quality is extraordinary along with attractive colour packaging—in essence, if it feels appealing. Moreover, the consumer’s willingness to pay over a period of time decides the fate of product consumption. Recording the buyer’s willingness to pay over a time span may reveal how in-demand a product really is. Therefore, it becomes essential for marketers to know people’s WTP time and time again to make sure they are on the success track by placing their products in the market in the lucrative time cycle. As people become less interested in paying for a product, depending upon the dwindling quality of the product, low consumption or any other reason like a comparable other brand related to time and place, the business can go bankrupt in no time.
To conclude, willing to pay is directly linked to the frontal brain gamma asymmetry. Even a minute of focus and observation to make a price decision affects gamma frequency of frontal asymmetry. Observation of brain responses during the activity of making a purchase decision shows how abrupt and seemingly mundane choice-making tasks affect neural mechanisms. Business researchers and practitioners can gain considerable projected focus from this exceptional brain research.
Akshat Jain is a Research Scholar with Indian Institute of Technology Delhi. He is pursuing his research studies in the field of psychology and neuroscience.