Consumer Neuroscience : Pricing research to gain and sustain a cutting edge competitive advantage by improving customer value and profitability

Abstract: This is the first study that exclusively focuses on gaining knowledge of the vast opportunities that Neuroscientific pricing research offers for marketing purposes. The findings of this study provide evidence of the importance to improve customer and organizational decision making. The findings further highlight the crucial importance of Neuroscientific pricing research. Moreover, evidence is provided that fundamental and well formulated models and concepts need to be developed in the discipline of Neuroscientific pricing research. Neuroscientific pricing research can improve the understanding and the use of pricing by validating and developing existing pricing theories that are largely behavioural or standard economic in nature and build on unrealistic assumptions such as perfect information, profit maximization and rational choices. (Pratt, 1964; Lucas, 1971; Friedman, 1976; Stigler, 1987; Rappaport, 1996; Caplin & Dean, 2009, p. 24) Rao and Kartono (2009, p. 9) explain that "our understanding of pricing processes is still in its infancy". Moreover, Neuroscientific pricing research has been sporadically published. (Knutson, Fong, Adams, Varner, & Hommer, 2001; Knutson, Rick, Wimmer, Prelec, & Loewenstein, 2007; Plassmann, O'Doherty, Shiv, & Rangel, 2008) So far, pricing research has incorporated advancements in game theory and microeconomics, behavioural decision theory, psychological and social dimensions and newer market mechanisms of auctions over the last decades. (Rao, 2009, p. 1) Bijmolt et al. (2005) highlights that pricing research has implications for how we understand information processing in any decision context where resources and information are scarce and costs must be weighed against benefits. Moreover, Neuroscientific pricing- branding- and design research will offer organizations a unique range of tools and abundant opportunities to gain and sustain a competitive advantage and to improve customer value and profitability. Innovative industry leading companies, governments and civil society organizations should debate whether they can afford to not to be part of developing Neuroscientific research mainly for the reasons of control and power.