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"MARKETING MAY BE MORE POWERFUL THAN COMPANIES REALIZE." —Ziv Carmon this experiment, before consum- ing the drink and solving a series of puzzles, a group of students read a marketing message that included the statement, "drinks such as SoBe have been shown to improve mental functioning, resulting in improved performance on tasks such as solving puzzles." A control group solved the puzzles without consuming the drink or reading the message. In both cases, researchers found that the placebo effect holds true for marketing as well as medicine. In the first experiment, students who believed they were paying full price solved more puzzles correctly than either those who believed they were paying a discounted price or the con- trol group. In the second, students who read the marketing message solved more puzzles correctly than those who did not. Such studies as these could change the way companies view their market- ing and discounting practices, says Carmon. "Companies need to think more carefully about whether price discounts are the best way to pro- mote sales," he says. Because of the placebo effect, discounts may actually make a product less effective. At the same time, the study also raises interesting ethical dilemmas for marketers, who could use the placebo effect to make false claims or raise the price simply to improve its effective- ness in the marketplace. "Even mod- Look who's reading BizEd! "Every day I'm inundated with articles and publications to read, as every dean across this country probably is, but I always find time to read BizEd. BizEd offers innovative ideas that help keep the Haub School on the cutting-edge." Joseph A. DiAngelo, Ed.D. Dean Erivan K. Haub School of Business Saint Joseph's University The only way to ensure receipt of your personal copy is to subscribe. Visit www.aacsb.edu/publications to subscribe online or to download subscription forms and rates. BizEd BizEd MAY/JUNE 2006 55 est placebo effects may make false claims legitimate," the researchers write in their paper. In the future, Carmon and his colleagues plan to study whether the country where a product is said to be made may also produce a placebo effect; or whether an unbranded, but otherwise identical, medication may result in less effective healing. In each of these situations, says Carmon, "marketing may be more powerful than companies realize." To read the entire study by Shiv, Carmon, and Ariely, "Placebo Effects of Marketing Actions: Consumers May Get What They Pay For," visit Carmon's Web site at faculty.insead. edu/carmon/cv.html. n z