The Latte Macchiato Experiment

Validation of NeuroPricing® in the field:

The Latte Macchiato experiment

Our client wanted to know, which price students are willing-to-pay for a cup of latte macchiato from a vending machine located on a university campus. In order to help our client optimizing his pricing strategy we applied NeuroPricing®.


Process

In April 2013 we conducted a field study to validate NeuroPricing® and to test the predictive power of the tool. In the context of the study, we set up a new vending machine on the campus of the Munich University of Applied Sciences. We manipulated the machine in a way, that the prices for Latte Macchiato varied between 0,05 € and 4,65 €. 35 students participated in the EEG experiment.

 

First, these 35 subjects were asked via questionnaire, how much they would pay for a cup of latte macchiato from this specific vending machine. Next, we recorded their brain activity to measure willingness to pay. 

 

This part of the study resulted in two different predictions for the entire student population: one prediction based on questionnaires and one prediction based on EEG brain data. Interestingly, the demand curve prediction of those two measures differed vastly.

 

In a second step, we manipulated the vending machine in a way, that the prices for the latte macchiato varied constantly between 0,05 € und 4,65 €. This enabled us to observe the real world behavior of 150 students using the manipulated vending machine. 

 

 


Results

Finally, we were able to compare the three demand curves: (1) the NeuroPricing® based demand curve predicted from the EEG data, (2) the demand curve based on the questionnaire data, and (3) the real-world demand curve based on the data from 150 students buying at the manipulated vending machine. 

It turns out that the demand curve as predicted by our NeuroPricing® EEG brain data was manifold more accurate in predicting population behavior than the demand curve derived from questionnaire data.  



The NeuroPricing® experiment is validated.


This is one of the key studies that validated the NeuroPricing® study design and analysis algorithms. We regularly use NeuroPricing® in a variety of industries to predict consumer behavior better than with surveys. Knowing the “true” willingness-to-pay is a priceless advantage and a huge leverage to increase the profitability of the respective products.

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