It’s early in my career. I’ve joined a hair care brand which has just launched two new products: one pink grapefruit, the other orange. Each variant has the color, imagery, and scent of either fruit.

While sitting at my desk one day, an R&D director informs me that they are the same scent. I’m shocked. “That’s not possible,” I say. “They smell different.” She assures me they are the same.

Perplexed, I lift each of the bottles to smell them again. Even armed with 100% certainty that these fragrances are identical, the pink bottle still smells like grapefruit to me, and the orange one like orange. My brain simply can’t separate the two. It feels like my mind is playing tricks on me, but I can’t deny the difference in scent.

As my neuroscientist friend often says about the brain, “perception is reality.”

We’re taught that most products and services deliver objective, quantifiable results. R&D, engineering, and professional service teams build or implement products and measure definitive outcomes. Branding and marketing are often seen as the fluff on top. But is product performance absolute?

In this article, I argue that branding creates a placebo effect – a powerful expectation-setting tool that can measurably impact our customers’ experience.

What is the Placebo Effect?

The placebo effect describes the health improvements observed after receiving a treatment that has no therapeutic effect. It used to be perceived as mysterious, unexplainable, sometimes gullible healing, but is now understood to be the result of how the brain processes expected health outcomes.

Let me share just a few medical examples to illustrate its power.

Motor function: In one study, Parkinson’s patients received an injection of an active drug or a placebo. The placebo injection triggered a 200% increase in dopamine in the brain and translated into improved motor function among half of the patients.
Pain management: Placebos are often considered as effective as pain drugs. One study showed that a placebo resulted in strong pain relief, verified by fMRI brain scans.
Depression and anxiety: In one study, patients were given active or placebo antidepressants. Remarkably, 75–82% of the patients felt better, regardless of which drug they received. In a meta review of studies, about 35–40% of patients responded to placebos, and some studies suggested that 17% of individuals may show greater improvement with placebos than antidepressants.

How the Brand Placebo Effect Works

So, what does the placebo effect have to do with branding? In short, everything.

To put it simply, brands have the power to create the placebo effect.

In this case, the brand represents a set of expectations on top of the functional benefits the product or service delivers. Even with no additional performance or quality enhancement, brands can biochemically and behaviorally modify a customer’s experience.

Cues such as price, authority, logos, and claims create expectations about an impending result, and in doing so, have the power to influence the brain to make the expectation a reality.

Let’s look at an example of a brand’s impact on the functional performance of Ibuprofen. This drug is legally required to be the exact same ingredient across generic and branded versions, and in clinical trials, it has the same pharmacological impact.

One study looked at the impact of branded ibuprofen to treat headaches. In one leg of the study, participants were given ibuprofen tablets with a brand name (Nurofen). In reality, half the tablets were active ibuprofen and half were a placebo (no actual drug). Amazingly, the pain reduction reported was similar between the active ibuprofen and the placebo.

The study also examined the impact of tablets labeled as “generic ibuprofen.” Again, half the participants received active ibuprofen and half a placebo. This time, participants reported the placebo as significantly less effective compared to the generic active ibuprofen. This result is not surprising. We expect the actual drug to be more effective. What’s fascinating is how the branded placebo ibuprofen was able to so effectively reduce pain, delivering the SAME level of improvement as the actual drug.

Similar effects have been observed and measured across a number of other domains such as athletic performance, pleasure enhancement, and persistence. Brand and price cues consistently prove the power of branding to influence product results.

Here are a few more branded examples:

· Physical Performance: Two groups of people were given a putter and told to putt into a hole. While the putters were exactly the same, one group was told they had a Nike putter. The other group was not given any information on brand. The Nike group required fewer shots to sink the ball.

· Price: Participants tasted the same wine but were told they had different prices, either $5 or $45. The group that drank the $45 wine perceived it to taste better. Brain scans indicated that the participants who drank the more expensive wine had increased activity in pleasure centers of their brain, confirming that the price influenced taste.

· Mental Acuity: Participants were given the same lemon‑lime soda in two different cans—one plain, one labeled Red Bull Energy Drink. Those who drank the Red Bull-labeled can solved more difficult word‑puzzles and stuck with tasks 11% longer.

A strong brand triggers a set of expectations that have the potential to deliver meaningful gains in performance or improved experience. Brain imaging consistently shows that a strong brand or brand cues (such as price) can lead to higher reward activity, heightening pleasure, and altering physical behavior.

How to Create the Brand Placebo Effect

A brand does not equal advertising. Rather, a brand is the sum of all interactions a customer has with the product or company. This includes the product experience, customer service, your website, and what others say about you.

In my article on building a strong brand, I elaborate on these 3 principles, which should be the foundation of your brand.

1) Consistent: Customers need to have frequent, repeated exposure to the same message.

2) Congruent: All aspects of your brand need to reinforce the same idea across brand interactions, including marketing, sales, product experience, and customer service.

3) Connection: You must create empathy and understanding with your customer, often through authenticity and shared values, in order to build trust.

To fully harness the power of branding as the placebo effect, we need to create context. When we give our customers a frame of reference for how to evaluate and understand our product within their world, we have the opportunity to improve their experience.

Context is created through cues. Pricing, color, associations, endorsements, distribution, design, and use cases are all different types of cues. Depending on our customers’ perceptions, they interpret these cues in different ways, so we need to understand the associations our customers make with various cues. A celebrity may be highly influential for one group of customers and a turnoff to others. Nearly any element can influence how our brand is perceived and give subtle indicators of value and expected performance.

These cues, in turn, create expectations. The expectations are a set of beliefs about the anticipated result. The power of this mechanism is that our brain can—to some degree—impact the actual outcome.

That outcome then creates a feedback loop by reinforcing both the original cues, and the expectations, thereby further enhancing the outcomes.

Here’s how to maximize the power of the placebo affect through your brand:

Align your Brand Positioning to the Product or Service Purpose:

The Nike putter study also tested whether a “Gucci” putter improved performance. It did not. The specific attributes that define the brand, athletic performance for Nike versus luxury style for Gucci, must relate to the product’s objective in order to positively impact the outcome. (For more on brand positioning, check out my article series on this topic.)

Identify Relevant Cues to Reinforce Your Positioning:

Price impacts how customers perceive quality, taste, and experience. Color and design can signal attributes such as sustainable or artificial, modern or outdated. A lab coat creates a sense of trusted medical authority, whereas a rude salesperson communicates indifference. Pay attention to the explicit and subtle cues you communicate across all customer interactions to evaluate whether they reinforce or detract from the experience you want to enhance.

Reinforce the Expected Benefit Through the Customer Journey:

Identify moments after purchase, during use, and after use to remind your customer how you’re delivering on their expectation. Sensorial cues such as scents and sounds can reinforce the connection between cues and expectations. Emails with proof of performance, such as progress achieved and benefits delivered, remind customers that your promises are actively being fulfilled.

Ethics of the Brand Placebo Effect

The power of brands to influence our brains is a tool to be wielded intentionally and responsibly. Done well, it can benefit our customers. Done misleadingly, it can erode trust and diminish brand experience.

We can’t, nor should we, overpromise something that can’t be delivered. Many of the improvements from brands are in the 10-20% range, so they are meaningful yet moderate lifts.

As stewards of creating a valuable experience for our customers, we need to use the power of branding to enhance and delight rather than to deceive.

To ensure the responsible influence of our brand, ask these questions:

Are we creating expectations that our brand or product can deliver on?
Does the expectation actually create more value for the customer?
Does the expectation trick the customer into buying?
Do we have substantive proof that our product or service delivers our implied or explicit expectation?

Deceiving customers is not only unethical, it’s also bad strategy. A weak brand or one known for misleading or deceiving customers can elicit negative expectations and create the opposite of the placebo effect, a worse product experience. Instead of compensating or hiding deficits, we must build brands on value and quality.

Along with R&D, engineering, and operations teams dedicated to improving product performance and service outcomes, marketing is a powerful tool in this toolbox. Through consistent messaging that sets the right context for the benefits you offer, your brand can meaningfully enhance your genuine strengths to positively impact customer results and build loyalty.

The Untapped Power of the Brand Placebo Effect