What makes a first-time buyer select a specific packaged good brand or product from all the other products on the supermarket shelf or Web page?

It happens to us maximum times that we go to a supermarket to buy a packet of milk but when coming out we have a bucket full of things which we don’t even need.

“We think of ourselves as being rational, a sort of human calculator”

Although, we like to think that we’re rational, especially when it comes to purchasing decisions (comparing all available info and opting for the best objective solution), the truth of the matter is that we’re not very good as human calculators. It happens to us maximum times that we go to a supermarket to buy a packet of milk but when coming out we have a bucket full of stuff.

Our brain interprets number differently i.e irrationally, and subjectively.

The sellers place things in the supermarket that the buyer gets attracted towards other things and buys them. It is usually seen that the dairy fridge is placed at last in the supermarket. It’s the strategy of the seller to make the buyer go through the other stuff while visiting the shops daily to buy a packet of milk.

One of these strategies is termed as Decoy Effect.


What is Decoy Effect?

In marketing, the decoy effect (or attraction effect or asymmetric dominance effect) is the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated.

Decoy effect is a cognitive bias that you can use in your product pricing, in finance and even in politics in order to influence people’s decision making.

In simple words, when there are only two options, consumers will tend to make decisions according to their personal preferences.

But when consumers are offered another strategical decoy option, they will be more likely to choose the more expensive of the two original options.

Example Number 1;

National Geographic ran an experiment to test how the decoy effect influences consumers to buy a large popcorn rather than a small or medium one.

To begin with, they offered the first group of consumers a small bucket of popcorn for $3 or a large one for $7.Decoy

The result revealed that most of the consumers chose to buy a small bucket, due to their personal needs at that time.

As for the second group, they decided to offer three options: a small bucket for $3, a medium bucket (the decoy) for $6.5 and a large one for $7.

This time, most of the consumers chose the large bucket because they saw value in more popcorn for only $0.5.

The medium bucket was asymmetrically dominated by the large bucket. In other words, the decoy effect encouraged consumers to go for the expensive option.

The below video describes the Nat Geo study of decoy effect:

How to Implement The Decoy Effect?

Follow the next five simple steps to add the decoy effect to your price offering:

  • Choose your key product:  The one you want to sell more of. Make sure it is popular with your customers.
  • Structure your key product: Remember, your key product should contain more benefits than the other products, and higher priced.
  • Create a decoy: Your goal is to make the decoy asymmetrically dominated by your key product and to increase your key product attractiveness as a result.
  • Have at least three offers (recommended): However, don’t add more than five (beware of the choice overload bias).
  • Price the decoy close to your key product (the high-priced option): Choose the same or a slightly lower price.

The decoy effect shows that the way we judge a product’s worth depends heavily on what our options are. It also shows that sometimes seemingly irrelevant options heavily influence people’s choices. These “decoy” products push their references around enough to make people choose differently.

Key lesson

The context in which we make choices makes a difference. Options that may seem pointless given their dismal sales figures can shift what consumers choose to buy.

Are you in search of a mobile app development company?

Do you have an app idea that can create marvels? You would need the assistance of an app development company and your search comes to an end with Terasol Technologies. Whether it is Android or iOS, we have expertise in both segments. Just scroll through our website and get to know about our previous work.

What’s your challenge? Let’s solve it with technology. Contact Us Now.

Vaishnavi Seth

Vaishnavi Seth

Business Development Manager at Terasol Technologies
Currently working as a Business Development Manager her responsibility is to push new businesses to the company and expand the company’s reach to new horizons. Vaishnavi believes that there’s always something positive even in the most difficult of situations.
Vaishnavi Seth