The Decoy Effect is a price psychology trick when a consumer tends to switch between two options when given an unbalanced third option. These choices make one price unreasonable so the other price range looks very profitable.
The choices given will relatively dominate asymmetrically. It is also known as the attraction effect or asymmetric dominance effect. The asymmetric dominance in question refers to a price inducement that makes one of the other options much more attractive.
The dominating factor can be felt in terms of quantity, quality, additional features, and so on. The price of the product specified as a decoy is not intended to be sold. This value is given only to push consumers away from competitors' prices towards the target of more expensive or profitable options.
Example of Application of the Decoy Effect
Have you ever felt confused when you got a coffee or popcorn package size offer? Not to mention, you usually have to make decisions quickly because the queues at the store locations are already crowded. The simplest thing that can be seen as an illustration is as follows.
If you look at the price list plastered on the window, which one is the most profitable popcorn to buy? Of course, it would make more sense to add Rp. 5,000 to buy the biggest popcorn.
Psychologist Barry Schwartz even calls it a paradoxical or tyrannical option when consumers experience excessive choice when faced with many alternatives. This is also concluded from several behavioral experiments that have been carried out consistently.
The results show that greater choice complexity increases anxiety and hinders decision making. To overcome this anxiety, consumers tend to simplify the process. Consumers only choose several criteria (eg price and quantity) to determine the best value (value for money).
How the Decoy Effect Works
The decoy effect does affect a person's decision making psychologically. Although there is no definite formula for the success of this marketing strategy, the decoy situation is quite ideal in providing competitive options. The following reasons can make the decoy situation an effective strategy for marketing.
1. Influence without realizing
The idea that decision-making can be influenced by factors beyond our consciousness may be hard to believe. However, research has shown that in general, a person is not good at determining the reasons for his own behavior.
While it is believed that decision-making is conscious and deliberate, in reality, there are often factors that influence choices.
2. Provide justification for choice
Launching from The Decision Lab, people's choices are influenced by factors beyond their awareness. However, that did not stop them from immediately providing an explanation as to why they responded the way they did.
This brings up the interesting point that when people make decisions, their goal is not to choose the right option. Rather, the purpose of decision-making is to justify the outcome of the choices they have made.
The decoy strategy provides an easy reason for someone to choose a target. There is an emphasis on being more pro (in favor of) choosing the target and contra choosing the competitor's value. This makes people feel comfortable with choices that really just need a little push to make.
3. Make choices don't feel overwhelming
The main idea of the decoy effect is preference uncertainty. In any given situation, there are many factors that an individual can consider to make a decision. The more unsure about which to prioritize, the harder it is to choose.
To avoid uncertainty of preference, people usually choose a small number of factors to focus on in assessing their choice, such as price and quantity. The decoy effect exploits this by manipulating the factors of interest.
A person's individual thinking style plays a role in how likely he is to be affected by the decoy effect. A study involving more than 600 participants found that people who are most easily influenced by bait are people who tend to rely on intuitive reasoning.
So, the decoy effect strategy has a pretty good potential to increase the income potential of the products sold by the company. However, the context must also be in accordance with the basic principles that form the basis for determining the price of a product.
The decision makers who determine the price value in the company can follow the Marketing Pricing Strategy program which is designed by prasmul-eli to be able to study psychological aspects, traditional approaches, and other factors in determining prices.
The Decoy Effect is a price psychology trick when a consumer tends to switch between two options when given an unbalanced third option. These choices make one price unreasonable so the other price range looks very profitable.
The choices given will relatively dominate asymmetrically. It is also known as the attraction effect or asymmetric dominance effect. The asymmetric dominance in question refers to a price inducement that makes one of the other options much more attractive.
The dominating factor can be felt in terms of quantity, quality, additional features, and so on. The price of the product specified as a decoy is not intended to be sold. This value is given only to push consumers away from competitors' prices towards the target of more expensive or profitable options.
Example of Application of the Decoy Effect
Have you ever felt confused when you got a coffee or popcorn package size offer? Not to mention, you usually have to make decisions quickly because the queues at the store locations are already crowded. The simplest thing that can be seen as an illustration is as follows.
If you look at the price list plastered on the window, which one is the most profitable popcorn to buy? Of course, it would make more sense to add Rp. 5,000 to buy the biggest popcorn.
Psychologist Barry Schwartz even calls it a paradoxical or tyrannical option when consumers experience excessive choice when faced with many alternatives. This is also concluded from several behavioral experiments that have been carried out consistently.
The results show that greater choice complexity increases anxiety and hinders decision making. To overcome this anxiety, consumers tend to simplify the process. Consumers only choose several criteria (eg price and quantity) to determine the best value (value for money).
How the Decoy Effect Works
The decoy effect does affect a person's decision making psychologically. Although there is no definite formula for the success of this marketing strategy, the decoy situation is quite ideal in providing competitive options. The following reasons can make the decoy situation an effective strategy for marketing.
1. Influence without realizing
The idea that decision-making can be influenced by factors beyond our consciousness may be hard to believe. However, research has shown that in general, a person is not good at determining the reasons for his own behavior.
While it is believed that decision-making is conscious and deliberate, in reality, there are often factors that influence choices.
2. Provide justification for choice
Launching from The Decision Lab, people's choices are influenced by factors beyond their awareness. However, that did not stop them from immediately providing an explanation as to why they responded the way they did.
This brings up the interesting point that when people make decisions, their goal is not to choose the right option. Rather, the purpose of decision-making is to justify the outcome of the choices they have made.
The decoy strategy provides an easy reason for someone to choose a target. There is an emphasis on being more pro (in favor of) choosing the target and contra choosing the competitor's value. This makes people feel comfortable with choices that really just need a little push to make.
3. Make choices don't feel overwhelming
The main idea of the decoy effect is preference uncertainty. In any given situation, there are many factors that an individual can consider to make a decision. The more unsure about which to prioritize, the harder it is to choose.
To avoid uncertainty of preference, people usually choose a small number of factors to focus on in assessing their choice, such as price and quantity. The decoy effect exploits this by manipulating the factors of interest.
A person's individual thinking style plays a role in how likely he is to be affected by the decoy effect. A study involving more than 600 participants found that people who are most easily influenced by bait are people who tend to rely on intuitive reasoning.
So, the decoy effect strategy has a pretty good potential to increase the income potential of the products sold by the company. However, the context must also be in accordance with the basic principles that form the basis for determining the price of a product.
The decision makers who determine the price value in the company can follow the Marketing Pricing Strategy program which is designed by prasmul-eli to be able to study psychological aspects, traditional approaches, and other factors in determining prices.
