Hello and Welcome to Hisales consulting podcast. I’m your host Prakash Batna, and I believe in the philosophy - Selling is Fun, When you know how.
Today I’ll discuss a very interesting topic – The decoy effect and how many organisations use it successfully to influence customer choices without they knowing it.
The decoy effect is also called the attraction effect, Symmetrical dominance effect
So What is The Decoy Effect?
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 3rd option - decoy option, they will be more likely to choose the more expensive of the two original options.
The 3rd and unattractive option is a “decoy” because the marketers are not really putting it there to be purchased.
By including inferior options, marketers shift the frame of comparison and change the kinds of value comparisons that potential customers make about the other options. The unattractiveness of the one option helps customers see the value of the other options. When used appropriately, this effect can nudge people towards making certain purchasing decisions more often.
Suddenly the irrelevant Option becomes relevant in nudging the customer to chose the product which the companies want them to choose.
The Decoy Effect in Sales
The effect can also be used to change customers’ product preferences. For example, National Geographic did a test of this effect with popcorn purchases in a movie theatre setting. They started with two options:
Small popcorn for $3.
Large popcorn for $7.
In the experiment, the majority of people purchased the small popcorn. People said that $7 was a little too expensive for the large size.
Then they added a third option, a medium popcorn size option for $6.50. This was a decoy because the option is inferior to the large popcorn: you get much more popcorn with the large option for very little price difference.
Small popcorn for $3.
Medium for $6.50.
Large popcorn for $7.
Now, many more people chose the more expensive large size. Adding the medium size helped people see the greater value in the large popcorn option.
You can see the decoy effect in Coffee shops, Real estate, rental bbiz, Fast food and QSR and so on
Price is the most delicate element of the marketing and product mix, and much thought goes into setting prices to nudge us towards spending more.
A step-by-step process for designing a decoy product
1. Choose the product you want to sell the most
2. Create three product choices
3. Make sure these three choices include a “secret agent” decoy
4. Price the decoy close to the high-priced option
5. Make the decoy only marginally better than the low-priced option
Keep in mind that this effect can’t con someone into buying something they don’t want. If you don’t want a subscription to The Netflix, you won’t buy one, no matter what the options are. Same with popcorn, diamonds, and any other product.
I use decoy effect in selling my consulting services, workshops and sales programs regularly. And that’s it for today. Do keep listening to my sales and selling podcast and Don’t forget to follow, like hisales consulting on the Linkedin and FB platform. Also check out my website www.hisales.in for free resources and blogs.
Lastly, let me know what you think and I greatly appreciate it. Myself Prakash Batna reminding you again “ Selling is Fun, When you know How”. Take Care