top of page

Marketing tips

Here's an example of a marketing edition of The Foundation newsletter

How to use the decoy effect

"It's easier to trick someone than to convince them they've been tricked."

​

— Mark Twain

Decoy effect.png

There's a famous popcorn experiment which was conducted by Dan Ariely — a renowned behavioural economist and psychologist. It goes like this:

​

You visit the cinema and are presented with three choices of popcorn:

​

  • Option 1: Small bucket for £3

  • Option 2: Medium bucket for £6.50

  • Option 3: Large bucket for £7

 

Which do you choose? Probably the large bucket — the overwhelming choice made by most people. Why? Because it seems better value than either the small or medium version.

 

But did you know that was the plan all along?

 

Because, in marketing terms, the medium bucket was a decoy.

 

Here's how it works:

​

  • Creates a comparison: A decoy is an offer that's priced in a way (or has features) that makes one of the other options (the target) appear more attractive by comparison. In this case, the large bucket (where price is used as the comparative factor).

  • Urges a preference: Because of the decoy, customers who are indifferent or leaning one way or another find themselves nudged towards the target.

  • Creates the perception of value: The decoy is designed to be less attractive when compared with the target — either by price or features. This then makes the target option appear more attractive.

 

Think about all those times you've considered which coffee size to choose in Starbucks. Or which software package is the best option. The decoy effect will no doubt have been in action.

 

And here's how you can use it:

​

  • Offer three levels of your product or service: Three is the minimum you need to create your decoy. If you don't have three individual options, try bundling. For example, media publications will often present prices for print only, online only and then print and online. You can also choose more than three options but this risks introducing the 'Paradox of Choice' (when decision paralysis sets in because customers are offered too many choices). So we'd advise no more than four options.

  • Set your decoy price close to your target's price: This will make it easier for your prospective customers to compare value. The decoy price doesn't need to be lower, it's there for comparison

  • Aim for the middle: Our eyes are drawn to the centre of what we look at. This is known as the centre stage effect. We'll discuss it in more detail in a future edition. But if you want to draw attention to either the decoy or the target, place it in the centre of the choices you're offering.

 

So now you can see how the popcorn offering was set up and why it works.

 

If you want to influence how your customers buy, you can prompt them with the decoy effect.

 

If you found this newsletter helpful, we'd be grateful if you'd share it with colleagues and friends. If they want to, they can sign up directly here.

​

Image credit: Freepik

bottom of page