How You Are Influenced To Choose Without Really Knowing It

behavior

How You Are Influenced To Choose Without Really Knowing It
The decoy effect is the phenomenon where consumers swap their preference between two options when presented with a third option. Shutterstock

Price is the most delicate element of the marketing mix, and much thought goes into setting prices to nudge us towards spending more.

There’s one particularly cunning type of pricing strategy that marketers use to get you to switch your choice from one option to a more expensive or profitable one.

It’s called the decoy effect.

Imagine you are shopping for a Nutribullet blender. You see two options. The cheaper one, at $89, promotes 900 watts of power and a five-piece accessory kit. The more expensive one, at $149, is 1,200 watts and has 12 accessories. 

How You Are Influenced To Choose Without Really Knowing It

Which one you choose will depend on some assessment of their relative value for money. It’s not immediately apparent, though, that the more expensive option is better value. It’s slightly less than 35% more powerful but costs nearly 70% more. It does have more than twice as many plastic accessories, but what are they worth?

Now consider the two in light of a third option.

How You Are Influenced To Choose Without Really Knowing It

This one, for $125, offers 1,000 watts and nine accessories. It enables you to make what feels like a more considered comparison. For $36 more than the cheaper option, you get four more accessories and an extra 100 watts of power. But if you spend just $24 extra, you get a further three accessories and 200 watts more power. Bargain!

You have just experienced the decoy effect.

Asymmetric dominance

The decoy effect is defined as the phenomenon whereby consumers change their preference between two options when presented with a third option – the “decoy” – that is “asymmetrically dominated”. It is also referred to as the “attraction effect” or “asymmetric dominance effect”.

What asymmetric domination means is the decoy is priced to make one of the other options much more attractive. It is “dominated” in terms of perceived value (quantity, quality, extra features and so on). The decoy is not intended to sell, just to nudge consumers away from the “competitor” and towards the “target” – usually the more expensive or profitable option.

The effect was first described by academics Joel Huber, John Payne and Christopher Puto in a paper presented to a conference in 1981 (and later published in the Journal of Consumer Research in 1982).

They demonstrated the effect through experiments in which participants (university students) were asked to makes choices in scenarios involving beer, cars, restaurants, lottery tickets, films and television sets.

In each product scenario participants first had to choose between two options. Then they were given a third option – a decoy designed to nudge them toward picking the target over the competitor. In every case except the lottery tickets the decoy successfully increased the probability of the target being chosen.

These findings were, in marketing terms, revolutionary. They challenged established doctrines – known as the “similarity heuristic” and the “regularity condition” – that a new product will take away market share from an existing product and cannot increase the probability of a customer choosing the original product.

How decoys work

When consumers are faced with many alternatives, they often experience choice overload – what psychologist Barry Schwartz has termed the tyranny or paradox of choice. Multiple behavioural experiments have consistently demonstrated that greater choice complexity increases anxiety and hinders decision-making.

In an attempt to reduce this anxiety, consumers tend to simplify the process by selecting only a couple of criteria (say price and quantity) to determine the best value for money.

Through manipulating these key choice attributes, a decoy steers you in a particular direction while giving you the feeling you are making a rational, informed choice.

The decoy effect is thus a form of “nudging” – defined by Richard Thaler and Cass Sunstein (the pioneers of nudge theory) as “any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options”. Not all nudging is manipulative, and some argue that even manipulative nudging can be justified if the ends are noble. It has proven useful in social marketing to encourage people to make good decisions such as using less energy, eating healthier or becoming organ donors.

In the market

We see decoy pricing in many areas.

A decade ago behavioural economist Dan Ariely spoke about his fascination with the pricing structure of The Economist and how he tested the options on 100 of his students.

In one scenario the students had a choice of a web-only subscription or a print-only subscription for twice the price; 68% chose the cheaper web-only option.

They were given a third option – a web-and-print subscription for the same price as the print-only option. Now just 16% chose the cheaper option, with 84% opting for the obviously better combined option.

In this second scenario the print-only option had become the decoy and the combined option the target. Even The Economist was intrigued by Ariely’s finding, publishing a story about it entitled “The importance of irrelevant alternatives”.

How You Are Influenced To Choose Without Really Knowing It

Subscription pricing for The Australian today replicates this “irrelevant alternative”, though in a slightly different way to the pricing architecture Ariely examined.

Why would you choose the digital-only subscription when you can get the weekend paper delivered for no extra cost?

In this instance, the digital-only option is the decoy and the digital+weekend paper option is the target. The intention appears to be to discourage you from choosing the more expensive six-day paper option. Because that option is not necessarily more profitable for the company. What traditionally made print editions profitable, despite the cost of printing and distribution, was the advertising they carried. That’s no longer the case. It makes sense to encourage subscribers to move online.

Not all decoys are so conspicuous. In fact the decoy effect may be extremely effective by being quite subtle.

Consider the price of drinks at a well-known juice bar: a small (350 ml) size costs $6.10; the medium (450 ml) $7.10; and the large (610 ml) $7.50.

Which would you buy?

If you’re good at doing maths in your head, or committed enough to use a calculator, you might work out that the medium is slightly better value than the small, and the large better value again.

But the pricing of the medium option – $1 more than the small but just 40 cents cheaper than the large – is designed to be asymmetrically dominated, steering you to see the biggest drink as the best value for money.

So have you just made the sensible choice, or been manipulated to spend more on a drink larger than you needed?The Conversation

About The Author

Gary Mortimer, Associate Professor in Marketing and Consumer Behaviour, Queensland University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Related Books

No Nonsense No Gimmick Guide to Marketing Your Book: How to Sell More of Your Books Without Selling Your Soul

behaviorAuthor: Eric Beebe
Binding: Kindle Edition
Format: Kindle eBook
Studio: Post Mortem Press
Label: Post Mortem Press
Publisher: Post Mortem Press
Manufacturer: Post Mortem Press

Buy Now
Editorial Review: Easy to understand introduction to the basics of book marketing, building a foundation with the fundamentals of marketing:

  • product (your book),
  • people (your readers),
  • price (what's it worth to your reader?),
  • place (where can I buy your book?), and
  • promotion (how do you tell your readers the book is out there?)



    Invaluable timeless information at your finger tip. These aren't just some ideas the author thought up, these are time tested concepts that can adapt to any situation.


    Whether you are self-published or with a small press, you know marketing your book can be a challenge. This challenge is made even for difficult by the snake oil salesmen pushing their latest gimmick to sell more books through an overpriced and likely recycled eBook.

    There are many books out there that claim to have the “secret” to extraordinary sales numbers for self-published and small press authors. These books provide the latest gimmick and usually the only person selling an extraordinary number of books is the author of the gimmick book. The challenge is that these books deal with an environmental situation, taking advantage of something fleeting, something few, if any people can control.

    This book uses the time proven principles of marketing to help the reader understand the marketing process and how to use these concepts to sell more books. That’s not to say the ideas in this book are outdated and obsolete, not at all. The principles of marketing are the foundation of these methods, not the methods themselves. What sold a book in 1975 is unlikely to sell a book in 2015, but the basic concepts are rooted in the same principles. Make sense? If not, it will soon enough.




  • Marketing Gimmicks –The Unorthodox Ways of Marketing Your Products: Unconventional Selling

    behaviorAuthor: Subhash Chandra Thakur
    Binding: Kindle Edition
    Format: Kindle eBook

    Buy Now
    Editorial Review: There are traditional ways of marketing your products, but there are ways which are on borderline –which can help you to sell your products. This is no-brainer and low entry fee method to reach a large chunk of audience, where a handful buys your product.




    Making Business Connections That Count: The Gimmick-free Guide to Authentic Online Relationships with Influencers and Followers (Six Simple Steps to Success Book 4)

    behaviorAuthor: Michal Stawicki
    Binding: Kindle Edition
    Format: Kindle eBook
    Creator(s):
    • Anthony Smits
    • Aaron Walker


    Buy Now
    Editorial Review:

    Make authentic connections with influencers without being sleazy or bothersome


    What if you could connect with 7-figure business owners as soon as your venture (a small business, blog, YouTube channel—whatever!) begins?

    What if you could effortlessly get on the radar of influencers just by being yourself? Imagine how connections like these will help your initiative skyrocket!

    Four years ago, Michal was an lifelong employee entrenched in a large company; a shy introvert without a single business idea whatsoever. He did not know what a webinar was and had no Facebook account. Today Michal is active in several online communities, with authors, marketers, influencers and business owners. His works have been mentioned in Forbes and Business Insider.

    Michal interacts with millionaires and exchanged messages with Darren Hardy and David Allen. A rock star, with 2 million followers on Twitter, featured his blog post. His books got reviewed and recommended by bestselling authors.


    In "Making Business Connections That Count" he explains how you can achieve similar results.In this book, you will learn:
    • A foolproof method of getting on the radar of influencers

    • Where to connect with top bloggers, podcasters and business owners

    • How to provide value to them even if you are just starting out in the online business world
    • How to drive your agenda without being perceived as bothersome

    • How to stand out in anyone’s crowd of followers

    • How to network with influencers even if you don't yet know a single blogger

    • How to initiate contact when you need a favor
    • What is the hidden networking superpower available to everyone
    • How to bring value to the table from day one
    • How to discern between genuine and superficial relationships

    • When it's OK to ask for a favor

    • How to make an offer your partner will feel embarrassed to decline

    • How to build friendships AND business connections
    • How to do favors for big influencers without a big-time investment

    • How to be authentic in your networking efforts, so you will never be mistaken for a sleazy salesman


    Buy this book now, so you can create relationships with respectable peers and mentors, to boost your brand since day #1!
    Pick up your copy today by clicking the BUY NOW button at the top of this page!




    behavior
    enafarzh-CNzh-TWtlfrdehiiditjamsptrues

    follow InnerSelf on

    google-plus-iconfacebook-icontwitter-iconrss-icon

     Get The Latest By Email

    {emailcloak=off}

    follow InnerSelf on

    google-plus-iconfacebook-icontwitter-iconrss-icon

     Get The Latest By Email

    {emailcloak=off}