Have you ever seen a product or service plan option that seemed objectively worse than the other options? That might have been the decoy effect in marketing at play. It can be used to subconsciously lure you into making a more expensive purchase. In other words, if an option seems like a bad deal, the creators of the option might have done it intentionally to influence you.
The decoy effect examples
There is more than one way the decoy effect is being used to influence your decisions and make you spend more money. The first way of using the decoy effect would be to create a way more expensive food or drink option, so you wouldn't pick the cheapest one. See the example below.
Default wine options
- $12 wine option
- $19 wine option
Wine options with decoy
- $12 wine option
- $19 wine option
- $32 wine option
The new wine menu that includes the decoy will make the 19 dollar wine option way more appealing. It doesn't matter if the expensive wine option will be popular or not because there is a high probability that the 19 dollar wine will be picked way more often than before which will increase the profits in the grand scheme of things. The other way of using the decoy effect is to create an inferior option that is similar to one of the default options. The use of this type of decoy effect is quite common. National Geographics even ran a study that showed how a decoy increased the highest portion size popcorn sales. See how the prices looked below.
Default popcorn options
- $3 small portion
- $7 big portion
Popcorn options with decoy
- $3 small portion
- $6.5 medium portion
- $7 big portion
Just by introducing that inferior medium portion size option, the sales of the large popcorn portion had increased quite a lot. The third way of using the decoy effect is just by presenting an inferior option with similar attributes to one of the default options. This will enable the customer to compare those two options and increase the probability of picking the superior option. See the example below.
Default options
- $44 product A
- $42 product B
- $45 product C
- $46 product D
Options with decoy
- $44 product A
- $42 product B
- $45 product C
- $32 product -D
- $46 product D
With many similar choices of different products, it becomes harder for a person to decide and be confident in his decision. This phenomenon is called the too many options paradox (learn more about it here). A decoy can simplify this decision-making process by creating a comparison point that shows that the person is buying a superior version of a similar product. Studies show that it increases the likelihood of a person picking the superior option.
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