How decoys work - Deepstash

How decoys work

When consumers are faced with many alternatives, they often experience choice overload that increases anxiety and hinders decision-making.

Consumers try to reduce this anxiety by selecting only a couple of criteria (say price and quantity) to determine the best value for money.

A decoy steers you in a particular direction while giving you the impression that you are making a rational, informed choice.

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MORE IDEAS FROM The decoy effect: how you are influenced to choose without really knowing it

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. The medium is a slightly better value than the small, and the large better still. The medium is designed to be the decoy, steering you to see the biggest drink as the best value for money.

If you buy the biggest, was it because you made a sensible choice, or have you been manipulated to opt for bigger than intended?

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The decoy effect

It happens when consumers change their preference between two options when presented with a third option, or decoy.

The decoy is priced to make one of the other options much more attractive. The decoy is not intended to sell, just to nudge consumers away from the competitor and towards the target.

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What Your Prices Say to Customers

Pricing can be used as a marketing strategy or as a way to increase perceptions of quality. Sometimes it’s baked directly into a brand’s ethos.

It’s so much more than a simple calculation—pricing, especially the practice of psychological pricing, can have a real impact on the purchasing decisions of your customers. 

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The Decoy Effect

It is a marketing tactic used to nudge you into purchasing a higher-priced variant of a product or service.

The Decoy effect can be applied in recruitment, polls, elections, or anywhere else where there is a choice involved.

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Setting the right prices for your products

This is a balancing act. A low price isn’t always ideal, as the product might see a healthy stream of sales without turning any profit. Similarly, when a product has a high price, a retailer may see fewer sales and “price out” more budget-conscious customers, losing market positioning.

Ultimately, every small business will have to do its homework. Retailers have to consider factors like cost of production, consumer trends, revenue goals, and competitor pricing. Even then, setting a price for a product isn’t just pure math (numbers behave in a logical way; humans, not so much).

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