Chapter 7 of PSYCHOMarketing by Roger Nichols
This is the most intriguing marketing tool in the book. The decoy effect results from something we all come by naturally, namely, our cognitive biases, the tendency of our minds to make inaccurate judgments as a result of what we perceive.
Are you thinking, what did he just say? I said, you think you are making a rational decision, but you didn’t realize you were actually directed to make that decision. How do I know? There have been many experiments illustrating the impact of the decoy effect on the decision-making process.
Huber, et al. identified it in 1982, as the “asymmetric dominance effect,” which is simply a phenomenon in which you are inclined to lean toward one or another of two products (let’s say, Meat A and Meat B), when a third option (Meat C), is offered. Keep in mind that Meat C is of high quality and value in some aspect, but it is also of low quality in other ways. In a nutshell, the third option, which is shown in a poor light, serves as a decoy whose sole objective is making you—unconsciously—select the product the marketer wanted you to purchase all along.
Huber’s team conducted a study by asking people if they would prefer a five-star restaurant that is very far away over a three-star restaurant that is nearby. When he discovered the subjects had a tough time choosing between the two, he added a third option: a four-star restaurant located farther than the five-star restaurant was. With the introduction of this third option, folks had no difficulty deciding they preferred the five-star restaurant with absolute regularity. When Huber then replaced the third option—a two-star restaurant located midway between the thee-star and five-star restaurants—he realized the subjects opted for the three-star restaurant with alarming consistency. He concluded that people probably opted for the three-star restaurant because their attention was diverted from the five-star restaurant while they were considering which was better, the two- or three-star restaurant.
Here’s another example of the decoy effect. A group of researchers, from the Chinese Academy of Sciences and the University of Colorado, conducted a study using 168 workers from three different food-production firms in China. The researchers provided the workers in these companies spray bottles of sanitizer to wash their workstations and hands every hour. After the first 20 days of using the spray bottles, the researchers introduced two more options, which were more difficult to use than the original spray bottles. These decoys revealed that, when the options were added, the number of workers who started using the original spray bottles increased from about 60% to over 90%. This study supports the fact that decoys substantially affect the decision-making process of consumers.
What the decoy effect teaches us is that marketing can affect many decisions, involving anything from job offers and political persuasions to consumer product purchases. In order to influence the consumer’s choice, marketers must compare all the alternatives in the vast array of cost, value, and other options, leaving no stone unturned, so to speak.