decoy effect

Decoy Effect

Decoy Effect Jonathan Poland

The decoy effect is a cognitive bias that occurs when people make choices based on the relative attractiveness of options. When faced with a list of options, the presence of an obviously inferior option, known as a “decoy,” can influence people’s decisions. For example, a marketer may include a decoy option in a price list to make the other options appear more appealing. This can lead to a higher conversion rate, as customers compare the options and choose the better deal, feeling more confident about their decision.

The decoy effect is a well-known phenomenon in psychology and marketing, and it has been studied extensively. Research has shown that the decoy effect can be highly effective in influencing people’s choices, even when they are aware of it. This is because the human brain is wired to make decisions based on relative comparisons, rather than absolute values.

Overall, the decoy effect is a powerful tool that can be used to influence people’s decisions. By including a decoy option in a list of choices, marketers can make the other options appear more attractive and increase the likelihood of a sale.

Here are a few examples of the decoy effect in action:

  • A restaurant offers three meal options: a budget-friendly meal, a premium meal, and a decoy meal that is more expensive than the premium meal but offers fewer options and less value. Customers are more likely to choose the premium meal because it appears like a better deal compared to the decoy meal.
  • A clothing store offers three shirt options: a basic shirt, a premium shirt, and a decoy shirt that is more expensive than the premium shirt but offers fewer features and lower quality. Customers are more likely to choose the premium shirt because it appears like a better deal compared to the decoy shirt.
  • A travel website offers three vacation packages: a budget-friendly package, a premium package, and a decoy package that is more expensive than the premium package but offers fewer amenities and less convenience. Customers are more likely to choose the premium package because it appears like a better deal compared to the decoy package.

These are just a few examples of how the decoy effect can be used to influence people’s choices. The specific use of the decoy effect will depend on the context and the goals of the person using it.

Learn More
Restructuring Jonathan Poland

Restructuring

Restructuring is the process of reorganizing or reshaping an organization in order to improve its efficiency, effectiveness, or competitiveness. It…

Solution Selling Jonathan Poland

Solution Selling

Solution selling is a type of sales approach that focuses on offering customers a tailored solution to their problems, rather…

Pricing 101 Jonathan Poland

Pricing 101

Pricing refers to the process of determining the value that a business will receive in exchange for its products or…

Project Failure Jonathan Poland

Project Failure

A project is considered a failure when it does not meet the expectations of sponsors and other key stakeholders. This…

Cost Leadership Strategy Jonathan Poland

Cost Leadership Strategy

A cost leadership strategy is a business plan that aims to reduce unit costs for a product or service to…

Risk Acceptance Jonathan Poland

Risk Acceptance

Risk acceptance involves consciously deciding to take on a risk, often because the potential reward outweighs the potential negative consequences…

Business Development Jonathan Poland

Business Development

Business development is a multifaceted discipline that involves identifying and pursuing opportunities to grow a business. It’s a combination of…

Innovation Process Jonathan Poland

Innovation Process

Innovation refers to the process of making significant improvements by taking bold steps forward, rather than making incremental progress. This…

Value Creation Jonathan Poland

Value Creation

Value creation refers to the process of creating outputs that have a higher value than the inputs used to produce…

Content Database

Search over 1,000 posts on topics across
business, finance, and capital markets.

SLED Contracts 150 150 Jonathan Poland

SLED Contracts

A SLED contract refers to a contract awarded by State, Local, and Education (SLED) government entities. These contracts involve the…

Innovation Process Jonathan Poland

Innovation Process

Innovation refers to the process of making significant improvements by taking bold steps forward, rather than making incremental progress. This…

Sales Activities Jonathan Poland

Sales Activities

A sales activity is any action or task that a salesperson undertakes in order to achieve revenue. This can include…

Strategic Thinking Jonathan Poland

Strategic Thinking

Strategic thinking is the process of considering the long-term direction and needs of an organization, and developing plans and strategies…

Production Jonathan Poland

Production

Production is the process of creating goods or services for the purpose of satisfying consumer demand. It involves a range…

Sales Skills Jonathan Poland

Sales Skills

Sales skills are the abilities, knowledge, and personal characteristics that enable an individual to succeed in a sales role. These…

First Principles Thinking Jonathan Poland

First Principles Thinking

Overview First principles thinking is a method of reasoning that involves breaking down complex problems into their most basic and…

Retail Automation Jonathan Poland

Retail Automation

Retail automation refers to the use of technology to automate and streamline various processes in the retail industry, such as…