How Can Decoy Marketing Boost Sales?

Need to sell more of a product or service?

Try this: Offer your customers a similar, but inferior product, at about the same price. While it’s unlikely that they will actually buy the less attractive offer, you may actually see a jump in sales of what you are trying to sell. This is known as the ‘decoy effect’ or decoy marketing.

In Predictably Irrational, author Dan Ariely describes an experiment whereby two groups of subjects saw one or the other of these offers to subscribe to The Economist.

Offer A:

• $59 – Internet Only Subscription (68 chose); or
• $125 – Internet and Print Subscription (32 chose).

Predicted revenue – $8,012.

Offer B:

• $59 – Internet Only Subscription (16 chose);
• $125 – Print Only Subscription (0 chose); or
• $125 – Internet and Print Subscription (84 chose).

Predicted revenue – $11,444.

Not a single person chose Print Only Subscription for $125. Yet by adding a decoy product, the Internet and Print Subscription offer jumped from 32% to 84% of respondents.

The print-only offer was the decoy, and served to give the combined offer a higher perceived value. While it’s true that Dan’s test had the subjects make the choice without actually consummating the deal with a credit card, it’s clear that introducing the decoy made the combined offer look more attractive.

According to Dan, decoys change behavior when a subject is choosing between alternatives that are more or less equally attractive.

Have you tried adding a decoy offer to increase the perceived value of the offer you want customers to buy?

Full story at Neuroscience Marketing »