Ruby Marketing & Business Accelerator

The power of 3 choices (aka the Decoy Effect!)

Today’s Extra comes from marketing specialist Barret O’Neill. It’s the fascinating strategy that businesses use to help their customers make up their minds, in the business’s favour. It’s called the Decoy Effect, and it’s pretty powerful.

We all make mental shortcuts to reduce brain effort. When making choices, we operate differently when given 2 choices, than when we are given 3 choices.

Two Choices

When we face two choices, we check with ourselves what we would prefer. We compare the pros and cons of each option relative to our needs. And our minds are good at that.

Three Choices

When we face 3 choices, we stop assessing against our needs, and we start assessing the options against each other. With 3 options, our minds try to find the option that offers the best value, as compared to the other two options, aka the Decoy Effect.

Marketers use this to skew the customer into choosing the option that gives the business the best returns.

Let’s look at two examples:

The Decoy Effect

When the customer is only faced with the large and small popcorn options – they will choose based on how much popcorn they feel like eating.

When faced with the above three choices, their minds now flip to comparing the value of each offer, relative to the other offers. And so, the LARGE (at 50c more than the medium, for MUCH more popcorn) wins out. The MEDIUM is just a DECOY so it makes sense in your brain to buy the LARGE. As the marketer intended.

Again, in the above Economist example, if faced with the digital-only, or the print-only options, you would choose based on your personal preference. Do you like having the publication in your hands, or do you prefer reading it online? You may also choose online if you’re on a tight budget.

The Economist would prefer to have you sign up for both the digital and physical publications. This gives them higher readership numbers, which they use when selling ad space.

The DECOY is the PRINT ONLY option, so that your brain decides that it makes obvious sense, to sign up for both!

As with all psychological triggers, use the decoy effect with respect, and always give amazing value.

Love playing pricing games? Here’s another pricing strategy that you might enjoy.