HOW DOES DECOY PRICING INFLUENCE PEOPLE?
The compromise effect
The attraction effect
Due to this, consumers tend to choose the third option irrespective of its pricing as it has more value than the other two subscription packs.
The ultimate purpose of Decoy effect is to make consumers choose the product variant that is expensive when compared with other options. When a consumer decides to go for the expensive product in the options, there’s a better increase in the sales revenue. This, in turn, increases the profit produced by the product.
Increase in Sales → Increase in Revenue → Increase in Profit
Many large-scale industries and Small and Medium Enterprises (SME) use the decoy effect as their marketing starategy to increase their sales revenue and profit.
For example: Check out how Netflix India offers subscriptions using the decoy effect.
Consumers whose requirements are to watch movies and TV shows just on their mobiles will prefer the first option. Every other consumer will reject that option completely.
Feel free to connect with us if you want implement similar kind of digital marketing strategies/techniques for your business. We’re always happy to help.