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Decoy effect and pricing
1. The decoy effect &
pricing
Presented by
Dhanraj.D
Santhosh Selvan I.S
2. What is Decoy Effect’s
First, Do any decoy used in your life while
making a decision ?
2
3. A decoy is usually a person,
device, or event which resembles
what an individual or a group
might be looking for, but it is
only meant to lure them.
3
4. Decoy Effect
▹ It is Psychology used in marketing strategy
▹ Two is easy to compare but three will confuse.
▹ Third option is called as decoy
▹ The effect is also known as Asymmetrically
dominance effect
To get perfect what we refer let’s refer others
definition
4
5. The decoy effect is a phenomenon
whereby consumers will tend to have
a specific change in preferences
between two options when also
presented a third option that is
asymmetrically dominated. 5
6. How it works
6
Rs 50 Rs 130 Rs 150
Small Medium/Decoy Large/Venti/Main focus
The actual amount of Medium should be Rs 100 or
Rs 75
7. Why it is done
▹ Human Psychology made it easy to
trick human minds
▹ Forcing consumers to buy more than
they need.
▹ Give satisfaction feel but actually
they are not.
Market psychology describes the
overall
behavior of a market based on
emotional and cognitive factors on
net which refers to the consumer as
whole.
7
Psychology Marketing
8. Types of marketing in Psychology
8
Psychology
&
Marketing
The
Cheerleading
Effect
The charm
effect
Indolent
Effect
Decoy effect
10. 10
the decoy effect should not really exist in practice. But this
theory relies on the assumption that consumers’ purchasing
decisions are perfectly “rational” and take into account all the
“right information”. However, in many cases the consumer
does not possess the “perfect” level of information about a
product’s utility.
The reason why irrational price is
successful
• Attraction Effect
• Compromise Effect
17. A failure story in Decoy Pricing strategy
17
US Price
Strategy
India’s Price Strategy
18. Study on decoy effect ( By survey )
In total, 140 participants took part in
this analysis of the decoy effect.
Figure 1 displays the response
options along these two dimensions.
Figure 2 the participants preference
toward subscription offers when the
decoy effect is deployed
18
19. Without the introduction of the Decoy effect
19
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Percentage
Basic Subscription
Premium Subscription
20. After the introduction of the Decoy effect 20
0%
10%
20%
30%
40%
50%
60%
70%
80%
Percentage
Basic
Premium
Decoy
22. A decoy effect is a powerful tool in driving consumer
decisions.
Consumers are deciding between options, rather than looking
at the relative value of each.
The price value isn’t the product value instead how humans
retaliate against the price makes the product value.
22
What we conclude
