Evaluating
Decoy Effect
Customers alter their preferences when presented with a strategically placed, less attractive alternative (decoy), significantly influencing their choices and perceptions toward preferred options.
For Example
Cinemas often use the Decoy Effect in their popcorn pricing strategy. Offering a medium popcorn priced close to a large popcorn makes the large option appear as the obvious best value, significantly driving customer choice toward purchasing the larger, more profitable item.
Similar Biases
Similar biases: Anchoring Effect, Framing Effect, Compromise Effect Opposing biases: Status Quo Bias, Omission Bias, Rational Choice Theory
We tend to remember tasks and goals that are not completed.
The Decoy Effect, also known as the attraction effect, describes the phenomenon where customers' preferences change when a third, intentionally less appealing option (the decoy) is introduced. The decoy isn't meant to be chosen; instead, it enhances the attractiveness of another target option by comparison, significantly influencing customer decision-making. In Customer Experience (CX), brands leverage the Decoy Effect by strategically positioning products or services to highlight the superior value of preferred choices. Effectively using decoys reduces customer uncertainty, simplifies complex decisions, and boosts satisfaction by clearly presenting perceived value. However, brands must use this effect ethically, ensuring transparency and avoiding manipulative practices that may erode customer trust or loyalty.
Original Decoy Experiment (Huber et al., 1982)
Participants were initially presented with two options (A and B), each with distinct advantages. When researchers introduced a third option (decoy), similar to one choice but clearly inferior, the target option became significantly more attractive, shifting customer preferences strongly toward it. Meaning for CX: Brands clearly using decoys strategically significantly enhance perceived value of preferred options, effectively influencing customer decisions, and simplifying complex evaluations.
Popcorn Size Experiment (Ariely, 2008)
Participants choosing between two sizes of popcorn significantly preferred the smaller, cheaper size. However, when researchers added a third, clearly overpriced medium-sized option (decoy), participants overwhelmingly shifted toward the previously less popular larger size. Meaning for CX: Strategically positioning decoy products significantly influences customer perceptions of value, driving them clearly toward preferred, higher-margin options.
Subscription Plans Experiment (Simonson & Tversky, 1992)
Participants initially preferred a basic subscription over a premium plan. After researchers introduced an intermediate "decoy" option priced very close to the premium but offering fewer features, customers significantly shifted their choices toward the premium plan, clearly perceiving better value. Meaning for CX: Brands leveraging strategically placed decoys significantly simplify customer choices, enhance perceived value, and effectively guide customers toward more desirable outcomes.
Clearly Illustrate Preferred Value
Highlight Preferred Options Clearly
Brands effectively using decoys clearly demonstrate the superior value of preferred options early in customer journeys, significantly reducing uncertainty and guiding initial decisions. Mobile providers clearly use decoys by offering a low-value intermediate plan to significantly highlight better-value premium packages, boosting initial interest.
Reinforce Desirable Choices Early
Clearly Communicate Value through Comparison
Clearly introducing decoys at awareness stages significantly emphasizes desirable choices, enhancing initial brand impressions and simplifying customer decisions. Software companies clearly offer “standard” plans with fewer features at similar prices, significantly making premium subscriptions appear clearly valuable and desirable.
Guide Customers Clearly through Complexity
Simplify Decision-Making Clearly
Decoys significantly reduce customer decision anxiety at consideration stages by clearly framing choices to highlight desirable products. Consumer electronics brands like Apple clearly use storage capacity and pricing decoys, significantly simplifying decisions and making higher-priced models appear clearly attractive.
Enhance Product Perception
Clearly Highlight Superior Options
Brands effectively using decoys during exploration significantly enhance perceived value, clearly guiding customers toward superior options. Car dealerships clearly display slightly lower-priced models with fewer desirable features, significantly steering customers clearly toward preferred premium vehicles.
Clearly Demonstrate Superior Value
Reduce Complexity in Evaluations Clearly
Clearly introduced decoys significantly simplify research processes by clearly making preferred products appear superior. Travel agencies clearly offer less appealing vacation packages at slightly lower prices, significantly enhancing the perceived value of premium packages during customer research.
Facilitate Clear Decision-Making
Clearly Enhance Perceived Value
Decoys clearly simplify the selection process, significantly increasing perceived value and guiding customer choices effectively. Subscription services like Netflix clearly introduce decoys (e.g., slightly cheaper options with limited features), significantly simplifying decisions and guiding customers clearly toward higher-value plans.
Reinforce Value at Transaction
Clearly Optimize Customer Decisions
Clearly positioned decoys significantly enhance perceived value at the purchase stage, clearly reducing customer transactional friction and anxiety. Retailers clearly display premium bundles alongside less attractive decoy options, significantly increasing the appeal of desirable product bundles and reducing hesitation at checkout.
Maintain Perceived Satisfaction
Clearly Reinforce Decision Quality
Post-purchase, clearly reminding customers of their selected option’s superiority compared to available decoys significantly maintains long-term satisfaction and reinforces customer confidence in their decisions. Premium membership programs clearly remind members of the value chosen compared to less attractive options, significantly reinforcing sustained satisfaction.
Customer Experience Challenges
Typical challenges in CX where the bias can be used
- Selection: Customers significantly struggle with complex selections without clear reference points. Clearly introducing decoys simplifies decisions significantly, reducing cognitive load and decision anxiety.
- Information: Customers overwhelmed by unclear or poorly structured choices significantly struggle to discern value. Clearly communicated decoys significantly improve perceived clarity, enabling customers to make confident, informed decisions easily.
- Price: Customers significantly struggle evaluating relative value without clear comparisons. Decoys significantly clarify pricing structures, clearly enhancing customers’ perceived value of higher-priced, desirable choices.
Customer Experience Pillars
Renascence CX pillars where it can be applied most efficiently
- Expectations: Clearly communicated decoys significantly align customer expectations toward desirable, superior-value options, ensuring consistent satisfaction and positive emotional responses throughout customer journeys.
- Convenience: Clearly positioned decoys significantly simplify customer decision-making processes, greatly enhancing perceived convenience, ease of selection, and reducing cognitive effort required for evaluating options.
- Integrity: Clearly ethical and transparent use of decoys significantly maintains customer trust, authenticity, and brand integrity. Honest, clear comparisons significantly reinforce long-term positive brand relationships.
Customer Experience Interfaces
Interfaces & touchpoints where it can be applied most efficiently
- Digital: Clearly displaying decoy options on digital platforms (e-commerce sites, subscription services) significantly simplifies decision-making processes, enhancing perceived value, clarity, and overall customer satisfaction.
- Shelf: Clearly positioned decoy products on retail shelves significantly highlight desirable options, reducing customer decision fatigue and effectively driving positive purchasing behaviors.
- Promo: Clearly communicated promotional decoy options significantly influence customer perceptions of value, enhancing positive emotional responses and driving enthusiastic participation.
Renascence Tip
Brands must strategically leverage the Decoy Effect by transparently and ethically positioning clearly inferior alternatives to highlight preferred options. Clearly structured decoys significantly simplify customer decision-making, enhance perceived value, and reduce cognitive overload. Effective implementation involves maintaining clear transparency, ethical communication, and avoiding manipulation, ensuring sustained customer trust, emotional satisfaction, and enthusiastic long-term loyalty.
