Many of you may have a Sales and Marketing Background I hope you will find the article below interesting.
The Decoy Effect in marketing (superb)
Why does Apple always come up with three versions of iPhone?
Let’s understand this by an example.
Let’s say you are an ice-cream lover. You find great value in eating ice-cream.
One fine day, you are out to treat yourself. Shopkeeper provides you below options:
One Scoop Ice Cream: 13 bucks
Two Scoop Ice Cream: 19 bucks
Three Scoop Ice Cream: 19.5 bucks
The negligible difference between the prices of 2nd and 3rd options gets your attention.
This is called Decoy Effect.
A 2nd option is just a Decoy option. Companies provide decoy option so that customer can compare Decoy option with an expensive option (and select the expensive one).
In the absence of a decoy option, the customer will compare: 13 bucks vs 19.5 bucks – and may probably go with a cheaper option.
But with decoy option, the customer now compares 19 bucks vs 19.5 bucks – and most likely selects the expensive option.
Can you see a similar pattern in the pricing of iphone11 by Apple?
iPhone: $ 699
iPhone Pro: $ 999
iPhone Pro max: $ 1099
Yes, Apple does use Decoy effect to drive consumer to buy the expensive version of their product. Not only they are making quality products, but also they are not leaving any stone unturned when it comes to marketing and selling their products.
Explained very well in Dan Ariely’s book “Predictably Irrational”.
Tehelka Bureau adds: The book also explains why do our headaches persist after we take a one-cent aspirin but disappear when we take a fifty-cent aspirin? Why do we splurge on a lavish meal but cut coupons to save twenty-five cents on a can of soup?
When it comes to making decisions in our lives, we think we’re making smart, rational choices. But are we?
In this newly revised and expanded edition of the groundbreaking New York Times bestseller, Dan Ariely refutes the common assumption that we behave in fundamentally rational ways.
From drinking coffee to losing weight, from buying a car to choosing a romantic partner, we consistently overpay, underestimate, and procrastinate.
Most of the time, we’re deeply irrational. Yet these misguided behaviors are neither random nor senseless.
They’re systematic and predictable — making us predictably irrational.
There are predictable patterns in our behavior.