Offer a Similar (Yet Worse) Product

Should you offer a decoy product?

Consider these subscriptions to The Economist magazine:

• $59 — Digital
• $125 — Print
• $125 — Print and Digital

At first glance, they seem wrong. Print only has the same price as Print and Digital.

But alas, print only is a decoy option.

Nobody chooses this subscription, but it boosts demand for the more expensive Print and Digital subscription (Ariely, 2008).

Why It Works

Adjacent options are comparison points (Rooderkerk et al., 2011).

• Compromise Effects. Customers prefer the middle of two extremes.
• Attraction Effects. Customers prefer similar, yet superior options.

Adjust your assortment to trigger these effects.

How to Apply

• Show Inferior Options. A real estate agent could help their client see the value of a $700k home by showing a $600k home that needs a lot of repairs.
• Add Decoys to Middle Tiers. Consider a $700 and $1k smartphone. Add a $900 phone that resembles the $700 model so that you enhance both models ($700 and $1k).

• Ariely, D., & Jones, S. (2008). Predictably irrational. New York: HarperCollins.
• Rooderkerk, R. P., Van Heerde, H. J., & Bijmolt, T. H. (2011). Incorporating context effects into a choice model. Journal of Marketing Research, 48(4), 767-780.