Are you a trader and want to sell quickly? You want your products to reach a large number of customers? Using the decoy effect is considered one of the subtle “catch” tricks of the sellers. So what is this effect? How to apply in business? Read the following article to find out the details.

The decoy effect and strategies to increase revenue in business

 What is the decoy effect?

The decoy effect is also known in English as the Decoy Effect. Many people refer to this as the asymmetric advantage effect in business. This effect is universally applied in the pricing of all commodities.

When using the above brand, the seller will entice customers by offering “prey” for customers to choose products according to their needs. Especially, after buying, customers are still happy and excited because they think they can buy it cheaply.

When customers have two choices, often they will pay attention to the product with a lower price. This situation makes it difficult for businesses to sell higher priced items.

However, if the seller includes a third product with a similar price, customers will pay more attention to the high-priced product. Therefore, businesses need to offer a 3rd “decoy” product to attract customers.

The psychological nature behind the decoy effect

Through studies on human psychological nature, the decoy effect is highly appreciated in business. Once applied, surely many customers have it.

Effect is applied due to psychology or comparison
Effect applied by psychology or comparison

When making a purchase, our decisions are often influenced by factors: Packaging information, comparisons and the nature of irrational thinking. Understanding this mentality, businesses have launched “birds of prey” to appear.

Think about it, when standing in front of products with 10% off, 50% off, buy two get one free, buy one get one free,… All discounts are meant to attract customers.

Because of the psychological nature of buyers, they always like good products with cheap prices. In fact, sellers can have many ways to reduce prices to attract customers and still make a profit.

How is the decoy effect applied in business?

The decoy effect used in business from low to high items is very effective. However, to understand how this effect plays out in business, let’s explore the following.

How is the effect applied in business?
How is the effect applied in business?

Customer comfort strategy

When buying, if there is only one choice, it will be difficult for customers to buy. Therefore, in order to give customers the freedom to choose, businesses have offered many options with different prices.

At this point, customers are free to choose products according to their own desires. Although, your decision may cost more. But customer psychology still feels that they have bought a good price.

In fact, a supermarket offers a box of 16 packs of instant noodles for 100,000 VND to “prey” for a box of 20 packs of 120,000 VND.

At this time, many people will choose a box of 20 packs of noodles because they think buying a big box is much cheaper. However, customers will not realize that a box of 16 packs of noodles is a “bird of prey” for businesses to sell a box of 20 packs.

Strategy for adding a 3rd option 

A typical tactic of this effect is to add a third option. The business will offer another option for the customer to choose, but this item will be less attractive than the previous two products. The goal is to direct customers to the product that generates more revenue.

Decoy bird illustration
Decoys illustration

For example:

  • A small glass of water for 1 dollar
  • A medium-sized water cup for $4
  • Large water cup + 5 dollar ice cream cone.

After thinking about it, customers will probably find a medium-sized cup that costs 4 dollars to be too expensive. Most people would love the large cup for just $5 with an extra ice cream cone.

Results obtained after one day of testing:

  • Small water cup for 1 dollar (13 people)
  • Medium water cup for 4 dollars (1 person)
  • Biggest water cup + 5 dollar ice cream (56 people)
  • Sales result that day: $297.

The next day, they try to sell with two options:

  • Small water cup for 1 dollar (27 people)
  • Large water cup + 5 dollar ice cream (43 people)
  • Revenue: $242.

This shows that, if the 3rd option is less attractive, the customer will change the choice. Since then, the store’s revenue has also increased dramatically.

The 100 Rule Strategy

The law of 100 in this business effect is explained as follows:

  • For items priced under 100,000 VND: List the discount amount for the product as a %, can be 5%, 10%,… depending on the business career.
  • For items with a selling price of 100,000 VND or more: List the discount amount for the product in the actual amount.

For a better understanding, read the following example:

A pair of pants costs 90,000 VND, if you reduce 30%, it will feel more like a decrease of 27,000 VND. Despite the fact the discount amount is the same.

Products of great value should directly list the discount amount
Products of great value should directly list the discount amount

A computer costs 12,000,000 VND, if you say 1,200,000 VND reduction, customers will find it better than 10% off even though the amount of reduction is not different.

Specific example of decoy effect

This effect is specifically applied by businesses as follows:
A spa offers 3 beauty care packages:

  • Package 1: Eyebrow spray for 1,000,000 VND
  • Package 2: Lip tattoo cost 2,000,000 VND
  • Package 3: Eyebrow spray + Lip tattoo cost 2,200,000 VND

When offering the above 3 service angles, the spa applied package 2 to be a decoy for package 3. Because of the price, package 2 is considered expensive, and combo number 3 is considered too cheap.

If the spa applies this secret, many customers who only need lip tattoo will wonder if they should do it again? Because if you choose combo number 3, the price will be 800,000 VND cheaper. And certainly, the number of customers choosing to choose service package number 3 will be more.

What’s so special about the decoy effect book?

If you want to pocket the secrets of successful business quickly, you cannot ignore this book. The book series consists of 3 books, the content given is effective marketing experiences based on psychology.

Set of 3
Set of 3 “birds of prey”

All the tips in the series are built on a long period of research. The researchers have applied it practically and successfully.

Books 1 and 2 of the series focus on understanding the psychological effects of customers for sellers to “trap”. The third book is knowledge to help sellers apply the effects to increase sales quickly.

Should I read the whole book of decoy effects?

After reading a rough introduction to the 3 books of this effect. Many people only choose book number 3 to apply the effects in business.

However, experts say that for long-term success, sellers should read from book 1 and book 2. Because these are two books about psychology, once you understand the buyer’s wishes, the business will easy response.

Study the whole book for comprehensive marketing skills
Study the whole book series for comprehensive marketing skills

If you only read book number 3, you will not understand the nature of each effect. Since then, the ability to combine effects together is still awkward. So, if you want to get to the key to quick and lasting success, then study these 3 effects books in full.

Comment the effectiveness of the decoy effect

When applying the decoy effect, the seller is sure to always get a larger amount of money than the normal sales policy. Because this effect “leads” customers to products of higher material value. As a result, the daily profit will double.

However, not all businesses are successful when applying this effect. Because to use decoys, the items need to have the same quality and design, and the price is different.

For example: If the bird of prey is applied in selling shoes with 3 different models, it will be difficult for customers to compare. At this point, the seller needs to find the similarity that is the same material and design but the price is big difference.

Frequently asked questions about the decoy effect

In business, although many people apply this effect, there are always questions that arise. So let’s solve the questions surrounding the decoy effect.

Answer questions about the decoy effect
Answer questions about the decoy effect

Why is it called a decoy effect?

This effect appears based on a real experiment by experts. They used the decoy to lure other birds. The wild birds, seeing the house birds eating delicious food, did not hesitate to swoop down to eat with them and fall into the trap.

What are the areas where the decoy effect can be applied?

This effect is considered common in the business world because it is so easy to implement. However, the service business and the food and beverage business are applied most effectively.

What does left number effect mean?

The number effect on the left is also considered a form of decoy. Specifically, this effect is explained as follows: If the left digit has the largest difference, the customer will make the decision without paying attention to the following numbers.

Is it easy for customers to detect that you’re using “tricks”?

Businesses are using effects to entice customers to buy their products. However, in terms of benefits, customers do not lose, sellers only direct customers to buy products of higher value.

Therefore, many customers know what the seller is intending, but they still choose to “trap”.

Above is all information about the decoy effect and strategies to increase sales in business. With outstanding strengths, this effect will always be evaluated as a “guideline” in marketing. Please read the content of the article carefully to apply the most flexible effect to your business field.