Using Psychology to Guide Customer Choices

giftbasketdecoyHave you ever had trouble trying to decide between two different products?   Your customers may be having the same problem.  Using a bit of psychology can help them make up their mind.

Researchers at the University of Minnesota have used brain scans to prove that adding another product, that is very similar but less attractive and priced about the same, will increase the orders for the more attractive of the three products.  A choice between three products seems to increase sales figures more than a choice between two products.  The less appealing product works as a “decoy” makes the choice easier.

In a Journal of Marketing Research article “Trade-off Aversion as an Explanation for the Attraction Effect: A functional Magnetic Resonance Imaging Study,” Rao (University of Minesota) and co-author William Hedgcock (University of Iowa) explain the reasons for this decoy effect. Volunteers had their brains scanned while they made choices between several sets of equally appealing options as well as choice sets that included a third, somewhat less attractive option. Overall, the presence of the extra, “just okay” possibility systematically increased preference for the better options. The fMRI scans showed that when making a choice between only two, equally preferred options; subjects tended to display irritation because of the difficulty of the choice process. The presence of the third option made the choice process easier and relatively more pleasurable.

How can we use this information in our sales and marketing?

If you have a retail store and want to increase sales for a particular product, you can always offer the product “as is”, offer it beautifully wrapped, and perhaps offer it wrapped along with an add-on.  For example, you have a tea cup.  Display the tea cup alone.   Add a few teabags and wrap in cello with a beautiful bow as a second choice.  Then add tea cookies to the mix for a little higher price.

You can use the same techniques with product offerings on your website as well.

How have you used decoys to increase sales of a higher priced product or gift basket?  If you are receiving this post via email, you can click on the title and go directly to our blog to share your comments.

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