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Decoy Effect

5th October 2022

Decoy Effect, also known as the asymmetric dominance effect, is a strategy businesses use to attract customers to choose their most premium product. But here, the twist is, it’s more of a business-centric strategy, where it is planned to improve profits to their business by selling their similar products via price trap.

Businesses make their pricing strategies, so customers are given various options to choose with different prices. A product becomes more premium as more value is added (value is a perceived notion by customers in terms of amount, quality, or services). The pricing gaps keep decreasing with the rise in added values or as the premium-ness of products keeps expanding.

This strategy is made to play with the psychology of the customers, where a customer would believe that less price means lower product standards, and then he plans to purchase the following premium product. After knowing the slight difference in the price of this premium product and most premium ones, he immediately switches his mind to the best product available.  

A common customer thinking pattern, “If I am spending so much on getting a certain level of premium services, there should be no harm in paying a bit more to get the best one, anyways the difference is not significant.” This way, businesses achieve their targets while improving customer satisfaction levels.

Triambk Bharadwaj
7PM – The Marketing Club

(MBA Batch 2021-2023)

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