Decoy Pricing
- Decoy pricing is a form of deception where customers are forced to make certain choices when making decisions. Sellers introduce at least three products that sell for different prices and vary in their attributes (Mortimer, 2019). The decoy can be a product of low cost but low quality or a high priced product with more top quality. Therefore, customers are left in a paradox of which choice to make. Most of them will choose the medium product and leave out the low-quality one and the high priced product. For instance, a seller might have one blender at $50 with 50 watts and another one selling at $100 with 100 watts. However, the seller might introduce a decoy blender selling at $75 with 80 watts. A buyer might end up buying the medium product to avoid spending more $25 and still have a blender with high watts.
- When I was buying a laptop, I think the seller applied decoy pricing, which influenced my decision. I wanted a Hp Core i5 that was going for $375, with RAM of 6GB and a memory capacity of 700GB. However, the seller introduced other two laptops. One was going for $500 and another for $400 with more quality features than Hp Core i5. I ended up buying Hp Core i7 that was trading for $400.
References
Mortimer, G. (2019). The decoy effect is making you spend more money without realizing it. https://finance.yahoo.com/news/decoy-effect-making-spend-more-161747709.html