The Decoy Price Strategy is presenting in an advertisement three
options, and two are the same price; however, one of the two similarly priced
products is inferior. The product that is inferior and has an equal price is
the decoy. Dan Ariely, a behavioral economist, did a study on an advertisement
by the economist newspaper. They offered selling subscriptions for its online
website for fifty-nine dollars; however, the other two options were 125 dollars
for both online article access and the printed newspaper, or the printed newspaper
alone. Dan found in his sample survey that sixteen percent would choose the
online subscription, and the rest would choose the online and printed
subscription. The decoy can be seen as the printed newspaper, since no one chose
that option. Dan did the survey a second time without the decoy, finding that
the online subscription would be prefered sixty-eight percent of the time. The
decoy pricing strategy is clearly more profitable because the majority chose
the more costly subscription price. The third option lets people ponder a more
informed decision; however, the effect can be skewed to the hope of the
corporation. I am pondering, showing the Apple website and their prices of the
iPhone in our in class presentation. They showed three products, and I am
surprised that they do not display the iPhone 5 with the iPhone 5s and 5c.
Apple chose to show the iPhone 4s instead of the iPhone. There were many
options for the comparison of the three products, but the pricing tells us what
offer is the decoy, and what product that they are trying to sell. The two
products that were the same price hinted me at that. The simplest option for
the 5s had only 16 gigabytes of memory and a price of 199 dollars. I could tell
that the 32G iPhone 5c is the decoy because it cost the same, and it looked a
lot worse than the 5s. Appearance is important to the decoy pricing strategy. I
was also surprised that they had a buy now button that did not indicate any
specific one of the three, which can reveal the product that they plan to sell
the most, and my suspicion was right. The 16G iPhone 5s was displayed first on
the buy now link. This is one of many pricing strategies.
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