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I've been thinking about the placement of decoy products. For example, let's say you have a menu with

  • A. an egg and cheese sandwich for $5.00 (the decoy option)
  • B. an egg, cheese, avocado, tomato, and bacon sandwich for $5.50 (the main option)

Option A would serve as a decoy because you don't expect anyone to buy it, but it makes the other option look much more reasonably priced. The two options have to be placed close to each other for the decoy to serve its purpose.

My question is: Should decoys be placed before or after the products they're intended to sell?

My instinct says that the decoy should be placed first.
Placed first, the decoy serves as an anchor, locking the user into an idea of what a reasonable price is. However, if the first thing the user sees is the clearly over-priced option A, they may develop a bias against the prices of the site or even leave the site because it looks too overpriced at their first impression.

Alternatively, the decoy could be placed second.
Placed second, the main option (B) grabs the user's attention, with an interesting product and a somewhat reasonable price. Because the user encounters it first, I think they would be more likely to buy it instead of other options (although I haven't found any studies yet to support this assumption). In this positioning, once the user sees the decoy, they realize that the first option is a "deal" and return to it.

Does anyone know of any studies that would suggest whether the decoy should be placed first or second?

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Interesting question but seems more about marketing/psychology than UX in particular. –  DA01 Dec 28 '12 at 21:16
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@DA01 I don't think you can say "UX in particular" when marketing and psychology are subfields within UX. The way I see it, UX is a field which encompasses reasonable amounts knowledge from a couple dozen disciplines, including graphic design, usability, marketing, communications, psychology, UI, branding, sociology, formal testing, business, and HCI. How can we understand how users will experience our sites without trying to understand as much about their psychology as possible? –  3nafish Dec 28 '12 at 23:59
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I find marketing often at odds with UX, not a subset of. ;) –  DA01 Dec 29 '12 at 0:20
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I actually agree with you, though the term 'service design' is beginning to be used more often for that all-encompassing idea. –  DA01 Dec 29 '12 at 0:20
    
Have you considered printing two versions of the menu and A/B testing? –  Nick Dec 30 '12 at 0:54

2 Answers 2

up vote 2 down vote accepted

I think this article which I read just a few days ago would be very interesting to you. It's a case study of price structuring for an eBook, but he also gives the example of Beer. The author talks about how he tries to steer users to a certain price point ("anchoring") by offering the product in three different options.

http://thinktraffic.net/most-common-pricing-mistake

The specific question of whether to put the item first or second is hard to call and I would recommend some Case A/Case B user testing to trial it out. Based on the article I have linked you to, a good method seems to be to provide three options, causing most people to default to the mid-priced item. It's important in this case to show the clear advantages of both the mid and high priced items.

As I said it's hard to give a definitive answer saying put Product A first, I think the best method is testing both versions and logging results. If you are effectively showing one product on a webpage in different options like the eBook example (i.e with added extras), then it makes sense to display the options in price order.

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I think you should placed the real one before the decoy, and I based my answer on the chances of making the sell.

If you place the decoy first, the chances of making a sell is limited to situations where the customers will actually keep looking down the menu. So you are taking a big risk here depend on if the customer will keep looking down the menu. But from those customers who actually looked at the entire menu, within this group, the chances of selling to them is high, but again WITHIN this group.

But if you place the real one first, since the price is reasonable, you might get the sell without the "big difference" effect. And if the customer took the time to keep looking, it will increase the chance of your sell because of the "big difference" effect. So the only reason why you would lose a sell in this situation is that the price is not a reasonable one for the customer, and I think that's a low possibility right?

So in order to make a scientific decision, you need to know the following parameters:

  • R = customers think the real one's price is Reasonable
  • RB = customers think the real one's price is Reasonable because of the "Big difference"
  • M = customers finish viewing the entire Menu
  • D = customers think the decoy's price is reasonable

then use them on these probability functions:

  • p(sell with decoy first) = p(D) | p(M') + p(RB) | p(M)
  • p(sell with real one first) = p(R) | p(M') + p(RB) | p(M)

given that p(a) | p(b) = p(a) X p(b) / p(b)

And then choose the decision with the highest probability.

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