Monday, October 29, 2007

Product decoy

Really interesting class last week in the interesting subject of Consumer and Buyer Behaviour.
The first topic we talked about in class was “decision framing”, this is the way in which you phrase or frame the options in front of a consumer, option one these crisps have only 30% fat, or these crisps are 70% fat free, people will tend to go for something that is X amount fat free rather than thinking how much fat they are eating.

The most interesting part of the class was about decoys.
Some schools of marketing thought would say that when positioning a product/service the optimal practice is to choose a specific and distinct segment to aim for and accompany it with a suitable pricing strategy. An example of this can be observed in the example of the strategy of Ryanair as opposed to that employed by Singapore Airlines, they are opposite ends of the scale and therefore do not engage in the wars seen in the middle ground of most markets.

This week one of our lecturers discussed the idea of a product decoy, a strategy which can be used by manufacturers and retailers to use operating in the middle ground to their advantage. He gave us the example of a bike shop that sold two models of bike one for $99 and one for $199 he asked for a show of hands of which option we would choose assuming we would only need this for a short journey to and from college, and not for any specialist reasons the majority of the class said they would purchase the $99 option.

He had asked a similar question in the exact same class he gives at another time slot during the week, but this time asked the class which they would choose if there were three options, one for $99, one for $199, but this time a more expensive option at $399, now which would people choose?
This time the majority of people said they would choose the option for $199.

An example of this that I have thought about before is restaurants and their wine menu, they always have the cheap option, a middle option, and then the astronomically priced option. Nobody wants to buy the very cheapest wine because it will make them look cheap, nobody can really afford the crazy priced wine, so they have to go for the middle options. Interesting stuff

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