How ‘decoy pricing tactics’ are costing you

Consumers are being warned to watch out for so called ‘decoy pricing’ tactics that could see them paying more than they need to at supermarkets, pharmacies and cafés.

The tactic encourages shoppers to change their preference between two options when a third option – known as the decoy – is presented.

“This is a very clever tactic to get you to buy the larger option,” retail expert Assoc. Prof. Gary Mortimer of QUT Business School told Canstar Blue. “Imaging you are standing in a café about to order a coffee. You have two options, a Small size at $4.00, or a Large at $6.00. Like most people, you will probably pick the cheapest option. Now, imagine another option is added – a medium at $5.50. Suddenly, the large seems to be better value – it’s only another 50 cents more than the medium.

“Why would anyone buy a medium coffee, when for 50 cents more you can have a large? You have just experienced the Decoy Effect.

“Take a look around your local supermarket, pharmacy, café, smartphone manufacturer, even newspaper subscription service and you’ll start to notice ‘decoys’ popping up everywhere.

“When it comes to the psychology of pricing, it’s certainly messing with people’s heads.”

As highlighted by Nine News, the larger – and more expensive – options are made to look better value by the decoy middle product.

Decoy pricing in action

Nine News used common products sold at pharmacies to highlight the issue.

A small 31-tablet pack of Blackmores Vitamin C costs $9.49, with the 62-tablet pack costing $16.49. But shoppers only have to pay an additional $3.50 to purchase the 150-tablet pack, making the 62-pack a decoy.

“Shoppers are being encouraged to buy bigger products when in fact they probably don’t need to buy a bigger product,” added Assoc. Prof. Mortimer.

“The sole purpose of a decoy is to make an alternative product (the target) more attractive to a consumer. Simply, the ‘decoy’ is never chosen because it is ‘dominated’ by the other options on price, quality, convenience and so on – but it makes one of those options, generally the most expensive, seem more attractive.”

Shoppers are being urged to be more aware of the pricing strategy the next time they hit the shops.

“What they’re doing is they’re creating a perception shift in your mind that allows you to perceive extra value,” Behavioural Strategist Dan Gregory told Nine News.

“So, they’re not forcing your behaviour, but they are certainly influencing it.”

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