Pricing of the fries is pretty confusing at McDonalds. Regular fries will cost you Rs 70, a medium one will cost you Rs 110, and a large one will take away Rs 120 from your pocket.
But wait, why are we discussing the menu of a food chain business?
I will come to that, but imagine that you are in McDonald’s and the annoying cashiers ask you which fries you want: small, medium, or large.
The regular fries are not a bad choice because they’re a pocket-friendly choice and the quantity is less. However, after increasing the price by more than 50%, you only get some more fries on your plate. The large fries come to the rescue, and for just $10 more, we get a large packet of fries.Although I am not a mind reader, I doubt you will order medium fries for Rs. 110/-.So what’s the point of keeping the medium fries on the menu? Well, medium fries are really important for McDonald’s.The medium fries act as a decoy for the large fries, and this is the decoy effect. The decoy effect states that a consumer is likely to change their preference between two products when presented with a third option. The company does not want to sell the decoy, but they want to make the other product a happy deal, like the large fries in this case.This can also be seen at Starbucks, Ikea, or while eating popcorn in cinema halls. Ikea is a magic Swedish furniture brand that uses this strategy like a boss. For example, for cabinets, they have three options: a small cabinet with a small space and ordinary material at $40; a large cabinet with a large space and premium material and a complementary storage compartment at $65; and a product as large as the previous one but with not much storage and no premium material and no complementary storage compartment at $60.
In the example above, the product at $60 is the decoy, and both products are high-value products for different market segments.rnrnrnrnrnrnrnSo when are you applying the decoy effect in your business to grow? Comment below.
