What is it
Choices are often made relative to what is on offer rather than based on absolute preferences. Consumers’ preference for one option over another can change when a third, similar but less desirable, option is presented. This explains the ‘the Economist’ ad which featured three subscription levels: $59 for online only, $159 for print only, and $159 for online + print. The only function of introducing the middle option to pay $159 for print only was to make the expensive option to pay $159 for online + print look more enticing than it would if it was just paired with the first $59 option, and it succeeded with an overwhelming increase in uptake of the combined offer.
How can I use it in my favour
A retailer had introduced a home “bread bakery” machine into their stores for $275. But consumers weren’t interested. Instead of yanking the bread maker, the retailer changed how it was presented. They added a larger model of the bread maker priced about 50% higher. Suddenly, the $275 version began to fly off the shelves. Given two breadmaker models to choose from, people saw the smaller one for less money as the better deal.
The Decoy option can be used to attract your target audience to the buying option you most want them to take.