Have you ever wondered why you bought that new brand of potato chip? Or why, when you were given a coupon for a new brand of jam, you bought it? So, I am not claiming to know one’s buying habits, but I’ll let you decide.
In general, we tend to focus on comparing things that are easily comparable-and avoid comparing things that cannot be compared easily (Ariely 2008). This idea that people, and more specifically, consumers, make choices based upon being presented with easy comparisons can have a profound effect on the pattern of consumption.
So, what is the theory behind this idea of comparisons? It is somewhat simple. We don’t have an internal value meter that tells us how much things are worth, but we can determine, for instance, that a six-cylinder engine is more expensive than a four-cylinder engine. Why? Dan Ariely (2008) found that we focus on the relative advantage of one thing over another, and estimate value accordingly. Thus, it is our sense of relating one thing to another that facilitates the framing process, and if the framing is set up in a particular way, the pattern of consumption can be manipulated.
If products are framed in a particular way, one can better evaluate the likelihood of a product being purchased. One, the presence of a ‘decoy product’ has the ability to sway one’s choice towards a particular product. For example, Ariely (2008) conducted the following experiment as it pertains to the decoy.
He came across a subscription for the Economist which gave the following information: 1.) Purchase the online only subscription for $59; 2.) Purchase the print version for $125; and 3.) Purchase the online plus the print version for $125.
He gave these options to his students and an overwhelming majority chose the print and online version, option three. He conducted a second experiment in which he left out the decoy, that is, the print only version for $125, and the results indicated that fewer people chose the online and the print version and the majority chose the online only subscription. Thus, it appears the presence of a decoy may have a profound effect on consumers’ choices-without them even knowing it!
Further research conducted by Ariely (2008) presents the idea that relativity is the main factor for one’s behavior, and in our case, consumer behavior. His research showed that strategic products or decoy products may cause one’s choice to be radically skewed-or predictably skewed.
Second, by presenting products in a smaller sample, the likelihood of purchase increases. Sheena Iyengar (2010) expanded on this idea of relativity that Ariely presented and found that smaller selections of products caused consumers to purchase products more often than one’s faced with larger selections.
Say, if one were presented with a coupon for jams and the interested individual approaches twenty-eight different jams, what’s the likelihood this individual will actually make the purchase?
Take the same scenario and present the individual with only six jams to choose from. Which is the ideal scenario for someone to actually make a purchase?
Iyengar (2010) conducted this very experiment and found that consumers purchased the jam 30 percent of the time when faced with only six jams to a mere 6 percent when faced with twenty-eight different jams. If the variety of selection is limited, it creates an easier choosing process (Iyengar 2010). Thus, too much variety may be overwhelming and thus cause the consumer to not purchase at all.
So, keep this in mind if you are trying to sell a product or if you are the buyer, think about what may be going on behind the scenes.