fbpx
Get In Touch
Suite 805, 220 Collins St, Melbourne VIC 3000
[email protected]
Ph: 1300 097 925
Work Inquiries
[email protected]
Ph: 1300 097 925

3 Psychological Laws of Performance Marketing

Anchoring Bias

Anchoring bias occurs when people rely too much on pre-existing information or the first information they find when making decisions. For example, if you first see a T-shirt that costs $1,200 – then see a second one that costs $100 – you’re prone to see the second shirt as cheap. Whereas, if you’d merely seen the second shirt, priced at $100, you’d probably not view it as cheap. The anchor – the first price that you saw – unduly influenced your opinion.

This initial information affects subsequent judgements and achoring often works even when the nature of the anchor doesn’t have any relation with the decision at hand. It’s useful tool to increasing percieved value.

Tinder’s pricing table shows the most expensive subscription first (the anchor) so that the other plans look inexpensive in comparison. They’ve included social proof with the ‘most popular’ tag in the most expensive option and removed the buy barrier from the button replacing with the more innocent “continue”.

Hicks Law

Hick’s law is a psychological principle which states that the more options are available to a person, the longer it will take for him or her to make a decision about which option is best.

When presenting options on a landing page try not to offer too many by reducing the number of options or finding ways to hide specific items. Always consider, do these things need to be displayed at once?

If you can’t minimise options, try putting them in a skimmable order and make sure the items are familiar.

Hicks Law – Man trying to make decision on what drink to purchase

Decoy Effect

In marketing, the decoy effect (or attraction effect or asymmetric dominance effect) is the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated.

An option is asymmetrically dominated when it is inferior in all respects to one option; but, in comparison to the other option, it is inferior in some respects and superior in others. In other words, in terms of specific attributes determining preferences, it is completely dominated by (i.e., inferior to) one option and only partially dominated by the other. When the asymmetrically dominated option is present, a higher percentage of consumers will prefer the dominating option than when the asymmetrically dominated option is absent.

The asymmetrically dominated option is therefore a decoy serving to increase preference for the dominating option. The decoy effect is also an example of the violation of the independence of irrelevant alternatives axiom of decision theory. More simply, when deciding between two options, an unattractive third option can change the perceived preference between the other two.

Essentially, you create a “no brainer” option like the extra large popcorn for 50c when you’ve already upsold them from $3 to $6.50… because who doesn’t want more popcorn? freaks.

The decoy effect
Author avatar
Mark L