Want to increase high-end sales? Add low-quality decoys

New research on consumer behavior shows how the ‘upscaling effect’ can increase sales of high-end goods. All it takes is to offer low-quality decoy products at the price of superior options.

Ioannis Evangelidis

In The Upscaling Effect: How the Decision Context Influences Tradeoffs between Desirability and Feasibility, published in the Journal of Consumer Research, Ioannis Evangelidis (Associate Professor of Marketing at Esade), Jonathan Levav (King Philanthropies Professor of Marketing at the Graduate School of Business, Stanford University) and Itamar Simonson (Sebastian S. Kresge Professor of Marketing, Emeritus at the Graduate School of Business, Stanford University) conducted 19 studies to explore how offering an inferior option affected sales of desirable alternatives.  

By offering a clearly inferior choice at a price comparable with a high-end model – such as a home printer that prints fewer pages with a lower image quality than its similarly priced counterpart – consumer preferences shift towards the high desirability alternative, rather than a cheaper model. 

The findings provide important insight for managers who are seeking ways to enhance sales of high-end products, and also for consumers who may be inadvertently drawn into buying certain products. 

The quality v price trade-off

When faced with the choice between desirability (quality) and feasibility (price), consumers often look for reasons to justify selecting the superior option. These purchasing decisions involve trade-offs: will spending more result in a better product, thus enhancing savings over time? Or will saving more in the short-term result in a risk that pays off? 

When faced with a choice between quality and price, consumers often look for reasons to justify choosing the superior option

This trade-off has been explored extensively in consumer research, which has shown that introducing a significantly higher-priced alternative increases sales of a ‘compromise’ option – one which is neither the lowest nor the highest price. But the research from Esade’s Evangelidis and co-authors introduces a new element into the decision-making process: when an alternative is offered that is inferior to all others, consumers will justify prioritizing the high-end option

The upscaling effect
Introducing an inferior decoy option (C) to a binary set that consists of an highly-feasible option (A) and a highly-desirable option (B) increases the choice share of the latter.

The study, say its authors, suggests that offering a decoy product that is high in price and low in quality alongside the high price, high quality option prompts consumers to choose the high desirability product. 

Deploy the decoy

The team came to their conclusions after a thorough scientific process involving seven experimental and 12 supplemental studies, with much of the research carried out by experts at Esade’s Decision Lab.  

Upscaling effects were examined in the first study using five products: backpacks, Bluetooth speakers, external hard drives, hotels and TVs. The quality of each product was defined by ratings that participants were told had been given by previous customers (e.g., review ratings) or were objective metrics of quality (e.g., capacity of a hard drive). 

Participants were split into two groups. The first was offered two product choices: one high-quality high-price (highly desirable, or HD) option and one low-quality low-price (highly feasible, or HF) alternative. The second group was also offered a third option — a decoy that offered low quality at a high price.  

This decoy option was intentionally designed to be neither desirable nor feasible. One product tested by the research team was a hard drive. A 1TB hard drive was offered at $40 (the HF option) and 2TB hard drive offered at $80 (the HD option). Generally, in the decision-making process, consumers would be expected to first identify the HD option.  

The decoy for the upscaling effect is intentionally designed to be neither desirable (low quality) nor feasible (too expensive)

The second stage of the process would then be to seek justification for their choice. At this point, they may struggle to justify the additional expenditure and choose the HF option, as the study confirmed. However, the group offered the decoy option acted differently. 

The decoy hard drive used in the study was a 1TB option priced at $80: half the capacity of the HD option, double the price of the HF option. Compared to each alternative, this product was neither desirable nor feasible. 

Participants offered this third ‘decoy’ option were significantly more likely to choose the HD option. Additional studies testing the results in different environments, including changing the product category, the brands on offer and the way in which the options were presented confirmed the findings.  

Justifying choices

A series of additional experiments assessed a wide range of decision-making environments to bolster the evidence obtained by the first study. Each showed that consumers were more likely to talk themselves into buying the HD option than choosing the HF alternative when offered the third ‘decoy’ option. 

However, one study (Study 4) revealed that, when consumers were asked to justify and provide reasons for their choices before choosing (vs. after), the upscaling effect was eliminated. The effect was also eliminated when the price of the HD option was only slightly higher than the HF option. 

Introducing a clearly inferior option also increased the overall likelihood of a sale

Study 6 demonstrated that the upscaling effect was increased when the HD option was positioned next to the decoy, and Study 7 showed a similar increase when alternative options were presented together.  

The implications of the upscaling effect are particularly important, say the researchers, because they can boost sales of high-price products — as long as managers bear in mind the important moderating factors. Additionally, consumers who are self-aware of this phenomenon will be able to make more informed purchasing decisions. 

Retail value

The lessons for retailers, say the researchers, are straightforward: introducing an inferior decoy option prompts customers to choose a higher-quality, higher-priced alternative. A further — and surprising — result of the study was the revelation that introducing the clearly inferior option increased the overall likelihood of a sale.  

When the inferior products are placed next to high-end alternatives, the sales boost is even stronger. In a live retail environment, the different products would be displayed side-by-side. Online, the products would be shown on the same page.  

The framework identified by the researchers suggests that consumers will identify their preferred (high-quality) option and then seek evidence to support their choice. When the inferior option is introduced, it serves to support the consumer’s decision and justify the more expensive purchase. 

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