Three is the magic number

Ever found it hard to choose between two items? Well, research shows that adding a third can make your decision a little easier.

It’s well known that humans aren’t rational when it comes to making purchases. The economic rules that are supposed to predict our consumer behaviour often fall foul because they don’t take into account the idiosyncrasies that make us human.

Rational decisions abide by certain rules, one being the Regulatory Hypothesis – existing options can only decrease in preference when a third  is added, because the third takes up choices too.

But don’t forget, we’re not very rational. What sometimes happens is that when a third option is added, people start choosing one of the original two options more.

Let’s imagine Bob the shopkeeper.

At the moment Bob is selling two different brands of ice‐cream. One brand is a lemon flavour, good quality but expensive. The other brand is an orange flavour that is not as good quality but cheaper. Sales of each brand are more or less the same.

When Bob introduces another brand, a strawberry flavour, people start choosing lemon more.

But why does this happen?

It’s because of how Bob has positioned the strawberry ice‐cream relative to the other two options. For strawberry to increase sales of lemon, it has to be perceived in the following way in terms of price and quality:

  • Strawberry is both worse quality and more expensive than lemon
  • Strawberry is better quality, but more expensive than orange

For the strawberry ice­‐cream to increase shares to lemon it has to sit in the shaded box on the graph.

Preference graph

Note: The people choosing have no preference on flavour and are judging the ice­‐creams solely on quality and price

So because lemon is better than strawberry in terms of both quality and price, whereas orange is only better in terms of price (we like things to be cheap), lemon is perceived as being the best option and is chosen more.

This increase in preference for lemon is called the Attraction Effect and its influence on behaviour has ranged from the purchase of batteries and orange juice to even judging gymnastic competitors. It throws up some interesting opportunities in terms of advertising, depending where and how you are perceived compared with your major competitors.

Who knows how influencing campaigns could be if they could harness and use a little bit of this theory?

Reference

Doyle, J. R., O’Connor, D. J., Reynolds, G. M. and Bottomley, P. A. (1999), The robustness of the asymmetrically dominated effect: Buying frames, phantom alternatives, and in-­‐store purchases. Psychol. Mark., 16: 225–243.

doi: 10.1002/(SICI)1520-­‐6793(199905)16:3<225::AID-­‐MAR3>3.0.CO;2-­‐X

 

Advertisements