20090720

"The Illusion of Choice"

Full disclaimer: Not one of my theories. This was told by one of my professors and I found it interesting enough to share.


If you were provided with the following subscription options for a magazine, what would you choose?

Option 1: Online only - $49.99/year

Option 2: Print only - $69.99/year

Option 3: Print + online - $69.99/year


If your reaction was "wait, why is option 2 present at all? No one in their right mind would choose 'print only' when they could get print AND online for the same price! ", read on.

Option 2 is provided only to give you the illusion of choice. Option 2 makes option 3 "look good".

If you were looking to purchase only the online version (for $49.99), you might be tempted by "what a good deal" the combo is. Think about it again--if you were offered only choices 1 and 3, would you have spent time thinking about option 3? Probably not.

With option 2 being offered, would you give more consideration to option 3 than if option 2 was not offered? I would!

The reality is that the online version doesn't cost them very much, and they can afford to provide this service for "free", when the end result is that they've got $20 more from you than you intended to give them.

Even if a small percentage of people who intended to spend $49.99 end up spending $69.99 instead, this has worked out very well for them, at little to no cost!

The same principle is at play at the fast food joints where they offer "combos" of burgers, fries and coke. I go there for a burger, not intending to buy a coke, but I take the combo because I get a "good deal", ultimately spending several dollars more than I intended to.

It's freakin' brilliant.

6 comments:

asha said...

Doesn't option 3 include costs for producing the print version? So it would cost them more than Online only option, wouldnt it?

Pranesh said...

yeah it is F ing brilliant..

btw, why isn;t there any comment option in the other post?

hexium said...

@asha, yes, but also brings them greater profits!

@Pranesh: uh.... no comment... : P

$uprema said...

I guess you should hone your marketing skills if you want to make the options appealing to people - Not all people go for the option 3 you know... ;)

aalok said...

hmmm... I wonder why I didn't think of that before!

PRADEEP K. said...

Some idiot had said "Customer is King." If at all that's true, then he must have meant "the king of idiots".

Just wondering.

Cheers! :)