Starbucks Decoy Effect Strategy

The “Decoy Effect” describes how price comparisons between products affect choice.

When there are only two options, and they’re priced “fairly,” people make decisions according to personal preference.

But, if there’s a third choice that’s overpriced compared to the first two options, it changes how people consider all options.

The third option is a “decoy” choice. The decoy’s purpose is to change perceptions of the other options, not sell.

🔶How does Starbucks apply the Decoy Effect?

Their classic three-tiered sizing structure is a dead giveaway. Starbucks uses this strategic pricing technique so that customers choose the size that provides the most profit to the company.