How Does the Decoy Effect Enhance Consumers' Purchasing Decisions?

Abstract

Today, competition for businesses is becoming stronger globally in general and for Agency businesses in particular. That makes product pricing and price for customers an extremely important factor to promote customer purchasing behavior. Based on this concern, it is necessary to implement specific strategies to offer prices that are suitable for consumers while bringing maximum benefits to the company. A pricing strategy that is often used but rarely studied is the decoy effect. This study aims to determine the motivation of the Decoy Effect on consumer purchasing decisions. The theory of the Decoy Effect has been proven to have an impact in marketing and influence on customer behavior, as demonstrated in research in 1982, but in the context of the Agency service industry, it has not been studied yet. Therefore, this study will explore the impact of the Decoy Effect on enhancing customers' purchasing decisions. The collected data were processed using confirmatory factor analysis and exploratory factor analysis. To evaluate the initial standard of the data, the author determined the reliability of the data through the Cronbach's Alpha coefficient of the scales, all of which were greater than 0.7. The research results showed that the Decoy Effect promotes purchasing decisions and creates consumer intentions.