Testing the decoy effect in the presence of store brands

Abstract

Purpose – The purpose of this paper is to test decoy effect in the framework of sales promotion, by conducting several experiments to figure out how this decoy effect is influenced by the presence or absence of a store brand. Design/methodology/approach – Several experiments have been conducted to test the validity of the decoy effect and rule out some explanations for the changes in demand that take place. The experiments consider three brands (two national brands and one store brand). All the brand names and prices employed in the experiment are real. Findings – The results indicate that, as expected, the inclusion of a decoy in the choice set significantly increases the consumer’s relative preference for the promoted product; however, more importantly, the results also show that store brand consumers are more influenced by a decoy than national brand consumers. Originality/value – This paper presents the first evidence of the decoy effect in the presence of store brands.