"The Strategic Role of the Decoy Effect in FMCG Marketing: Implications for Pricing and Product Positioning in North India"

Abstract

This research examines the Decoy effect to elucidate the strategic significance of this phenomenon in shaping customer decision-making, pricing perception, and product positioning for Fast-Moving Consumer Goods (FMCG) in Northern India. Data were gathered using a quantitative study approach using structured questionnaires and experimental sets involving 200 respondents. The researchers aimed to achieve four primary objectives: to assess the influence of the decoy effect on consumer decision-making, to evaluate the efficacy of decoy products as marketing tools, to investigate the correlation between pricing strategies and consumer value perceptions, and to analyse the implications for product placement and brand competition. The analysis used metrics such as One-Way ANOVA, Independent Samples t-test, Multiple Regression Analysis, and Post Hoc Tukey testing to derive a conclusion substantiated by robust empirical evidence: the decoy effect impacted the participants' decision-making process. Results: The ANOVA findings revealed substantial variations in purchase intention and perceived value across decoy circumstances (p < 0.001), with robust decoys significantly enhancing both measures. The t-test findings demonstrated significant outcomes for both elevated target product choice rates and enhanced brand preference ratings attributable to the presence of a decoy. Regression study revealed that high decoy pricing had a considerably more favourable influence on perceived value and purchase intention compared to discounted or regular pricing methods (β = 0.521, p < 0.001). Furthermore, ANOVA and Tukey post hoc analyses demonstrated that the use of mid-tier and premium-tier decoys significantly enhanced market share acquisition and customer loyalty in comparison to the absence of decoy strategies. The research indicates that the intentional use of the decoy effect might serve as a marketing tool for FMCG firms in North India, augmenting perceived value in consumers' minds and offering a competitive edge. The findings provide significant theoretical advancements for the behavioural marketing literature and provide helpful practical insights for marketers aiming to enhance their pricing and product positioning strategies. Subsequent studies may further examine culture and demography as variables of decoy efficacy