It’s no secret that choice architecture works wonders for businesses. In the following article we would try to explain what is choice architecture, and share some tips about how you can implement it into your marketing efforts.
What is Choice Architecture ? To put it simply, the choice architecture is a psychological phenomenon used in marketing and most aspects of business where people buy products.Choice Architecture is when a purchase decision is heavily influenced by choices offered to the consumer.
In marketing, we often give customers many choices. Choice overload leads to confusion and decision making paralysis. In order to solve this problem, you need to offer your customers fewer choices. For example: When Apple releases the new Iphone there are usually only two options to choose from. Other examples of the choice architecture can be seen in default choices, the decoy effect, multi-unit pricing and the framing effect. There are many ways you can leverage the choice architecture in your marketing campaign to increase your conversion rates.
A recent example of the choice architecture can be seen in the Food Choice Architecture: An Intervention in a Secondary School and its Impact on Students’ Plant-based Food Choices(2015). In 2015, Dr. Hannah Ensaff and etal conducted a study on how choice architecture can influence adolescents daily food choices.
The Experiment involved two different groups from different schools in Yorkshire, England. In the first group(intervention), the students were offered specific plant based food items including sandwiches containing salads, fruit salads and other vegetarian options. One of the components of the intervention group included product placement, labelling and overall presentation of the food item.
In the second group(control), no changes were made to the food options offered in the cafeteria.
In both schools, a cashless system was used where students would choose their food item on a touchscreen pad with a unique item code. In the results, it was found that students in the intervention group purchased 112 food items and students in the control group purchased only 72 items.
Based on these findings, Ensaff and etal concluded that when there is choice architecture intervention it can influence and improve adolescents daily food choices.
So how can you effectively use the choice architecture in your marketing? Follow these four steps:
Default choices- Companies can use an opt in/opt out strategy and give consumers default choices. An example of a default choice is Google.For most of the world population, Google is the default choice for a search engine over Microsoft’s Bing or Mozilla’s Firefox. However, default choices are not fixed and consumers are willing to change their choices if there is a better alternative.
Limiting your choice- By limiting the number of choices you offer to your customers, you are shrinking your choice overload. A lower choice overload leads to higher conversion for your customers. A great example of a company which was successful by limiting choices was Mcdonalds. When Mcdonald’s was founded it only had 3- 4 food items on its menu while other fast food restaurants had 10-12 food items on their menu. Today, Mcdonald’s is one of the one successful brands worldwide with a net revenue of $21 Billion.
Decoy Effect and Choice Architecture-
Previously we discussed multiple pricing options, customers tend to purchase either the cheapest or mid range package. But the decoy effect can actually convince the customer to purchase the premium option. Look at the following example:
As the customer, you are given three options for popcorn: small, medium and large.
As you can tell the medium is only slightly cheaper than the large popcorn and thus convinces the customer to purchase the large popcorn. If done correctly, you can use the decoy effect to increase conversions.
Leverage Limited Offers- Always show the cost of your product or service and give your customers a limited time offer. For example: the original price of Nord VPN is $4.92/ month for one year. However, the company gives limited time offers including $1.99/month for 3 years. If you give your customers a limited time offer adjacent to other price options, it will in turn increase conversions.
As you can see, the choice architecture can only benefit your marketing efforts. By using the choice architecture, you can increase your performance in your marketing efforts!
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