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Nov, 2021

Take the easy way or the highway – A compromising effect in marketing

There is an ancient proverb for marketing that still rings true today. It states that when a marketer presents 3 versions of a product together - a low, a medium, and a high priced option — consumers will almost always pick the middle option. This is called “the compromise effect” and you likely use this strategy in your own day-to-day life. But, have you ever wondered how the compromise effect affects how things are marketed towards you? Can the compromise effect be used to change consumers’ perception?

Marketers have long exploited the compromise effect to influence the way customers shop. For example, if they wanted customers to select option X, they would make sure that option Y was priced lower and option Z was priced higher. This strategic use of the compromise effect has seen successful results across many industries for many years.

Recently, however, something has changed that affects the validity of the compromise effect. People faced with three product options, with prices ranging from low to high, will NOT always choose the middle option IF they have access to product reviews. With access to reviews, the people who would usually opt for the lower priced option felt comfortable to do so. The people who tend to choose the higher priced option also felt reaffirmed in their decision.

The vast majority of consumers, who are typically most affected by the compromise effect, began to switch between the cheaper and more expensive models (instead of selecting the middle-option) when given access to other users’ opinions of the products.

If user-generated online reviews enable consumers to feel like they can determine the best quality product on their own, the compromise effect, one of the foundational practices of marketing,  might be undermined.

If the quality is easily and readily discernible through online reviews, then brand signals lose much of their power. The focus of a marketer should shift to clearly discover consumers’ preferences and then determine what influences lead to consumers’ purchase decisions.

If consumer reviews are really this powerful, then marketers should use them as a new tool to replace the compromise effect. Content in online consumer reviews is equally accessible to  consumers and other competitive firms. While many may need to unlearn the principle of the compromise effect, marketers now have a new and more effective tool to influence consumer behaviors.


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