Issue #2543

• WEALTHY: Your customers make irrational choices (Alex Mandossian)
• HEALTHY: Smart kids eat this (Kelley Herring)
• WISE: Nietzsche on the origin of rational thinking

ALSO IN THIS ISSUE:

• The Power of One reading technique (Michael Masterson)
• An excuse to wear Santa Claus’s hat (Cecily Lai)
• It’s Fun to Know… about reindeer
• Add “apposite” to your vocabulary

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The Decoy Effect – and How It Can Help You Make More Sales

By Alex Mandossian

Let’s say you’re trying to decide where to dine tonight – and you’re in the mood for Mexican food.

Your spouse says, “I heard about a new place the other day. Supposedly, it has handmade tortillas and chiles rellenos that are to die for. The only problem is, it’s about a 30-minute drive from here.”

You’re hungry right now. So your spouse offers another option: “There’s our old standby, Don’s Tex Mex. It’s right down the street. But, as you know, the food’s only average.”

You’re torn between your growling belly… and a desire for those handmade tortillas.

And then your spouse pipes up again, “I just remembered that restaurant we went to last month. Remember how good the salsa was? But… it’s about 45 minutes away.”

Suddenly, the 30-minute drive to the new place with the handmade tortillas doesn’t seem so bad.

It happens all the time – where the introduction of a third option suddenly makes one of your earlier options look better. It sounds irrational. And it is. But it’s such a common phenomenon, it even has a name. It’s called the “decoy effect.”

Marketers often take advantage of the decoy effect. Consider the following scenario…

You’re at the movies, and you’re thirsty. So you go to the concession counter to get a soda. The small size is $3.00. The large size is an outrageous $5.00. But then the person behind the counter points out that it is only 50 cents more than the medium size. Suddenly, the large size seems like a better deal.

That’s the decoy effect.

In his New York Times best-seller, Predictably Irrational - The Hidden Forces That Shape Our Decisions, Dan Ariely describes an interesting study he conducted with students at MIT’s Sloan School of Management. The study was based on a clever bit of “decoy-effect” pricing in an ad he found for a subscription to Economist magazine:

Offer A: Internet-only subscription for $59

Offer B: Print-only subscription for $125

Offer C: Print-and-Internet subscription for $125

“I read these offers one at a time,” writes Ariely. “The first offer seemed reasonable. The second option seemed a bit expensive, but still reasonable. But then I read the third option: a print and Internet subscription for $125. I read it twice before my eye ran back to the previous options.”

At this point, Ariely asked himself the same question you may have asked yourself when presented with a similar Good-Better-Best pricing model: “Who would want to choose the ‘Better’ option [print delivery only - Offer B] when both the ‘Good’ [Internet delivery only - Offer A] and ‘Better’ options could be purchased at the same $125 price [Offer C]?”

Good question.

In my own marketing experience, I’ve found that the decoy offer – Offer B in this Good-Better-Best pricing model – influences my prospects to have a strong bias toward Offer C (the “Best” option). 

When Ariely presented a group of 100 MIT students with the three subscription options from the Economist ad, the same thing happened. Though some selected Offer A, most went with Offer C. None of them selected Offer B, the decoy.

So he wondered what would happen if he removed Offer B. After all, since no one had selected it, it shouldn’t make any difference, right?

Not exactly…

When he presented another group of 100 MIT students with just two options – Offer A [Internet-only for $59] and Offer C [the Internet-print combo for $125], 68 of them chose Offer A and only 32 chose Offer C. Which makes the “decoy-removed” version of the ad far less profitable than the one the Economist actually ran.

I’ve split-tested the traditional “Good-Better-Best” model against the decoy model myself.  

In the traditional model, Good = $X, Better = $Y, Best [Good + Better] = $Z.

But over and over again, the winning model looked like this: Good = $X, Better = $Y, Best [Good + Better] = $Y.

How can you use the decoy effect to make your offers stronger, more appealing, and more profitable? Start testing today.

[Ed. Note: Alex Mandossian knows a thing or two about marketing. He has generated over $233 million in sales for his clients. And in the past three years, he increased his own revenues from $1.5 million to $5 million. You can get Alex's advice and practical marketing tips for info-publishers, small-business owners, and entrepreneurs for free at AlexMandossianToday.com.

There's no better time than now to start your own Internet business. And ETR can help. As a member of our elite Internet Money Club, you'll get a proven roadmap for building and growing a profitable business online. Are you ready to create a business that could potentially make $100,000 to $25 million a year? Space is limited, so find out now if you can still enroll in the "Class" of 2009.]

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== Highly Recommended ==

Ready for Your “Mind-Over-Money Make Over?”

NO ONE ever thought they would amount to anything.

And yet, against all odds they all became billionaires.

What was the “X” factor that made the difference and allowed ordinary men to enjoy the financial freedom that most people could only dream about?

Well, one man knows exactly what it was… He experienced first hand how four “Average Joes” went from ordinary to extra-ordinary. 

Now, he’s boiled down every tactic, trait, and “secret wealth attraction strategy” these four billionaires remarkably possessed… And he can give you a “mind over money make-over” in just 30 days that’ll allow you to attract gobs of money like bees to honey.

Ready to finally “Crack the Wealth Code?” 

Dear ETR: “What does Michael do when he’s studying a book?”

“Hello to the Early to Rise team and the amazing Michael Masterson! I’ve started to read Power and Persuasion. I’ve only read about 2/5 of it, but for the advice I’ve already received – let alone what’s coming up – I could have easily paid Michael a few thousand dollars. His writing style and content are brilliant. The concepts are easy to read and easy to ‘get.’ This book could sit on my desk as a ready reference on leadership for the rest of my working life.

“I want to learn and apply everything in the book – but the content is so rich, I just don’t know how to go about doing that. What does Michael do when he’s studying a book? More important, how does he put it into practice? I guess what I’m asking is, what are Michael’s learning strategies?

“If there is an article on this in the ETR Archives, could you please point me to it? (I know Michael’s really busy, but it’d be so cool if he could answer this personally.)”

Wes Rothman

Dear Wes,

This is a great question.

In the old days, as I read a book, I would underline dozens of paragraphs and take many notes – and then I’d put it aside and do nothing.

Now I employ the Power of One rule… and it works better.

When applied to reading books, the Power of One says that you should search the book for one good idea that you can put to work in your life immediately. Take that one good idea and turn it into a specific goal. Make that goal a yearly one, and then break it down into monthly, weekly, and daily tasks. (We explain exactly how to do that in ETR’s goal-setting programs.)

Work on that one thing until it has made a measurable difference. That will get you charged up. Then implement it in every way you can. Before long, it will become part of your skill set. It will burn itself into your limbic brain. It will become a success-building reflex.

And then you can go back to the book and pick out the next best idea.

A good example would be the book MaryEllen Tribby and I co-wrote, Changing the Channel: 12 Easy Ways to Make Millions for Your Business. The book is a goldmine of marketing ideas. Each of its 12 chapters teaches you how to master one important channel of marketing.  

Study the book and pick the marketing channel that you think will have the greatest immediate impact on your employer’s business or your own business. “Immediate” is the key word here. If you pick one that you can’t implement immediately to experience its benefits, you will soon forget about it.

All great skills can be practiced for years and years. The better you get at them, the more powerfully you can apply them. You will eventually want to have many in your business-building quiver, but start with just one… the one you can start using immediately!

- Michael Masterson

[Ed. Note: Taking action right away is one of the fastest, simplest ways to achieve your dreams. Discover dozens more specific techniques you can use to get everything you want out of life right here.

Have a question for one of ETR's experts? Send it to AskETR@ETRFeedback.com and we just may respond to it in ETR.]

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Boost Your Kids’ Brainpower With This Supplement

By Kelley Herring

Want your kid to be a star student? Feed him fish.

We’ve long known that omega-3s are important for developing and maintaining healthy brain tissue. Now, new research shows that docosahexaenoic acid (DHA) significantly improves cognitive function.

In the study, 175 healthy four-year-old children were randomly assigned to receive either 400 mg/day of DHA or a placebo. They were tested for various types of cognitive function before and after the supplementation.

At the end of the study, researchers found a 300 percent increase in blood levels of DHA in the supplemented group. They also found a significant association between a higher level of DHA in the blood and better performance on a test that measures listening comprehension and vocabulary. What’s more, for each one percent increase in blood DHA, the percentile rank on the cognitive test improved by up to nine points.

DHA is found primarily in cold-water fish like salmon. But if your little ones are finicky about fish, you can still give them the benefits by supplementing their diets with a yummy supplement like Carlson for Kids orange-flavored DHA (100 mg), Barlean’s Fresh Catch Kid’s DHA (320 mg), or Nordic Naturals Children’s DHA (125 mg).

[Ed. Note: Making your family's life healthier doesn't have to be difficult or expensive. You can find recipes for plenty of wholesome, healthful meals - plus get the latest breakthroughs in health and fitness - in ETR's natural health newsletter. Sign up for free right here.

Survive the holidays with nutrition expert Kelley Herring's brand-new e-books, Guilt-Free Desserts and Healthy Holiday Hors d'Oeuvres. You'll find 60+ recipes you can easily make at home.]

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10 Little Things I Love About the Holidays

By Cecily Lai, ETR Marketing Associate

1. Giving gifts and cards. (Of course, receiving gifts/cards is a great feeling too!)

2. Decorating the Christmas tree. It’s always so much fun.

3. Baking. This is when I can take my time to massively produce baked goodies, like gingerbread man cookies, cranberry scones, and pumpkin pies. Yum.

4. Getting together with my family. It’s a joy to spend time with them, especially the time we spend playing silly little games.

5. Listening to the Christmas songs. They bring up wonderful memories and lift everyone’s spirits. It gives me an excuse to act like a little kid again, singing “Rudolf the red-nosed reindeer, had a very shiny nose…”

6. Seeing the Christmas lights around the neighborhood. When I lived in Hong Kong, they put lights up around the business buildings and skyscrapers. Here, most of the lights I see are on people’s houses. Both ways are beautiful! 

7. Drinking a cup of nice hot chocolate to add some winter essence to this wonderful season. (If the weather gets cold enough for us to put on sweaters and coats down here in South Florida, it will be even better!)

8. My aunt’s secret recipe for homemade dinner rolls. I get to eat them only once a year.

9. Dressing up in red (a lot) and wearing a Santa Claus hat.

10. The reminder that Christmas is not just an ordinary holiday. This is when Jesus was born. It reminds me of how fortunate I am to be where I am now, and reminds me of all the great things and wonderful people that God has brought into my life.

[Ed. Note: What is your #1 favorite thing about the holidays? Let us know right here.]

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It’s Fun to Know: On Dasher, On Blitzen…

Reindeer – a domesticated variety of caribou – have been kept in herds for nearly 2,000 years by native peoples of the Arctic regions of Europe and Asia. They depend on the reindeer for food (sorry, Rudolph), clothing, shelter, and transportation (usually pulling, yes… sleighs).

Both caribou and reindeer thrive in extremely cold temperatures. They have a unique type of fur that traps air, providing insulation. Their diet, too, is adapted to their harsh environment. They eat mainly lichen and tough grasses, the only food available in the Arctic tundra for much of the year.

(Source: Arctic Studies Center and the National Park Service)

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== Highly Recommended ==

Are You OK With (Smaller) Online Profits That Automatically Flow Into Your Bank Account Every Month?

Seems like everyone’s going for broke and trying to earn a million their first year online. In the meantime, a handful of people are happy as clams with automatic income streams – usually a few thousand dollars – fattening up their bank accounts each month.

Of course, you can set up as many of these income streams you want.  So if it’s more money you are after, then go for it!   Best part:  It only takes about an hour to set up and it’s easy to do. And then imagine yourself sitting back and watching the money roll in.

Sounds too easy, I know. But perhaps everyone is busy trying to make a killing online… and so they’ve overlooked this fast and easy way to make very nice (but not ridiculous) amounts of money. Why not take a peek today and see if this is right for you?

Word to the Wise: Apposite

Something that’s “apposite” (AP-uh-zit) – from the Latin for “to set or put near” – is very appropriate and relevant.

Example (as used by Alan D. Sokal and Jean Bricmont in Fashionable Nonsense: Postmodern Intellectuals’ Abuse of Science): “Suppose, for example, that in a theoretical physics seminar we were to explain a very technical concept in quantum field theory by comparing it to the concept of aporia in Derridean literary theory. Our audience of physicists would wonder, quite reasonably, what is the goal of such a metaphor – whether or not it is apposite – apart from displaying our own erudition.”

[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library.]

Copyright ETR, LLC, 2008

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