Not much I can add to this story, other than noting its educational value.
Great reading, thanks for sharing. I can think of plenty of examples of this in practice, cinema popcorn comes to mind.
You see this is the way the different option and accessory packs are designed and deployed within product lines. For example a line of cars based on the same chassis (and often the same engine) will have different price points depending on the accessories and treatments. It may seem quite logical that you pay more for more features but if you look closely at what you pay for what you get the relationship isn’t so clear. In some cases a given option pack seems to exist only to direct attention to another one. In the case of the ‘top’ model they seem to exist only satisfy those who must have ‘the best’, for the same money you might get a better car buying the bottom option of the next model up.
In the example given decoying isn’t the only thing going on, we also see bundling and false comparisons. If you add up the price all the options as aftermarket adds-ons the pack may seem cheap. This ignores that fact that manufacturers’ aftermarket bits are exorbitant, third party options can be much cheaper and that you may not want all the items in the pack. But, but it’s a bargain!
Great example. I really question whether the tiers of car models always make sense to the average person.
Very interesting article. I usually just get what I set out to get. If I don’t want a larger size, I don’t buy one, no matter the attractive price of the larger product. Usually the decoy is easy to spot, easy to remove from consideration, and then you just have the original choice.
Same logic or sense as the often massive discounts available if you can purchase with a fleet discount.?
Rule #1: Companies exist only to make money. Confusing tiers make more sense viewed in the context of being a means to upsell to vulnerable ie uninformed consumers. Car magazines often lament confusing tiers, and spend considerable time analysing them before making recommendations on intended usage and bang for the buck. Rarely do they recommend the top tier. Savvy consumers will often satisfy their requirements by purchasing a relatively base model and going to the aftermarket to source better quality components often at a cheaper price than what the car companies would have provided.
Some consideration does need to be given to mass vehicle production with certain vehicles on certain production lines such as lhd and rhd, where moving a car from one line to another to satisfy a particular customer isn’t logistically practical when that line isn’t even in the same building. Then there are the expectations of bigger markets to be satisfied first, where cars are relatively cheaper so consumers can afford to go for higher level options. Not making excuses, just saying there may be some mitigating factors.
It still doesn’t entirely explain why there’s such a non linear/bewildering progression from one tier to the next.
I don’t think it’s germaine to cars, it seems that you often need to jump tiers or go straight to the top to get what you want but then you’re also getting a whole lot you don’t want at a much higher price. Hmmm funny that. And guess who invests millions of dollars in market research and selling tactics/training every year to know what you’re thinking and how to get to your soft consumer underbelly?
Well said @Mustang! I think you are right in saying there are many industries where tiers are applied in this way. How about hotels as another example - the difference between a standard room room, a deluxe and so on. If someone were so inclined, it probably wouldn’t be too hard to look through the user photos/reviews on TripAdvisor and determine if and where the key room differences occur and how each hotel handles this differently.
Here is one about a particular model of vehicle. The Hyundai Ioniq (we are looking at the full EV model but this goes for the hybrids as well). They have 2 tiers of finish, there is the Elite (base model) & the Premium.
If you buy the Elite it comes with most “driving safety/helpful features” that the premium model has eg Lane Keeping Assist, Forward Collision Avoidance but it does not have Parking Distance Warning-Front. To get that added feature you must buy the Premium. There is no option to add it as an extra to the Elite. But if you buy the Premium it comes with a Sun/Moon Roof which we definitely do not want but you can’t have that feature removed from the Premium. As for the other “Trim stuff” on the Premium we are not concerned either way but these two points for us are mutually exclusive. The only option for us in this car’s tiers is to go after market and fit a Front Parking Sensor (it is not a display model it only gives warning beeps) to the Elite.
In the following image the dashes are for the Elite models of the Hybrid, Hybrid with Plug in and the Full EV.
Price for the full EVs are Elite $49,259 and Premium $54,084
In the past there was a significant difference between the base model and the top premium model. The base model lacked things like airconditioning (that’s what windows were for), leather trim, manual window winder (rather than electric windows), CD/cassette radios (AM/FM radio instead), cruise control etc. These were only fitted to the upper models to make them more attractive for a customer to purchase.
Today, many of these ‘options’ are in the base model, along with many of the safety gear (as they are mandated by the Australian design rules). The differences seems to be limited to different engine/gearbox configurations (yet some manufacturers are also normalising this) or whether one thinks the subtle differences make a vehicle more luxurious than a lower end model. Some also may have steel rims and hubcaps compared to alloys.
Also, are these luxurious items worthwhile or make the car more luxurious? Maybe not the price premium paid on purchase.
We often look for details that indicate the room size. Not always provided, but common for some OS destinations and some recent bookings we made locally.
Often the Standard, Superior/Deluxe, and Executive rooms are all the same floor area. The difference is purely in the eye of the traveller.
If like us you share a bed and it’s a double, any hotel room is luxury. No need to upgrade! Although trading the night time sounds of the Aussie bush (curlew last night) for the wail of city sirens, we often wonder where the real deluxe rooms are?
Another example is restaurant wine lists. Featuring a really expensive wine nudges consumers to choose a more expensive wine than they otherwise would have.
I suspect that the plethora of tiers in the telecommunications and power supply plans are another example of decoying to entice consumers to the provider’s preferred choice.