You may not have heard of the Goldilocks effect, but chances are your buying decisions have been sculpted by it multiple times. A staple technique within marketing, it simply involves presenting users with multiple choices, with the intention of priming them for the ideal middle option.
As you may have guessed, the terminology comes from the Brother’s Grimm story of the Three Bears, where Goldilocks, confronted by three bowls of porridge, chooses the one which is ‘not too hot, not too cold, but just right’.
This is essentially the exact same principle that is utilised by marketers. Have you ever noticed when buying software for example, you’re often given the choice of bronze, silver or gold packages? You may have assumed that the company would prefer you to buy their full priced premium gold package. In fact, they are actually priming you for the silver package.
The method is incredibly effective, and the vast majority of users will go for the middle ‘silver’ type option. The reason is that it plays on a natural psychological impulse, namely, the desire to avoid extremes. In a typical person’s thought process, they see the ‘gold’ option as too expensive and excessive, a luxury which would be nice to have, but not necessary. In contrast, they perceive the bog standard ‘bronze’ option as risky. The cheaper pricing and description suggest that the quality may be suspect.
This leads to what seems like a completely logical conclusion: the ‘silver’ option is the best of both worlds. Good quality, affordable, and functional, it is the perfect choice.
User experience and design are often utilised to enhance this principle. This is done by subtly making the middle option appear more prominent, making sure the user cannot miss it. This could be achieved by designating the middle option a different colour, varying its font, or simply just making it appear bigger.
The other magic element of Goldilocks pricing is that it doesn’t just prime the user into buying into a particular option; it renders them more likely to make a purchase in the first place. This comes from another psychological quirk: our inherent need for choice.
Choice makes us feel empowered. When given a few options, our natural impulse is to choose one of them, rather than to just walk away and not chose at all. There are many everyday examples of this. For example, if you are a parent, you may well go through the struggle of getting your child to eat fruit and veg. However, you may have noticed how your child is more likely to eat healthily when you frame it in terms of a choice: “do you want to eat a banana or an apple?” You are priming them to act within the bounds of the options you have given them.
And it is the same with that example of the bronze, silver and gold packages. If there were only one product, your choice would be a simple to buy or not to buy. But by presenting multiple options, your mind is now operating within those three choices. The option of not buying at all becomes side-lined, less immediate.
The Goldilocks effect is nothing new, and has been used in big marketing and sales campaigns for decades, sometimes with breath-taking results. For example, in 1992 Panasonic decided to add a premium product to its line of microwave ovens, for the price of $199.99. The two existing microwaves in the line were priced at $179.99 and $109.99. The result: sales of the medium priced $179.99 microwave dramatically increased, helping Panasonic increase its market share to 60%. The lesson is that the Goldilocks effect can pay huge dividends, even in the setting of expensive hi-tech consumer goods.
Overall, the Goldilocks effect is a holy grail for marketing, being easy to implement, extremely subtle, and on the whole producing compelling results. Ultimately, it is a prime example of marketing theory being implemented in a beautifully simplistic way.