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insight & trends
10 May 2021

what is the goldilocks effect?.

On the wooden kitchen table, there were three bowls of porridge. Goldilocks was rather hungry. She tasted the porridge from the first bowl.

“This porridge is just too hot!” she howled.

Next, she tasted the porridge from the second bowl.

“This porridge is just too cold,” she shivered.

So, she tasted the last bowl of porridge.

“Yum, this porridge is just right,” she said with a cheeky grin as she winked and ate it all up.

Do you remember one of the better-known fairy tales, Goldilocks and the Three Bears? So, what was Goldilocks presented with in the fairy-tale? Three bowls of porridge which were “too hot”, “too cold”, and “just right”.

The Goldilocks Effect can be expanded to use as a marketing technique. It simply involves presenting users with multiple choices, with the intention of priming them for the ideal option. It is a marketing concept that has been used in big brands for decades, sometimes with breathtaking results. A good example is McDonald’s; in a research study by Sharpe, Staelin and Huber (2008), they asked consumers to choose between a range of different sized drink options. No matter what the sizes were on offer, 80% of the consumers chose the medium option.

When it comes to advertising and marketing, giving consumers options makes them feel empowered, and this is why the Goldilocks Effect is a holy grail for marketing. Not only does it prime users into buying a particular option, it actually makes them more likely to make a decision in the first place. 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.

It is also a technique we have seen and maybe even fallen for on digital every day. Brands and websites use the effect in their pricing, like the examples below.



Looks familiar right? Can you recall how many times you chose the middle package simply because you didn’t want to buy the rather expensive package or go for the cheaper and therefore basic version?

In closing, the Goldilocks Effect is easy to implement, extremely subtle, and on the whole, produces compelling results. Ultimately, it is a prime example of marketing theory being implemented in a beautifully simplistic way.

 
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