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Published: November 23, 2010
 / Winter 2010 / Issue 61

 
 

A Better Choosing Experience

In another study, Iyengar and Emir Kamenica discovered that the employees who participated made worse investment decisions, on average, when they chose from plans with more options. For every 10 additional funds offered in a plan, employees allocated 3.28 percent less of their contributions to equity funds (as opposed to bond or money market funds), and they were also more likely to avoid allocating any of their contributions to equities at all. Unfortunately for them, equities are virtually guaranteed to outperform bonds and money markets in long-term investments. Even employees in their 20s, who should have been allocating 80 to 90 percent of their contributions to equities (based on the accepted wisdom of financial advisors), became more likely to entirely avoid equities as the number of options rose, undermining their long-term financial well-being.

The deleterious effects of too much choice have been observed in situations as varied as buying chocolate, applying for jobs, and making healthcare decisions. This presents a considerable opportunity for marketers, but it requires looking in a different way at one of the essential contradictions of consumer choice: People keep expressing a desire for more choices, and businesses keep expanding product and service options in order to fulfill this desire — but it often does more harm than good.

Confidence, Trust, and Fun

Don’t marketers have to give consumers what they want? Yes and no. We should give them what they really want, not what they say they want. When consumers say they want more choice, more often than not, they actually want a better choosing experience. They want to feel confident of their preferences and competent during the choosing process; they want to trust and enjoy their choices, not question them. As Irvine Robbins of Baskin-Robbins might have said, “They want fun.” And it’s your challenge to give it to them. The following four approaches will help you meet that challenge.

1. Cut their alternatives. You’ve heard it said that “less is more,” but rarely in the context of consumer choice. Most companies avoid reducing the number of products they offer because they’re afraid of losing shelf space to their competitors. But careful trimming can lower costs, increase sales, and improve the choosing experience for consumers. In the mid-1990s, when Procter & Gamble Company winnowed its 26 varieties of Head & Shoulders anti-dandruff shampoo down to 15, eliminating the least popular, sales jumped by 10 percent. In a similar case, the Golden Cat Corporation got rid of its 10 worst-selling offerings in the small-bag cat litter category. This led to a 12 percent increase in sales and slashed distribution costs by half; the end result was an 87 percent profit hike. Another example comes from a 2001 study that tracked an online grocer that had made substantial cuts in the number of products it offered, across 94 percent of all the product categories. Not only did sales rise an average of 11 percent across 42 categories, but 75 percent of its customer households increased their overall expenditures.

If you’re working hard to explain to your customers — and perhaps even to your employees — the differences among the variations you offer, then it’s time to think about making a few cuts. If the poor performers aren’t evident from sales figures, focus groups and online networks can help you separate the wheat from the chaff. Potential consumers should be able to zero in on a product’s defining characteristics and explain why it is (or is not) appealing to them. If people respond vaguely or inattentively, that’s a signal that the choices you offer are not distinct enough and should be consolidated.

 
 
 
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Resources

  1. Matthew Egol and Christopher Vollmer, “Major Media in the Shopping Aisle,” s+b, Winter 2008: On the growth potential of in-store media, and better use of this critical consumer choice touch point.
  2. Bridget Finn and Michal Lev-ram, “Recent Research: The Downside of Choice,” s+b, Summer 2009: Corroborating research about the consumer dissatisfaction that stems from too many choices.
  3. Nicholas Ind and Majken Schultz, “Brand Building, Beyond Marketing,” s+b, 7/26/10: Moving branding practices toward a connecting strategy that promises to make consumer choice easier.
  4. Sheena Iyengar, The Art of Choosing (Twelve, 2010): By describing the psychological impact of having too much choice, too little choice, and varying levels of autonomy, Iyengar shows how the conditions of choice influence business, society, and personal fulfillment.
  5. Barry Schwartz, The Paradox of Choice: Why More Is Less (Harper Perennial, 2005): Another leading work on the “darker side of freedom”: the limits of the human mind in managing a surfeit of options.
  6. For more thought leadership on this topic, see the s+b website at www.strategy-business.com/marketing_media_sales.
 
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