More Choices, Fewer Sales

Consumers must like lots of choices – why else would there be hundreds of shampoo brands and variants on a typical supermarket shelf? Actually, its been known for years that too many choices can reduce consumer purchases. A 2000 study at Columbia University compared consumer behavior when confronted with a selection of either six or 24 gourmet jams in an upscale grocery store. The bigger selection did indeed cause more customers to stop and check it out – 60% vs. 40% for the limited selection. The interesting part, though, was the purchasing behavior. While 30% of the customers presented with the limited selection made a purchase, a mere 3% of those who saw the extensive selection bought something. [See When Choice is Demotivating: Can One Desire Too Much of a Good Thing? Iyengar, S. S., & Lepper, M. Journal of Personality and Social Psychology, 79, 995-1006. (2000).]

Now, additional research conducted by Kathleen Vohs at the University of Minnesota shows that choices can sap one’s stamina and ability to stay focused. Of particular interest to Neuromarketing readers, choices caused subjects to have more difficulty when they needed to make a risky decision later.

In one experiment, 18 women were told to choose among a variety of products, including T-shirts, scented candles, shampoos and others. Another 20 women didn’t make choices but were asked to consider their preferences.

Both groups were then asked to drink an unpleasant-tasting concoction — an orange drink mixed with vinegar and water — in return for a nickel for each ounce consumed.

“We found that when people had been making choices, they drank less than when people had just been thinking about their preferences,” Vohs said.

This suggests that those who didn’t make choices had more capacity for “self control,” Vohs said.

In other experiments, the researchers found that making choices made it tougher for participants to perform well on a math test, avoid distractions and take action regarding a malfunctioning videotape. [From HealthDay - Choices Sap Your Stamina, Self Control: Study by Randy Dotinga.]

The “risky behavior” effect found by the researchers is interesting, since often a purchase decision carries some risk – dissatisfaction with the product, finding a better deal later, etc. This would be particularly true for large purchases like automobiles, which involve a high cost product that the consumer will use for years. Buy a shampoo you don’t like, and you can buy a different one the next day with little economic loss; you can’t do that with a car purchase.

The trick, it seems, is finding the sweet spot for your product: offering enough choices to ensure that a customer can find a satisfying product, but not so many that the customer will be bewildered or demotivated.

Customer guidance may help, too. In the Columbia study, almost nobody purchased jam products when the selection was huge. What if a salesperson had been on hand to ask customers a question or two about their preferences, and then make a strong recommendation? “If you like strawberries, then you’ll absolutely love our strawberry ginger jam… it’s full of fruit flavor, but has really interesting spicy notes, too. A group of chefs rated it their favorite choice from our full range of jams.” Likely, a bit of effort to help the customer decide (and validate that decision with additional data) would go a long way toward slicing through the confusion and frustration caused by too many choices.

Even in a self-service setting, guidance in the form of labels, shelf talkers, etc. may help by directing consumer attention toward products that may be suited to their needs and wants. The general message doesn’t change, though: choice isn’t always good, and more choices can actually reduce sales.

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— who has written 959 posts on Neuromarketing.

Roger Dooley writes and speaks about marketing, and in particular the use of neuroscience and behavioral research to make advertising, marketing, and products better. He is the primary author at Neuromarketing, and founder of Dooley Direct LLC, a marketing consultancy. Follow him on Twitter.

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4 responses to "More Choices, Fewer Sales" — Your Turn

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Sudeep 12. February 2010 at 6:54 am

I can understand the plethora of choices available for the FMCG product as these are low involvement purchases, where span of attention is lower. However in case of automotive products like Cars etc. the choices have really not helped. The products are positioned withthise assosiated with prestige. I guess limited choices does help consumer to decide faster and do not raise the unneccessary expectations.

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Mens Underwear Too? 29. May 2010 at 8:39 pm

This issue of “more choices, fewer sales” may be the problem for my client’s ecommerce store. He looks to have the largest inventory of brands and styles on the web, doubling that of his likliest competitors.

Do you think that this data holds up in the online environment, and for items of moderate cosyt like mens underwear?

How would it be tested in a real-world environment?

Dennis

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Roger Dooley
Twitter: rogerdooley
30. May 2010 at 8:42 pm

Amazon is the most successful online retailer, and their strategy has been to chase even long-tail items. I do a lot of my online shopping at Amazon in part because I know that if the product exists, I will likely find it there.

I think the products that were tested and showed sales improvements from a smaller selection were simple items, like jam and peanut butter. Fashion items may behave totally differently. (And is men’s underwear a commodity item or fashion item? I’d suppose that it could be either depending on the buyer.)

As you suggest, testing would be ideal. Setting up two stores or interfaces might be a bit of a challenge, but perhaps you could pick one category and test the theory by offering two different selections.

If I had to guess, I’d say that sales would go up with a bigger selection in your case, but of course costs (for marketing, carrying inventory, etc.) will also rise. Good luck!

Roger

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David Shillito 10. July 2012 at 10:58 am

Well worth your time – More on ‘The paradox of choice’ here …

http://www.youtube.com/watch?v=VO6XEQIsCoM

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5 responses to "More Choices, Fewer Sales" — Your Turn

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