Article focus - Consumer behavior with regard to choice
Finding the balance between choice and simplicity
Business leaders often relate more sales with more choice. Investing heavily in research and development and product development, pursuing the goal of giving consumers a wider choice hoping it would have a powerful impact on sales. This is done assuming that the consumer would somehow find what they are looking for in the stack of offerings. While this is correct to an extent its effectiveness dilutes as choice increases and often flips upside down negatively impacting the former idea of increased sales. Despite the allure of an extensive selection, consumers often find themselves overwhelmed when confronted with a myriad of choices.
Tech brands may tend to provide customers with countless product variations, options, pricing packages and countless CTAs (call to actions), and retail brands may tend to offer countless options of flavors, sizes etc. But when is too much? and when is too little? and when is it just right?
Choice overload on consumer decision-making
As we go a little deeper into the concept of choice overload, we uncover profound insights that can inform strategic decision-making. There is an underlying link between assorted choices, innate levels of motivation, perceived control over a decision, and satisfaction derived from making that decision. Research on buyer psychology has proven that the consumer actually does not know what they want, and the more choice we give them 'decision paralysis' sets in along with decreased satisfaction. Research indicates that this cognitive overload can lead to indecision and dissatisfaction, ultimately impeding the purchasing process
A research involving jam jars was conducted by two professors from Stanford and Columbia University. Shoppers were exposed to two displays at diverse times. One containing 24 choices and another containing 6. The extensive choice display enabled a 60% stop and look rate as opposed to a 40% at the lesser choice display.
However, in terms of sampling ratio, there were no significant differences and the purchase ratio at the limited selection had a 30% conversion rate as opposed to the 3% at the extensive choice display
Therefore it was evident that as the desirability of the choices increases the customer may come across 'choice paralysis' thereby differing their decision, emphasizing the concept of simplicity.
This concept has its exceptions, and limited choice is certainly required to keep the consumer excited and is surely better than no choice. It's achieving that fine balance between choice and simplicity which would keep a brand at the forefront of converting a prospect into a customer.
Practical Takeaways
Technology companies can offer tailored data and insight based recommendations based on their customer's past preferences and past behavior cultivating a sense of exclusivity and relevance, resonating with consumers on a deeper level
Tech companies could focus on the key features of the product and exclude the less important features in communication
Retail brands could highlight a select number of products or promotions, guiding consumer decision-making and drive sales
Categorize products systematically for ease of understanding
Optimize offerings with data-driven insights
Remove low-performing products from the portfolio, also freeing up investment for better-performing products
Comments