Tag Archives: TED talk

how much product choice is too much?

After having listened to Barry Schwartz TED talk (multiple times – if you haven’t CLICK HERE) as well as Dan Gilbert’s TED talk (if you haven’t – CLICK HERE) I couldn’t help it but observe how companies deal with the paradox of choice in a different manner.

From an economic perspective, increasing product choice, assumed costs can be controlled, should make a lot of sense. The economist trained mind thinks of course about a perfect world inhabited by an infinite number of homo oeconomicus, occupying an infinite number of price value points along the price curve, yet for one product class (perfect price discrimination). The marketer on the other hand, will join the discussion and argue that a finite number of heterogeneous target groups exist, displaying however homogeneous needs and wants (the basics of traditional segmentation). The mix of these two worlds is exemplified by Samsung; for the non-trained aspiring mobile phone customer, Samsung offers (at the time of writing) a staggering 145 different mobile phones. Note, this includes various carrier combinations. Switching over to TVs is even more confusing. One has to wonder, particularly after reading Schwarz’s books or listening to his talks, if brands are increasingly hurting themselves by increasing the number of product choices offered to consumers.

just a phone

According to Schwarz, increasing choice for humans lead to several negative effects but most of all a decrease in overall satisfaction which in itself sounds like a paradox, yet manifests itself in the following terms:

Opportunity cost of choice: the higher the number of options, the more attractive the 2nd, 3rd of nth option becomes to the consumer. In other words, with each option the value of opportunity costs increases until, in theory, it reaches a point of paralysed decision making.

Expectations increase: the more choice consumers’ perceive, the higher expectations become. The more unlikely however becomes, that set expectations will or can be met by the current product offering.

Doesn’t it also seem like a paradox to offer double digit product choices in one product category , assuming today’s stressed consumers have both the time and the drive to research product differences. Shouldn’t the smart marketer argue, that in the light of the ROPA effect (read here if you haven’t), diminishing cannibalisation of marketing efforts is hardly achieved with a complex and almost undistinguishable product portfolio? Is it still seen a sign of weakness in our society to reduce offering instead of enlarging the portfolio – after all, who wants to claim product offering declined under his or her reign?! Does it make sense to spread marketing budgets across +100 different product variances instead of focusing efforts to get one product message and positioning right? Wouldn’t it make much more sense to establish one dominant product design and then allow to establish alternative for price discrimination purposes instead of working the other way around: “let’s throw all we have and see what sticks the most – this will be our flagship product”?!

I argue that in the light of big data, marketers should increase their influence on the company’s product portfolio and not only emphasise on social listening post launch but also social rational pre launch.

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