07 Nov 2005  What Do YOU Think?

Is Less Becoming More?

Americans these days have a lot more choices in products and services. But do consumers and suppliers suffer from choice overload? If so, what does this abundance mean for companies?

 

Summing Up

Less is increasingly more, at least in the minds of customers, according to nearly every respondent to this month's column. However, some cite product complexity as the cause of rising real and psychological consumer "costs" while others point to the proliferation of choice as the cause. F. Chircu helped frame the discussion by writing that "When producers want to differentiate themselves, up to a point the safest and quickest way . . . is to add features or increase product complexity. . . . Choice complexity is usually brought about by . . . 'me-too' producers that want to capitalize on the first-movers' research and development. . . . Regardless of the type of complexity, whether product- or choice-related, the consumer is ultimately overwhelmed."

Addressing the issue of product complexity, K. Root commented, "The difference is when consumers know what they want and when they don't. . . . In the case of a new cell phone, I don't know what I want. . . . Here's where companies make the mistake of competing on technical features for short-term gains instead of providing customers with solutions to their problems. More is just too much."

Typical of comments regarding the issue of choice were those by Mehmet Genc, who said, "As choice increases, search costs increase . . . [and] it takes longer to make a decision. At the same time, due to social changes, we have even less time to make choices. . . ." Marino Dacco commented: "I think we should find the answer in consumer psychology rather than in geographical markets, segmentation, and so on. . . . Too much choice is like having no choice, and buyers will start to feel that."

What to do about all of this evoked a wide range of opinions. Respondents had advice for both customers and producers. After pointing out that "Less is more is probably a great way to be a consumer. If you practice it, you will drill down into your purchase thinking and determine real needs versus discretionary needs," Michael Schwartz asked, "Do you really need those $1,200 Testoni loafers?" Peter Vajda advises, "In our culture, the difference between 'have' and 'happy' is a most difficult lesson to learn indeed, and the psychological impact is great." As for producers, Richard Eckel suggests that "Manufacturers should stop trying to develop these marginal differentiators and expend their creative efforts on new products and processes that create value, instead of slapping a new coat of paint on shopworn goods." Sandi Edgar wrote, "Instead of trying to weed out new products, focus on promoting the best of the new products. The consumers will determine which are successful and which are not."

But just how is "less" achieved? As Martin Reveli points out, "To artificially restrict choice eliminates some elements of competition. . . . Long live the long tail." Can one organization take the initiative without endangering its competitive position? Or does the answer lie in increasing levels of disruptive competition, the strategy of providing less for much less? What do you think?

Original Article

The issue of whether less is more, both for consumers and suppliers, is being joined by an increasing number of researchers and commentators. It is perhaps indicative of the degree to which affluence combined with technology is making it possible to produce and consume a greater range of products and services. But is this in everyone's best interest?

One who might weigh in in the affirmative is Chris Anderson of Wired magazine, who has popularized the concept of the "long tail," about which he is writing a book. It refers to the tendency of consumers to buy a greater variety of things in smaller quantities when the opportunity is made available to them. Exhibit A is the way in which Amazon stimulates sales by its listing of thousands of books that would otherwise be out of print, given their meager sales through traditional channels. Internet technology and supply chain efficiencies have made this possible.

The implication of Anderson's thesis is that the "long tail" phenomenon benefits producers and consumers alike. But a recent Harvard Business Review article by consultants Mark Gottfredson and Keith Aspinall questions whether there are benefits for producers, particularly those producing increasingly varied products targeted for smaller and smaller market niches. They report that "nearly 70 percent of managers admit that excessive complexity is raising their costs and hindering their profit growth." In other words, there is a trade-off between innovation and complexity on the one hand and profitable relationships with customers on the other. Too much innovation merely increases complexity without creating economic benefits for either the producer or the consumer.

In his book, The Paradox of Choice, Barry Schwartz maps the adverse impact of what he calls the "culture of abundance" on everything from customer satisfaction to mental health. His research findings suggest that "while people in the United States have more choice than any group of people ever has before, and thus, presumably, more freedom and autonomy, we don't seem to be benefiting from it psychologically." In a vast oversimplification of his findings, he concludes that consumers increasingly are beset with worries associated with the inability to choose among increasing options, the increasing difficulty of comparing options, a sense of "missed opportunity" in the buying process, and ultimately stronger cases of what is known among marketers as "post-purchase dissonance" and "buyer's regret." He maintains that increasingly these are contributors to depression. Catherine Getches, who asks "whatever happened to the generic aisle" in stores, laments that we are inundated by new product variations. (Most of these are probably unprofitable as well, according to Gottfredson and Aspinall.) As Getches puts it, "getting out of a convenience store isn't so convenient anymore."

Can we have too much freedom of choice in products and services? Gottfredson and Aspinall suggest raising the investment hurdle rate on new products to stem the flow. But should all new ideas have the same hurdle rate? How can this help a producer sort the better from worse ideas in advance of bringing them to market? Will we as consumers increasingly reject new products in an effort to defend ourselves from their onslaught and maintain our sanity by increasing our loyalty to those we know and trust? What do you think?

To read more:

Catherine Getches, "Brand Boggled," The Boston Globe, September 1, 2005, p. A19.

Mark Gottfredson and Keith Aspinall, "Innovation vs. Complexity: What Is Too Much of a Good Thing?" Harvard Business Review, November, 2005, pp. 62-71.

Barry Schwartz, The Paradox of Choice: Why More Is Less (New York: Harper Perennial, 2004).

Comments

    • Anonymous

    The volume of choices and the onslaught of "new and improved" products seem to leave consumers confused and sometimes mistrustful of producers. The producers might do well to spend more time and energy maintaining the quality of their current lines rather than creating marginally new variations that are of questionable utility.

     
     
     
    • Marina Dacco
    • University Researcher, Ph.D. consultant in charge of strategic marketing and, brand development direction

    I think we should find the answer in consumer psychology rather than in geographical markets, segmentation, and so on. In general, I believe that cognitive dissonance is the result of the "sense/nonsense" that people experience in actions such as making a purchase, and in the sensation of accomplishment or lack of accomplishment that they feel.

    Too much choice is like having no choice, and buyers will start to feel that.

     
     
     
    • Daria Blackwell
    • President, White Seahorse, Inc.

    The worst conundrum is that once I make a decision to try a new product (or a new version of an old product), very often the product will have disappeared the next time I try to buy it. I assume this is because not enough people bought it when I did. This situation, therefore, discourages me from trying new products. Otherwise, I am wasting my valuable time, first in deciding what to buy to begin with, next in searching for something that is no longer on the shelf.

     
     
     
    • Peter Vajda, Ph.D.
    • SpiritHeart Integrated Coaching

    In our culture, the difference between "have" and "happy" is a most difficult lesson to learn indeed, and the psychological impact is great.

    We live in a culture where it is paramount for many to see themselves and be seen by others as somebodies instead of nobodies. One of the ways that many people attempt to achieve this elusive state is by having and buying. Buyer's remorse is often a function of not achieving the desired state of happiness, success, ego gratification, and "being seen."

    Is it any wonder the self-storage business is a booming industry? Lots of purchases, lots of remorse; little satisfaction or true happiness.

     
     
     
    • K. Root
    • Process Consultant, TeamWorx

    Less is always more. But there is a key difference in the two scenarios your column describes. The difference is when consumers know what they want and when they don't. In the case of buying books online, I know what I want (or I'll know it when I see it) and even though running around the country searching used bookstores could be fun, it's usually impractical. So the online solution is not the book, but the connection to the book—more satisfaction with less frustration.

    However, in the case of a new cell phone, I don't know what I want—either because I can't understand the features and contracts or because I don't want to try so hard to understand them. Here's where companies make the mistake of competing on technical features for short-term gains instead of providing customers with solutions to their problems. More is just too much.

     
     
     
    • Anu Ranganath
    • Voice of the Customer Program Manager, Cisco Systems

    Loyalty programs are worth the investment as long as they are preceded by corporate-wide motivation and understanding of the need to grow customer loyalty, and are followed with methods of measurement that are meaningful to the business (i.e., that ensure that success metrics of the program are tied to business success metrics).

    There also needs to be dedication to linking loyalty increases to long-term growth for the corporation's products, services, brand, and reputation.

    Most companies don't go far enough in measuring customer satisfaction. A sustained delivery toward enhancing superior customer experience will result in customer satisfaction time after time, transactionally. More importantly, it will result in loyalty for the long term. My personal experience tells me that customers in the loyalty zone are much more resilient about tolerating minor problems and are more forgiving toward such transgressions. However, getting them into that zone is the hard part.

    Without a dedicated effort to build loyalty, an increase in customer satisfaction and loyalty is just a hit-or-miss result.

     
     
     
    • Chester Wong
    • CEO, Fair Regent, Hong Kong

    Too much freedom of choice for the consumer leaves fewer choices for the producers, who in turn cannot carry so many stock keeping units. This may lead to a resurrection of intermediaries who have access to various channels and can consolidate small demands into larger orders that fulfill minimum order quantities. This is actually good news for smaller manufacturers, who could avoid direct competition with mega-corporations and just concentrate on a few niche products.

     
     
     
    • Sandi Edgar

    Instead of trying to weed out new products, focus on promoting the best of the new products. Consumers will determine which are successful and which are not.

     
     
     
    • Richard A. "Tony" Eckel
    • President, Systems Synergy, Inc.

    Innovation has precious little to do with complexity, whether an overabundance of options in automobiles or flavors and features in toothpaste. These erstwhile features are not significant departures from the base product, and in the case of automobiles, they cannot be unbundled from "packages" anyway—there are not thousands of possible combinations, only four or five packages to choose from.

    Consumers are not receiving the benefits of large investment in new product development in the form of new and better-performing products. Instead, we see increasingly marginal cosmetic changes applied to mature products in a facelift analogy to keep the product "new and fresh." Even auto parts stores are hawking pneumatic paint guns whose aluminum bowls are anodized in colorful primary colors. Where is the value? In the end, the producer is simply spending more to own a marginally larger piece of a fixed pie with a substantially reduced margin.

    Consumers will reject the increasingly obsessive product variation cycle as valueless, except in clothing and cosmetics where individuality is still a primary differentiator. Manufacturers should stop trying to develop these marginal differentiators and expend their creative efforts on new products and processes that create value, instead of slapping a new coat of paint on shopworn goods.

     
     
     
    • F. Chircu
    • Consultant, CoSeMa

    First movers seldom encounter complexity problems with producers. When producers want to differentiate themselves, up to a point, the safest and quickest way to achieve that goal is to add features or increase product complexity. So the first impulse of some producers is to err by doing more. When successful, product complexity is being subsidized either by scale economies, as in software, or by consumers' wants, as in luxury products.

    Choice complexity is usually brought about by those "me-too" producers who want to capitalize on the first-movers' research and development. It is remarkable, though, how Apple manages to achieve product simplicity and choice complexity with its iPod line of products. Product simplicity endears iPod to the consumer, while choice complexity helps Apple segment its customer base. Products start simple, and then get copied and more complicated until another category starts anew.

    Regardless of the type of complexity, whether product- or choice-related, the consumer is ultimately overwhelmed. One example is found on the cereal shelves at your health-food store. Cereals come in about two dozen offerings, but chances are that you'll find just one that contains organic grain without sugar.

     
     
     
    • David Havison
    • Director of Analytics, ECG

    We work within the grocery and drug retail industry. The average grocery store offers 35,000 to 40,000 SKUs (stock keeping units) today versus 12,000 to 15,000 thirty years ago. The suppliers offer about 20,000 new items each year, with 1,000 being new efforts while the rest are line extensions. While the industry promotes 1,000 items each week per store, the primary vehicle for growth has been new items.

    The issue we are considering is how to change this dependence on new items. This is part of the oligopoly argument from Joan Robinson on down: How does the supplier reduce new duplicative items and reduce underperforming items when the competitors will absorb the shelf space with alternative items that perform no better and perhaps even worse?

    How does the grocery industry change its form of dependence on new item introduction fees (the push strategy) and move to a consumer sales strategy (the pull strategy)? The top 5,000 items still account for about 90 percent of sales, as they did thirty years ago.

     
     
     
    • Mehmet Genc
    • Assistant Professor, Baruch College

    I do think that there are problems associated with too much choice on the customer's side. As choice increases, search costs increase, and decisions involve evaluation of more options. Since we are boundedly rational beings, this could mean that we discount or ignore a lot of the options. This could increase brand loyalty as a mechanism that reduces search and evaluation costs. There is also the issue that with more options, it takes longer to make a decision. At the same time, due to social changes, we have even less time to make choices, especially for everyday products that have smaller wallet share. This again indicates relying on good old heuristics to make choices. On the seller side then, if you can satisfy customers well once, they might be more likely to stick with you even though they have more choices.

     
     
     
    • Betty E. Reed

    As a female in the forty-five to fifty age group, I totally agree that an overabundance of options in services and products exists. I personally experience the most angst when evaluating investment and career options. We are bombarded daily with our potential to be adrift in our old age if we do not invest correctly. At the same time, we are trying to follow Oprah's advice to "lead our best lives." How do you do it all and what is the "best" answer for us? Analysis paralysis can set in.

    What turns me into a consumer? Trust is absolutely key in most of my buying decisions for services and products. Have the provider's services or products been consistent in quality? How were mishaps handled? Was the customer treated with respect? What does management really believe in? What has been the leader's own personal record? Are they keeping current?

    These are the things that I take into consideration when purchasing to cut through all the information thrown at us.

     
     
     
    • Dean Schroeder
    • Owner, Orange Tree Imports/retail gift/gourmet

    We often deal with this problem: When does a large selection become too large? The answer varies with each product category we sell. For example, we can profitably offer six different garlic presses, at a variety of price points. They will all sell. But we offer only one strawberry huller, and only in season.

    Within each category, as long as we are offering choices that make sense (i.e., the differences in price, quality, or function are clear), it makes the customer's decision easy. If, however, the customer cannot understand why we offer a certain selection, he or she will become confused and leave without buying.

    In consumer electronics, new products are offered at an overwhelming rate. Salespeople in stores often can't keep abreast of the technology, offering a liberal return policy in lieu of product knowledge. The consumer thereby becomes the guinea pig, which may have some appeal.

    Most of our sales come from products or brands that we and our customers know and trust. When I get interested enough in a new item to add it to our selection, it should be for a clear reason: It is somehow better or a better value. My customers will understand the benefit to them and will buy it . . . especially in the fourth quarter. After all, there is always a need to surprise someone with a gift of something they may not have seen and surely don't already own.

     
     
     
    • Dawn Rivers Baker
    • Editor/Publisher, The MicroEnterprise Journal

    I think there is a difference between the average Joe being inundated with a bewildering array of consumer choices and the phenomenon of producers finding niche markets among special-interest segments of the buying public and meeting the very specific needs of that market.

    There is a reason why the nation's population of microbusinesses is growing so rapidly. These tiny businesses are capable of operating on shoestring budgets, which enables them to meet the needs of a relatively small niche market and still retain profitability.

    Looking at the big picture, it doesn't make much sense for larger corporate players to drive up their own production costs trying to chase these tiny businesses out of markets that are profitable for the microbusiness but unprofitable for them. At the same time, their success feeds this vast new market for small business goods and services. That sounds to me like a win-win situation for businesses large and small.

    As for the consumers, I think the way they ultimately react will depend entirely on whether their personal needs are currently being met by products in the mainstream marketplace. If producers insist on redesigning their products and attempting infinite expansion of product offerings as a defense against the upsurge of microbusinesses, it is possible that eventually consumers will weary of the clamor. On the other hand, if the big boys keep their eyes on the prize, focus on their core competencies, and leave the niche markets to the niche players, I think everybody will be better off.

     
     
     
    • Rachel Chan
    • Student, University of London External

    Is this a consequence of the break from modernity to no longer conform to a homogeneous selection of products and services? Rediscovering some sort of human spirit in which individuals need to differentiate themselves from the rest through the statement made by their choice of different products? I think such stands are more responsibly made through political choice of goods and services. Corporations like Wal-Mart ought to be boycotted by those who care about social responsibility (and not just on surface value or as a marketing tactic, but in its essence) and worker concerns. Choice should then be limited and narrowed down based on political and ethical affiliations of these corporations. In that way, we can better differentiate ourselves as individuals rather than through supporting the increasing "niche-ification" of brands.

     
     
     
    • Andrea Learned
    • President, Learned On Women

    In order to save time when they shop, consumers, especially women, will likely reject the bulk of new products and variations. Still, brands certainly won't stop coming up with new variations of products. The result is a great opportunity for the already trusted organizations/retailers to serve as a buyer's filter, and sift out the choices that don't serve their customers before the customer even gets there.

    People (and consumers) may, in theory, like the abundance and never-ending choices in North American society, but on a daily basis, and with a look at their own actual shopping experiences, I think many consumers (of either gender) would have to admit that less is more for the majority of their purchases.

     
     
     
    • Martin Revell

    I disagree that more choice equals more competition, which equals more value. To artificially restrict choice eliminates some elements of competition. The example of online book companies is only one aspect. Today, engineering parts are freely available through many Web sites. This has ensured that there is fair competition and that the buyer has choice as to where they spend their dollars. Monopolistic manufacturing practices are reduced to giving customers better choices and value.

    Long live the long tail.

     
     
     
    • Anonymous

    I enjoyed reading your article very much. I was at the mall the other day looking for Christmas gifts and was overwhelmed by the choices available. I was tempted to purchase everything I saw. But, I know I would regret it the minute I made a purchase. In a neat and concise form, your article raises an important paradox that apparently has no answer.

     
     
     
    • Brett Butler
    • Director, Marketing Strategy & Technology, Lexmark International, Inc.

    I completely agree that, in certain categories, there are too many choices. I'm in the final stages of building a custom house and have been staggered by the large number of decisions and the innumerable choices available for each decision.

    Bathroom tile was the worst. My only savior was a tile specialty store that presented pre-designed bathroom displays. I took digital pictures, gave them to the builder, and said, "Do this." Unfortunately for the tile store, their prices were high and I sourced the tile from a different retailer, even though they didn't provide the same "tile on display" service.

     
     
     
    • Michael Schwartz
    • Consultant

    Less is more is probably a great way to be a consumer. If you practice it, you will drill down into your purchase thinking and determine real needs versus discretionary needs.

    I would suggest that the continued practice of drilling down or thinking hard about the separation of real and discretionary needs will build strength in the consumer, and offset the "buyer's regret" and depression that the article suggests.

    A lot of discretionary spending has little rationale in a real sense. In many cases, discretionary spending is done because of self-indulgence, to show off to friends and family, to enhance your perceived status, and so on. It doesn't build the real values that the drilling down process does. I would also suggest, as a last comment, that there is not much more thrilling than purchasing less and getting more for those purchases.

    Do you really need those $1,200 Testoni loafers?