Traditional wisdom teaches that brands win market share by offering a wide variety of products, increasing the chance of appealing to a wider variety of customers. But how happy are you when trying to find a head cold remedy at the pharmacy amid an overwhelming number of competing formulas, each slightly different than the other? It's enough to give a shopper, well, a headache.
The belief that variety is good "is not always true," argues Harvard Business School professor John Gourville in "Overchoice and Assortment Type: When and Why Variety Backfires." The research paper, co-written by professor Dilip Soman of the University of Toronto's Rotman School of Management, demonstrates that sometimes offering too many choices prompts the confused consumer to defer a purchase or run to the arms of a competitor with a less cluttered product line.
In this e-mail interview, Gourville discusses the cause of "variety backfire" and gives practical advice to avoid it.
Poping Lin: Traditionally, companies have followed the "more is better" route when offering customers choices. Your research suggests that sometimes too much choice will cause a customer to defer a purchase. Why is that?
John Gourville: There are actually two questions here. The first is, "Why have companies followed the 'more is better' route?"
It could be for several reasons. First, it may be that they truly have fallen into the belief that more is better, and have not adequately considered whether or when this is true. In a sense, they have a very blunt tool that they are overusing. Second, there is a constant battle for shelf space in most grocery stores. If you are Quaker Oats, you would like to have more shelf space than General Mills. One way of doing this is by adding more and more variety to your cereal offerings. Finally, there may be tremendous competitive pressure to expand your assortment. If your competition comes out with new sizes or flavors, you feel you have to keep pace. The end result is a constant proliferation of offerings.
The second question is, "Why might having too much choice be bad for a brand?" The research I have done with Dilip Soman shows that certain types of variety can actually overwhelm a shopper or make that shopper question whether they are choosing the right item from among that assortment. Sometimes this can lead to choice deferral; consumers simply give up and delay choice. Other times, we find, it can drive consumers toward another brand that offers a simpler assortment. In a sense, the consumer is saying, "I can't decide which product to choose from the many offered by Brand A, so I will choose from the one or two products offered by Brand B."
Q: You introduce the construct "assortment type" in the paper. What does the concept mean and how does it impact on brand share? What is an "alignable" assortment versus a "non-alignable" one?
A: Assortment type refers to the types of tradeoffs an assortment demands of a consumer. An alignable assortment is one where products vary along a single dimension—such as size or speed or capacity. Therefore, the tradeoffs are "within attribute" tradeoffs—do I want more or less of this dimension? This type of assortment tends to be good. For instance, when you go shopping for Levi's 501 jeans, the fact that there are hundreds of combinations of length and waist sizes allows a person to find the one that fits best.
The second type of assortment, non-alignable, involves tradeoffs across dimensions. An example would be laptop computers that vary in configuration, with one having a CD-ROM and another having a wireless modem. Entrees in a restaurant would be another example. In these cases, choosing one alternative provides you with some features, but forces you to forego other features. This type of variety tends to be bad. You can think of this as the cold-medicine problem. You have a cold, go to the store, and are faced with twenty different types of cold tablets from a single manufacturer: one for a cold plus sore throat, another for a cold plus nasal congestion, another to be taken only at night, another to be taken during the day. You are suffering and you just want to feel better, but you have to pick and choose what symptoms you have and don't have. We call this "overchoice."
Q: Could you provide some real-world examples where companies led their customers into overchoice and also examples of companies who understood this problem and created an effective product mix?
A: There are clearly domains where consumers face overchoice: analgesics, automobile options, mutual funds, upholstered furniture, etc. In these domains, fewer options could prove a lot more attractive to individuals. This is the wonder of something like the Vanguard Index 500. It reduces the potential for regret and it reduces the complexity of the choice. In general, however, I think that "overchoice" is more the norm than the exception.
If your competition comes out with new sizes or flavors, you feel you have to keep pace.
There are examples of companies that have done a good job, however. For instance, at one point in time, Honda offered its popular Accord in only one of three models—the DX, the LX, and the EX—a good, better, best strategy. This greatly reduced the number of choices a consumer would need to make. Procter & Gamble, in recent years, has sought to reduce its offerings in many categories. And Titleist, in the past five years, has gone from an extremely large assortment of golf balls to only five.
Q: Were you surprised by any results from your three studies?
A: At one level, we were not surprised by these results. We had a strong sense that "overchoice" existed and it was more a matter of finding out when and why. At another level, however, we were surprised at how robust the effects were. In subsequent research, we have been able to replicate the effects across a bunch of different domains ranging from Web service to vacations to cameras.
Q: What is your practical advice to managers to avoid overchoice?
A: There are a couple of different ways to deal with overchoice. The most obvious is to simply reduce the number of alternatives you offer within a brand. Do you need seventy-five flavors of Snapple or will twenty-five do? Do you need twenty-five SKUs of toothpaste or can you get by on ten?
The question is which alternatives to eliminate and what the customer response will be. In the case of one online grocery retailer, by reducing their assortment in various categories by 20 percent to as much as 80 percent, they increased their revenues by 11 percent.
An alternative to reducing variety would be to help consumers navigate the variety that exists. Sometimes this can be done by identifying alternatives by their use rather than their features. For instance, Dell sometimes identifies their desktop computers in terms of who they are intended to serve. The result is a "gaming" desktop, a "home office" desktop, an "Internet ready" desktop, and so on. Rather than worry about what specs you require, you get the desktop that meets your profile.
An alternative to reducing variety would be to help consumers to navigate the variety that exists.
Other manufacturers take this a step further and actually work you through the decision process. At one point Titleist asked potential purchasers a series of questions, the answers to which would result in the recommendation of a particular golf ball. By saying you tended to hit far but off line, you'd have one ball recommended to you. By saying you tended to be good around the green but short off the tee, you'd have another ball recommended to you.
In all these cases, by either reducing the number of alternatives or helping consumers through the decision-making process, a company can reduce the complexity of the choice and reduce the consumer's feeling that they might be making the wrong choice.
Q: What are you working on now?
A: In recent years, I've been looking at innovations, trying to understand why and when seemingly promising innovations succeed or fail in the marketplace. Basically, I find that successful innovations tend to minimize the behavior change they demand of consumers. The hybrid electric cars, such as the Toyota Prius, would be a good example. In spite of great technological innovation, the Prius drives like any other car on the road. As a result, consumers don't need to change anything about the way they interact with their automobiles. Other innovations, like online grocery shopping or the Segway scooter, demand significant changes on the part of consumers. The end result is either marketplace failure or, at best, a very slow, painful adoption process.