BusinessBusiness Strategy

Ineffectiveness of too many choices and data!

Are a lot of choices for the consumers always a smart marketing strategy? Apparently yes as the traditionalist American marketing Gurus may have us believe. But research tells us otherwise. Sheena Iyenger, Assoc Prof at Columbia University, did research on the affect of increasing the flavors of jams in a grocery store and its sales figures. Similarly the satisfaction from a choice of the same Godiva chocolate seemed to be more when taken out of a pack of 6 rather than a pack of 30!

To explore consumer responses to extensive options, we conducted a field investigation in an upscale grocery store, Draeger’s, in Menlo Park, Calif. On two consecutive Saturdays, a tasting booth for Wilkin & Sons exotic jams was arranged. As consumers passed the tasting booth, they encountered a display with either six or 24 different jams. We observed and calculated the number of people who stopped at the tasting booth as well as the number of people who chose to purchase the jam in question.

The results are striking. They demonstrate that although extensive choice is initially more enticing than limited choice, limited choice is ultimately more motivating. In fact, 60 percent of the passersby approached the table in the extensive-choice condition, as compared to only 40 percent in the limited-choice condition. However, 30 percent of the consumers who encountered the limited selection actually purchased a jam, whereas only 3 percent of those exposed to the extensive selection made a purchase.

In subsequent studies we found that people are actually less satisfied with the choices they make if selected from a larger set of options. For instance, the same Godiva chocolate chosen from a set of 30 chocolates is considered to be less delicious than if it is chosen from a set of six. Moreover, we found that the negative consequences of too much choice extend beyond consumer contexts to work contexts. An examination of individuals completing a task chosen from a larger range of options as compared to a smaller set of options revealed that people performed better at their chosen activities if they have chosen the activity from a smaller range of options.

It seems that data and choices have a similar relationship to decision-making and its effectiveness when it comes to the volume. Increasing data and choices initially increase the effectiveness and accuracy of the decision. But after a certain point – which comes fairly early in the volumes game, the effectiveness and accuracy starts declining. So basically its a classic bell curve!

It is therefore not always the smartest of moves to go for higher amounts of data to gather more information for your decisions.

As Tom Peters also discusses in his blog-post that strategy is not as important as execution is. Which essentially points to the habit of analysis-paralysis in most companies. The amount of time taken to analyze a situation is just crazy!!

Remember, there are two things important in any decision – Time and Analysis.

Do not Analyze so much that the Time becomes irrelevant.

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Desh Kapoor

The panache of a writer is proven by the creative pen he uses to transform the most mundane topic into a thrilling story. Desh – the author, critic and analyst uses the power of his pen to create thought-provoking pieces from ordinary topics of discussion. He writes on myriad interesting themes. Read the articles to know more about his views and “drishtikone”.

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