Choice Overload: Solution through Offering Less Choice - Essay Example

Choice Overload: Solution through Offering Less Choice Today, consumer decisions have increasingly become complex because the brands have proliferated and become similar and choices have expanded. Due to this expansion, consumers are expected to navigate the consumer landscape and use their rational decision-making skills and exploit the information-rich content. However, the decision-making skills process has been found to be an imperfect one and customer choices are subject to a number of predictable errors (Kimmel, 2012). In addition, the author observes that consumers prefer fewer product choices because there are many uncertainties in decision-making. Consumer decision-making is complex and subject to both rational and irrational forces. Today, consumers are getting information from a wide variety of sources due to penetration and increase in technological advancements. Consumers get information about products, brands and services on the internet. Due to a wide pool of information sources, consumers are likely to make bad decisions. The wider the product pool, the more the likelihood of making a bad decision. Too much choice has been found to be demotivating. To investigate this, Iyengar and Lepper (2000) established a tasting booth inside a luxury food store in Menlo Park, California and invited the customers to taste their jams. The researchers rotated the jams on an hourly basis such that every time, there were six different flavours on from which to choose. On another booth, they placed 24 different flavours. The consumers who had limited assortment to choose from were ten times more likely to purchase the jam than the ones who chose from a wide range of assortment. From such findings, a notion has risen and this notion is “the paradox of choice” (Kimmel, 2012). This notion suggests that consumers have more difficulty making a choice when a marketer offers them a wide range of choices. Schwartz (2004) defined the paradox of choice as the fact that consumers in the developed countries are likely to have a broad range of choices. Researchers associate such wide offerings with welfare and freedom. However, Shwartz (2004) argued that too much choice makes consumers feel less happy, less satisfied, and can even lead to paralysis. He argues that the more the marketer continues to increase choices, the more the consumer feels that someone has catered for his/her welfare. However, the choice can only be increased only to a certain point and beyond this point; a negative impact is experienced. Schwartz referred this contradiction as “the paradox of choice.” Gero (2011) associated too much choice with mass confusion in the context of the B2C online mass customisation. Therefore, it is not necessary to overwhelm consumers with a large amount of choice to the extent that it makes them unhappy. In his redefinition of the “paradox of choice”, Gero (2011) proposes that marketers should emphasise more on meaning of the attributes from which the consumer can choose rather than emphasising on the quantity. A meta-analysis of 50 experiments by Scheibehenne et al. (2010) found out that choice overload was either likely to occur or not to occur. Various conditions were found to play a role in the mixed results. Among these conditions were contextual parameters such as categorisation and arrangement of products, time pressure for customers, consumer decision strategies, and general information overload. Kimmel (2012) observes that there is enough evidence to suggest that an abundance of options can lead to choice overload. Scheibehenne et al. (2010) suggest that marketers can boost their success in sales by offering less choice. These authors further suggest the conditions under which adverse effects of choice overload are likely to occur. For example, they argue that there are certain preconditions that must be present for an overload to occur. These preconditions include consumer’s lack of familiarity with the products on the assortment table. Iyengar and Lepper (2000) found out that, the consumers with prior experience of the products prefer a wide assortment. For these consumers, satisfaction increases with an increase in number of options from which to choose. A negative relationship was, however, witnessed between the consumers who had no prior experience of the products with a wide range of assortments. Another precondition is that in a wide assortment of products, consumers are likely to select the most dominant product. Therefore, the lack of dominant option leads to the occurrence of choice overload (Scheibehenne et al., 2010). However, these authors argue that there exists no definition of what constitutes a choice overload. To some researchers, a choice overload is a “reasonably large” number of options (Iyengar and Lepper, 2000). As argued by Gero (2011), consumers may decide not to purchase any of the available products if they encounter an unbearable scope of choice on display. To add value into this, Keller and Stealin (1987) suggested that there exists a U-shaped relationship between both quantity and quality of choice and the choice effectiveness. They proposed that there is decision ineffectiveness in increasing the quantity of information while the quality of that information remains fixed. However, these factors may also interchange but in this case effectiveness of choice will increase if the quality of information is increased while the quantity remains fixed. Huberman et al. (2007) have observed that increasing the number of options increases the uncertainty of consumer’s preference. Though, these authors failed to explain what they meant by preference uncertainty, their proposition cannot be ruled out. Their proposition is not just a mere redescription of ‘too-much-choice’ effect. According to The New York Times (2010), too many choices of salad at a Woolworths supermarket in Sydney, are troubling consumers. A man took his child to a Woolworth supermarket in Sydney, Australia and told him to choose an ice cream from a wide assortment of them. The boy feared that in his selection, he may leave the option that would have been better. The author of the newspaper argues that the problem of choice overload is not common only in such cases; rather, it is a problem encountered by every consumer. Another article by BBC (2000) indicated that the consumers are being overwhelmed by too much choice. The article observed that the decisions about products such as shampoos, mobile phones among other items are causing consumers unnecessary stress. A special observation was that many supermarkets are offering 40,000 products. These products include more than 600 brands of coffee, over 400 brands of shampoos, and 18 types of organic cheese among others (BBC, 2000). The problem of choice overload is more common in the supermarkets than in other marketplaces. Scheibehenne et al. (2010) gives a wide range of examples of choice overload in supermarkets. For example, Dreyer was offering 34 flavours of ice cream to consumers in 1977, but in 2004, it was offering over 250 flavours. In 1964, Arby’s was offering only one kind of roast beef sandwich but in 2004, it was offering more than 30 sandwiches. In early 1990s, Tropicana was offering two flavours of orange juice but in 2004 it was offering 24 flavours. While Frito-Lay offered two types of potato chips at the time of its establishment, in 2004, it was offering 60 types. Finally, in 1974, Whole Foods offered only two kinds of lettuce. However, in 2004, it had 40 different kinds of lettuce. Another example includes iTunes, which is currently offering over 5 million songs (Scheibehenne et al., 2010). The Guardian (2014) argues that marketers should keep it simple and avoid giving their customers decision overload. Antony Weiss of The Guardian argues that giving customers too much choice makes them less likely to buy the products. He further argues that an average person makes thousand of decisions in per day. Psychologists such as Iyengar and Lepper (2000) suggested that there is a certain limit to which a person’s brain can make decisions. The Guardian (2014) argues that too much choice often leads to decision fatigue. Iyengar and Lepper (2000) supported their argument with a jam experiment described earlier in this paper. A study by Food Marketing Institute in 2010 found out that most supermarkets in the US stock approximately 40,000 products (The Guardian, 2014). This number represented five times the number in 1975. The study concluded that too much choice reduces customers’ satisfaction as well as sales. The UK policy makers are making attempts to introduce regulations that simplify consumer choices in the energy sector. The deregulation of UK energy markets made consumers have difficulty in making their choices. Some consumers made poor choices and others remained on more expensive tariffs. The policy makers assume that simplification of the information and choices facing decision makers will improve decisions. Consumers are not the only culprits in choice overload. Product and service overload also occurs in B2B engagements. Within B2B engagements, there are hundreds or thousands of different options. In addition, an overload in B2B engagements may result in an overload in B2C engagements. Decision-making research has demonstrated that consumers’ preferences depend on various factors such as a set of options available, the particular features of the context in which a consumer makes choices, the degree of uncertainty about attribute values, the time available to make a decision, and the difficulty of trade-offs involved (Kimmel, 2011). Psychological research has directed much of its focus on the human decision-making process. Many decisions made by consumers are made based on their prior experience and familiarity for specific products, brands, and services. Their choices tend to follow a predictable course. However, sometimes, consumers may proceed to make a choice without any defined preference. Kimmel (2011) classifies problem-solving into two when it comes to decision-making. These types are limited problem-solving and extended problem-solving. The decisions that fall into extensive problem-solving are the ones that require careful deliberation and systematic effort by consumers. In this case, consumers have to do a significant search for information, compare alternatives, and evaluate the attributes of each alternative and anticipated satisfaction-providing outcome. Extensive problem-solving decisions are required when a consumer is purchasing a car, a computer, a new home, and other expensive products. A wide range of options for such products is more stressful to consumers compared to products and services that require limited problem-solving decisions. The marketer can only understand consumer behaviour in terms of relevance, frequency, freedom, influence, and influence (Perry, 2014). He further argued that, if the consumer is purchasing a product for the first time, he/she is likely to spend more time and effort to make a choice in order to minimise the risk of making the wrong choice. If the customer is doing a repetitive action in buying, he/she is likely to have low involvement in the process. Consumption may be less voluntary or involuntary. That is; the consumers usually have little choice when it comes to purchasing some brands such as fuel. Finally, the consumer may make his/her choice based on the influence of friends or family. However, Perry (2014) argued that the above ideas may not apply when there is too much choice because too much choice creates information overload and confuses the consumer. In order to understand consumers’ behaviours, three theories are particularly important. These theories are the cognitive paradigm, the learned behaviour theory, and habitual decision-making. The cognitive theory is based on the idea that a purchase is an outcome of problem-solving (Perry, 2014). Therefore, consumer behaviour is a decision-making process. Through this process, a consumer receives and makes sense of considerable quantities of information, engages in a comparative evaluation of alternative goods and services, and makes a rational selection. However, the theory may fail to apply where a consumer does not have sufficient time or motivation to search for information and evaluation alternatives. The learned behaviour theory proposes that consumers learn from past experiences. These past experiences may either consist of a satisfaction or dissatisfaction with a product or service. There is also the likelihood of consumers taking short cuts when purchases are made on the routine basis or are habitual in nature. The habitual decision-making theory suggests that consumers make decisions based on their loyalty to a particular brand. Consumers have accepted that only their brand can satisfy their needs even if there is an existing better solution. This theory also assumes that consumer behaviours can become established and habits may also become deeply embedded (Perry, 2014). Influencing consumers’ behaviours is one of the most important factors in marketing. There are many ways through which consumers’ behaviours are influenced. This paper has established that an increased product options can lead to choice overload. Several authors and researchers have established a presence of overload due to increased product options. Shwartz (2004) proposed several ways that marketers can use to reduce the negative effects of the paradox of choice. However, two points extracted from Schwartz proposition are of particular importance. First, the marketer should omit the choice if he finds out that it is of no significant importance. Secondly, the marketer should make his choices based on reflection on what is important in this decision. The marketer who adopts both propositions will be able to limit the size of the solution space. Abbey National conducted a research in the UK and found out that instead of spicing up their lives, too-much-choice is causing customers stressful repercussions (BBC, 2000). Approximately half of the women respondents and one in five male respondents indicated that they were very irritated with the choice of what to eat because of the wide variety of options. Other irritations among the UK adults were the choice of clothes and television programmes. The study concluded that more choices bring more challenges thus complicating the lives even more. The study findings are similar to Scheibehenne et al. (2010) proposition which indicated that when encountered by a wide variety of options, the consumers chooses well known and trusted brands. Others prefer to do their purchases on the days when the shelves are less full (BBC, 2000). Most consumers end up with deep regrets after choosing a product from a wide pool. In addition, consumers are more uncertain when choosing from a large and complex assortment size than when they choose from a smaller assortment size. Some theorists have suggested that consumers’ characteristics can be moderated (Sagi and Friedland, 2007). In describing counterfactual thinking, Sagi and Friedland (2007) observed that people experience ‘if only’ thoughts after making a choice and purchase. The counterfactual theory proposes that consumers’ regrets are greater if he/she made a choice from a wide variety of products than when he would have made it from a low variety. The experience of regret is seen as one of the indicators of the negative effect of choice overload (Scheibehenne et al., 2010). The concepts of satisfaction and regret are intertwined. To explain counterfactual thinking better, Medvec et al. (1995) used the case of Olympic athletes. They argue that the athletes who win a silver medal are more likely to be less happy compared to the ones who win bronze medals. The counterfactual alternative is the comparison of the feeling he would have had if he won a gold medal. A bronze medal winner tends to engage in downward comparison, so he does not have many regrets. Malhotra (2013) proposes a variety of solutions to marketers when they are choosing the assortments to offer to consumers. He argues that in the initial stage, which he refers to as the orientation stage, “the consumer takes in the assortment as a whole” (p. 3). He suggests that in this stage, the marketer should only select the products based on the component that makes an assortment more attractive – products perceived variety. Such an assortment offer consumers four items: i. The consumer can enjoy most of the brands in that assortment ii. The consumer can get at least one option from that assortment that he/she likes iii. The assortment offers the consumer more ways to enjoy it iv. How much variety the consumer thinks there is in that assortment Another factor that a marketer should consider is ‘perceive complexity.’ The perceived variety at the assortment level may be positive, but it can become a liability if it results in confusion or decreased satisfaction due to choice overload. Several research studies and pieces of literature have found this to be a common problem (Iyengar and Lepper, 2000; Scheibehenne, 2010; Huberman, 2007). In this stage, consumers evaluate options. The perceived complexity at the item choice level can lead to poor decision-making, delay in choice or consumers opt not to choose at all. It is evident that choices become less consistent as choice set sizes increase. There are different ways in which large set sizes can produce a decrement in choice consistency. Some of the consumers may even opt out of choice situations. As suggested by Malhotra (2013), extended choice sets are likely to overwhelm the limited information-processing capabilities of decision-makers. Alternatively, the addition of options increases the similarity between alternatives thus causing a conflict in making a choice. In addition, the expectations of consumers increase with the increase in the choice set thus increasing the counterfactual thinking of ‘if only’. Malhotra (2013) suggests that the reduction of products should be done strategically. If the reduction is done strategically, sales can increase. Reduction of products offered is one of the best ways of dealing with complex assortments. Retailers can avoid an overall decline in sales by cutting or dropping products that few people purchase, are redundant, or are easily substitutable. However, marketers should take not to drop items that may make customers leave and purchase somewhere else. Researchers conducted several experiments on the effectiveness of cutting items from a large assortment. A much earlier study by Broniarczyk et al. (1998) suggested that consumers use heuristic cues to judge assortment variety and as long as these cues remain intact, consumers will not notice the brands reduction. Their results further suggested that perceptions of variety can remain the same even if actual variety is reduced. However, as suggested earlier, dropping off items has to be done strategically. Diehl and Poynor (2010) suggest that reduction of an assortment is important. They argue that, even when a consumer buys a product, the product is likely to cause lower satisfaction if it was chosen from a large assortment rather than a smaller one. A smaller assortment size gives consumers low expectations; therefore, these expectations are easily satisfied. Contrary to this, a large assortment size offers consumers high expectations; therefore, it is difficult to satisfy these expectations. As a result, consumers are less satisfied and they are likely to divert their attention to the competitors. Marketers have to engage in choice cuts in order to achieve success in sales. This paper uses the theory of cognitive dissonance to solve the problem of choice overload. The most advanced form of making a choice involves weighing information about the available options. So as to select the option that is most promising, it is necessary to choose from a limited range of options rather than large. This proposition underpins ultimate consumer satisfaction. A choice can impair self-control. The larger the choice range, the more it impairs self-control. The smaller the choice range, the lesser it impairs self-control (Vohs et al., 2008). Therefore, the marketers who stock small assortments are likely to have satisfied customers than the ones who stock large assortments of products. The reason behind this proposition is that small assortments do not deplete much of consumers’ self-strength. In addition, consumers self-regulate themselves in the act of choosing. The consumer uses energy to override one option and choose the other one. In the market, a consumer self-regulates him-/herself more in the presence of a large assortment of products and vice versa. A large assortment is more depleting than a small assortment. Vohs et al. (2008) suggests that choosing from a large assortment pool consumes the self’s limited supply of energy, thereby making the consumer have less energy to demand from that marketplace in future. Today, consumers live a busy life due to increased activities that they have to conduct daily. Therefore, their time to shop has become very limited. Marketers have to consider this when providing their assortments to consumers. People do not like wasting countless hours weighing trivial decisions and ruminating about whether their decisions were optimal. Many marketers have recognised the value of fewer choices. However, many others have not recognised this value. The baseline to overload reduction is to display the most valuable items and the ones that the consumer is more likely to set aside from others. Simplifying consumer choices makes marketers enable consumers to have greater focus on the remaining products. However, the small assortment must contain better quality products. Customers are happy when they make an informed decision without having to navigate through a wide range of options. Consumers are more decisive when they choose from a small assortment than when choosing from a large assortment. Today, consumers experience a proliferation of products range when making their online purchases. 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