Choice is nice, but also confusing.

Research about choice is nice, but also sometimes confusing.

The classic psychological experiment on choice is probably the one involving jams in a supermarket. A choice of six was found to lead to substantially more jam being sold than a choice of 24. You may attract people to your abundant display, but they get confused and end up not buying.

Other studies on choice have found that when people do choose from a large range they end up feeling less good about their decision: with the gap between good and bad inevitably condensed, unconscious nagging doubts remain about the option selected.

However, the situation isn’t as simple as to say that reducing choice will lead to higher sales and happier customers. Customers may reject you for having too little choice. Alternatively, range rationalisation may remove a specific product that someone wants, leading them to shop elsewhere. I’ve heard that some supermarkets have benefited from rationalising categories, whilst others have lost significant sales. As ever with psychology the context is crucial.

Now there is another piece to put into our understanding of choice jigsaw; what happens when you have a large range that is clearly delineated? Does this change how people shop?
This is important because choice isn’t simply a matter of the number of items presented to customers. It’s also a matter of how well-structured the category is; how easy it is to segment it quickly in your mind so that you can focus in on a manageable choice.

Researchers gave people a choice of chocolates. In each case they were told that the chocolate had been graded according to quality and positioned from low to high. In one case people had a choice of five chocolates, in another twenty one. People were asked what they were willing to pay for one of the chocolates.

The difference was significant: when presented with the large selection, people would sometimes pay forty percent more than those offered the same chocolate in a smaller selection. On other occasions they would pay thirty percent less.

Hold on! They would pay more AND they would pay less. What explains the contradiction?
The answer is quality. Given a larger selection people will pay more for the same HIGH quality chocolate, but less for a low quality one.

The same pattern of responses occurred with a second study that tested people with wine.
They also found the same pattern when they looked at the prices paid in real wine auctions: again, the price paid was influenced by the range on sale in the same directions.

Clearly retailers have a choice to make and / or a balance to strike. If they are confident that they have a well-segmented category and a customer base that is seeking out higher quality products, then this research suggests a larger range will be advantageous.

Companies targeting more price-driven customers should consider making ranges smaller.
And as for those retailers who can’t decide, or who want to try and have the best of both worlds, experimenting with a cleverly designed compromise is a possibility (but I can’t give away absolutely everything for free in these articles!).

Source: Columbia Business School. “How consumers discriminate: Study reveals how the quality of a good and the assortment of choices available influences consumers.” ScienceDaily, 10 Aug. 2011. Web. 31 Aug. 2011

Image courtesy: Kima