|
Search
Website
Home
Calendar
of Events
Contact Us
Board of Directors
Board Login
Education
Course Descriptions
Class
Schedule Cert.
Maintenance Instructors
Events
& Programs
Membership
User
Login
Company Coordinators
Career/Jobs
Articles
& Papers
Selected
Links
Current
News Links
Feedback
  
 
|
EDITORIAL
Consumer Marketing: A Flawed Strategy
By Ira Smolowitz, Ph.D.
__________________________________________________________________________
In a recent issue of the Western Massachusetts newspaper – The Republican
– the columnist D.C. Stewart indicates that he and his wife were
discussing the option of buying a new television. They were confused
by the current television options. Their confusing choices were
HDTV, plasma HDTV, LCD, LCD HDTV digital cable ready, HDTV capable,
HDTV digital or EDTV. 1 Is this a serious problem?
Is this a pervasive problem? The answer is yes, to both questions.
Barry Schwartz, is professor of psychology at Swarthmore College
and the author of The Paradox of Choice: Why More Is Less
(Harper Collins 2004). He states:
About 10 years ago, I went to the Gap to buy a pair
of jeans. I tend to wear my jeans until they are falling apart,
so it had been a while since my last purchase. A nice young saleswoman
greeted me.
“I want a pair of jeans – 32-28,” I said. “Do you
want them slim fit, easy fit, relaxed fit, baggy or extra baggy?”
she replied. “Do you want them stone-washed, acid-washed or
distressed?” “Do you want them button-fly or zipper-fly? Faded
or regular?” I was stunned. I sputtered out something like,
“I just want regular jeans. You know, the kind that used to
be the only kind.”
The trouble was that there was no such thing as “regular” jeans
anymore. Besides, with all these options before me, I was no longer
sure that I wanted “regular” jeans. Perhaps the easy fit or the
relaxed fit would be more comfortable. So I decided to try them
all.
The jeans I ended up with turned out just fine, but what occurred
to me on that day is that buying a pair of pants should not be
a daylong project. By creating all these options, the industry
undoubtedly had done a favor for customers with varied tastes
and body types. However, it had also created a new problem. In
the past a buyer like me might have had to settle for an imperfect
fit, but at least purchasing jeans was a five-minute affair. Now
it had become a complex decision in which I was forced to invest
time, energy and no small amount of self-doubt, anxiety and dread
over the ordeal.2
Social psychologists Sheena Iyengar, PhD, a management professor
at Columbia University Business School, and Mark Lepper, PhD, a
psychology professor at Stanford University, were the first to empirically
demonstrate the downside of excessive choice. In a 2000 paper in
the Journal of Personality and Social Psychology (JPSP, Vol. 79,
No. 6), the team showed that when shoppers are given the option
of choosing among smaller and larger assortments of jam, they show
more interest in the larger assortment. But when it comes time to
pick just one, they’re 10 times more likely to make a purchase if
they choose among six rather than among 24 flavors of jam.
Next, Iyengar sought to examine consumer choices with higher stakes
to see if a greater investment in the outcome meant people would
make different or better choices. In a study under review at JPSP,
she and Wei Jiang, PhD, a finance professor at Columbia Business
School, analyzed retirement-fund choices -- ranging from packages
of two to 59 choices -- among some 800,000 employees at 647 companies.
Iyengar comments:
With 401(k)s, people are given enormous incentives to
participate through tax shelters and employer matches. So, essentially,
if you choose not to participate, you’re throwing away free money.
Instead of leading to more thoughtful choosing, however, more options
led people to act like the jam buyers: When given two choices, 75
percent participated, but when given 59 choices, only 60 percent
did. In addition, the greater the number of options, the more cautious
people were with their investment strategies, the team found.
Relatedly, too much choice also can lead people to make simple,
snap judgments just to avoid the hassle of wading through confusing
options -- which ironically can sabotage a company’s marketing plan,
finds psychologist Alexander Chervev, PhD, of Northwestern University’s
Kellogg School of Management. In a paper in press in the Journal
of Consumer Research, Chernev found that when people were offered
variants of the same brand of toothpaste -- cavity-prevention, tartar-control
and teeth-whitening types, for instance -- they tended to switch
to another brand that offered a single option.
Chernev says:
If you introduce a product just for the sake of introducing
a new product, you can end up with several products that target
the same customer. The customer has no idea how to decide and
may therefore switch to another brand that doesn’t require making
tradeoffs.3
...As businesses rapidly increase their portfolios of products
and services - either in response to consumer demand or through
mergers and acquisitions - - they run the risk of adding too much
complexity, which can eat away at scarce resources and ultimately
harm returns.4
Why then is the following condition so prevalent:
“Attention, shoppers: Welcome to today’s marketplace, where consumers
face a bewildering variety of choices. In grocery, we have 24 different
bagged lettuces, 100 cheeses – 20 of them cheddar – plus 30 kinds
of muffins, 24 flavors of coffee sold in bulk and 80 varieties of
cereal in just the first 10 feet of the breakfast aisle. Looking
for something to read? Visit Amazon.com to browse among tens of
millions of titles.” 5
In my opinion, corporations erroneously operate under the following
assumptions: (a) the more shelf-space our products occupy, in comparison
to the competition, the better off we will be. (b) the more product
choices we offer the consumer – the greater is the probability that
the consumer will buy at least one of our products.
In addition, corporations may fall into a thought-process that in
game theory is known as the prisoner’s dilemma. Corporation A may
believe that ideally if it reduced its product portfolio and competitor
B also prunes its product portfolio –- no competitor gains at the
expense of the other. However, the fear of being double-crossed
prevails. If corporation A reduces its product portfolio, and competitor
B, at the last minute does not – corporation A perceives itself
to be at a disadvantage. Likewise, corporation B runs the risk of
being betrayed by competitor A. The product proliferation ‘arms-race’,
in my opinion, continues. The ensuing product proliferation is detrimental
to the competing corporations and their associated current/future
customers. A proliferation of products or brand extension has the
following potential detrimental corporate impact: (a) brand proliferation
may cause cannibalization of sales; b) disturbs the basic thrust
of consumer marketing. By point (b) I mean that a corporation wants
the consumer to buy its product routinely, without hesitation. Exposing
the consumer to new choices causes hesitation on the part of the
consumer. In that confusing, destabilizing, period of hesitation
-- the consumer may abandon a routine purchase practice and switch
to a competitor’s product.
References
1. Stewart, D.L. “Buying a New TV Initially Confusing” The Republican,
February 2, 2006, p. E2.
2. Schwartz, Barry “Too Many Choices” AARP Bulletin, April 2005
(downloaded from http://www.aarp.org/bulletin/yourlife/many_choices.
html print) - 2/3/06 - p. 1.
3. DeAngelis, Tori “Too Many Choices?” APA Online – Volume 35, No.
5, June 2004. (downloaded from http://www.apa.org/manijor/jun
04/toomany.html - 2/3/06 pp 1-2).
4. “Unraveling Complexity in Products and Services” Knowledge@Wharton
(downloaded from http:/knowledge.wharton.upenn.edu/article/1382.cfm)
- 2/2/06 p.1.
5. Barnes, Steve “Too Many Choices Can Lead to Bad Decision Making”
Albany Times Union, January 29, 2006 – copyright
at 2005 Detroit Free Press, Inc. (downloaded from http://www.freep.com/apps/phcs.dll/article?
– 2/3/06, p.1).
_________________________________________________________________________________
Articles printed with the permission of Dr. Ira Smolowitz,
Professor of Finance and Dean, Bureau of Business Research and Program
Development at American International College, Springfield, MA.
_________________________________________________________________________________
Page updated: May 21, 2007 7:51 AM |
All
contents © 2007. All rights reserved.