It’s good to offer consumers choice, but not too much

People value something more if they have options to choose from but too much choice hampers decision-making, especially if it’s hard to differentiate.

When my children were toddlers, I was taught the secret to tantrum-free life: offer choice. Do you want carrots, or peas? Do you want your ice cream in five minutes or in 10? The options are carefully curated, keeping the parent in control. But the decision is down to the child – giving an illusion of power. And this made for happy toddlers and (relatively) peaceful mealtimes.

It seems that this desire for agency stays with us as we grow. In fact, the need to exert control in our decisions has been shown to impact life-and-death outcomes.

In 1962, NA Ferrari at Case Western Reserve University conducted a study on this topic. He questioned the residents at a women’s nursing home to find out who had made the decision to join, and the impact of this decision. Shockingly, among the 17 women who felt forced to move to the home, all but one died within 10 weeks. Conversely, only one of 38 women who felt they had freely chosen to enter the home died within that time frame. There was no difference in the state of health between the groups when the women first entered the home: the only difference had been their sense of control.

This is a disturbing finding. But what does it have to do with marketing? Well, research from a more commercial setting supports the underlying inference.

In 1975, Harvard psychologist Ellen Langer sold office workers lottery tickets for $1. Half were allowed to pick their numbers, whereas half had numbers allocated to them.

Just before the lottery was due to take place, Langer tried to buy the tickets back. Those who had been given their numbers asked for $2 on average for the ticket, whereas those who had selected their own number wanted more than $8.

Option overload can result in consumers choosing not to buy anything or simply going for the default or cheapest option.

The scale of difference is impressive: many psychological studies show effects in the order of 15% or 20% impact after applying a bias. But this one – offering agency – showed a fourfold increase.

Langer’s experiment, and others like it in different categories, show that we value items considerably more when we have a role in selecting them.

So, what can brands do? Well, introduce more elements of choice – even if it feels trivial. If you’re a bank, offer people the choice between colours. If you’re considering an incentive, let people pick from a couple of options, as Fred Olsen (shown below) does. Even if no one picks the least popular alternative, the other item appears more acceptable.

Spoilt for choice

So, choice is a good thing. But like most things in life – you can have too much.

Because evidence shows that offering too much choice can cause decision-making to grind to a halt. Option overload can result in consumers choosing not to buy anything or simply going for the default or cheapest option.

Evidence for what psychologists call choice paralysis comes from the work of Sheena Iyengar of Columbia University and Mark Lepper of Stanford University. Their study, in 2000, set up a stand selling jam in an upmarket supermarket. On some occasions, the stall sold six jam varieties, and at other times 24.

The results showed that the broader display had more stopping power – 28% more customers stopped at the stand with greater variety. But this did not translate into sales. In fact, shoppers were 10 times more likely to purchase a jar of jam at the stand with the limited range. Researchers have theorised that the sheer number of options available with a wide variety actually removed control – because customers couldn’t possibly compute all the variables and make the ‘right’ decision.

While these headline results became famous, the genuine story is a little more nuanced. Later researchers discovered that choice paralysis only occurs in some settings. In his 2015 meta-analysis of 53 experiments Alexander Chernev, a psychologist at Northwestern University, identified four situations when people prefer fewer choices:

  1. They have no well-defined preferences

  2. They are unfamiliar with the options

  3. The options are similar with no clear winner

  4. The options are difficult to evaluate, perhaps because they are presented poorly

His research suggests that, if any of these factors apply to your category, then choice paralysis is a heightened risk.

So, if you want people to value your product, do offer options – but don’t get carried away. And you’ll end up with customers as happy as a toddler with an ice cream.

Source:https://www.marketingweek.com/richard-shotton-offer-consumers-choice-not-too-much/ Copy link