The Paradox of Choice in Consumer Markets

Apr 21, 2011
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A few years ago I read a book called The Paradox of Choice: Why Less is More by Barry Schwartz. His anecdotes were insightful and pointed to truths about the amount of choice the free market has laid on us as consumers. Of course free markets and consumer choice should be good things, but there are certainly experiences I have had where the overwhelming sense of having too many options made it difficult to actually make a decision.

I related to much of what the book was saying, particularly with the experience of picking out a DVD to watch from my massive collection. I recall staring at a wall of DVDs and having the most difficult time deciding what to watch. The decision-making process when faced with so many good choices was simply immobilizing.

The book points out how in many cases the burden of decision-making leads to buyer's remorse in consumers. With so many options, their choice is rarely the clear winner. And when any part of the product purchased did not fully meet the expectation of the consumer, the alternatives which were not chosen immediately come to mind.

I think about the ideas in this book as they relate to the technology industry. Consumers are faced with a multitude of choices purchasing computers, mobile devices, TVs, software, and other electronics which constantly flood the market. While there is nothing inherently wrong with having all this choice, the challenge lies in helping consumers make the right choice for their lifestyle.

There are, I'm sure, plenty of tactics to address the challenge or perception of too much consumer choice, however I want to highlight two:

Clearly Establish the Value Proposition
Too often products in the consumer technology category do not have a clear, well-established value proposition. I try to emphasize this concept with our clients: consumers will pay for what they find valuable. The challenge is to clearly establish what that value of a product or service is and then communicate it eloquently to the end user so they also perceive its value. A good example of this is how Apple markets the iPhone with their commercials that demonstrate the product being used in a situation or use case. Other companies are starting to catch on as well and market the use case more than product. Those commercials demonstrate in tangible, relatable ways the value of having powerful tools at your disposal and in this case a computer in your pocket.

One of the ways we assist our clients with this strategy is to spend time genuinely trying to understand the end customer for a particular product or service. To often, I feel, companies assume something is valuable to the market which may not be true and miss what it is about the product that is truly valuable. This leads to the wrong value proposition being communicated and in turn accentuates the problem of the perception of too much choice. Once value can be identified by truly understanding the end customer, it then becomes much easier to communicate what is truly valuable to the market. This leads to the next step which is to educate the end consumer.

Educate the End Consumer
Too often many consumer product companies leave their value in the hands of retailers and hope that the retailer can communicate their value to the end customer. This may have been a good idea in the past, but it is simply a flawed strategy in today's market. Today's consumers are some of the most educated consumers the world has ever seen. This is driven largely by the wealth of information found on the Internet. We know this because nearly 80% of US consumers research online before they buy. Which means that in today's retail world there is a very big difference between those who are buyers and those who are shoppers. A buyer is someone who knows what they want or has come very close to making up their mind before walking into a retail store to purchase it. A shopper is someone whose mind is not made up and is entering retail needing assistance to make up their mind. We are shifting from more of a shopping mentality to a buying mentality in the US. The wealth of information available on the Internet for consumers to use in making buying decisions is contributing to this shift.

The solution that we constantly recommend to our clients is to use the vast quantity of online tools, social networking tools, and more to give your potential customers all the resources to walk into retail with their mind made up about your product.

Choice is good but sometimes it is much to complicated. It will continue to be difficult for many products to get above the noise in the market and the result will be confused and indecisive consumers. We can avoid this however if we continue to start with the value created and educate the market about that value.


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