Can we ever have too many choices?
A deep dive into how decision fatigue can impact segmentation.
You’ve probably heard a thousand other people say this, but consumers want choice. Everyone is different and so we need different options for everyone. But the question is, how many choices do people want?
The way that brands offer choice is through market segmentation. Kerin and Hartley define market segmentation as the act of “aggregating prospective buyers into groups, or segments, that (1) have common needs and (2) will respond similarly to a marketing action.” (212). Once a target market is segmented then specific products can be made or offered to that segment appealing to their unique desires or wants.
The text continues and says that “a business firm segments its markets so it can respond more effectively to the wants of groups of potential buyers and thus increase its sales and profits.” (212) My question is, is more choice always better, or is there a point where choice can hurt a brand’s profitability more than it is helping?
The answer to this question can be found perfectly in the famous Columbia University study by Sheena Iyengar. She wanted to test how choice impacted consumers’ purchase decisions and so she ran a study where she set up a jam booth outside of a grocery store. She initially offered consumers many different jam flavors to try and then hopefully purchase. A few days later she then offered people only a few choices which they would hopefully try and then purchase. Her study showed that more people stopped to try the jams when there were more options but fewer people actually bought the jams after tasting them. From here it is clear that consumers are excited and intrigued by choices but when there are too many choices they easily get overwhelmed especially when a purchase decision has to be made.
Iyengar’s study highlights two concepts that are very popular right now. It exemplifies the problem of analysis paralysis, “[a term that] refers to a situation in which an individual or group is unable to move forward with a decision as a result of overanalyzing data or overthinking a problem.” (Investopedia) The study also displays the issues associated with decision fatigue, “the emotional and mental strain resulting from a burden of choices… [which] leads to 1 of 2 outcomes: risky decision-making or decision avoidance.” (Healthline) Both analysis paralysis and decision fatigue are prevalent modern-day issues facing consumers as they make their way through the purchase decision process. “Rather than empowering us to make better choices, our virtually unlimited access to information often leads to greater fear of making the wrong decision, which in turn leads to us spinning our wheels in a seemingly inescapable purgatory of analysis paralysis, all the while getting nowhere on our important projects.” (ambition & balance)
Seth Godin says that when consumers are offered too many choices they choose to “walk away.” (54) In order to solve this problem marketers have to realize that “everything is better in moderation” and that “the key to successful product differentiation and market segmentation strategies is finding the ideal balance between satisfying a customer’s individual wants and achieving organizational synergy.” (Kerin and Hartley) Marketers have to find the perfect balance between offering choice while also not overwhelming their consumers with choices. So yes consumers want choice but they do not want all the choices in the world.
Can you relate? Do you easily get overwhelmed by too many choices? Let me know in the comments below!
Until next time,
Rachel
Sources:
Kerin, R. and Hartley S. (2020). Marketing: The Core. McGraw-Hill Higher Education. Eighth Edition. New York, NY.
Godin, Seth (2018). This is Marketing. Penguin Random House LLC. First Edition. New York, NY.
