More choices increase sales

Early this year I attended an excellent, thought-provoking presentation by the very lovely Professor Sheena Iyengar from Columbia Business School  on her (small-scale) choice experiments.  The results seemed to suggest that consumers could easily experience choice overload.  And the implication for marketers was to beware of offering lots of choices because this can actually depress sales.

It was this last implication that worried me because (a) it seemed to clash with the real-world evidence, and (b) there are good logical reasons why different consumers on different days might notice/want different things, so more choice should satisfy more people.

I asked Prof Jordan Louviere, director of the Centre for the Study of Choice, and one of the world’s top authorities.  He replied bluntly “it’s worthless. These guys do not understand how to run experiments properly and/or how to properly analyse data, so they draw totally inappropriate conclusions about their results.”

Supporting Jordan’s assessment is that replications of Sheena’s experiments by other researchers have failed.

Now the Journal of Consumer Research has published a meta-analysis of 50 different choice-overload experiments (including Sheena Iyengar’s) across categories and countries.  The results show more choice options led to more (not less) consumption, there is no generalised choice-overload effect, and no conditions could identify why different studies get different effects.

IN CONCLUSION

No doubt consumers can find choices bewildering at times.  Marketers need to help them out e.g. by giving them signposts.

But the conclusion that offering more choice can easily decrease sales is an incorrect message.  More choices increases sales.

Ref:
Can There Ever Be Too Many Options? A Meta‐Analytic Review of Choice Overload
Author(s): Benjamin Scheibehenne, Rainer Greifeneder, Peter M. Todd
Journal of Consumer Research, Vol. 37, No. 3 (October 2010), pp. 409-425

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3 thoughts on “More choices increase sales

  1. Professor Byron, awesome post. 🙂

    I’m curious if there is a framework to workout an upper bound. I’m assuming there is an upper bound.

    Based on my split-tests (I have done quite a few but this is anecdotal ) on online ecommerce sites, one is too low and 10 or so might be too great. The optimal also depends on the offer, product category, price etc etc.

    But prices of choices can be ‘used’ to make one offer far more attractive than it would otherwise be.

    1) Product A – medium quality – $47
    Product B – low quality – $45
    Product C – high quality $147

    vs
    2) Product A – medium quality – $47

    You can move preference to product A easily in 1. Also the order in which you display the various offers, will also change results. Presenting $147 first, and then $47 will generate more sales than just presenting $47. The $147 acts as an ‘anchor’ of some sort.

    Love your blog,
    JJ

    • Hello there,
      it’s interesting to test among 3 choices and vs 1 choice only; however, here it is offered only 3 choice rather than the abovementioned choice-overload problem now in the market. It would be easier and less time-consuming to make a better decision amomg 3 choice products and interesting to know whether the amount of 3 is ‘just right’ choice for consumers.

      Christy

      • Easier is one thing. But consumers also want their preference. If it isn’t one of the 3 they don’t thank you for making their choice easier.

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