The Paralysis of Too Many Choices

Intrinsically as humans, we want to be right about the choices and decisions we make. Our customers, just like us have the same desire. They want to feel they are right about the purchase decisions they are about to make or that they are right about the choices they have already made in what they bought. We live in an age of limitless choices in almost every product and brand in almost all retail outlets, both offline and online. Faced with limitless options, we want to minimize buyers remorse. The kind of remorse we feel when we think that we have made a less than optimal choice in what we buy.

With respect to products and brands we find in retail outlets, flavors vary. Size varies. Colors vary. Taste varies, and manufacturers vary. Take laundry detergents as an example. The popular brands include Purex, Tide, Ariel, Omo, Gain, Arm & Hammer, All, Oxiclean, Seventh Generation, ABC, Era, Method, Shout, Wisk, just to name a few.

Barry Schwartz and the Paradox of Choice

In his 2005 bestselling book, The Paradox of Choice, Barry Schwartz demonstrated that in consumer patronage, there is an inverse relationship between offering consumers too many choices of a particular product and their patronage of the product. Retail store management often assumes that offering customers 50 styles of the same jeans rather than 5 styles will increase the chances of patronage. But this is not always true. In 2000, psychologists Sheena Iyengar and Mark Lepper published their research findings of the relationship between offering shoppers too many choices of a particular product in one instance versus offering the same shoppers fewer choices of the same product, and consumer patronage. In one instance, dressed like shop floor attendants, they displayed 24 assortments of gourmet jam with a promotional offer of $1 discount for each jam purchased. In a similar experiment, they offered much narrower assortments of only 6 assortments of gourmet jam brands. The 24-assortments jars of jam attracted more curiosity than the 6 gourmet jars of jam. However, what they found was that the 6 jam assortments out-sold the 24 jam assortments by a ration of 1 to 10. As a retailer, the moral of this experiment is that though more choices may avail your customers greater options, you are more likely to increase the basket size of your customers by limiting the assortments of each product assortment you carry in each of your product categories. It may sound counterintuitive, but more variety of the same product is not always better than less. 24 assortments of the same product is a lot more confusing than just 6 assortments. faced with too many choices, decision paralysis sets in and a decision to buy may be postponed, perhaps indefinitely until the shopper exits your store! 

Analysis Paralysis

Analysis paralysis or paralysis by analysis is a situation or a state of mind where an individual spends an inordinate amount of time thinking of and over-analyzing a choice or of making a decision, which ultimately leads to procrastination or of making no decision at all. Your goal as a retailer is to help your shoppers narrow the amount to mental resources they expense in their decision-making process at your store. The less time and mental resources they expend on decision-making, the more you increase the chances of your store patronage.

The 6-Step Process of Mitigating Against the Paradox of Choice to Increase Your Sales

1. Define your store brand image: your store brand image should drive your product assortment category. If every-day-low-price store image is your goal, then it will be incongruent to display premium products at premium prices. High-priced products require an investment of more time in decision-making, as shoppers want to be sure they are making the right choice at the right price. Every-day-low-price products require less investment in time and mental effort as the consequences of a wrong decision is emotionally minimal.
2. Determine the optimal product assortments in your store: your sales objective should drive how you define your assortment categories. And your assortment categories should, in turn, be based on your target consumer group. Assist time-pressed shoppers with limited assortment in each product category. With too many assortments of the same product and little time to make a decision, you increase the possibility of a shopper making no decision at all when presented with too many brand assortments of the same product. For instance, a shopper presented with six assortments of jam will more likely make an instant buying decision than when the same shopper is presented with 20 assortments, wide price spectrum, flavors and colors.
3. Use the psychology of anchoring to aid shopper-decision: use the psychology of anchoring in your tactical pricing decision. For instance, by placing high-priced, high-quality wine at the beginning of your wine shelf, followed immediately with average-priced but high-quality wine is a tactic that exploits the Recency Effect. A shopper who has just seen a high-priced wine will most likely use the high price as an anchor and will see average quality but moderately priced alternative next to it as a good buying option. You increase your chance of patronage of the average-priced wine because of the Recency Effect of anchoring a few high-priced products next to a wider assortment of lower priced products and brands.
4. Invest more in training your shop-floor attendants: some products require more information and knowledge in making informed shopping decisions. For instance, a high assortment of high-priced, multi-function electronic gadget will obviously require more knowledge and information before a buying decision is made. The paradox of choice and analysis paralysis also apply to too many functionalities embedded in a product, especially in electronic retailing. The presence of trained store attendants who can explain the functionality of such assortments of the same garget will increase the chances of purchase, especially where you stock same or similar products from different manufacturers, and you carry assortments in many design configurations.
5. Differentiate between small and big decisions: convenience store products are usually low-priced items that require minimal efforts in time and mental energy in decision-making. You can afford to carry a wider assortment of these products. They include but are not limited to cigarettes and tobacco products, non-alcoholic drinks like sodas, water, energy drinks, fresh-food items like sandwiches, burritos, hot dogs, and chocolate bars like Twix, Kit Kat, Snickers, Hershey bars, Milky Way, Nestle Crunch, biscuits and cookies, toothbrushes and toothpaste. Big decision products are pricey and require the expenditure of time and mental efforts in making a buying decision. As they come in different brands, functionality, sizes, models, and manufacturers, you will require the presence of trained store floor personnel to make the buying decision a lot much easy for your shoppers. Big decision products include various brand and models and make of automobiles, auto parts, and model, electronic gadgets such as freezers, refrigerators, air-conditioners, and cookers. Big-decision products are prime candidates for analysis paralysis and paradox of choice and so they require knowledgeable store floor assistance who can help and guide a shopper or the shopper may leave without making a purchase.

6. Use limited assortments to cross-sell and upsell: too many choices can be suffocating and confusingly brain-draining and may exhaust your customers of their limited time, effort and mental energy to expense in other product purchases. With limited choice, of say 5 to 6 brands of say printers, your customer may still have the time, energy and effort to invest in inks. Or the upsell activity of buying a scanner. This presupposes that the chosen printer has no scanning capability. Likewise, with limited choices in the models, make, and prices of a cellphone, your shopper may still be sufficiently patient to buy a custom-made headphone (upsell) or you can cross-sell cellphone cover at the same time.

The freedom of choice is not necessarily a bad thing. It is the essence of democratic capitalism. As a retailer, leverage on choice limitation as a model of assisting your customers, rather than letting unlimited choice variability inhibit their capacity to make decisions. Appreciate that too much choice can intrinsically lead to buyer-remorse and limit the capacity of your retail business as a buying destination of choice for your preferred consumer segment.