Should a product have one or maximum two types of the brand?
Should a cola be just a cola or should it be changed in six different ways and six flavours are formed?
Should we really have too many choices for the same brand or product line?
These are interesting questions that budding marketers would certainly like to ask themselves. So does choice given to the consumer really affect the brand sales significantly? Does it really give an advantage to the company for its brand in terms of variety offered to the consumer?
The answers to these questions might be yes, but are we sure? A study conducted by Sheena Iyengar et al says the contrary. The study spanned across different continents across the world with the purpose of understanding the psyche of people that is related to making choices. The study is an impeccable blend of human psychology, behaviour, marketing strategy and consumer relations.
A study experiment was conducted amongst employees of certain organisations by Iyengar et al. The organisations dealt in providing investment options to various clients through funds. It was observed that an organisation which had 5 types of funds in the portfolio, the participation of sales representatives in the firm was 72%. In a firm where more choices were given to consumers for fund investments, the participation of sales representatives dropped significantly to 67.5%, for 35 product portfolios. When a firm with 56 types of funds was chosen, the sales participation reduced even more to 61%. This proved that whenever more choice was given, it led to decrease in performance/participation/ increase in sales for the firm, due to an overdose of different product lines introduced unnecessarily.
For understanding this more, a concept for “equilibrium of choice” was formulated by Kamenica and Iyengar. To put it very briefly, an immediate and important consequence of this feature of equilibrium choice sets is that random selection from a larger menu yields lower expected utility than random selection from a smaller menu. Selecting an option of uncertain utility is fine when only a few options are available since all elements of a small choice set yield high expected utility.
For example, consider the case of say the product “Strepsils”. In spite of it being an OTC drug, it has 7 flavours in the brand namely tulsi, adrak-honey, orange, lemon, regular, menthol and tulsi-honey. A person afflicted with throat infection may not want such a huge array of product line for every flavour and every type will solve the same purpose. Thus, it can be a great matter of thought and research for marketers marketing such products whether to continue with such huge product lines or zero-in on 2-3 best flavours. As the equilibrium theory suggests, the chances of highest utility are LEAST when the product line is large.
Consider another study conducted by Iyengar. In this study, choices were given to job interview candidates regarding which type of drink they would like to have while they wait for their turn. The Americans, so used to “Spot the difference” right from their young age, as Iyengar puts it, will like to choose the drink they find different and better than others. If we shift from the states and enter Russia, the remarkable difference is that they perceive EVERY drink as flavoured soda. Add to that a glass of lime and water, and only then another product category is observed. Hence, they do not mind having any drink offered to them!
For Eastern Europeans, the sudden availability of consumer products was a disaster. Choice led to fear – people felt like there was too much to cope with. More choices can be confusing and frustrating, sometimes terrifying. Choice isn’t always a marker of freedom, but it can suffocate us with meaningless minutia.
This is one more lesson for marketers to learn and link their strategies to this outstanding study. Marketers on the basis of this study can now decide their target market very effectively as well as clearly define their product line according to the “choice-based culture” of the people. They can consider the utility value of each of their product lines and base their strategy as to how many product types to manufacture for each popular brand.
At the same time, the study will be effective for marketers to decide whether the consumers in the particular target market actually wants those many types of that product and whether they should really go for expanding their line.
Nevertheless, Iyengar believes that it is wrong to say no to choice. No single narrative serves the needs of everyone, everywhere. Hence, brands have to be built to provide choice to the consumer. Our argument is only based on the premise that too much choice can indeed spoil the fun for the brand. Too much choice can leave us bewildered, and marketers, in this modern world of choice, can consider this a serious strategy to ponder about!
-Written By-
Tanmay Joshi (MMS I, JBIMS)
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