Less or More -Understand the need
Bill looked around the table at the other officers of Whole Foods who had arrived for the meeting he chaired as VP of Sales. Paul, as Brand Manager, was bubbling and raring to go as usual. His eyes quickly travelled to Scott the sedate and experienced Brand Manager and then Pam, the smart R&D Manager, who sat next to Scott. The debate had been raging on whether to increase the range of brands of butter and Bill had called for this meeting to take a final decision.
Bill tapped on the table. “Okay everyone. Let us start with Scott.” Scott started off by saying, “As you all know butter has been one of our stable products with good sales. Shoppers who buy butter also tend to buy other dairy items so the challenge is to attract more customers and thereby increase our sales. We already have quite a range of brands and we need to broaden the range to include items such as blended butter, whey butter, flavoured butter, etc. As customers become aware of the increased choices we can anticipate greater sales.”
“Thanks Scott ” Paul said getting up to speak. “What Scott said is quite logical and, on the face of it, the more choices one has the greater would be the sales. I thought so too till I read a research paper by Dr Sheena Iyengar, Professor of Business at Columbia University. She carried out a series of studies of the affects of choices on human decision making. “
“In an earlier experiment,” continued Paul, “she had a tasting booth which periodically switched between displaying 6 jams and 24 jams. One would expect that with more choices, there would be more sales. But what Dr Iyengar found was only 3% of those who stopped at the larger booth bought any jam while a whopping 30% of those at the smaller booth bought something or the other. Buying jam, or butter for that matter, is a snap decision and is not something one agonises over. So when the shopper is presented with a whole range of choices, he or she has to slow down and study the pros and cons of each brand and this effort is mentally taxing and the shopper chooses to avoid a decision and walks off. Dr Sheena also found in other studies that when a shopper did buy something after being confronted with a large set of choices, he or she somehow felt let down by the final decision and did not feel fully satisfied unlike the situation with the shopper who buys out of a limited set of choices. “
“I believe we are already carrying too many choices of butter. Let us cut down the choices we offer and carefully select fewer brands based on popularity and past sales. For the same shelf area we will be able to stock more quantities and move related dairy products closer. Shoppers will be able to see all the choices at a glance and will shop faster. We should gradually move this same strategy to other products in the store and I believe we will be astonished at the results, “ Paul finished.
There was silence as everyone absorbed these starting facts and they certainly seemed logical although reducing the number of brands to increase sales seemed like inviting disaster. Finally, Bill spoke up. “I think Paul has made a strong case and it is certainly tempting to try out his ideas. Let us try it on the new store that we are just opening in Providence.” Everyone trooped out congratulating Paul on his brilliant presentation.
*** The research is pretty interesting but look at the flip side. Think about online streaming market – even though Amazon has offered good choices, Netflix rules the market with variety of movies. Here less is better does not seem to apply. Same goes with Total Wine that sells all kinds of spirits. What about webpage that offers more? What about the presentation you are going to make to your executive leadership in selecting the best option? *******