Wednesday, January 28, 2009

Is Choice a good thing?

The need for modernization and differentiation in today’s competitive world results in the consumer being provided with innumerable choices and options. It is because of the belief that each consumer is unique and each customer encounter is inimitable and they deserve to be treated like king. But presenting a huge assortment does not essentially lead to customer satisfaction; on the contrary companies end up creating more convolutions, increasing costs and even perplexing consumers. A simple product like a bathing soap has a choice of nearly 50 brands and some brands have more than10 variants. Whether it is a soap, toothpaste or deodorant, consumers are provided with a wide variety. A consumer buys a variant of soap today and builds a preference for it. But the next time he looks for the same it is not available because the shop is stocking other variants of the brand. In such a situation, the consumer is required to try other available variants/ other brands.
As a modern day consumer, we also have a choice of outlets- a typical kirana in the neighbourhood with around 4000 SKUs (stock keeping units) or a large hypermarket with more than 50,000 SKUs. Moreover, every month new SKUs are launched. These creates space constraint in the outlet and at the same time appears more critical to look at simpler options to meet the needs of the consumers. In FMCG category approximately 1,500 new brands have been introduced in the last three years and almost in the same period, there have been nearly 1,400 line extensions of existing brands. If a consumer wishes to invest in mutual funds, there are more than 30 choices before him and each institution offers a choice of more than 10 plans.

With a given whole host of preferences, people have difficulty in staying focused. Excessive choice forces consumers to develop high expectations which may be difficult to be realized in reality. With my few years of teaching marketing to the management graduates, I feel it is imperative for marketers to understand that the company should maintain its focal point and continue to maneuver developing products/ services that matter most to the customer and have a distinct competitive advantage. It is important to limit preferences to a manageable number. To achieve success, one should give the consumer not a wide variety but insight-based and manageable choice. Else too many choices will not allow the consumer to choose but will craft the consumer to move.