Thursday, 4 April 2013

Choices, Choices, Choices

We all like choice, and yet faced with too much choice it can be difficult to make a decision.  I imagine most people can recall an occasion where they spent a considerable amount of time agonising over an ultimately fairly trivial decision between two options.

In the online world where choice not just of product but also retailers abounds, how do we make our decisions and how can retailers guide our choices?  The inbox I use for my online shopping is constantly bombarded with offers on the latest “award winner” or “best seller”.  But is this helpful?

A paper recently published by Goodman et al. [1] suggested that actually these signs have the potential to make customer decisions harder.  They found that in cases where developed preferences exist, recommendation signage tended to enlarge the consideration set increasing decision time and difficulty. 

They suggested that signage has the potential to force consumers to reconsider their choice and expand the consideration set beyond the norm:

“Interestingly, this finding suggests that a recommendation sign on one option could actually increase the probability of consumers considering another option.”

This doesn't sound great for manufacturers wanting to make their product stand out from the crowd.  However this may not be bad news for retailers – preliminary research mentioned at the end of the paper suggested that this expansion of the consideration set might lead to a greater overall level of purchasing.

All of the examples were conducted with fairly cheap commodities.  It would be interesting to see their model extended to high-ticket purchases such as digital cameras.  I suspect the way consumers use recommendations to make decisions in these circumstances would differ as it is a one-shot choice.  If you buy a tea and don’t like it, it is very easy to avoid that brand or flavour next time you shop.  The sunken investment in buying a digital camera is likely to shape how your decision is made.

Dan Siddle
Research Innovation Specialist

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