A little story about “the jam experiment”: A grocery store in Melno Park, California sets up a special display to sell jam. At certain times, the display had six flavors to choose from. At other times, the display had 24 choices. Each person who came by the sample booth was given a $1 coupon to purchase. The displays were up for a total of 10 hours. Here are the results:
The display with 24 choices
Number of people who stopped by: 145
Number of people who bought from the display (based on coupon redemption): 4
Percentage redemption: 4%
The display with six choices
Number of people who stopped by: 104
Number of people who bought from the display (based on coupon redemption): 31
Percentage redemption: 31%
What appeared to customer as a typical promotion was actually a sociological experiment. The attendants handing out samples were research assistants of one Dr. Sheena Iyengar, the S.T. Lee Professor of Business at Columbia Business School. She was studying the effect that the number of purchase choices has on the propensity to actually make a purchase.
This experiment seemingly proves that customers presented with fewer choices are 10 times more likely to purchase compared with those who are shown many choices. It has been help up as a crucial example of choice overload, the idea that presenting customers with too many choices actually inhibits customer purchases. The idea of choice overload is counterintuitive; classical economic thought maintains that more choices are always better for the customer.
Many economic polemicists have latched on to these results. Barry Schwartz, in his book The Paradox of Choice, uses this as an example of the harm caused by the abundance of choice in a free market.
Interestingly, despite a seemingly tenfold improvement in purchasing propensity, you don’t see a lot of modern stores limiting their selections. The trouble with all this is that the results from Iyengar’s experiment have never been satisfactorily replicated. At the same time, others have pointed out legitimate flaws in her methodology. While guest posting on the blog Retailing with Confidence, Guru Raj points out:
“The crucial issue for this experiment is that, in combination with this background variation, the two groups of jam buyers were not assigned randomly. Because the experiment was done for a total of ten hours in only one store, and shoppers were grouped in hourly chunks, there could be all kinds of reasons that those people who happened to show up during the five hours of limited assortment could have different propensity to respond to $1 off a specific line of jams than those who arrived in the other five hour period.”
It could be that the variety or complexity of choices does effect people’s willingness to buy. However, we do not currently have conclusive proof of what causes are significant, and why they work. More research is needed in this area before anyone can say with precision what is the best product choice array to show to customers.
- Cutting Down On Choice Is The Best Way To Make Better Decisions (mcdaanlimited.wordpress.com)
- More Is More: Why the Paradox of Choice Might Be a Myth (theatlantic.com)
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