Business Psychology - Latest Findings

Article No. 214
Customer Psychology Findings, by James Larsen, Ph.D.

Variety for Sale = Mass Confusion

A marketing strategy with a flaw and a research study that reveals how to correct it.

"Category killers" like Toys "R" Us, Barnes & Noble, and Circuit City offer huge assortments within specific product categories, hence the name, "category killers." Customizing businesses such as Dell Computers also offer huge varieties. Unfortunately, one thing both types of businesses share is confused customers.

Picture a customer facing a huge assortment of electronics at Circuit City: video, audio, recorders, and so on. Before very long, many such customers walk away in frustration, having failed to even understand the names of many of the devices on display.

Picture a random T.V. viewer reacting to a Dell Computer commercial: "Tell us your specifications . . . " "How should I know my computer specifications?" ". . . and we'll build the right computer for you." "I wouldn't know the right computer if I tripped over it." This viewer will not be calling the toll-free number printed on the screen.

Could these electronic devices and computers enrich the lives of these customers? Probably. Could they afford to buy them? Probably yes. But rather than gaining new, satisfied customers, too often, these businesses must simply watch in dismay as these customers walk away and buy nothing at all.

Mass variety and customization are marketing strategies with a flaw, and the confused, overwhelmed customer is it, but some firms have faced the challenge. Car dealerships and electronics retailers, for example, have pioneered the teaching kiosk as a way to introduce a product category and help people identify their preferences.

Cynthia Huffman, from the University of Delaware has watched this development with interest, and she wondered if it made a difference how information was presented to customers. She also wondered if asking customers to make judgments and express preferences during this learning process affected their purchasing experience.

Huffman conducted a series of experiments which compared two ways of presenting information. The first closely matches our current practices: a series of examples of a product are shown and varying features of the product are highlighted in the different examples. She labeled this an examination of alternatives. The second is new to most of us: each product feature is presented separately, and examples of different choices of this product feature are shown. She labeled this an examination of attributes.

For example, Choice Seating Gallery manufactures customized sofas, and a presentation of alternatives would find salespeople leading customers through showrooms to see a variety of sofas. A presentation of attributes would find them showing customers attributes that could be combined into a unique style, for example, types of back construction, straight, curved, and rounded.

Huffman also examined the impact of three levels of customer involvement in the learning experience. The first was minimal; customers weren't involved at all. They were shown the alternatives or the attributes, and that was it. The second was a moderate level. Customers were asked to state their preferences with each choice set presented to them. The third was a high-involvement level. Customers were asked to make two judgments with each choice set: the importance of the choice to them and their preferences.

In complex shopping environments, Huffman found that the attribute strategy was best. Customers were more satisfied with the learning process and perceived their choice task to be less complex. They also felt closer to actually making a purchase than were customers who were asked to examine alternatives.

Huffman also found that customers moderately involved in the learning task were much more satisfied with the shopping experience and more satisfied with their final selections. Indeed, highly involved customers experienced the shopping experience so differently that Huffman cautions us to avoid asking customers to make across-attribute importance judgments or tradeoffs. This greatly adds to customers' perceptions of complexity, and if you recall, the whole point was to reduce these perceptions of complexity so customers would enjoy the shopping experience.

Business owners know when choices for their customers are complex, and if they are, then Huffman's research reveals both the importance of simplifying this experience and a way to do it. Learning product attributes is the best way to help customers handle great variety, even if the eventual choice must be made from alternatives on the floor, and asking for preferences of the different attributes is the best way to make the experience more enjoyable.

Reference: Huffman, Cynthia, and Barbara E. Kahn (1998) Variety for Sale: Mass Customization or Mass Confusion? Journal of Retailing, 74 (4), 491-513.

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