The Paradox of the Paradox of Choice

In the mid-2000s, Barry Schwartz wrote a book called the Paradox of Choice that drew marketers’ attention. It cited evidence that more choice was bad as it created stress and ultimately worse decision making on the part of consumers. Even worse, more choices led to less buying!

The central idea of the book was largely inspired by an experiment conducted by Dr. Sheena Iyengar, a professor at Columbia University, along with Mark Lepper from Stanford University. The experiment, often referred to as the "jam study," played a central role in illustrating the concept of choice overload, which Schwartz explores in his book.

The Jam Experiment

• Setting: The study took place in a supermarket, where Dr. Iyengar and her team set up a tasting booth offering samples of different types of jam.
• Two Conditions: In one version, shoppers could taste from 24 different jams, and in the other, they could taste from a smaller selection of 6 jams.
• Findings: When only 6 options were available, a significantly higher percentage made a purchase.

Surely any marketer would conclude that they have over-SKU-ed their brands based on this.

Only problem…this book is utterly wrong.

Theory is wrong. 

Those who study behavioral economics know that when consumers are faced with too many choices, they use simplifying heuristics to make their choices manageable. Brand familiarity, what Amos Taversky called “elimination by aspects”, and satisficing are heuristics that consumers use to manage the effort needed to make a decision.

Evidence is questionable.

Notable meta-analysis by Peter Todd (integral to the Max Planck Institute for Behavior and Cognition) et al, published a review in 2010 of 50 studies on choice overload and concluded that the effect was not as robust or consistent as originally thought. They found that increased choice did not always reduce satisfaction or likelihood to choose, and the effects were often small or nonexistent.

I think the experiment was fundamentally flawed because, in real life, shoppers know the brands they are looking for so their heuristics work. In the jam experiment, everything was new to the shopper, replicating nothing in the real world. If you ever tried grocery shopping in a foreign country where the brands are mostly unfamiliar, you will see how much longer that takes. Again, the jam experiment represented something closer to that which meant nothing.

The marketplace is moving in a different direction.

Twenty years ago, a typical large supermarket carried 20-25,000 SKUs. Today it carries 35-40,000 SKUs. Then there is the dominance of Amazon where almost anything is available. If consumers hated choice and it stressed them out, why would retailers all be moving in the other direction? 

My recommendations to marketers and researchers based on better behavioral economics than “the paradox of choice”:

1. Don’t be afraid to add SKUs.  This is a form of personalization.  In addition, it might buy you extra facings in physical stores which is always a good thing.
2. Help consumers navigate the blizzard of meaningless ads by making them more relevant through targeting. When you target the Movable Middle (those with a 20-80% probability of choosing your brand) you are helping people to decide in your favor as they are still considering alternatives of which you are one. The proof is that through 11 experiments, we found Movable Middles to be 2-23 times more responsive to advertising.  That would only happen if the ads were relevant.
3. Reinforce cues and be careful about changing them.  The single biggest reason that the new packaging for Tropicana OJ was a disaster (-30% in sales) is that they messed up shoppers’ recognition heuristics. No shopper wants to spend 10 minutes buying orange juice!
4. Shopper brains are Bayesian prediction engines so help them reach the right conclusions. The parent brand name, what you are next to on the shelf, package color and design, descriptors, the number and sentiment of reviews…these are all signals that the shopper brain ingests to predict what is their best choice (like Bayesian priors). I bet you could test an unknown coffee product, show it in a package design that connotes “premium” and strong taste, and placed next to Starbucks, give it some familiarity through branding and consumers could give you purchase interest, attribute ratings…the whole nine yards without telling them anything more about the new item.
5. Marketing research lists. As implied in the book “Nudge”, marketing research survey design is a form of choice engineering.  If you create lists that are too long, the brand of interest can get lost. Respondents will give you an answer but it is less likely to be the right one if the list is poorly constructed. If you want to accurately measure sub-category buying, balance the choices across sub-categories. For example, if you want to know if people recently bought a top (apparel), don’t give them one choice for tops and 10 choices for bottoms.

In a world where consumers are bombarded with choices, the key isn’t to reduce options but to help consumers navigate them effectively. By understanding behavioral cues and refining ad targeting strategies, marketers can turn a potential paradox into a powerful tool for driving attention to your brand and incremental sales.