Consumer Overload: Why Too Many Choices Can Chase Away CustomersPublished: November 08, 2006 in Knowledge@Emory
Could it be a consequence of the up-and-coming “me” generation? Or is it that the makers of consumer goods are just so willing to give us what we want? Whatever the case, people are more often demanding that the products they order be suited specifically to their needs, rather than settling for the standard alternative. Sometimes, however, too much of a good thing—as in too many choices for customization—can have diminishing returns.
Stefan Stremersch, a visiting associate professor of marketing at Emory University’s Goizueta Business School, has long been fascinated by technology marketing, and in particular how information technology is marketed. Mass customization, where components of a product are mass-produced but customized to the individual consumer, has been a dominant marketing instrument in the information technology industry, notes Stremersch.
In one of his latest research studies published in the Journal of Marketing Research, Stremersch, with the help of Benedict G. C. Dellaert, a professor of marketing at Erasmus University Rotterdam, investigates why consumers, when mass customizing a product, prefer one mass-customization configuration over another and what implications those preferences have for the companies that are offering the choices. “The computers you buy online are all mass customized,” notes Stremersch, coauthor of “Marketing Mass-Customized Products: Striking a Balance Between Utility and Complexity.” “You can choose which components you want in your PC, all these components are mass produced and then the assembly line at Dell or Hewlett-Packard picks and chooses which components go into your PC. The most important thing, though, is that companies are giving people this choice to go through the mass-customization process. This fits into a stream of research in marketing that looks at [the ways companies often] offload too much complexity to consumers just because they can. Consumers, faced with so many choices, are bailing out because the process is too complex for them.”
The authors’ central premise is that the value consumers derive from their ability to choose various components for the product they are buying is influenced by two factors: the idea that they will get a product that better suits their needs and the complexity of composing that product. “The return consumers get by using this mass-customization process is that they are bound to find a product that better serves their needs because they are able to self-compose it,” explains Stremersch. “On the other hand, consumers go through a lot of cognitive hassle during the complex decision-making process. Let’s say you can customize 10 attributes within a PC and for each attribute you have 10 choices. On the one hand, I get a better value out of the product if it’s closer to my needs. But to get it closer to my needs, I need to make an intellectual effort in choosing and composing my product.”
Stremersch and Dellaert set out to help managers understand how to strike a balance between utility and complexity. They use data from an experiment in which they asked consumers to customize PCs under different experimental conditions that mimicked real-world mass-customization configurations, and to choose whether they would use the mass-customization configuration if it were to become available. They also identify mass-customization configuration factors that may differentially affect both product utility and complexity, including the extent of mass customization, the heterogeneity in the levels that are available for a mass-customizable module, and the individual pricing of mass-customizable modules.
Did the consumers in the experiment start to bail out? Not quite. Stremersch and his coauthor found that within the rather large range of modules and module levels that they manipulated in the study, consumers did not perceive significant increases in complexity, and they were able to achieve higher product utility. This is good news, they write, for companies that want to offer a lot of options to their customers. They also found that the negative effects of complexity on mass-customization utility are lower for expert consumers, making them a potentially attractive target segment for mass customization.
They conclude that firms can benefit from the introduction of extensive mass customization by using a carefully designed mass-customization configuration that increases utility and decreases complexity. “Our paper shows how the balance between complexity and utility occurs; what factors are driving complexity, and what factors are driving utility,” explains Stremersch. “Taking the results of our paper allows you to structure the interface such that you can better play this balance between complexity and utility. We also found that the utility of the product is also influenced by the complexity of the process, meaning that if you have a very complex process, it will not only get consumers a lower utility out of the mass-customization experience, but it will also get them a lower-utility product. It’s really important for managers not only to hold into account the extra utility they’re giving consumers by giving them more choice, but also to account for the complexity they are loading up on these consumers in order to make these choices.”
Stremersch, always with an eye on the broader scope of research within technology marketing, says that he hopes this research can be a starting point for further research in marketing on mass customization. For instance, he and Dellaert point out that they do not address the question of how consumers choose between buying a mass-customized product and buying a standardized product. It would also be interesting, they suggest, to study the role of the supplier in the mass-customization choice process. We can expect to hear lots more, says Stremersch, about the choices that are causing even the most informed consumers to grow weary with feature fatigue.