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A paradox of choice happens when customers become overwhelmed by options and then decide to avoid the entire product category.
Last week I posted an article titled Too Much of a Good Thing: Explaining the Decline of Guitar Hero and Rock Band which stimulated discussion on Gamasutra and various blogs that linked to the article.
Some of the issues raised related to complexity, usability, product life cycle issues, etc. But a comment on Plastic Axe was about something completely different:
Right now you can walk into any given Best Buy and there are probably at least three aisles worth of peripheral packages. This week they’re adding DJ Hero and next week will see the Band Hero set. This has to be overwhelming for the common consumer. Now most of those aren’t adding ‘new’ peripherals to the mix, but I’d imagine what is essentially the same thing in 10 different styles can be just as confusing and detrimental. At some point the regular shopper is going to think “Enough already!”.
When product choice becomes overwhelming to customers, they become subject to the "paradox of choice." In the book, we discuss the phenomenon as it relates to game consoles, but it applies equally to peripherals, software, and other products.
Research has shown that even when faced with two choices, customers are often less willing to buy a product than if they only have one product available to them. Common wisdom holds that consumers are better off when they have more product choices to cater to their individual tastes and needs.
In reality, offering more choices could cause you to lose customers, resulting in declining sales for each product offered, and possibly for the product category as a whole.
The flipside to the paradox of choice is "scarcity marketing." Marketers are familiar with the concept of creating scarcity as a way of driving sales. In the late 1990s, I had a discussion with a marketing agency that was responsible for the launch of a major game console.
To create buzz, they advertised to a select audience that the console would be for sale one day earlier than the rest of the world, but only in one store in a small rural town. That morning, the agency sent a film crew to the store to document the long line that had formed to get the console a day early.
Very early the next morning, they broadcast the film via satellite to major news studios that then rebroadcast the footage on morning news programs. That sent customers scrambling to the nearest store before the consoles sold out. People did not realize that the footage was from the day before and the news studios were too understaffed to verify the accuracy of the footage (that it was not taken the same day).
Personally, I felt the agency had acted unethically and I was shocked by how willing they were to boast of their "success." Regardless, the agency understood that a perception of scarcity can create demand, just as too much choice can suppress it.
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