Consumers almost always tell researchers that they prefer to have many versions of a product from which to choose. But, in fact, consumers’ perceptions of how many choices they prefer change depending on whether they intend to use an item for pleasure or to meet a functional need. (Think of a swimsuit desired for beachwear versus swimming laps.) For retailers, that difference has big implications for the problem of assortment — how many variations of a single product to offer.

Consumers motivated by pleasure believe that what pleases them differs greatly from what pleases most other people. They will therefore prefer a large assortment. But when seeking to meet a utilitarian need with the same product, they are less inclined to see their preferences as being greatly different from those of other people. They will then be satisfied by a smaller assortment from which to choose.

That’s what we found recently when we conducted a series of six experiments in which participants were asked to consider the choice of a product and were provided with either a pleasure-focused or a utilitarian motivation for the choice.

For instance, undergraduate business students in a lab setting were told to choose a song to listen to for pleasure before studying. A separate group of participants were told to select a song to listen to and evaluate as part of studying. Asked to indicate the exact number of song choices they preferred, pleasure-focused participants wanted to consider more song options, on average, than participants with a utilitarian motivation. The same result held true across experiments involving books, CDs, paint colors, and films.

Further, when participants in the song experiment were provided with their preferred number of options, we found no difference in satisfaction with assortment size between the two groups. In other words, participants with a functional motive were as satisfied with a small assortment as pleasure-motivated subjects were with a large assortment.

In another exercise, 286 participants were asked to imagine that they owned two cars: one they drove for pleasure on weekends and one they used to commute to work. One group was told that they would be choosing a new paint color for their commuter car, and the other that they would be choosing a new color for their pleasure vehicle. Both groups were then asked to what extent they agreed with this statement: “I believe my preferences for colors are unique and different from others’ color preferences.” Then they were asked to gauge, on a seven-point scale, from “not at all difficult” to “very difficult,” how hard they thought it would be to find a color to match their preferences. Finally, they were asked how many paint colors — from one to 50 — they would like to see in order to make their purchase decision.

As expected, participants in the pleasure-car group wanted a larger assortment of paint colors, on average, than those in the commuter-car group. They also perceived their preferences as differing significantly from those of other people than did the commuter-car group. And they anticipated greater difficulty finding a product that matched their preferences. These results indicate that what drives the choice of assortment size is how unique consumers perceive their preferences to be compared with those of other people.

For retailers, understanding the dynamics of assortment is critical for attracting and keeping customers. The composition and size of assortments not only affects customers’ ability to find a product they like but also influences their decision to visit a store or website in the first place. Further, deep assortments of single products vie with broader variety of products overall for limited floor space in stores and warehouses. No wonder retail managers work so hard to determine the optimal number of variations of a product to carry, advertising managers spend so much energy deciding how many variations to advertise, and product category managers struggle with how many variations to include.

There are a number of things retailers might do to better manage assortment in light of what drives consumers’ perceptions of preference uniqueness. They can assess whether the purchase of a particular product is more strongly associated with pleasure or function, emphasize the stronger of the two in advertising and promotions, and manage assortment accordingly.

They should also pay attention to the extent to which their target customers are motivated by pleasure or utility. For instance, consumers in a commercial area are more likely to be motivated by utility than consumers in a residential area, providing the store with the opportunity to carry smaller assortments and a wider variety of products overall. Stores located in vacation and tourist spots, where consumers are more likely to be seeking pleasure, might offer larger assortments of individual products.

Retailers can also adopt tactics to make pleasure-motivated consumers see their similarities with other people and lead them to prefer smaller assortments. Emphasizing buyers’ affiliation with a specific group on product aisles — for instance “essentials for college students” — is one way to draw attention to similarities among customers. Providing customer-tailored assortments, as with recommendation algorithms, can also reduce consumers’ desires for large assortments by reducing their uncertainty about whether the assortment contains options matching their unique tastes.

In an effort to maintain optimal and efficient assortments, retailers often eliminate low-selling products. However, this tactic can backfire. In 2008 Walmart famously cut 15% of its SKUs, but consumer backlash and reduced sales soon followed, prompting the company to reverse the decision. Such uniform cuts fail to take into account that consumers motivated by pleasure feel they have unique preferences, requiring large assortments even if some of the product variations sell poorly.

Much previous research has focused on how consumers’ desire for uniqueness shapes their product choices, with little attention to their initial choice of assortment size. Our results indicate that purchase motivation changes how unique consumers feel their preferences are for a specific purchase. That, in turn, influences the degree of difficulty they anticipate in finding a product that aligns with their preferences and the number of options they want to review. For retailers, focusing on product uniqueness first, instead of whether consumers feel they have unique product preferences, puts the cart before the horse.

from HBR.org https://ift.tt/2N0yKz8