The Dilemma of Too Much Choice
There’s a saying, that I’m sure everyone knows, that goes “there are only two certainties in life; death and taxes”. Well, there’s another one that they forgot to tell you about— segmentation. Segmentation has taken the modern world by storm and refuses to relinquish its firm grasp on the consumer market.
What is segmentation? As Scott Galloway defines it, it is “the process of dividing a large homogenous market into cohorts with similar needs or wants”. Essentially, it is the division of market more specific markets in order to cater to more specific populations. Through segmentation, companies and brands are able to justify price-points that otherwise would have been unattainable and provide a more specific experience for their consumers. With segmentation of the market inherently comes more choices, and if these options successfully cater to a new demographic and are successful then it is beneficial for the company.
The driving force behind the absurd amount of choices you have while calling an uber, segmentation has been adopted in every avenue of the market. The success of segmentation stems from two factors: optimizes revenue and what Seth Godin describes as the “promise of association”. By discriminating prices, segmentation obviously leads to maximized revenue. But people choose one option over the other because of the association they place with each option. By creating and serving their specific tribe, Seth Godin explains that each option does at least one of the following if successful:
- Serve users who care about origin and elegance
- Serve users who care about status.
People feel they need to spend on a certain item because they believe themselves as a person who would do that. The emotional experience offered by purchasing the product is as much tied to the price as the functional aspect of the product. By offering different experiences and statuses, segmentation is able to entice consumers effectively.
However, can the overload of choices actually be a detriment to the consumer?
With today's abundance of options, driven by segmentation, consumers can be overwhelmed and their decision making stalled. Do I really need the $200 pair of Bose Headphones when I can buy the $50 pair of Skullcandy that are just as good? Yes, it creates more options that you could identify with, but it also could cause the “paradox of choice”, where you begin to care more about the fine details and negatives of a product that you otherwise would have. In today’s market, consumers are overloaded with choices that lead to product fatigue, annoyance, and distrust in the brand — “They’re taking advantage of me”. Choice paralysis could also occur, where the consumer doesn’t even make a final decision because they are bombarded with so many options. How many of you have searched something on Amazon and skimmed through a few products just to not order anything?
Overall, the jury is still out on whether segmentation is hurting the consumer experience. I can tell you one thing though, it definitely is helping brands capitalize on our individualization.
