An HBS professor says that too much variety in a company's product line can be counter-productive.
Link: When Product Variety Backfires : Marketing : HBS Working Knowledge.
The belief that variety is good "is not always true," argues Harvard Business School professor John Gourville in "Overchoice and Assortment Type: When and Why Variety Backfires." The research paper, co-written by professor Dilip Soman of the University of Toronto's Rotman School of Management, demonstrates that sometimes offering too many choices prompts the confused consumer to defer a purchase or run to the arms of a competitor with a less cluttered product line.
This makes sense. But I disagree with one of his conclusions. Gourville argues that "overchoice" implies that companies with mile-long product catalogues should reduce the number of products in their stable. As a Long Tail devotee, I don't like that idea, whether applied to mutual funds or toothpaste.
I much prefer his second idea, which is to retain the mile-long catalogue and help consumers find what they need within the catalogue. (After all, the more niches there are, the more likely it is that I will find something that is tailored to my own tastes.) Building this hand-holding capability will help companies build sustainable competitive advantages for the future.
Reducing 25 toothpaste flavours to 5 only makes each of those 5 more easily imitable by others. The maker of toothpastes has no control over which brand the consumer chooses. Conversely, helping a consumer find what he needs --either overtly by providing access to a product expert or labelling products as Gourville suggests, or covertly by using technology to automatically recommend the product most likely to be useful to the consumer or by building a platform that facilitates conversations between consumers-- builds a capability that cannot be replicated by a competitor. You alone have access to each individual consumer and possess knowledge of that consumer -- things that no one else possesses. This is a long-term sustainable competitive advantage, which can in fact even strengthen over time as the company learns more and more about its consumers.
The Long Tail is probably the best source for learning more about how one could help consumers navigate one's product catalogues. This page is a particularly good read.
So: too much variety? No. Not enough hand-holding.
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