EDITOR'S LETTER
Too Many Choices

How much is too much? That question was recently tackled in a survey of business executives in 300 industries conducted by George Group Consulting and Wharton. While super-sizing selection may seem like a sound competitive strategy, the study suggests two not-so-positive outcomes that many companies experience. First, too many choices can confuse consumers. And, second, increasing selection can put a drain on profits.

At more than 60 percent of the organizations surveyed, a relatively small portion of their products actually accounted for all of the operating profit. Nonetheless, more than 40 percent of those surveyed said their offerings had increased by nearly 50 percent in the last five years. 

In the face of adding additional products�and, therefore, costs�to their offerings, the biggest mistake service companies make, according to Wharton professor Eric Clemons, is cutting service bells and whistles to offset the added product-
associated costs. It's like the airlines buying new planes or adding routes, reports the study, and then eliminating pillows and blankets. Companies that have successfully increased offerings are those "that have a formal process for deeply understanding
customer needs."  

So, what's the answer? According to the study, "The reality is that customers are really a lot more receptive to a simpler offering than companies think." What's really rewarded, says Clemons, isn't volume, but "meaningful differentiation."

Sincerely,

Stephanie K. De Long
Editor-in-Chief