Reduce Product Selection To Increase Cannabis Sales
Many cannabis retailers and producers underperform for a reason that appears counter-intuitive: they offer too many products for sale. Whether shopping in an online or physical environment or perusing a sales sheet, many well-intentioned buyers will be befuddled from a plethora of products and configurations - and end up purchasing less than was originally intended or just walking away.
Moreover, bloated product portfolios can spawn operational complexity leading to brand confusion, poor service, reduced scale economies and increased error rates.
Consumers seem to want more choice but shop at their own peril. In 1949, the typical U.S. grocery store stocked 3,700 products. Today, the average supermarket has 45,000 products with the typical Walmart stocking around 100,000 products. Remarkably, Cold Stone Creamery provides customers with 11.5 million ways to customize their ice cream with a menu of mix-ins.
Some psychological studies analyzed the negative impact of too much choice. One study looked at participation in defined pension plans. When the plans offered only two funds, 75% of the relevant employees participated. When the plans offered 59 funds, the percentage of participants fell to 61%. Similar findings around “choice overload” have been observed in other situations as varied as applying for jobs, purchasing jam and making healthcare decisions.
Why does a person’s behaviour change when faced with an excessive number of options? Cognitively, individuals find it very difficult to compare the features of more than seven different variables due to neurological limits on a human’s ability to process information.
During market research, consumers often say they want greater selection. Not surprisingly, companies willingly oblige by offering more products that target ever narrower needs and niches.
What marketers should do is give consumers what they really need: an optimized product mix plus new ways of shopping that reduces the cognitive demands of choosing.
There are many ways to improve the ‘choosing’ experience, including:
1. Cull the number of available options, beginning with the unpopular ones;
2. Foster buyer confidence by using personalized recommendations from budtenders, recommendation engines and 3rd party experts;
3. Guide the consumer’s purchase journey by categorizing the offering based on usage patterns or certain features;
4. Condition and educate buyers by starting with simple offerings and then gradually introducing them to more-complex choices.
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