Christian and Sonya raised an interesting conundrum with their question in reply to my last post.

“In a category like breakfast cereal, are the manufacturers hurting themselves by having so many brands and varieties within those brands?”

There are two aspects to this from a retail marketing and consumer behaviour perspective.

The brands are doing themselves a favour (with an approach that was started by the cigarette manufacturers many decades ago): by proliferating the number of brand options you increase the likelihood that someone will choose one of your brands (and they basically don’t care which the customer takes so long as it’s one of theirs).  This makes it much, much harder for a new entrant to take market share away.

The retailers however are not helping their cause.  It’s been found in one study of European supermarkets, that those who stock a smaller ranges sell more in total than those that stock a larger one. 

This probably happens for a couple of reasons:

  • The complexity of choosing makes venturing into a new product area (i.e. one that you don’t typically purchase) unattractive, because the consideration set is overwhelming and the potential risk of choosing badly is too high.
  • The diverse choice where the range is larger makes the likelihood that you will default to an unconscious purchase strategy much higher; that means either buying what you always buy, or else picking the cheapest option (lowest risk).

So in these situations the retailer would be well advised to resist the demands of the manufacturers to carry extra lines.  Depending on the size of the retailer that’s sometimes not easy because the brands involved are powerful.  It’s also something that those brands will use as a bargaining point when the retailer squeezes them to reduce cost (which ironically may end up costing the retail more than they save).

Thanks for your question!

Philip

22 Comments

    1. April Braswell

      oh, I LIKE Duane’s question indeed!

      yes yes!

      although, with cereals that I DO like (since weight loss surgery and a physically SMALL stomach, I just about NEVER eat cereal anymore.) I do taste test the storebrand ones.

      And in MOST cases preferred the brand cereal’s taste and switched back.

      but then I’ll buy the LARGE size to be frugal where I can. 🙂 which most families are needing to do in SOME area of their lives these days with the current economy.

      All the best,

      April Braswell

      Online Dating Coach, Dating Expert

      reply to comment→
  7. Christian Haller

    Appreciate the response to the question. Sometimes you jsut want to walk out without buying a thing. Becasuse I will have a variety products on my site before this is all done, I’m looking forward to the rest of your material.

    Christian

    reply to comment→
  10. John Ho

    Phil,

    Good insights, as always!

    It’s never one size fits all as we carefully consider each situation on it sown merits.

    So your analysis, while applying the fundamental principles, needto consdier the overall impacts when each principles seems to clash with one another in any individual case.

    Same as analysing a personality using Pure Numerology for understanding personalities for better influennce & persuasion. Even though each number hs its own meaning, it’s the combination of them that gives the varied combined meaning.

    John Ho
    Understanding Personalities for Better Influence & Persuasion (WordPress)
    Understanding Personalities for Better Influence & Persuasion (Vox Blog)

    reply to comment→
  12. JC MacKenzie

    It’s interesting-I hate going to Subway [the sandwich shop]. There are so many CHOICES to make right down to multiple kinds of bread!

    And I don’t stop there very much anymore, I would rather just skip lunch.

    Good insights

    Thanks
    JC JC

    reply to comment→
  19. Pam Schulz

    Great insights about choices. I found this paragraph fascinating:

    The retailers however are not helping their cause. It’s been found in one study of European supermarkets, that those who stock a smaller ranges sell more in total than those that stock a larger one

    Looking forward to learning more.
    Pam

    reply to comment→
  20. Darryl Pace

    Phil,
    Very interesting information. It caused me to think about the grocery store I usually shop in, and how they carry many, many different brands of cereal. I also thought about the fact that despite the number of different cereals they stock, I always get the same 1 or 2 cereals and, generally, don’t consider any others. I guess I’m on automatic pilot when cereal shopping, and I do what’s easiest — pick the cereal I’m already familiar with.

    Health, Fitness — Darryl Pace

    reply to comment→

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