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Choice and Convenience in the Digital Economy

Modern customer behaviour has changed by the abundance of choice and convenience in the digital economy due to technological innovations in communication channels and online platforms.

In the digital age, customers can access almost an endless stream of information. They are constantly bombarded by numerous brands that are vying for their business to solve their problems or cater to their needs.

The abundance of choice for customers is why marketers are kept up at night thinking of innovative ways to stand out from the competition.

From a consumer’s point of view, she wants to be presented with some choices. Studies have shown that people do like to have choices.

Decades of psychological theory and research have demonstrated that giving people the ability to choose increases their intrinsic motivation, perceived control, task performance, and overall life satisfaction and happiness. But many of these studies offered people only a limited number of options, which they could easily differentiate and evaluate.

Current research shows that, as the number of options increases, so does the level of complexity of the decision itself. Although people are inherently attracted to having lots of choices, when it comes to actually choosing from among a large number of options, people often find themselves paralyzed and unable to make a decision.

In his bestselling book “The Paradox of Choice”[1], Professor Barry Schwartz investigates this phenomenon. He explains why even buying blue jeans, with all of their different cuts and styles, can take forever and even lead to what he calls analysis paralysis. He explains how, when it comes to choice, you can have too much of a good thing and that we overvalue having as much information as possible.

There is a reason Mark Zuckerberg always wears the same grey hoodie or why Steve Jobs wore the same black turtleneck and jeans. It a simple solution to the abundance of choice and analysis paralysis. You cannot have analysis paralysis if you have only one choice.

In this environment of an abundance of choice, customers want a balance of choice and personalization. Custom offerings and services that are tailored to their needs, streamlined or curated to their tastes can help combat analysis paralysis if choices or recommendations are made on their behalf.

The abundance of choice which results in the shift of power to the consumer is also why all business today is generally highly segmented. Traditionally, mass marketing was how businesses reached out to prospects.

While some established brands with large marketing budgets still adopt some form of mass marketing, almost all other businesses target niche markets. These submarkets, each have their own characteristics and demand a different sales approach to connect with the target audience.

[1] Schwartz, Barry, “The Paradox of Choice – Why More Is Less“, (2004). Harper Perennial.

Choice and Convenience in the Digital Economy

INCREASED CONVENIENCE

As businesses begin to offer flexible purchasing experiences across a variety of channels, users’ expectations for convenience in online transactions are increasing. Customers want to shop on their terms, whenever and wherever they are, regardless of the device or channel.

For most customers, the increased convenience that digital platforms provide is one of the biggest reasons they prefer online transactions over offline ones.

Online travel agents like Booking.com or Agoda are good examples of how convenience disrupted the air travel and hospitality industry by making it easy to book a flight or hotel room at the customer’s pleasure.

A 2016 report by Phocuswright found that the majority (47%) of travellers prefer booking with online travel agents because they find their website easy to use.[1] In a list of top ten reasons, every other response was related to the practical advantages online travel agents offer, including choice, best prices, and simple cancellation policies.

The entire interface of these online travel agents is designed for easy browsing and booking, and the site itself offers many conveniences for travellers; free cancellations, instant discounts for members, mobile booking confirmations that can be accessed offline, city travel guides, and more.

Likewise, food delivery apps like GrabFood, UberEats, GrubHub and DoorDash have taken advantage of the digital landscape to make ordering meals more convenient for its customers. By simplifying the process of choosing a restaurant, through to menu selection and payment, they have made it simpler than ever to order a meal that will be sent to your doorstep.

While e-commerce has created lots of challenges for some traditional offline businesses and even forced those that could not evolve and adapt to shutter, the websites and apps mentioned help provide another marketing and revenue channel for participating companies.

On the retail front, Euromonitor International projects, 83% of goods purchased globally in 2022 will still be bought instore.[2]

However, I believe this study includes both developing and developed countries, so it may not be wholly accurate or relevant in the context of offline businesses in developed countries. So, take it with a pinch of salt.

 

By understanding how customer behaviour has been influenced by digital platforms and channels, businesses must realize that have to evolve and adapt to meet modern customer expectations and demands.

[1] Raunch, Maggie, “Lodging Drives Steady Growth in US Travel Market“, (Mar 2016). Phocuswright’s U.S. Online Travel Overview Fifteenth Edition.

[2] Evans, Michelle, “New Technologies That Will Change How Consumers Shop in Store“, (Jan 2018). Euromonitor International.

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J C Sum

J C Sum is a certified management consultant (TR 43:2015), an American Marketing Association Professional Certified Marketer (PCM®) in marketing management as well as a certified digital marketing strategist (SSG-WSQ accredited) with 11 years of experience specializing in search engine optimization, content marketing and analytics. He is the author of "Evolve, Adapt or Collapse".

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