We don’t like making decisions.  The more choices we have, the sadder we get.  This may sound obvious but it is actually counterintuitive.  If given the choice between having more options or fewer options, people (customers) will tell you they want more.  Unfortunately, their behavior tells a different story. The more choices people have the more frustrated and unhappy they become.  This is perhaps the single most important and insightful nugget that decision theorists have uncovered in the last decade.  Here is how it plays out:

• Suzy decides she needs a red sweater
• Suzy goes to her favorite retailer or shops on-line
• Suzy has to choose between 20 different red sweaters
• Suzy decides she really does not want a red sweater

When people have too many options they tend to do one of two things:

1. Go with the simplest, cheapest, least risky option
2. Enter into a state of decision paralysis where making no decision seems better than the alternative

One of my favorite restaurants is In-n-Out Burger.  If you want a hamburger, fries, and a drink, go to In-n-Out Burger.  If you are in the mood for something else, don’t go to In-n-Out.  In-n-Out can do hamburgers in almost any way you can imagine: covered in chili, stacked 3-burgers high, smothered in onions.  Their menu goes deep (burgers any way you want), but they don’t go wide (burger alternatives).  The same is true for Apple and the iPhone.  Apple sells a lot of cell phones.  Every one of them is an iPhone.  You can get different features (deep) but not different phones (wide).

Fewer Decisions = Happier Customers. This is not what your customers will tell you; this is what their wallets will tell you.

I just finished reading about a study where participants were offered money in exchange for taking a survey.  Once they completed the survey, the surveyor threw in an unexpected twist.  Instead of the $15, participants were given the option to receive an ink pen valued at $20.  So did they choose the money or the pen? In study-after-study, the overwhelming majority chose the pen.

Here is where things get interesting.  The same study was repeated with one change; instead of a single pen there were three pens to choose from.  The choices included the pen from the original study and two similarly nice pens.  This time an overwhelming majority chose the money.  Why?  The same pen was available!  There were two other very nice pens as well.  Why did participants elect to take the money?

This type of consumer behavior (decision theory) has been the focus of numerous books over the last several years.  Here are several that I highly recommend:

• Trade-Off by Kevin Maney

• Blink by Malcolm Gladwell

• How we Decide by Jonah Lehrer

If, however, you have time to only read one book on the topic, it should be The Paradox of Choice by Barry Schwartz.  This is a must-read for anyone in Marketing or Product Development.

So, back to the money-vs-pen study, why did people in the second study choose the money?  The researchers offer their explanation, but I am more interested in hearing YOURS.  Post your thoughts.  Join the conversation.

I love the story of the Krispy Kreme box. You have probably not given the box much thought, but perhaps you will after reading this post.

The first chapter of any good packaging story begins with defining the product attributes you want your packaging to communicate. For Krispy Kreme it was fresh, fun, and cherishable.

They accomplished fresh by intentionally making the sidewalls of the packaging thin. This was counterintuitive. Most products that are sold warm are packaged in thick-walled packaging to trap the heat (think pizza box). The folks at KK wanted their customers to be able to smell the doughnuts and feel the warmth coming off the box. The sensation of freshness was more important than actually keeping the doughnuts fresh.

Putting polka dots on the box was done to communicate fun. There is nothing serious about polka dots. No one wears a polka dot anything to a funeral.

So how do you accomplish cherishable?’ This one is a little tougher. It required them to study how people handle precious things. What they discovered was that regardless of the size of the object, people tend to hold valuable things with both hands. So they designed a box that has to be carried with two hands. People actually receive a box of KK doughnuts much like they would an infant. There is no way to be nonchalant about how you hold a box of KK doughnuts.

Okay, I promise I am through talking about Oreos and Krispy Kreme. I will move on to something less fattening. That should not be too difficult.

What’s next for the U.S. cookie king- how about global domination? After being on top of the domestic cookie market for nearly 100-years, Oreo is now hoping to recreate the magic internationally.  First stop: China.

Trying to tailor Western brands to Eastern tastes is not always an easy journey.  Oreos were first introduced to Chinese consumers in 1996.  After years of stagnant growth, Oreo launched a consumer research study that uncovered some interesting insights.  They learned that traditional Oreos were too sweet for Chinese tastes.  Also, the packages of 14 Oreos priced at 72 cents were too expensive.  After experimenting with numerous prototypes, Nabisco arrived at a formula that tasted right and a package size that was affordable.

Then Oreo began a grassroots marketing campaign to educate Chinese consumers about the magic of Oreos and milk. Here are my four key elements of a successful marketing campaign:

1. get exposure
2. create intrigue
3. craft a memorable experience
4. generate momentum

Here is how Nabisco set out to accomplish all of these.  They established an Oreo apprentice program at 30 Chinese universities.  Ten applicants were selected from each school to become Oreo Brand Ambassadors.  The students were given bicycles outfitted with wheel covers resembling Oreos and were charged with handing out cookies to the multitudes.  Oreo themed basketball games were hosted in an effort to reinforce Oreos and dunking.  The bicycle campaign worked.  By 2006, Oreo had displaced long-standing brands and established itself as the best-selling cookie in China.

Oreo is currently focused on growing its European business. In a society steeped in the centuries old tradition of tea and biscuits, Oreos are viewed as a long-shot.  Brits are patriotically loyal to regional brands and locally produced chocolate.  Dunking is considered crude.  Becoming the best selling cookie in Europe will not be easy….but it will happen.  After hooking us on American Idol, they owe us one.

No company can stay on top for a century without being able to overcome adversity.  In 2003, adversity showed up at Oreos front door in the form of angry moms!

Heightened awareness of childhood obesity combined with a national low-carb obsession created a perfect storm that threatened to crumble Oreo. Oreo had gone from America’s favorite cookie to America’s most unhealthy. The original Oreo recipe was almost 60% sugar and heart-clogging trans fat.  Moms stopped buying them.  2003 witnessed Oreo’s first double-digit sales drop.

Oreo reacted by launching a string of healthier cookies such as Reduced Fat Oreos (30% less crème filling…not very innovative), Oreo Crisps (no crème filling…even less innovative), and Oreo Minis (like Oreos…only smaller). All were great attempts at fixing the wrong problem.  The problem was never the cookie.  America still loved the original cookie!  The problem was; moms felt guilty about serving the cookie. Step one in the innovation process is- SOLVE THE RIGHT PROBLEM!!

In the late 90s and early part of the 21^st century, milk sales were declining at a rate of 3-4% per year.  In an attempt to stop the slide the Milk Processors Board launched the uber-successful “Got Milk?” campaign. Oreo spotted an opportunity to turn their situation upside down. Oreo partnered with “Got Milk?” in what they called our way of helping moms get their children to drink more milk. Oreo adopted the new tag-line, “Milk’s Favorite Cookie.”  The only thing crazier than Oreo selling itself as an integral part of a healthy after school snack is….it actually worked! The co-branded Oreo/“Got Milk?” campaign helped to dramatically raise both milk and cookie sales in 2004.   The Oreo/”Got Milk?” campaign was so successful, the Milk Board offered to pay Oreo $1 million for the rights to use the Oreo brand in billboards and print ads across the country.

Oreo declined the money, but graciously accepted the free advertising.

Next week will be the last in the Oreos series- Oreos Part 5: Broaden Your Horizons.