Eight years ago, Michaela Draganska, then a PhD student at Northwestern’s Kellogg school, was searching a Chicago grocery for whole-milk yogurt. Nonfat, low-fat, and fruit yogurts lined the shelves — everything but what she needed.
Draganska was inspired. What happens, she wondered, when marketers offer consumers too much choice? She theorized that such companies confuse shoppers and needlessly bloat new-product budgets by blindly rolling out ever more flavors, colors, and sizes.
Draganska and her adviser, Dipak Jain (now Kellogg’s dean), developed a model to help marketers optimize SKU offerings. Of 13 yogurt brands, they found that just 3 — all low-priced local or store brands — would gain share by adding to their smaller lines. Yoplait and Dannon were better off cutting back.
Could such findings win traction? Draganska, now an assistant professor at Stanford, doubts it. “It’s a prisoner’s dilemma,” she admits.FCS