Too many choices.
Research in Motion (RIM), the makers of BlackBerrys, is having some problems. Their stock is down, the new line of products has been delayed for a year and there are rumors of corporate sharks looking to take a bite out of them.
In the view of most observers, the problem stems from too many choices. Since 2007, they have introduced 37 models including BlackBerrys that flip, slide, with touch screens, touch screens and keyboards, high and low end products. The product line is too complicated. In a recent NY Times article, a market research firm estimated that their market share slipped from almost half in 2009 to roughly 10 percent in the US.
Compare that to Apple’s iPhone. There have only been four since 2008 and all were the same but differed only in storage or capabilities from earlier models. Apple made it simple and less is more.
A marketing professor at the London Business School was quoted in the Times article as saying, “Too many options can be frightening and overwhelming.” In fact, other studies on the subject have indicated that, while people claim to like abundant choices, too many leads to confusion, increased concern about risk (making the wrong choice) and ultimately dissatisfaction.
Let’s turn to the alcohol industry.
Budweiser has lost the #2 position in beer to Coors and is now the third largest brand. There are lots of issues at play here but the overwhelming packaging choices consumers face at the store exacerbates the situation. At my last visit to a large beer retailer, I was assaulted with a dizzying array of cans, bottles and package sizes in 6, 12, 18, 24 and 30 packs. I bought a 6 pack of a craft beer.
How about rum? Captain Morgan came in Original Spiced, Silver Spiced (for those who didn’t like amber rum), Private Stock (an upmarket extension) and Parrott Bay, a brand extension and Malibu competitor. Each product in the line up had a strategic reason for being.
At a recent visit to the CM website, I counted 15 products in the line. Seven were for the base CM brand including Tattoo, Lime Bite, 100°, and Long Island Iced Tea. Eight were line extensions in the Parrott Bay brand extension category. Talk about confusing.
Compare that to Sailor Jerry. One brand, one message and one position. The brand is growing rapidly with a compound 5-year annual growth rate of close to 50%. Captain Morgan’s growth has been sluggish over the same time frame despite the massive number of SKUs. (For those of you in the business, it sounds to me like – good for shipments not so good for depletions.)
In a recent interview with Wine and Spirits Daily, Diageo USA President, Larry Schwartz, had this to say about Captain Morgan:
“I think we got a little sophomoric at some point, and I think now we’ve brought it back. We were operating too much in the beer space…”
Larry, it’s all about consumer choices and confusion. You might want to think about Crown Royal as well.