It’s no coincidence that the rise of the American chain restaurant coincides pretty neatly with the automobile’s shift from an aristocratic toy to a mass means of transportation. As society grew more mobile, a novel problem arose: As you found yourself routinely passing through areas you didn’t know intimately, how could you know where to grab a decent bite? Standardized franchise restaurants—by adapting the assembly line methods of Henry Ford, appropriately enough—provided the answer. What they might lack in quality, they made up for in consistency: Anywhere the internal combustion engine might take you, you could Look for the Golden Arches (or some other easily recognizable logo) and know exactly what you were going to find. The chain was unlikely to be the best casual dining in town, but you at least knew you weren’t going to be surprised with something epically awful. That was a particular risk for roadside restaurants catering primarily to travelers rather than locals: If you don’t expect to do much repeat business, there’s not much percentage in spending time and effort raising the quality of your food much above the level of “palatable.” The national chain, by contrast, had an incentive to ensure that local managers didn’t injure the reputation of the overall brand. A customer might not ever set foot in a particular McDonalds a second time, but a chain has to be concerned with whether her experience makes it likely she’ll visit any McDonalds again.
Now, Brad Plumer reports, there’s research suggesting that online review sites like Yelp are cutting into chains’ bottom line by providing an alternative solution to the information problem. The combination of peer-produced online reviews (which cover local diners along with the big-city restaurants) and mobile, location-aware Internet devices has made it incredibly easy to figure out where you can find the nearest restaurants with good reputations, wherever you might be. Under conditions of uncertainty, the chain represents a rational maximin strategy. As ubiquitous connectivity and peer-production of information reduce that uncertainty, the chain becomes an unnecessary hedge.
Yet it’s not just chain restaurants that have thrived by using standardization and branding to solve a consumer information problem: Branding and marketing generally often serve much the same function. Frequently, generic or store-branded products (soda, cereal, ibuprofen) are literally chemically identical to the more recognizable name-brand product, and only cheaper because they haven’t been saddled with the overhead of a costly marketing campaign designed to signal quality. (Think of the traditional argument for the evolution of peacock feathers: To survive while paying the high overhead cost of such a gaudy display signals genetic fitness.)
Imagine, then, what effect it might have if, five or ten years hence, augmented reality using sophisticated image recognition were as ubiquitous as Internet-enabled phones are becoming in the developed world. Imagine that, for nearly any product consumers encountered, some kind of aggregate rating—based on whatever criteria the individual has determined are most important—would simply appear, with minimal effort. Simply looking at an aisle of products—or even passing shops on the street—I might effortlessly learn which were deemed most satisfactory by people with tastes similar to mine. My incentive to take the time to rank products would be provided by my desire to give the system a basis for determining which other user’s rankings were most likely to be relevant for me. (Think here of Netflix recommendations or other type of social filtering, where contributing ratings enables the system to make better predictions about what I am likely to enjoy.)
With such information more directly available, marketing would become far less relevant to the buyer—and a far less worthwhile investment for the producer. Products, of course, would still need to be distinguished in some way, but a seller with a superior product would be far better able to compete without investing in a costly national marketing campaign. Advertising might be initially important in raising awareness about a new product and building an initial pool of reviews, but its salience would rapidly diminish.
That’s one way things might go, at least. The picture is a bit complicated because today we often “consume” the brand, and not just the product itself. That is a company like Nike might invest a great deal in slick marketing partly in order to create a series of public associations with their logo, so that part of what I’m buying when I purchase their sneakers is what (I hope) the Swoosh signals about the sort of person I am—or how I see myself, at any rate. But this seems like a major consideration in a relatively limited number of product areas, such as clothing (precisely because it’s displayed on the person). If that’s right, the “Yelp Effect” in world where augmented reality technology has been widely adopted could dramatically diminish the broader cultural prominence of corporate logos and brands.
18 responses so far ↓
1 Oscar // Oct 7, 2011 at 9:28 am
You don’t understand marketing at all. Plenty of people refuse to buy generic soap powder or breakfast cereal or milk or bread. Why? Because it looks cheap. This bothers them even though NO-ONE else will ever see them consume the product. Marketing has so twisted their values that they Pay a premium to feel good about themselves. Plenty of people are idiots.
2 Stones Cry Out - If they keep silent… » Things Heard: e192v5 // Oct 7, 2011 at 10:21 am
[…] Chains and the Internet age. […]
3 Simon // Oct 7, 2011 at 1:17 pm
this article is totally bang on. some might say it’s prophetic …
4 Sigivald // Oct 7, 2011 at 3:13 pm
Frequently, generic or store-branded products (soda, cereal, ibuprofen) are literally chemically identical to the more recognizable name-brand product, and only cheaper because they haven’t been saddled with the overhead of a costly marketing campaign designed to signal quality.
That is true.
I buy house-brand bulk painkillers, for instance.
But I buy name-brand cold medicine in blister packs.
Why? Because the house-brand stuff is uniformly impossible to open without scissors, but the expensive Sudafed or whatnot pops right out under light pressure.
Not a big deal in itself, but when I’m down with a cold, by God I’m willing to pay an extra $1.50 per package to not have to deal with that crap a few times a day.
(And contra Oscar, I don’t think we can blame “marketing” for the existence of posturing or signaling behavior.
On the contrary, marketing works as it does because such desires and behaviors already exist.
I mean, the idea that people paying to feel good about themselves is the result of “twisted values”?
Isn’t it instead perfectly natural that people will pay for things they desire, and that they desire to feel good about themselves?)
5 FS // Oct 7, 2011 at 3:40 pm
Andy Rooney, of all people, noted this back in 1978, in “Mr. Rooney Goes To Dinner.”
“There’s more dependable mediocrity than there used to be. It isn’t going to be very good, but it isn’t going to be very bad, either”
6 jnc // Oct 7, 2011 at 4:17 pm
A few observations: Yelp users rate most McDonald’s 3 or 3.5 stars. (At least that’s what I found when I checked just now on Mickey Ds in the SF downtown.) Think about that when you decide to try a new restaurant and think, “hey, it’s 3 stars on Yelp, how bad could it be?”
Also, why is there a whole star’s variance among McDonalds in the same area? I thought it was probably neighborhoods, but that’s not right based on my knowledge of the areas where the restaurants are.
Finally, there are several top-tier restaurants in SF that have a 4 star rating on Yelp. And by top tier I mean places where you would go for a special occasion and drop $200 for the meal. What are we to make of the 1/2 star difference between a McDonalds and those places? My first thought is that people who gave the top tier restaurant, say, 3 stars are comparing it to similar top tier restaurants or perhaps there’s not much overlap between Yelp users who rate McDs and fine dining restaurants.
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12 Ben // Oct 9, 2011 at 1:06 am
When I use Yelp, I tend to use in the manner jnc thinks people might. A 5 star cheap place ($) is likely not as good as a 4 star relatively expensive place ($$$), but I expect to get a good sandwich.
I usually would avoid a restaurant that is less than 3.5 stars. Most popular rating systems seem to mirror educational grading, i.e. 60% is bad.
Regarding McDonalds, evidently they had a pretty big free rider problem for a while. locations near freeways were often run down and dirty compared to “main street” locations. Presumably, the freeway franchisees didn’t expect people to be back. Evidently, McDonalds found a way to bring the hammer down on these franchises.
13 Michael B. Sullivan // Oct 11, 2011 at 5:02 pm
To back up Ben, yeah, I think that people are sort of implicitly comparing restaurants of similar types or price ranges. Basically, I think for most people, 3 stars means, “This restaurant performed basically to my expectations. And since I went to it in the first place, ‘to my expectations’ is reasonably good.” 1-2 stars means, “This restaurant underperformed my expectations.” 4-5 stars means “This restaurant outperformed my expectations.”
14 Freddie // Oct 11, 2011 at 8:21 pm
This all assumes the people rating restaurants (or whatever) are rational and reasonably good at rating.
15 Don Rodrigo // Oct 18, 2011 at 5:28 pm
The first “franchise” restaurants were built in the final quarter of the 19th century along major rail lines. Unfortunately I don’t recall the name of the entrepreneur who started the concept, but I know he hired young women as service and wait staff, because it gave his places the civilized atmosphere he was looking for to contrast with the saloons that were the only other option railroad diners had. The eateries were apparently very successfull.
16 Don Rodrigo // Oct 18, 2011 at 5:36 pm
Here it is, the Harvey Girls:
http://www.americanheritage.com/content/harvey-girls
17 Southern Beale // Oct 30, 2011 at 7:46 pm
This is precisely why I’m so grateful to Al Gore for inventing the internet (ahem).
I consider branding one of the main villains in our culture’s growing dehumanization. It’s a mechanism by which corporations have dehumanized us all and turned us into “consumers,” not people. Oh woopsies, we’re not even consumers any more, now we’re “credit scores.” And everywhere you turn, you’re assaulted with a sales pitch. We’re not people, or credit scores, or consumers — we’re profit centers for someone else. I hate it.
It’s something which has infiltrated every aspect of our lives (and is even worming its way into our public schools, which I find shocking).
So yeah, the democratizing nature of the internet has been a blessing. But it’s also being manipulated by these same dehumanizing forces attempting to manipulate us walking wallets. Hear about how ConAgra attempted to dupe some food bloggers into hawking one of their lasagna brands? It backfired, but it’s just one way corporations are trying to manipulate consumers into buying more of their stuff.
See, in the world of marketing and advertising, it’s no long “here’s my product and why it’s wonderful, please try it.” Now it’s this gaming of the system, a complete manipulation. It’s “I know you think my product is this one thing but it’s totally not and YOU’RE SUCK A SUCKER stupid plebe!”
That’s kind of my take on it.
I really have reached a place where I find all adveritising and marketing offensive, invasive and fraudulent. I kind of understand those people back in the 70s who decided to go back to the land and grow their own food and make their own clothes because they didn’t want to contribute to a corrupt system.
But maybe it’s just me.
18 altoapprendistato // Dec 6, 2013 at 5:33 am
http://www.altoapprendistato.com/