There’s been a bit of a slow roll through the (mostly) academic blogs discussing a recent paper by Bronnenberg, Dhar & Dube from The Journal of Political Economy called “Brand History, Geography, and the Persistence of Brand Shares”. Here’s the abstract:
We document evidence of a persistent “early entry” advantage for brands in 34 consumer packaged goods industries across the 50 largest U.S. cities. Current market shares are higher in markets closest to a brand’s historic city of origin than in those farthest. For six industries, we know the order of entry among the top brands in each of the markets. We find an early entry effect on a brand’s current market share and perceived quality across U.S. cities. The magnitude of this effect typically drives the rank order of market shares and perceived quality levels across cities.
In other words, brands of consumer goods tend to be stronger in regions closer to where they were originally made, and this effect persists for a long time. Richard Florida was the first to discuss the paper. Tyler Cowen then picked up their example of Miller Beer, which was basically the first beer launched in Chicago (in 1856!), and which is still the number one beer there 150+ years later. Matt Yglesias was next, and showed the effect graphically using data from Andrew Gelman showing Starbucks per capita:
and Wal-Marts per capita:
Gelman himself then entered the discussion, pondering the possibility that social networks are playing a role in this. I think that his take is exactly right, and it ties in to another of the themes I keep coming back to – network ties are persistent, and difficult to break.
This is a critical point for innovators to understand. When you are trying to get a new idea to spread, it isn’t enough to get people to hear it, or like it. Most of the time, you also have to get them to break an existing tie if they are going to adopt your idea. This is true whether your idea is a new product, a new service, a new way of doing things or a new way of thinking about things. This reminds me of Seth Godin’s angle on aspirin advertising – it doesn’t matter how frequently a new aspirin is advertised, or even how good it is, because he doesn’t have an aspirin problem. He’s got a brand that he’s used for years, and it works. So why invest any time, effort or money into learning about alternative aspirins, let alone going to the trouble of actually switching?
Innovations are generally destructive – in order to create new ties of their own, they have to break old ones. And as the examples of Miller Beer in Chicago, Starbucks around Seattle and Wal-Mart around Arkansas show, breaking existing ties is often harder than you expect. It’s not enough to come up with a great new idea, you have to get it to spread. And that means not just connecting with people, but connecting with them strongly enough that they are willing to continue to give you their time, attention and/or money. Since we all have plenty of choice in how we spend these things, you better have a good strategy for doing this!