Really glad you wrote this post. I think it’s trying to speak to something I’ve been concerned with for a while—a thing that feels (to me) like a crux for a lot of current social movements and social ills in the States (including the social justice movement, black lives matter, growing homelessness / decreasing standards of living for the poorest people). And of course, the whole shit-pile that is our health care system.
Some Questions / Further Comments:
(Please respond to each point as a separate thread, so that threads are segregated by topic / question.)
1) My guess is that under “Services and construction”, where you list “transportation”, you mean a different “transportation” than the one in the graph, which has “Transportation and Warehousing” as its own category? I’d appreciate clarification / disambiguation in the article.
2) I agree with your point RE: intangibles, that they correlate / go together with monopoly. But it’s difficult for me to tell HOW MUCH they ‘go together’. And whether it is strictly ‘a bad sign’. While I’m not a huge fan of how patents sometimes play out, I am a fan of branding. While you can’t just try to transfer the effect of Coca-Cola’s branding to your new product, I think you can, in fact, try to compete on branding.
(It would be terrible if someone tried to take exclusive rights over the use of the color red in logos or something, though. Hopefully that doesn’t ever happen.)
And, honestly, I think the ‘value’ of their branding might not be too inaccurately priced, in some sense? (Even if the product reduces in quality, I think the branding has value beyond trying to measure quality of product.) I also don’t whether ‘intangibles’ includes things like ‘excellent customer service’, but if it does, that seems like true value, not ‘fake value’. Even though it doesn’t directly cash out into more product.
Over time, I think more of what we consider valuable should be in intangibles? Seems like a sign of people having enough useful things that they can now afford to put money into “nice experiences.” And in many ways, people value having fewer choices because it cashes out into less effort.
3) Similarly, ‘company culture’—while it is ‘dark matter’ as Robin Hanson says—seems appropriate to value highly in some cases. I don’t think most ‘monopoly situations’ are a result of some company just having a really good, un-copyable company culture, but in general, I do expect it to be very difficult to transfer / copy really excellent company cultures. And as a result, I do expect something monopolistic-looking to emerge as a result of—not shady dealings or exclusive privileges facilitated by government—but as a natural consequence of very few companies, in fact, being really good places to work.
I would really like to be able to disambiguate between the situations where: There are only 3 main firms in this industry. Is it because those 3 firms are in fact providing outsized value in a way that’s hard to compete with? Or, is this happening because the government made some poor decisions that favored certain companies for not-very-good reasons, and they leveraged this into an effective monopoly?
While you can’t just try to transfer the effect of Coca-Cola’s branding to your new product, I think you can, in fact, try to compete on branding.
La Croix did this. It’s just flavored seltzer, the same as the 59c store-brand bottles, but it became wildly successful. What’s more, it had been around for a while before becoming successful.
The first MAI study identified a highly-attractive target segment of prospective sparkling water users not at all interested in the Perrier brand and its “snobbish / expensive / for special occasions” positioning
Among package designs evaluated, MAI research led to recommendation of the design considered least appealing by the Heileman Marketing Group. The MAI-recommended design:
a. Promoted an “all occasion” image
b. Offered strong LaCroix name presence
c. Used elements that were most consistent with water imagery to the newly-identified target segment
Another unexpected research result was the surprising consumer enthusiasm for sparkling water in cans, a packaging idea that had not yet been introduced in this category. LaCroix’s subsequent introduction of sparkling water in cans allowed the brand to capture the lion’s share of new category growth from this innovation
I don’t think that’s the whole story. La Croix was originally positioned as an alternative to Perrier, whereas now (maybe as a result of the packaging in cans) it’s positioned as an alternative to soda. And the copy on the box is pretty distinctive—“calorie-free”, “innocent” and so on. (It isn’t quite grammatical, but that must be intentional. Trying to affect a European accent?)
There’s a plausible narrative where La Croix succeeded because no one else had tried packaging seltzer in cans, but there’s also a plausible narrative where it succeeded mostly because of its unusual branding.
If pressed, I’d favor the first—Poland Spring also has a line of expensive brand-name flavored seltzers, but the bottles are a little unwieldy, not the sort of thing you’d pack with a work lunch. But I’m not in the target audience for its branding, so.
Really glad you wrote this post. I think it’s trying to speak to something I’ve been concerned with for a while—a thing that feels (to me) like a crux for a lot of current social movements and social ills in the States (including the social justice movement, black lives matter, growing homelessness / decreasing standards of living for the poorest people). And of course, the whole shit-pile that is our health care system.
Some Questions / Further Comments:
(Please respond to each point as a separate thread, so that threads are segregated by topic / question.)
1) My guess is that under “Services and construction”, where you list “transportation”, you mean a different “transportation” than the one in the graph, which has “Transportation and Warehousing” as its own category? I’d appreciate clarification / disambiguation in the article.
2) I agree with your point RE: intangibles, that they correlate / go together with monopoly. But it’s difficult for me to tell HOW MUCH they ‘go together’. And whether it is strictly ‘a bad sign’. While I’m not a huge fan of how patents sometimes play out, I am a fan of branding. While you can’t just try to transfer the effect of Coca-Cola’s branding to your new product, I think you can, in fact, try to compete on branding.
(It would be terrible if someone tried to take exclusive rights over the use of the color red in logos or something, though. Hopefully that doesn’t ever happen.)
And, honestly, I think the ‘value’ of their branding might not be too inaccurately priced, in some sense? (Even if the product reduces in quality, I think the branding has value beyond trying to measure quality of product.) I also don’t whether ‘intangibles’ includes things like ‘excellent customer service’, but if it does, that seems like true value, not ‘fake value’. Even though it doesn’t directly cash out into more product.
Over time, I think more of what we consider valuable should be in intangibles? Seems like a sign of people having enough useful things that they can now afford to put money into “nice experiences.” And in many ways, people value having fewer choices because it cashes out into less effort.
3) Similarly, ‘company culture’—while it is ‘dark matter’ as Robin Hanson says—seems appropriate to value highly in some cases. I don’t think most ‘monopoly situations’ are a result of some company just having a really good, un-copyable company culture, but in general, I do expect it to be very difficult to transfer / copy really excellent company cultures. And as a result, I do expect something monopolistic-looking to emerge as a result of—not shady dealings or exclusive privileges facilitated by government—but as a natural consequence of very few companies, in fact, being really good places to work.
I would really like to be able to disambiguate between the situations where: There are only 3 main firms in this industry. Is it because those 3 firms are in fact providing outsized value in a way that’s hard to compete with? Or, is this happening because the government made some poor decisions that favored certain companies for not-very-good reasons, and they leveraged this into an effective monopoly?
La Croix did this. It’s just flavored seltzer, the same as the 59c store-brand bottles, but it became wildly successful. What’s more, it had been around for a while before becoming successful.
What did they do?
I don’t think that’s the whole story. La Croix was originally positioned as an alternative to Perrier, whereas now (maybe as a result of the packaging in cans) it’s positioned as an alternative to soda. And the copy on the box is pretty distinctive—“calorie-free”, “innocent” and so on. (It isn’t quite grammatical, but that must be intentional. Trying to affect a European accent?)
There’s a plausible narrative where La Croix succeeded because no one else had tried packaging seltzer in cans, but there’s also a plausible narrative where it succeeded mostly because of its unusual branding.
If pressed, I’d favor the first—Poland Spring also has a line of expensive brand-name flavored seltzers, but the bottles are a little unwieldy, not the sort of thing you’d pack with a work lunch. But I’m not in the target audience for its branding, so.