Burgers, Fries, And Predictability

Charles Wheelan, author of “Naked Economics,” offers an economic take on branding:

McDonald’s “golden arches” have as much to do with information as they do with hamburgers. Every McDonald’s hamburger tastes the same, whether it is sold in Mexico City or Moscow or Cincinnati.

That is more a mere curiosity; it is at the heart of the company’s success. Suppose you are driving along Interstate 80 outside of Omaha, having never been in the state of Nebraska, when you see a McDonald’s.

Immediately, you know all kinds of things about the restaurant. You know that it will be clean, safe, and inexpensive. You know that it will have a working bathroom. You know that it will be open seven days a week. You know all of these things before you get out of the car in a state you’ve never been in.

Compare that to the billboard advertising Chuck’s Big Burger. Chuck’s may offer one of the best burgers west of the Mississippi. Or it might be a likely spot for nation’s next E. coli outbreak. How would you know?

If you lived in Omaha, then you might be familiar with Chuck’s reputation. If you are like millions of other people, even those who find fast-food unappealing, you will still seek out the “golden arches” because you know what lies beneath them.

McDonald’s sells hamburgers, fries and more importantly, predictability.

This idea underlies the concept of “branding” whereby companies spend enormous sums to build an identity for their products. Branding solves a problem for the consumer. How do you select products whose quality or safety you can determine only after you use them (and sometimes, not even then)?

Modern business requires that that we conduct major transactions with people whom we’ve never met before. Branding helps to provide an element of trust that is necessary for a complex economy to function.

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