chart

Why Everything Gets Worse Before It Gets Better

Why Everything Gets Worse Before Better

In marketing, the world is always 'new and improved'. Every day, thousands of ads run in every conceivable medium giving us new reasons to buy: the 2005 Miata is completely redesigned; Huggies are now as thin as Calvin Klein boxer shorts; airline seats are flatter, wider, softer than ever before. Since the publication of In Search of Excellence, managers have had 20 years of quality circles, heading ever upwards towards perfection.

It seems like a fairly safe assumption, then, that everything is getting better. But it's not. In fact, in certain key ways, most mass-produced products and services go through a long cycle of deterioration before they get better. They do this in response to consumer demand. Because, faced with a choice between convenience and performance, almost all consumers choose convenience.

When I first started researching this, I assumed that I would find exceptions. Sure, there were some slight variations. But wherever I looked, the rule held. Next, I worried that my observations were so obvious, and were such common currency among marketers, that I had never read them because they were too obvious to write down. But I've discussed this with marketers far smarter and more knowledgeable than I am. And they all make exactly the assumptions that this article challenges.

More importantly, some of the largest corporations in the world have been wrong-footed in their marketing, in their development of new products, and in the kinds of experiences they provide for their customers, precisely because they've ignored the principles that I'm about to outline. I'm talking about companies like General Motors and McDonald's, who could have seen the warning signs years ago by following the methodology I'm going to describe below.

But first, let me give you a few examples of what I mean.

RESTAURANTS AND THE HISTORY OF EATING OUT

After the French Revolution, the aristocracy with heads still connected to their bodies ended up in London. Deprived of their stately homes and chefs, they took to eating at an establishment set up by the great Escoffier. (Are you listening, France? Your cuisine was invented in England.) Clearly they were an elite, and this was not food for the masses. This tradition of grand restaurants serving extremely expensive, high-quality food has continued ever since in every capital of the developed world.

Once things had relaxed a bit in France, the 19th century saw the rise of the brasserie, serving a simplified version of haute cuisine to the new middle classes. The food was more simply prepared, the décor was a little less grand, and the formula was wildly successful.

Next came the Russian occupation of Paris in 1815. Cossack soldiers didn't mind so much about the quality of food, they just wanted it fast. The Russian word for 'quick' is 'bistro'. Hence the rise of the restaurants of the same name, serving quick, fresh food to the hungry masses. The Russians left, but the bistros stayed. The food might not have been as fancy, but people liked the convenience.

By 1933 when George Orwell was writing Down and Out in Paris and London, you could sit down to one of the finest meals in history at Maxim's, and when your waiter knocked off work, he could get a steack-frites down the road for next to nothing.

By the 1970s the restaurant business in the UK was increasingly run by catering chains like Berni Inn and Beefeater, serving standardised versions of what the UK public believed was 'posh' restaurant food. Doubtless in London you could still get a terrific meal for a great deal of money, but most of us chose the convenience and simplicity of steakhouse fare over anything more expensive and challenging.

Next came the Americans. KFC and McDonald's revolutionised the concept of eating out (1). They normalised it. It became a natural occurrence to have a hot meal outside your home, and nobody minded that it was carbs soaked in saturated fat. It tasted good and nobody had to wash up afterwards.

Then, something happened. A new generation of restaurants began to rise in the UK. Pizza Express, founded in the late 1960s in swingin' Soho, suddenly found that it catered to a newly aspirational diner. Faced with the total ubiquity of fast-food outlets, we began to see their shortcomings. McDonald's was an unfriendly, wipe-down environment where you clearly weren't welcome to linger. It didn't serve alcohol. There were pictures of clowns. Basically, you were eating in a (very clean) toilet.

Pizza Express combined the convenience of McDonald's with a real, adult eating experience. It's been followed by chains like Chez Gerard, Belgo and Wagamama. Here we see an almost-complete quality cycle: consumer demand pushes the quality of nearly all restaurants down. Once the lowest-common-denominator restaurants reached saturation point, consumer demand started pushing the quality up again (Figure 1).

The good restaurants didn't necessarily go away, but they remained for the tiny elite who were able and willing to pay. However, in a fully mature quality curve, the mass-market product actually overtakes the elite one.

FROM COFFEE HOUSE TO . . . COFFEE HOUSE

From 18th-century coffee houses where the intellectual elite invented the Enlightenment, coffee gradually became the drink of the urban middle classes in the 20th century. (Remember how Tom Courtenay aspired to drink coffee in the 1963 film Billy Liar?) Meanwhile the masses were given travesties like chicory coffee and then, post-WWII, instant coffee (2). Eventually we tired of Nescafé, and instant coffee became fancier (Gold Blend). Then Starbucks happened, and coffee would never be the same again (Figure 2).

The Starbucks phenomenon has been described as the 'fetishisation of commodity'. Something ubiquitous is elevated to an extremely high level. So much so, that it actually overtakes the elite (in this case gourmet) that the masses aspire to. The fetishisation of a commodity is the final point in the cycle, where the mass product crosses, and becomes indistinguishable from, the elite one.

LOOKING GOOD, SOUNDING BAD

Take a completely different consumer example: recorded sound. Professor Jack Dinsdale spent his career analysing sound quality. His conclusion was that every generation of consumer sound reproduction technology was worse than the last, with one exception.

The first truly mass recorded medium were 78 rpm records. When these gave way to 33 rpm LPs, there was a dip in quality as the sample rate went down (the record went round more slowly). However, consumers didn't care, as you could store a lot more on a 33 than you could on a 78. Then came cassette tapes, a medium that wasn't designed for storing music at all. Philips created cassette tapes as media for dictation. But people picked up on their convenience and portability, and soon they were a giant global music phenomenon, much to Philips' embarrassment, because they sounded truly dreadful.

It's true that CDs were better than cassettes, but according to Professor Dinsdale, they were still inferior to vinyl LPs. Once again, people had chosen convenience (i.e. portability) over a core attribute (sound reproduction quality). In fact, it proved quite difficult to make something that reproduced music worse than a cassette tape. But of course, we managed it eventually.

Welcome the delightful ground-glass quality of mp3! It has the bass response of a bee in a coffee tin and offers the depth of a grand piano being played over a telephone. However, a 60GB iPod can store the amount of music that would fill a house with LPs, and there's no sign that anybody's going back to vinyl in any great numbers.

Recorded music hasn't been around as long as restaurants, so maybe it's not surprising that the curve hasn't started heading back up again towards quality (Figure 3). Mp3 players are still relatively expensive, and have not reached the kind of saturation that KFC attained on our high streets – yet. But with the possibilities of storing a life-time's worth of music on a single device, I would predict, using our model, that the curve is going to bottom out soon, and people will be demanding better quality recording and playback on their devices very soon.

I COULD GO ON

But I won't. Think of beer, going from skilled local brewers to mass-produced breweries and ending up with Skol, the biggest-selling lager in the UK at the start of the 1990s. Now the market is dominated with brands that were then considered niche and premium. Or consider technology. There's a slight difference here, where Moore's Law stops mass-produced software from extreme quality drops (3).

I challenge you to find a product category that doesn't follow this pattern, where the core function is actually made worse through consumer demand: sunglasses, moisturiser, cars, high-street fashion, editing software . . .

THE TRAP

At some point along this curve, even the most dynamic brand is going to drop its anchor. By that I mean that consumer perception about the quality of your product is going to be fixed. And if that anchor drops while the curve is bottoming out, then it will take an enormous and immediate effort to get off the bottom and change consumer perceptions.

McDonald's, for example, stuck itself firmly on the bottom of the low-quality-food-served-in-toilet curve, and stayed there while consumer demand pushed the quality threshold upwards. Now it's playing catch up. It's too early to say whether its redesigned flagship restaurants, with wooden floors and non-hose-downable furniture, are justifying the investment with increased profits.

Meanwhile Kraft foods is experiencing flat sales in spite of continued fiddling with brand extensions. Its Tassimo high-end coffee product may help to lift it off the bottom of the coffee curve, but it's little, and late. General Motors, whose Chevrolet and Opel brands have purveyed basic cars at bargain prices, is struggling for sales in a premium-obsessed market.

ESCAPING THE TRAP

So does every giant miss the quality curve upswing? Emphatically, no. And different strategies seem to be successful. Take Ikea. Ikea is (as far as I know) unique, in becoming the only brand leader in the world that's got there simply through price. The people who brought you the (badly built, semidisposable, unpleasant to purchase) £50 Billy bookcase are employing two parallel strategies. One is to increase the quality of its products and move its whole range upmarket. The second is to expand into high-end furniture retailing through purchases. In the UK, for example, it has bought the Conran-founded Habitat (which is itself going upmarket thanks to the creative directorship of Tom Dixon) and that icon of arts and crafts movement chic, Heal's.

Similarly, Volkswagen is turning from a mass producer of basic cars into a luxury brand through the purchase of Bentley, Bugatti and Lamborghini and the production of the Phaeton. True, the Phaeton is hardly a success story. The Bentley, which is basically the Phaeton with a different badge, sold more units in 2004, despite costing nearly twice as much. However, this is only testimony to the inertia that brands face when pushing themselves up the quality curve. (I have full faith in Volkswagen's ability to pull it off. Look what it did to Skoda. And Phaetons are unbelievably good cars.)

GETTING BACK UP THE CURVE: KANO STRATEGIES

The simple practice of doing what you do, only better, is just one way back up the curve.

In the 1980s, Professor Noriaki Kano developed a model to show the connections between implementing product features and customer satisfaction (4). While intuitively you might think that the better you do something, the more people will like you, Kano demonstrated that the relationship is far from simple.

In fact, there are three different ways that consumers relate to improvements in products. Sometimes there's a simple linear relationship. He calls these 'one-dimensional attributes'. But, most times, there isn't. Some attributes are 'threshold attributes'. Far from being attractive, these are seen as the price of entry into a market. (For example, safety in cars: ten airbags don't make a car much more attractive than eight.)

Then there are 'attractive attributes'. When these things are absent, a customer doesn't really notice them. But their presence causes customer satisfaction to shoot up. Think of the ice creams and massages that Virgin gives its passengers on long-haul flights.

According to Kano, there are two ways to lift yourself up the quality curve. The first is to execute your linear attributes at an ever-higher level. The second is to do unexpected things that delight your customers.

However, when you look at the pattern suggested by the quality curve I've outlined, there's a problem with Kano's model. Delighting your customers might not be enough if your brand anchor is too firmly rooted in a 'quicker, cheaper, easier' model. Starbucks could fetishise the coffee commodity because it wasn't the brand that commodified it.

Timing is everything. Ikea started a campaign of 'name' designers and higher-quality products years before the furniture quality curve bottomed out.

WHAT YOU CAN DO TO AVOID THE TRAP

Your first step is to draw your market as a quality curve. What stage is your market at? Has it reached ubiquity? Are there mass brands that are actively pushing up the linear and attractive attributes? Plot them on the graph. Then plot your own brand on the curve.

If you're on a curve that is still heading downwards towards complete mass ubiquity (for example, video cameras or digital music players), then you need to consider a strategy that gives you a wide enough range to encompass mass-market goods, where the big money will continue to be in the short to mid-term. However, you need to consider creating a high-end offering, even if the margins are much more limited, because this is where your market will ultimately head. Canon is doing this brilliantly in the digital imaging arena, with entry-level products like the Ixus/Elph and professional level sophisticated video and still cameras. The professional brands of today will be the consumer fetish products of tomorrow.

If your market has bottomed out, then you need to consider how hard your brand has been anchored at the bottom. If you are easyJet, for example, and your brand is known for little else, then strategies of improvement and the additions of unexpected delights may not be enough to shake off associations of a product that's been pared back to a minimum and painted orange. Purchases of other brands may be the only alternative to decline and consumer indifference.

GO UP OR DOWN, BUT NOT SIDEWAYS

Don't miss the most obvious thing about the quality curve: it's a curve. You have to decide whether you're going down towards convenience and ubiquity, or up towards fetishisation and customer delight. Don't fight the curve. Don't develop brilliant products in a market that doesn't care about them. That's why Apple is small and Dell is big. And if you're going down, start laying plans for what happens when you need to go up. Volkswagen has Bentleys and Phaetons. Virgin Atlantic has Upper Class.

What have you got?

  1. Arguably McDonald's is not a restaurant, but rather the apotheosis of street food. However, as it persists in calling itself a restaurant chain, I say it's made its bed and they can lie in it.
  2. Maxwell House instant coffee, like bistros, was developed to meet the needs of soldiers.
  3. However, see Nicholas Negroponte's comments on computer speeds in Market Leader, Spring 2005, for confirmation of the 'quality curve' in action.
  4. Kano, N. (1984) Attractive quality and must-be quality, Hinshitsu, The Journal of the Japanese Society for Quality Control, April, pp. 39-48.

This article featured in Market Leader, Autumn 2005.

 


Newsletter

Enjoy this? Get more.

Our monthly newsletter, The Edit, curates the very best of our latest content including articles, podcasts, video.

CAPTCHA
12 + 6 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.

Become a member

Not a member yet?

Now it's time for you and your team to get involved. Get access to world-class events, exclusive publications, professional development, partner discounts and the chance to grow your network.