Friday, July 8, 2016

Fancy Stuff: How to Make People Really Like a Type of Product They Used to Despise

Let me start this post with a confession. I like whisky and think the different types taste very different from each other, I also like cognac but can’t tell them apart well, and different types of grappa I can tell apart but don’t really have an opinion on which ones are better. OK, so now you know my bias, which is important for what follows, and many of you have probably made an assessment of how (un)cultured I am.

But here is something to think about first: why did I mention grappa along with the other two alcohols? A few years ago, that would have been pretty insulting to whisky and cognac, but now it is natural at least among some people. And that is a big change with some importance outside drinking too, for example for management. In a paper forthcoming in Administrative Science Quarterly, Giuseppe Delmestri and RoystonGreenwood write about the Cinderella-to-Queen transformation of grappa, and what it means for our understanding of categories in general, and specifically organizations in markets.

Their paper is great in its description of how a dilemma for grappa producers, and their solution to it, solves a puzzle for researchers: why do different product types have different status rankings, and how much does that change over time? Grappa was cheap booze for the underclass. That was not ideal for grappa makers, who very much would have liked higher prices. But as long as rich people everywhere – in Italy too – though that grappa was no good, preferring other alcohols instead, that was not going to happen.

Some grappa producers were able to find a path to higher status. It involved failed attempts and even a bankruptcy, and exactly that combination of failure and eventual success let Delmestri and Greenwood work out the process. The paper has much more detail than I can give here, but the short story is that a rise in status involves distancing from the low-status past and present (detachment), copying of related high-status products (emulation), and connections to the broader society (sublimation). All needed to be done, and the “raw materials” for all needed to be present. The story of grappa’s rice to high status is interesting because it shows exactly how customers can change their minds when all the right levers are pulled. It took bottles designed to resemble perfume flagons, single-grape distilling and regional labeling, and linking to Milanese high fashion to make grappa fashionable and prestigious, but it could be done.

I think the story is also interesting because it suggests a condition that needs to be present for it to work. Grappa became high status after a long campaign. Can any regional or local product accomplish the same? Before you say yes, consider this: Italy is a pretty cool place, so grappa had a good starting point.