The boom in information for consumers has also severely weakened middle-market firms. In the past, these companies were able to charge a premium price because their brands were taken as signals of reasonable quality and reliability. Today, consumers don’t need to rely on shorthand: they have Consumer Reports and CNET and Amazon’s user ratings, and so on, which have made it easier to gauge differences in quality accurately.[18] The result is that brands matter less: a recent survey found that more than sixty percent of consumers think that stores’ generic[19] products are equal in quality to brand-name ones. In effect, the more information people have, the tighter the relationship between quality and price: if you can deliver a product or service that is qualitatively better, you can charge top dollar. But if you can’t deliver the quality you can’t get the price. (Even Apple, after all, couldn’t make Apple TV a hit.)[20]
This doesn’t mean that companies are going to abandon the idea of being all things to all people. If you’re already in the middle of the market, it’s hard to shift focus—as G.M. has discovered. And the allure of a big market share is often hard to resist, even if it doesn’t translate into profits.[21] According to one estimate, Nokia has nearly twenty times Apple’s market share, but the iPhone alone makes almost as much money as all Nokia’s phones combined. But making money by selling moderately good products that are moderately expensive isn’t going to get any easier, which suggests a slight rewrite of the old Highland ballad.[22] You take the high road, and I’ll take the low road, and we’ll both be in Scotland afore[23] the guy in the middle.
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