Re: [MLUG - DISCUSSION] those of you waiting for a Fry's or BestBuyin Columbia...

[Jonathan King <EMAIL:PROTECTED>]

On Tue, 8 Oct 2002, Kmicic wrote:

> Jonathan King wrote:
> 
> >     Visit_rate = (p + (1-p)*vr_ng).
>  
> > Hey, this even works to predict things about any highly selective
> > market.  Why are waiters and maitre d's in places with exceptional
> > food often really annoying?  If they weren't, then more of the wrong
> > sort would go there, and the next thing you know "all you can eat
> > catfish" would be on the menu.  Why are the prices so high?  The
> > standard argument is that it's because they can get away with it,
> > and that's true; in fact, though, it might be necessary to have
> > outrageous prices to keep the selectivity filter up.  Why only
> > 8 tables?  If they had more, then the probability of ordinary folks
> > blundering into the place goes up, and they aren't ordering the foie
> > gras.  In most cases, I wouldn't argue that these places
> > *intentionally* try to super-limit their businesses, but the ones
> > that maintain their original levels of quality/interest/whatever
> > will end up being the ones that at least blunder into
> > hyper-selectivity.
> 
> This is a clever analysis. But it doesn't fully describe many
> phenomenona.

Well, no.  I'm in no danger of winning a Nobel in Economics here or 
anything.  But I did learn something about why or when an establishment 
could "tip" from being a specialty outfit to being just another whatever.

> One such phenomenon is existence (and commercial success)
> of places like Ragtag Theatre, where they'll show movies which no
> commercial theatre in town will dare, and at the same time they're
> playing One Hour Photo along with all the mass slaughterhouses.

I noticed they were playing "One Hour Photo", which struck me as weird.
My guess is that they must have gotten a deal on this release at some 
point before the time when the studio got the guts to open it widely.

That said, I don't see how this example works against me.  You may have
noticed that there are only two first-run-through-the-killing-floor movie
theaters in town these days.  All of the others died because they tried
first to be direct competitors and failed (since their infrastructure
sucked) and then some of them then also failed as dollar-admission 
theaters (its cheaper to rent bad movies).  Ragtag's success (such as it 
is) rests precisely on the fact that they offer something completely 
different, flout the fact that they're completely different, and have 
enough audience to fill their tiny venue.  This business model has long 
been known to be successful...as long as the establishment doesn't occupy 
a location that could otherwise bring in more rent.  Most of the 
incredible rep. movie theaters of my youth are gone these days, not 
because they had no viewers, but because the location they depended on  
grew more valuable to somebody else.  Now you're right that I didn't 
mention the fact that location could be crucial (after all, Fry's could 
occupy any big box location anywhere), and in fact only the largest kinds 
of places can be randomly sited in a market.

> Of course you might argue that Ragtag's sole secret is the fact that
> they don't charge arm and leg for beer/soda and let you carry your own
> in... 

Well, when the city was considering a new alcohol audience the RagTag 
people did point out that it could really wax them severely. :-)

> In more general terms, your model does not account for any positive
> efforts on the part of management to educate the "non-geek" public into
> sophistication, which can also raise non-geek visitation levels without
> the place giving up its character.

I'm not sure what you mean here.  You can certainly try to market your
establishment.  The usual way is to market it more broadly than the
original concept, and I covered that.  Another way is, as you say, is to
direct marketing towards education in an attempt to enlarge your core
audience.  Art galleries and wine places (in particular) are pretty famous
for doing this kind of thing.  But I don't think what you're doing here is
really raising the non-{geek,specialist,whatever} visitation levels, but
rather *converting* "latent" geeks in your market.  So you could
reasonably claim that (say) the Rag Tag will try and get more people to
see their shows, but (at least before "One Hour Photo") they don't
actually show movies any different from what they've always had.  And,
after you've seen (say) 3 movies at the RagTag, I think you'd probably
be more fairly described as somebody who is at least a bit of a Film 
Enthusiast rather than just an average Joe who got tricked into seeing 
Amelie, Full Frontal, and something really weird there.  (OK, so maybe 
you're just dating a Film Enthusiast.)

> The example of restaurants is completely flawed imo. You can serve good
> food without going at length to overcharge or insult your customers,

OK, so I really didn't mean to suggest that you *had* to do this
intentionally, or that good food was impossible at places that were cheap
or had pleasant service.  I do think it is more likely that the good food
at cheap/pleasant places will be food that is either universally liked or
very intensely liked by only a small number.  

I guess I do think there is a slippery slope involved with any place that 
serves french fries and anything else.  (Note: I really like french 
fries; when I was in grad school I got to eat some of the best fries on 
the planet at a place called the Oakland Original Hot Dog Shop in 
Pittsburgh.  Dirt cheap, fast, and outstanding.  Go beyond fries, dogs, 
and sandwiches, though, and the food quality fell off a cliff.)
 
> or without lowering yourself to the "all you can eat whitefish" level. I
> recently had a chance to sample a few such establishments in Chicago.

Well, yes.  Chicago does have those 7 million people, and that can give
you the luxury of some severe competition in some well-defined market
segments.  For that matter, getting to some of these places was probably a
significant barrier to entry (if the traffic and parking are anything like 
I remember from the mid-80s), and "all you can eat whitefish" was probably
abundant in surburbia. :-)

Similarly, some of the best Indian food I've ever had was in Central
Square in Cambridge, where 4 or 5 Indian restaurants went head to head
within like 500 feet of each other.  Competition kept prices low, while
the demand was pretty local and/or focused given the amount of effort it
would take to get there to eat at one of these places, and the lack of 
effort to go to any of the generic pizza places that also clustered in the 
area.

jking

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