One of the biggest trends driving consumer consumption during the past decade is the demand for “real,” or authentic, items. Farmers markets, microbreweries, and all kinds of artisanal crafts, to name a few examples, have jumped in popularity.
But does that mean consumers will value more highly those products they perceive as being more genuine as opposed to mass-produced?
The answer, according to new research by Stanford Graduate School of Business professor Glenn Carroll and colleagues, is yes.
“In advanced consumer economies, consumers are buying on the basis of their interpretation of the product and its story,” he says. For example, Carroll says that when microbreweries began to proliferate, they were viewed as being more authentic by consumers who felt they were reestablishing tradition and creating community.
Molson Coors tried to tap into that zeitgeist, marketing a new line of beers under the name of Blue Moon Brewing Company. The Blue Moon line was a hit with leading-edge consumers — until they realized that it was actually produced by one of the biggest beer companies in the world. “It happens time and time again,” says Carroll. “Customers discover that a product is made by a large corporation, [and] they then view the product as inauthentic.”
Carroll, along with Balázs Kovács, from University of Lugano, Switzerland, and David W. Lehman from the University of Virginia, in Charlottesville, chose the dining domain to examine the link between authenticity and consumers’ value ratings. They picked restaurants because diners frequently remark on the authenticity of the food and the atmosphere; because consumers’ perception of restaurants varies so widely; and also because there are plenty of public sources that provide information on restaurants, which allows for controls of price, type of cuisine, and, most important, the quality of the food, service, and décor.
They wanted to test their hypotheses that organizations referred to as authentic by consumers will generate higher consumer value ratings, and that independent and family-owned organizations are more likely to be regarded as authentic than chains or corporate-owned organizations. Also, they projected that restaurants with a narrow niche width would be regarded as more authentic. For example, a restaurant would be more highly regarded if it were to offer only Mexican food, rather than Mexican food and pizza.
The authors developed an authenticity scale through an online survey designed to identify the exact language that consumers use when attributing authenticity. A total of 35 participants — 16 men and 19 women, with an average age of 37 — signed up to fill out a survey of restaurants for a $5 gift card.
They were asked to choose one word out of a pair that would best describe a restaurant as authentic. The 56 keywords came from two online thesauri — Roget’s and Merriam-Webster.
The authors then used an algorithm that assigns a number between 1 and 100 to each of the keywords. The highest scoring word was authentic, with 95 points. Other words with high points include genuine, real, skilled, legitimate, and traditional. Words with lower scores included scam, phony, false, inauthentic, and deceptive.
Using the authenticity scale, the researchers analyzed 1,271,796 online reviews posted on a public reviewing website between October 2004 and October 2011 on 18,869 restaurants in three major cities — Los Angeles, Dallas and New York. On the website, reviewers rate restaurants from one star to five stars, and write reviews of unlimited length. Other researchers have shown that a one-star increase on the website can increase revenues for a restaurant by 5% to 9%.
When Carroll and his cohorts crunched the data, they confirmed that even when controlling for quality, restaurants regularly referred to in consumer reviews as authentic received higher ratings on average, often by a half star or more. They also found that family-owned and independent restaurants received higher consumer value ratings than chains or corporate-owned restaurants. And while it does appear that having multiple cuisine categories decreases consumers’ perception of authenticity, Carroll says that this has less of an effect than they had anticipated.
In the second study, 210 participants were shown photos and short descriptions of fictitious restaurants using certain clues like which restaurants were family-owned, which were independent, and which had specialized cuisine.
They were then asked to estimate the likely cost of a dinner — one meal and one drink — at the restaurant, and rate the quality on a scale from 1 to 5, with five being the highest rating. They were also presented with a list of 30 authenticity keywords and were asked to divide them into two groups: words that are likely to appear in a review of this restaurant, and words that are not likely to appear in a review. Finally, they were asked to estimate how much they would like the restaurant and its food, on a scale from 1 to 5, and were allowed to include half points.
The second study affirmed the findings of the first study while also revealing a new one: Perceived price doesn’t have an impact on value ratings. Carroll and his co-authors suspect that this may be because people account for prices when figuring out the overall rating value.
The takeaway for businesses, says Carroll, is that authenticity has real value for consumers. “This isn’t our study that determines what is authentic — here we have systematic evidence for authenticity. And we found that if a product, service, or organization is regarded as authentic, it will lead to higher ratings,” he says.Glenn Carroll is the Laurence W. Lane Professor of Organizations at Stanford Graduate School of Business and the senior associate dean for academic affairs.
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This piece originally appeared in Stanford Business Insights from Stanford Graduate School of Business. To receive business ideas and insights from Stanford GSB click here: (To sign up : https://www.gsb.stanford.edu/insights/about/emails ) ]