Posts Tagged ‘Heinz’

Richard Florida
by Richard Florida
Thu Apr 23rd 2009 at 9:27am UTC

Home-Base Effect

Thursday, April 23rd, 2009

There’s an undeniable home-base effect for leading consumer brands. So, Starbucks does better in Seattle; Wal-Mart in Arkansas; Heinz ketchup in Pittsburgh. Here’s the abstract for the detailed study published in the Journal of Political Economy.

We document evidence of a persistent “early entry” advantage for brands in 34 consumer packaged goods industries across the 50 largest U.S. cities. Current market shares are higher in markets closest to a brand’s historic city of origin than in those farthest. For six industries, we know the order of entry among the top brands in each of the markets. We find an early entry effect on a brand’s current market share and perceived quality across U.S. cities. The magnitude of this effect typically drives the rank order of market shares and perceived quality levels across cities.

Tyler Cowen comments; and Andrew Gelman has maps which depict a similar diffusion away from home-base effect for Starbucks and Wal-Mart.

I wonder though if this is just a home-base effect, as brands take hold where they are established and get picked up more slowly elsewhere, or if there might be another (deeper) process which would explain why certain kinds of brands – say like Starbucks and Wal-Mart – crop up in particular locations to begin with.

Your thoughts?

Richard Florida
by Richard Florida
Fri Jan 16th 2009 at 9:44am UTC

How Long Does it Take Cities to Come Back

Friday, January 16th, 2009

This is a big question – for which there are no easy answers. Some cities are quite resilient: places like NY or London seem to be able to remake themselves seamlessly for new economic times. Others falter and never bounce back. But reading stories this weekend on two of my favorite cities -  Pittsburgh, where I lived for nearly two decades, and Detroit, where my wife Rana’s family lives and where we visit often – got me thinking.

The superb article on Detroit by Lawrence Ulrich in the Sunday Times captures the true soul and very real dilemma facing that city. It is a must-read for anyone who cares about cities and Detroit in particular.

The second article, also in the Times, takes a looks at Pittsburgh’s rebirth and, among other things, suggests there may be lessons there for Detroit and places like it.

It’s hard not to compare the two cities and regions, but they are really different places. Pittsburgh for one developed before Detroit. Its core industry was steel which emerged in the late 19th century; and it also had a more diverse industrial base – with leading firms like Westinghouse, Pittsburgh Plate Glass, Alcoa, Heinz, and others across a wide and diverse group of industries. Plus it was a financial powerhouse, with the Mellon interests not only being banking titans but functioning as an early sort of venture capital firm. Its major universities are located in the city. Its downtown core is intact (much of the worst decline was concentrated in mill town along the rivers outside the city’s limits). The city retains several very high-income neighborhoods and several excellent urban public schools. It has perhaps better “material” to work with and certainly a longer time frame to rebuild.

A colleague of mine once speculated that it takes at least two generations to overcome an economic crisis.  And that seems to hold, at least generally, when looking at, say, the crisis of steel in Pittsburgh or the crisis of manufacturing a generation or so earlier in Boston.

Detroit, while it has long faced urban decline, is facing its real economic test today. Yes, it has many assets, as Ulrich mentions. And, yes, it has to imagine and act on a future after auto. Auto has a role in it, particularly in design. But design itself is a bigger part of it, as Ulrich notes, Detroit was – and is – a center of design broadly. But it also must realize that even more so than Pittsburgh or Boston it cannot save itself.  It is home to several good universities, but its major intellectual assets are outside the city – the University of Michigan in Ann Arbor, and Michigan State University in Lansing. It also has to realize that it can benefit from greater connectivity to major metros and mega-region hubs nearby – Chicago and Toronto.

So, what do you think?