Macro/Micro: Hotelling’s Law


Terena Bell
MultiLingual March 2015
Columns and Commentary

A fried chicken salad is the most generic meal known to man.

No matter where you go, it’s prepared exactly the same way: iceburg lettuce, pieces of tomato and cheddar cheese topped with fried chicken tenders and the dressing of your choice....

Translation is clearly not a fried chicken salad. So why do people buy it like it is?

See, it’s all in how I, the consumer, see the salad. Differentiate all you like, but if I see every salad as the same, they’re the same. There’s actually a law for this: Hotelling’s Law. Developed in 1929 by Stanford University economist Harold Hotelling, Hotelling’s Law claims that competitors purposefully make their products as similar as possible. So there’s a science behind my salad. By making their salads alike, restaurants late to the scene save the work that creativity and branding require, and cut into their competitors’ existing markets. Call it the lazy man’s way to the top. Or maybe the smart one’s. But regardless, there’s a reason why you can’t tell store brand from the original or why every Home Depot in America seems to be across the street from a Lowe’s. Copycats go the easy road....