Marginal: Real

Columns From: 12/1/2007 Automotive Design & Production, , Editor-in-Chief from Gardner Business Media, Inc.

Commodities are about the pocketbook. Authentic products are about the heart.

While on a trip to learn about the 2008 Chevy Malibu, I had the opportunity to take a tour of the Gibson guitar factory in Memphis, where they make semi-hollow-body electric guitars.

While on a trip to learn about the 2008 Chevy Malibu, I had the opportunity to take a tour of the Gibson guitar factory in Memphis, where they make semi-hollow-body electric guitars. About 40 of them per day. “Factory” is probably a misleading word for what that place is. “Artisans’ workshop” might be more accurate. They’re making guitars by hand and heart, by craft and love. Sure, they have shipping and receiving, inventory, machining and assembly, paint, quality control, and other things characteristic of manufacturing operations everywhere. But there is evidently a commitment by the people who work at the Gibson operation in Memphis that far exceeds that which is probably the norm. While part of this is undoubtedly predicated on the fact that they’re completely involved in the process (e.g., one of the folks in the factory looks at the wood of the body of a guitar and determines what color it ought to be painted, based on his assessment of the grain pattern), another aspect is the fact that what they are making is real, authentic. This is something that can’t be said about too many products anymore. Commodities rule...right? Well, I would certainly disagree. What it comes down to is that there are certain products and certain experiences that are not undifferentiated. Rather, they are authentic. Like the guitars being made at Gibson. And people desire these products in a big way. Not everyone. Just some people. And those people are willing to pay for the real thing. Take, for example, the guitar pictured here. It is a Gibson Inspired By Dave Grohl D3-335. It has an MSRP of $3,880 and above, although I see that it can be picked up for $2,500. Not chump change. I suspect that those who are spending that kind of money are not your run-of-the-mill Foo Fighters fans. This is someone who has a serious commitment to music. And this is someone who is willing to invest in something that is authentic.

There’s a lot to be said about authenticity. In fact, so much so that James H. Gilmore and B. Joseph Pine II, the two consultants who emphasized the importance of experiences in The Experience Economy, have written a book on the subject: Authenticity: What Consumers Really Want (Harvard Business School Press; $26.95). This is not about marketing. This is about making things that are real. Like those Gibsons being made a block away from Beale Street. As the authors note: “People no longer accept fake offerings from slickly marketed phonies; they want real offerings from genuinely transparent sources.” And while authenticity may be about positioning something in the market, one must not lose sight of the fact that the “thing”—be it a physical product like a guitar or a service (say the Disney experience that we wrote about in the November ’07 issue (Learning From Walt Disney)—is something that has to be produced by people, real people who are ideally engaged in the process.

“The general affluence of boomers makes cost generally irrelevant; if they want anything, they simply buy it. Quality no longer differentiates; authenticity does.” This claim by Gilmore and Pine ought to make some people spit out their Starbucks. Not that they’re claiming that crummy products are going to cut it. Rather that some people—people who just happen to fall into the age demographic that is rather affluent—are more concerned with getting the thing that they want without compromise. And arguably, the younger generations are (a) comparatively as affluent or more so and (b) highly demanding.

Consider, for example, the Scion xB. While people could—and in some offices in Detroit probably do—list the faults and flaws of the first-generation model (the 2004), it became a great success. I’d submit that part of that success is predicated on the fact that that boxy vehicle was a JDM product—a Japan Domestic Market car. And the kids knew it. It was the real deal. The second-generation, ’08, xB was designed in California by a hip young designer, Jin Won Kim (Bringing the xB). It is not an authentic JDM vehicle. Could that explain, in part, why the cumulative sales of the xB through October of this year (38,207) were down 30.2% compared to the first 10 months’ sales of ’06? While not a lock, I’ll bet that it has something to do with it.

People who buy products know. People who make products know. For some reason, too many people who run (some) companies don’t seem to get it. Gilmore and Pine point out that when products become commodities “customers no longer care about an item’s manufacturer, brand, or features. Instead customers in essence care about three factors, and three factors only: price, price—and price.” Without authenticity, it’s a race to the bottom.