For awhile anyway, business school professors from Berkeley to Boston lectured about the Internet’s potential to be the great leveler of playing fields. The Internet was, after all, a place where a storefront was not only affordable to all, but all its real estate appeared to be of equal value.
Now comes a report by researchers at the Stanford Graduate School of Business that marks the end of notions of a merchandiser’s utopia. Using a complex model that factors in consumer behavior and the costs of shopping, business school professors Rajiv Lal and Miklos Sarvary demonstrated that the Internet can discourage consumers from searching for products that compete with known brands. In the virtual world, they conclude, as in the real world, the product that has the best reputation wins. – Art Jahnke