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 / Fall 2003 / Issue 32(originally published by Booz & Company)


The Economics of Aesthetics

GE experts say they listen to their customers “talk about their dreams.” One engineer from the Japanese electronics manufacturer Kyocera told technicians he wanted a “more masculine” design for the company’s new mobile phone. That’s how the trim on the phone changed from silver to gunmetal gray. “I figured they would look at me as if I was nuts,” he told a reporter. “But they didn’t. They came back a few minutes later with exactly what I wanted.”

Look and feel doesn’t trump function, of course. Some consumers may prefer mobile phones with a masculine look, whereas others want something cute. But everyone expects the phones to work. Aesthetics is critical today not because other factors don’t matter, but because competition has pushed quality so high and prices so low that style is often the only way to stand out.

To turn aesthetic pluralism into an opportunity, hard-nosed engineers, real estate developers, and MBAs must study what consumers value about look and feel — not prestige but enjoyment, not conspicuous consumption but personal meaning. A fancy label isn’t enough. Even luxury brands like Viking stoves are prestigious not because they’re expensive, but because of the sensual pleasures they offer. “Sometimes, I turn it on just to feel its power,” says a Viking owner. Another compares the stove to a “painting that makes the kitchen look good.”

Aesthetic plenty creates new challenges for companies. The more they incorporate aesthetics into their products and services, the higher customers’ expectations become.

To keep its stores distinctive and fresh, Starbucks has scores of designers on its staff. Yesterday’s cutting-edge restaurants, from TGI Friday’s to California Pizza Kitchen, are today’s standard suburban fare. Like every other measure of quality, aesthetics offers innovators a short-term advantage. But in a competitive market, investing in aesthetics isn’t a sure route to profits. It’s a cost of staying in the game.


Virginia Postrel ([email protected]) is the author of The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture, and Consciousness (HarperCollins, 2003) and an economics columnist for the New York Times. Her Web site is
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