The US Election outcome suggests the Median Voter Theory is alive and well. It argues the candidate closest to the conceptual, median voter wins. Why?
Voters choose the candidate closest to them and in a 2 candidate race the rational, vote maximizing position for the candidate to stake out is the middle. This theory purposefully oversimplifies the world but there’s a reason political pundits incessantly point out politicians changing their position or points of emphasis as they go from a primary (all Red or Blue) to general election.
The interesting part of this theory is how it applies to so many other markets and sectors. In fact, the move to the “middle” was originally observed in a 1929 article by economist, Harold Hotelling, explaining the tendency of competitor stores locating next to each other.
And it wasn’t the median store theory, it was the principle of minimum differentiation, noting it’s often rational to be less different on a relevant feature or attribute. For stores this is location.
Imagine the visual above being a street. You could locate Target/Burger King/CVS on the blue end and Walmart/McDonalds/Walgreen on the red but the maximally advantaged location is the one of minimal physical distance for the average customer – i.e. the middle of the street. This is why those stores co-locate together. They all have the exact same criteria for locating a new store and the exact same data to make the location choice.
The Median Theory or principle of minimal differentiation is littered across the fundraising world.
Time: End of year and everyone loading up with minimal differentiation to crank out Giving Tuesday barrages followed by two mailings, digital ads, paid search and a bazillion emails.
Offer type: Matching gift offer anyone? How about that nickel package or the tote bag offer or the labels?
Brand: If I had a nickel for every international relief charity that told me they were focused on women and children and were in-country for the long-haul I’d have enough nickels for a nationwide nickel package mailing.
There is an argument for being minimally differentiated. It’s cheaper and being known is more important than being perceived as different. Known and different can be great but very hard to pull off.
Behavioral science also argues for being mostly the same but with a flare of different, not maximally different. You want to stand out from the crowd but still be a part of it.
If you are adopting the minimally different approach then it only delivers maximum benefit if you own it. Talk of innovation is likely a waste of time and money. Grind out efficiency, be satisfied with your strategic choice and focus on minimal differences.
The alternative is maximally different and having a zig when others zag approach as your core ethos. This is what I’d call the Dollar General Model.
Dollar General took the contrarian approach on location. Their strategy was and is, “we’re gonna be where they ain’t”. The “they” is all the other box store competitors. Dollar General stores are located where no self-respecting Walmart or Target would ever go – low density, rural, lower income, food deserts, etc.
They are wildly profitable, having reported same store sales growth for 31 years in a row. They didn’t locate themselves at the middle or far end of the street, they found an entirely new street.
Are you a median charity following a minimally different strategy to build brand, get “in-category” and tow the efficiency line?
Or are you Dollar General, building a maximally different business?
If you haven’t made the explicit, strategic choice then maybe it’s time.