Why do Cambridge street vendors set up in remote locations?

MIT Sloan Asst. Prof. Juanjuan Zhang

On the streets of Cambridge, near the MIT campus, food trucks regularly set up shop selling lunch and snacks to hungry students, staff, and other passersby.

The trucks are mobile and can park in any legal, unoccupied spot. One might think the trucks would want to be where students congregate—perhaps near the MIT Great Dome at the engineering library—or where there is heavy foot traffic, like the Kendall Square subway station.

But while some food trucks do park at these high traffic or high visibility areas, others set up in more remote locations, such as the Technology Square or side streets near Memorial Drive.

Why would any food truck operator want to park in a place where customers are scarce? I’ve found in my research that one very effective approach to marketing is to lower expectations for a product or service—and then exceed those expectations, even by a small amount. In this case, would-be customers will see a truck parked in a remote location and assume the truck won’t attract much business. But if customers are spotted next to the truck, then the lunch seekers will assume the product must be quite good.

Consumers observe the behavior of other consumers, and what they learn influences their behavior. This phenomenon is called observational learning, a concept of growing importance in economics and management.

It is possible to model consumer behavior mathematically. These models can account for a huge range of variables, from product quality to price to sales volume. In my modeling work with collaborator Professor Jeanine Miklós-Thal from the University of Rochester, we’ve discovered that what we call “strategic demarketing strategies”—such as launching products in an economic downturn or shunning marketing altogether—can be very effective ways to promote a product over time.

To see if the model fits the real world, I tried to find out what was really happening with the food trucks of MIT. My research assistants and I approached the entrepreneurs who parked at remote sites and asked them why they chose the locations. Most of those interviewed gave the same answer: They believe that when passersby see a line at their trucks, these potential customers will conclude the quality of the food must be quite high.

This may sound odd coming from a marketing professor, but sometimes the best marketing strategy is to aim low, be happy with even mediocre results—and hope the public gets the message.

Juanjuan Zhang is Class of 1948 Career Development Professor; Assistant Professor of Marketing

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