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ADVERTISING AND COMPETITION IN THEORY PRACTICE AND PUBLIC POLICY A thesis submitted for the degree of Doctor of Philosophy by Christina Fulop Department of Economics Brunel University September 1980 ý_ ', 'ý{ (1) University, Brunel Uxbridge, Department in Advertising and Competition Practice Policy and Public Christina the study analyses towards A survey advertising advertising of account the of the developed are Finally, agreement empirical of advertising towards advertising the to follow for theory of as product public the of to entry give of advertising and on these exists which criticisms and also outline a short a more accurate world. theories into the theory effects from three then studied and services behaviour; of consumer consumer behaviour; which view- and show how products on the market. theories to real is research products to with are case is compared histories. then illustrate results The theory compared the the with with attitude and practice from extracts of of public the policy and competition. public the in academic and the policy firm to the major discrepancies draw attention between exist in concerned with them, of considered firms major economic bodies public interspersed in the market of The conclusions appear are and competition of is features of research reports no review and introduced the the such general some empirical histories case eight barriers behaviour of results on the profits, which a summary of points: of of value, on prices, specific Consumer behaviour the theory studies the theories alternative adver- operation and pronouncements and empirical Since have been made about their with in economic theory includes competition and research, to relating and competition. differentiation. theories attitudes of the main literature and theories and imperfect product the and competition firm, the literature economics and with market-place, theories the and compares in and competition policy Theory Fulop This tising PhD 1980 of Economics, theory which and the differentiation, need and practice, seems to to and the implications be predominantly eliminate advertising which based that on the imperfections in and non-price competition. the market (ii) i ACKNOWLEDGEMENTS I wish to guidance, I for should the prepared thank my supervisor, advice also like and patience to case histories, to Professor spare their thank through the and the time in firms the Vaizey, the stages all which members of lengthy Lord provided their discussions. staffs for his of the thesis. the material who were 1 CONTENTS Page INTRODUCTION PART 1: 3 REVIEW OF ECONOMIC THEORIES OF ADVERTISING AND COMPETITION (I) Traditional a b c Neo-classical c (III) c PART 2: Theories Managerial Management Competition Replies a b S and information and competition joint supply concentration and profits to entry as a barrier and the theory of the of information advertising advertising advertising advertising, advertising advertising economics Alternative a b Theory Theory of value Theory of the Firm - Perfect and Imperfect Competition Advertising and Economic Theory: Al B1 A2 B2 B3 C (II) Economic to to the economics of demand as a process the Critics of Theory not of the Firm Theory Theory of the firm technical model -a Organisation and operation of the firm included in the economics real world Concept of 'workable' competition 10 15 18 23 25 26 30 33 36 37 42 44 a situation Conventional 5 only in the of industry 47 47 48 49 THE CONSUMERIN THE MARKET (I) The Theory of the Consumer Behaviour (II) Consumer Firm and the Study of 53 Theories Behaviour limitations Resumd of the theories - their weaknesses - which have emerged from the into forms of research consumer behaviour: Aa priori 1. 2. B C I research cognitive personality dissonance theories research 1. 2. loyalty eclectic and three 56 - empirical brand brand 55 share research - e. g. 59 prediction 69 2 Page (III) Ad Hoc Market 1. 2. 3. 4. 5. 6. 7. 8. PART 3: Research: 72 Case Histories Macleans Toothpaste Jif Non-scratch Cream Scourer Golden Rail Superfry Automatic Persil Quick custard Mr. Kipling cakes Argos Distributors Ltd. 73 88 104 119 134 150 162 177 A COMPARISON OF ADVERTISING AND COMPETITION IN ECONOMIC THEORY WITH CASE HISTORIES OF THE OPERATION OF FIRMS IN THE MARKET PLACE AND PUBLIC POLICY 187 Introduction 187 (I) The Effect in Practice a barriers c d differentiation, product and brand information brands and competition retailers' b (II) of Advertising Competition to entry Under on: and price Oligopoly a Oligopoly and prices b Non-price competition loyalty 189 201 208 214 222 and oligopoly 222 230 CONCLUSIONS 246 BIBLIOGRAPHY 254 I 3 INTRODUCTION This analyses study and competition in market-place. The divergences and practice public policy divided into three barriers profits, a short review buyers which the traditional the viewpoint of of of is firm the in of particular, of from of advertised agreement on these criticisms which also benefits to as opposed almost been made about is there the and studies, from entirely Since products. have the analyses advertising theories is There advertising considering sellers on prices, oligopoly, which adver- of effects differentiation. gain of imperfect and on, the information products concept of value, - perfect studies and product economics theory concerned review by is features specific them. which are firms the in the case of give world: the a variety be taken which that it at its real of three a more accurate managerial and not theory of model should face situations account (1) viz. from diverge value; (2) that the theoretical reality, it can be compared I rejected since for conceived the behaviour of However, been have of management as a situation. firm the theories alternative economics; reasons, of as an abstract surprising against by an outline as a process intended therefore real for misconceived not to considered criticisms ever is followed survey and competition is the the with This of entry approach interspersed of the and empirical advertised of theory The thesis in economic theory i. e. competition, to no means general of theory and imperfect tising between occur and competition. and competition, and theories competition, the and pronouncements attitudes the main literature sovereignty, consumer in operation to advertising parts. reviews advertising with advertising to relating their found are the with theories with which compared towards Part-1 literature economics then are the and compares many of as being theory was only reasoning, and should provides demand; not a limiting and evaluated and it 4 (3) that in the literature Finally, Part parallel how under conditions nevertheless is consumer behaviour Finally, eight that 2. is In compared with Trading of Fair the the appear to follow for product of loyalty three theories is of view. consumer into research prediction. share how products are developed and forms different and the compete, points of empirical and brand theories economic case of from Commission, illustrate which the the of the in literature and the and practice and competition on advertising economics histories taken examples draw attention The conclusions firm it advertising Price attitude and competition such bodies of Commission of in research empirical Reports 1 with Part and the public as the Office towards policy and competition. advertising the from academic illustrate theory and Mergers Monopolies explain take. the turn brand to competition, market by examples mainstream from taken examples the major how firms market, can in as outlined the firm the of has which flourish. to in the histories 3 compares Part theory with and organisation. competition and imperfect consumer including on the of competition of structure 'workable' traditional followed case competition Part for survey which concept are dealt world industrial of oligopoly the by a brief introduced the of 2 studies behaviour, the with possible Part economics 1 outlines developed First, the of in the real of firms the major decisions exist between policy public and the theory need which to differentiation, to the major and practice, is eliminate advertising discrepancies implications and the predominantly imperfections and non-price based in which on the the market that theory such of as competition. t\. 5 PART 1 REVIEW OF ECONOMIC THEORIES OF ADVERTISING AND COMPETITION 1. Traditional Neo-classical (a) of Value Theory The factors theory i. e. and is the under to one occupation or to service the modern Briefly, Smith possible profit, by the and his of production factors the of set must advantage", net move from one type of product contains the germ an increase of man's the while for markets This too mechanism the factors as long harmony as the of was one part which society was dependent on in-the achievements of theory (i. e. irreproducible) of value and distribution was a quantity-of-labour by human industry'-and of commodities (1817, theory. he concentrated commodities; may be 'increased the exchange values of value Economy and Taxation Political 'scarce' that motives. conflicting He dismissed that quantities, The delicate price. desired goods \ The Principles goods produce them in the right earnings. His theory mass of largest the earn - providing an economic Book 1). and a low profit, in at work and labour possible in in 7&9, to had to produce 1821). to demonstrate of (Chapters sought 3rd edition, on the orthodox resources demand" a low price cause 'land harmony main in they largest balance "effective producers was also - capital, social out of equal production to do so they order cause hand" the of that Further, would Ricardo's are in much would delicate the of core profits demand and supply, forward sought system prices-and concept put "invisible the "principle and from of but too of on the the the comprise and price forms This of another, theory a supply small stimulus community. otherwise based supply another. Adam Smith of demand, and distribution. theory that determine which of value economic Theory Economic will tried be proportional' 6 in form the in stretched of later proportions to 'full the The modern the of part Austria and Walras the side modity in both demand and supply, the utility marginal but economists, in scarcity, 'utility' school now, for first to demand, relation production was made explicit. of production towards in Although Bawerk finally value to it accepted until in 1890. of Economics what theory in Austria, had formerly at which time, the been the quantity in in basic of the on scarcity on cost away from commodity the cost change and Bohm- and was not Marshall's Principles is bring a single that together theory any price demanded ý. to Value. of country into proposition of classical by Wieser was to contribution unit. of value Theory this a com- foundation caused of Alfred theories of of Much of what emphasis and developed publication His dependence in Menger marginal the dependence Utility of value value choice. in consumption opposition two competing a final a Subjective to Marshall's of implicit the and the was refined met'with and distribution. be that is The shift a shift of the of latter the problem that it. produce Carl as the theory of a 'Marginal the the analysis demand and final terms this theory utility from in England, satisfaction proclaimed the dates approached and as a general of be described the to used of replaced not the value that factors Jevons the or of exposition Mill were by Adam Smith but criticised The beginnings which use Ricardo school formulated and distribution demand and produced led Classical the the around was the but qualities, vaguely all of Switzerland on the the amount proposition theory. Stuart ofJohn century. This to of simultaneously of depended energies was widely of value nineteenth developed It on the his labour requiring on production in of value, theory theory School' from theory cost' depended commodity the of this of of varying element by Ricardo. and developed until most labour the book the and labour capital Ricardo, The simplicity of as a fundamental After devoted sections of it retained etc. ). of machines 'stored-up' (included in them embodied of labour to the quantities is of tends equal'to 7 the quantity on the underlying related to between the this joint of neither this of utility it. Likewise, scheme to consumer the the in foregone buying not in incomes their spend is that it they spend which in their money, supplied. be determined sacrifice of that as a pair economic the income derived was determined the of expense dis- the by the utility in its that the of i. e. prefer, (1) (2) alternatives that determine what consumer form, as shown by the consumers, consumers is there simplest tends price signifies is merchandise in which ways and produced ) be easier naturally to manufacturers, In and so on. is Nevertheless, consumer of spending and manufactured lengthening sovereignty earn a larger practice, in money return would that of pass methods processes goods would then them on to to producers the course, businessmen than if all activity anticipation as technical implies if accept manufacturers round-about even under to economic Retailers continually of by balancing are service, or orders. of merchandise are correct, the by consumers' products, complex, the of intermediate are at order. wholesalers which from The direction to wholesalers, demands. income theory ways they would proposition of and costs blades field whole this sovereignty preferences produced majority the the services This were a'commodity (Consumer sovereignty. i. e. costs, producing avoidance the was a balance upon utility expenditure a commodity underlying opportunity foregone the his curve own action. derived of depended others. The two'principles reflect pattern treat like obtained utility from to by its general to be obtained utility and the solely with effort (utility) cutting The individual activity. was based They were of value. supply behaviour Marshall enabled approach He applied to economic satisfaction determinants scissors, from for search sacrifice; the Man's costs. and how the relationships, utility demand curve showed how the Marshall supplied. of vast of consumers' of production, become more whose anticipations they are wrong. ý If they 8 shown by events are later the to change wishes of that their is In bring consumer are-compelled them more it way, by demand, Broadly, is sooner in closely still for or line with to maintain possible or rather the most by part sovereignty is where there is to three limitations. market, and less effective consumer sovereignty is the more competitive this controlled demand. businessmen and to plans, consumers. production expected be wrong, to more the effective an element of monopoly. The theory First, the what of amount of income disproportionately The first State on the market exerted than through - the taxation; progressive by-the, is third be man to rich less inequality, wealthy. the the sale of restricted. effectively generally of consumption by the can be alleviated second the in State: is driving, to determine consumers implicit by the know- of-technical may be prohibited; before inherent; of by the exerted imposed drink is limitation that drugs, as certain such as alcoholic others, distortion limitations the are such some goods, pull state power the stronger there on the Secondly, the permits subject and the resources limitation be produced. shall Thirdly, available an inherent imposes ledge of believed to be beneficial. important In several value In 1. contrast that to the concept importance of the of School: 'timeless of of the theory concept Utility the Marginal of the continually stressed price from differed Marshall's respects time equilibrium' element in Marshall determining and value: long in to be studied reference the margin, which must ... in well as differs character and enduring results, periods in in be reference from studied that which must as extent ' fluctuations. to short periods and to passing (Preface As a consequence, of value period stock under in of which he considered three time equilibrium a commodity; the 1920) xvi, influencing the factors periods relevant conditions short-run to relate in which supply: to the the the determination the momentary disposal of equilibrium ' a given output is 9 to related a given equipment for was necessary all economic that clarify but periods, 2. of that as given production as given rate of a certain wants The implicit fixed are it as having a supply is necessary for the of not when likely are was to during short the take price; is 'Marginal it factors a certain call forth measures cost. to receive but a cost, i. e. immediate, there to factors of School' Utility that by Marshall: accepted was not is etc. not a factor it period supply the did Marshall scale run. the just but assumption long the was taking The price static' predominates considered hand, other it. of quantity 3. because and the distinctions time in production School it which return these of Finally, population, on value Utility On the period. production of stocks producers 'non the technology, of utility cost of The Marginal timeless of influence the given to be variable. in of making of number assumed such as tastes, The importance to change. the to be considered value data in which are with operating producers disposal their at of long-run and the equipment; of number it is man's wants in the earliest although stages of development that give'rise to his activities, yet as the afterwards each new step upwards is to be regarded development to new wants, of new activities giving rise ' than of new wants giving to new activities. rise rather '... his (1890, Marshall Furthermore, to distance and was anxious in problems study to terms an imperfect only of the increasing nature intended seriously occupied second of pointed but ' Since economic as a rebuke to in those Mechanics) equilibrium followed of of economic progress' idea of treating economic industries was well the world, so that positions this aware his economic analysis preoccupation, the of the intricate comment was presumably analogy conditions to show a tendency which the under was not an introduction even Marshall real he maintained which who had taken from theme the 'barely and development returns. consequence from equilibrium' introduction, rivalries with 'high the himself 'statical of progress (Statical out p. 89) of of Jevons became precompetition., as Dobb pointedlout: A 10 dynamic considerations tend to be this, instability deal the stability or with could not ... or with and hence with fluctuations of paths of movement, (1973, p. 173) change as a process. ' 'following ignored from The differences by Pigou synthesised Marshallian the (b) of is industry an The product as it the to be perfectly Competition in has become familiar of assumptions com- perfect two conditions competitive dition individual firm buyers Perfect (a) to by varying markets were their the quantity by a horizontal will not if have the if are the in for buyers one firm of products then individual the average at firm the product of cost is commodity physical conin production small each It output. transportable readily and proximity. 'model' an analytical be small must The latter market. a relatively close of the pure form if: many sellers total the the of the onto minimum is take would minds of coming only competition there relation faced its and sellers a market output only reaches the so that industry. output be fulfilled also in profitable be fulfilled will the the total the to be homogeneous must in The most relative that some neglected and competition. firm the equilibrium also which and Imperfect under substitutable firm any other 2. if but wants, applicable only be perfectly will stationary of were be met. 1. will a setting system, of doctrine neo-classical is as follows: economic textbooks For in Perfect theory the of on time, Firm: the of The theory it logical a neat the of The essence must two views concepts The Theory petition. the by placing into it turned which of between sales of absolutely so that none he was prepared demand curve. any selling identical could costs; follows there in market price influence i. e. to market, It products that is a firm no point is seller every with in perfect trying to NI 11 increase limits the within, can be sold at the market the amount that (b) of buyers firm's the and sellers capacity aware were available everywhere there is knowledge and therefore other marketing (c) could economies dominate to this certainty and other the absence were absent of prices i. e. markets, advertising of and the scale of (i. e. market so that remain would producers no one seller relatively and small-scale); (d) there of is also and tastes kind of-any from entrepreneurs The assumption incomes no barriers were or and capital run complete costs; significant grow saleable. with in and opportunities perfect is when any amount price this made-in the remain to or to the rest the of theory-. static. and the same, movement of land, the state economy. in that the short is technology of labour, given. Under these long run size of put, and was earning that ensure the every producer and equipment, plant maintain minimum necessary number to move into-another of those prices industry under depends are in factors of substitutes on everything mutually of to related or the and in in else. perfect supply of every have. any, the of is is true factors of It also of, their true products that that the both in the industries. other one industry by other The price it to of. production prices out- cost) industry. the occupation. But them. produced dependent The model and no factors the efficient necessary in producers depend on the value products profit are such that industry producing consideration The prices the possible are products employed it, demand for the incentive production of most (low efficient of in would the with most amount is reached when prices equals of the producing commodity prices among producers was operating the only minimum Equilibrium the competition circumstances are affected industries. system is by the prices Everything a system; all prices on one another. competition yields an 'ideal' output in the of ý o. ý'ý"ý""°ý. r 12 that sense supplies the the of a commodity productive resources away from everywhere organised in secure in preferences stick of In asa the economic the of perfect case, and consists of, perfect competition, (2) producing and (3) a product wholly for no possibility traditionally assumed and thereby price in of'the system to i. e. unlike one firm the product to producer profit, thus reflect consumers' provides a yard- is three the in the industry; firm; industry. Then be able will treated essential any other of the enter were would monopoly of (1) necessary resources. pure opposite the production thus of competition, a monopoly earn allocation a single If The model way. the to bid price in both would, resources economic new firms that the additional obtain conditions uses. manner efficient pay to sufficient alternative of efficiency exposition special elements most be just ideal distribution an optimum to these under run, this have would produced long and the run short consumers price to is it raise his shape of depending upon the and monopoly were seen to be his demand curve. both Although in operating the competition perfect (many agricultural economy operate under conditions close to perfect operate under conditions close to pure Consequently, pure monopoly. or supplement concepts 1930s out the model of the there perfect the monopoly) of were several bulk competition of utilities" economic" competition perfect attempts Most competition. E. H. Chamberlin respectively, "public competition; extremes and imperfect of monopolistic by, in between operated clearly activity and commodities products made to replace were notable developed and Joan Robinson. and during the the As she pointed, 1969: in by showing that perfect cannot obtain competition (imperfect industry undermines manufacturing competition) "price the complex of ideas erected the slogan of equals on ' (Preface marginal xi) cost". '... Imperfect in economic competition analysis I other covers than the perfect economic models competition, of market forms i. e. monopolistic used 13 oligipoly, competition, whether competition, resources of other of competition are conditions: the then defined product is heterogeneous fulfil all by one or more influence to from different others by such monopoly or because absence between knowledge arises The distinctive a monopoly from the in contrast to neo-classical out the analysis of monopoly, case. most profitable special case the output at condition output of of the where under noticed occurs general the and treat where price proposition marginal to revenue all equals elsewhere; or near- was to show monopoly production. the that cost marginal marginal set as a special competition firms to appropriate competition equals existence an otherwise convert is more perfect of drawn and Robinson perfect that the distinction large-scale it economics line any and profits a clear Chamberlin of investment and an individual of is product practices; by a group economies contribution that is There into into about prices employed practices Then the and collusive of ability branding, initial of is some degree generate competitors scale does not their that consumers of large competition. situation which the the differentiation, entry restrictive of price of restrictive competitive of and imperfect of uncertainty monopoly because either production -required on the selling and features: and thus as product practices restraints advertising; same kind the are which situation perfect demand by persuading of is a homogeneous competition following the of but identical not firms few a when market for necessary firms. of exists. depictsa competition or types product, selling are oligopoly firms of number but of on two fundamental changes similar whereas imperfect cases entry and a homogeneous are oligopoly, conditions characterised sellers perfect all The different and the When a few firms products the the product which products imperfect Thus the of assumed. by ringing of competition. there freedom is assumes many firms producing monopolistic imperfect, industry into competition many firms the perfect In to monopoly. through or homogeneity the Perfect duopoly are most cost. is only profitable a 14 If the monopolist the be smaller because degrees he is imperfect of can be sold only theory takes which of price imperfect and does quantity However, is -just a static also inquire not because searcher lowered. competition are all under a price to a sellers an additional is output demand as given, (1969) Robinson As Lady all so that be in would outputs, is tend will competition all will how consumer formed: are preferences the for supplier demand curve competition, perfect the competition if costs) constant it than the that market output profits, perfect under is price by a declining faced as with Whereas the competitive (e. g. equal is, as it adopted, his maximise being market. more competitive then an imperfectly as will things other takers in producer such an output produce price assumption simplifying or is it: put in reality consists of which analysis, whole is dressed equilibrium positions, static of comparisons time. going on through a process up to appear to represent is necessary into a dynamic setting-it To put the argument between the short-period to distinguish aspect of com' (Preface long the vi-vii) aspect. and period petition ... 'The Under the imperfect the smaller may remain It of is Imperfect get the goods in Thus vehicle admitted longer sidered ýý for it that optimum level. only under perfect interest does does not they value profits maximising that, in be possible, almost the entirely the of firm terms of interest price in that of' economic should them. go on getting it where this firm as a mainly or, competition, theory. terms regarded the mobility consumers resources of out- coincide. results has been to order perfect with and should behaviour to be in new competitors, premise imperfect alternative in the and allocating presence the to best more highly, theory traditional price social the conform has competition, and yield not the imperfect are more markets may attract price the private competition because welfare below higher the high the since therefore resources, because output that analysis, competition profits; maximise put the the might was no has been con- Traditional theory, 15 has been too, contain concerned an element Finally, for of monopoly the purposes to a straitjacket, to have the and thereby Advertising effect the theory the confining of his reducing role in term used the firm the of entrepreneur words Benson of and Economic Theory 'perfect' is has no necessary moral implication. is 'perfect' in competition, by advertising market structure Since discussions before requires the domination of brought market about by a and secondly, - oligopoly. inextricably are between best. desirable as less concentration and oligopoly physical advertising linked, and competition, an industry by a few firms - elucidation. of the firm by a few dominant produced For return. than are barriers not arise. this to to entry. Without these among firms competition interdependence. with of It is argued the assumptions increases feature major the may in long run earn are made (1) conditions as a direct there under this result will higher that monopoly theory of their be a general is output rates of collusion and (2) concentration; oligopoly that in which industries that predicts firms occur, competition The other price - the the analysis; necessarily regarded of economic in not techniques, by seller relationship oligopoly of The theory rather the often selling on advertising to is 'imperfection' and other characterised proceeding concept the in An equivalent means complete competition particular first, a technical vacuum which imperfect Nevertheless, ' a tram. The adjective sciences of or normal a- (c) the are profits made in assumptions '... that moves creature In predestinate grooves he's He is not even a bus; it whether profit. simplifying analysis of with predominantly that profits is there will a diminution mutual unwillingness 16 lower to suit, and since fairly market initiatives in commonly, the will will prices favour cf are development barometric disciplined but levels the Barometric cost price and demand, it ordinated pricing. be followed reflection in and towards contributing the market of concentration new competitors, demand, of The greater the and similarity discipline being things and the equal, of frequent are this cost for firms if his decisions and market price in and competitive to sustain situation'the more volatile of and differences changes methods, and production form a much looser comprises presence immediately in and price disciplined into, much more difficult of, changes market prices entry leadership In conditions other factors to be. products is parallel elasticity product shares. made between higher, at and these seller the competition aimed high of More overt). by non-price only demand, the or not structures. likely where conditions, only cost and and profits leadership however, of remain price under an oligopolistic prevalence degree will interdependence the of include the a stagnant companies market raises even when costs loyalty, determine The major the products, more unresponsive prices is, against large to activities brand pricing the leadership price of cost to slowly (tacit promotion of will leadership. price security also similarity of leads lead will characterised its raise independent forego pricing and sales A distinction leadership. few them to markets therefore the will company which among oligopolists The absence of independent structure very co-ordinating competition price only of readily the firms the all will This market. shares leads advertising of no firm change market and the than the of unchanged, to do likewise, refuse share oligopolistic form remain follow to competitors will'cause Conversely behaviour differentiation rather shares The appreciation stable. their in lose and the changing, action others in which situation this profits. if will prices are in because prices, its market a fall suffer of because prices are conditions. felt highly price coleader will to be an accurate According to -. 17 in Stigler, barometric the pricing IC ands adherence of rivals his price to the extent that, ' tolerable with promptness. It has been for further barometric and a type parallelism composed of a larger than the with disciplined The position theory of troversy as is assumed accepted necessary because subject in expected from price an industry levels the the of of competitive norm pricing. on the debate considerable of in the place of advertising Persuasive loyalty, sense purchase require in and con- that the the latter, line two reasons imperfect if of to provide must techniques are indivisibilities information advertising to be excessive and wasteful, on welfare: product informative. and not and brand differentiation advertising both pay for for to the commodity even though proposals firms (Kaldor) in wishes to he only than he does under advertising were separated has led an incentive with supplied and would buy less reasoning has been competition; is jointly buyer perfect It or because persuasive stimulate advertisements a waste to be expanded. of effects always function. perfect, provision are was not have and sellers and represent some selling markets the Many advertisements Advertising world is-not undesirable with arrangement This the, real there a useful perform information and hence 2. in that be superfluous hand, other buyers competition would has been deemed for and therefore be-taxed that less parallel perfect could Nevertheless expenditure 1. on the techniques production A this the under advertising generally the of advertising If, resources. knowledge, in forms has been knowledge perfect diverge to form orderly As a result, sellers. of economic theory firm to closer responsible among economists. If, of the of a less and factors the that in result likely are 1951) behaviour of number and profits prices leadership price to his price only because reflects market conditions (1947,446) (Markham, argued leader: price I from the product. that advertising to, reduce prices; should that'adver- 18 tising the expenditure distributive public bodies B Most firm, the of the of cations 1. and in of effect advertising of branch the has, of however, by products in advertising in relation to dealing with economics on the concentrated advertising The association the industrial impli- welfare and particularly on product differentiation in imperfections in on competition, 2. four 3. The role increase of in the market of information of buyers firms advertised which These be dealt Advertising The first economic 'constructive' for of the to monopoly sector the cause share market, of the of three or to profits. - the economics the sellers of view these of approach. theory and economic as far separately re-inforces which from the point considered traditional entry, of economics as opposed advertising with earn has been products has been issues to recent - advertising of as a barrier advertising In a comparatively C will as an important advertising (an and enables concentration products causing firms); largest offered of concentration with prices; The significance industrial advertising and thus and higher capacity excess of loyalty, up brand building for than economic of structure: market Al dominated retailers testing comparative be more would discussion recent structure/organisation but large-scale information. providing theory and that system; or private if be reduced would as possible are closely for ease related, of exposition. and Information major analysis economist to was Alfred advertising, acknowledge he thought sale, which advertising which was primarily persuasive, and which he distinguished Marshall; designed not was wasteful, to inform informative if and but it about people was beneficial, even as a subject advertising raised between products 'combative' repetitive output and and lowered 19 costs, because such economies could (1919, p. 305). Marshall's separation during by Pigou adopted distinction latter of advertising 1920s, the '... that most independent firms because advertising it and out; of in element tcompetitive' of the firm. into advertising informative and impracticable ficial. unit other commodities, from the community's It is for that the those wasteful even prohibiting hand, 'competitive' and if resources products. with Chase of was considered advertising She judged, (1932). If increased advertising and reduced and mass production, then merely were used it be considered could a less bene- demand for redistributed in however, desirable pattern of view. point advertising it continued largely competitive two indistinguishable informative. prices, seemed to be implicit differentiate one another one firm or Stuart and other standardisation and therefore On the different of two kinds by Braithwaite was not advertising by facilitating per be self-defeating suggested investigation. empirical between The distinction costs formerly cancelled by taxing and more of advertising as to the relative wrangling merits (1925,113) compounds'. output a ' between could firms Pigou 'Nine-tenths most it products be prevented might of little apparently that The advertising. The distinction logical extreme more and therefore arrangements competing substitute efficient advertising to to monopoly; efforts merely and more another lead could and therefore could 'competitive' was advertising Advertising the was advertising. the demand for to another. supply (1932,196-200) the sole purpose of transferring from one source of given commodity undesirable. but a similar 'competitive' and two kinds had advertising He considered into content and he drew 'informative' between it. have been reaped without in the distinction that Braithwaite, it was the for made between function instance, of the 'informative' latter propounded that to 20 their of powers producers advertising In the of to win by creating 1930s Chamberlin but product, Later his Robinson advertising could by emphasising each brand; and he could (1969) Braithwaite's that for was lower output by the power process of and a vicious developed one another 'loyalty' of monopoly a pocket This became cumulative and Robinson from products replaced 'reputation'. then by claiming monopolies and were lost and quality price in motion. and so create advantages competition monopolies was set 'differentiate' tiser markets circle reputation because competition as instruments 'reputation' creating of restrict could advertising than put this then it be in would to important less gave a higher charge be used the this notion each price adverfor his competition. perfect view more forthrightly: '... competition, non-price such as artificial product differentiation, advertising and sales promotion ... for the greatest accounts part of the wastefulness of ' (Preface, imperfect ix) markets. Comanor and Wilson essential ingredient (1974) seemed to also for required the imply that introduction was the advertising of product differentiation: '... advertising differentiation, in this analysis acts as a proxy for product for the product or, more specifically, and heavy advertising that permit market characteristics expenditures from to differentiate effectively and the products of a firm Although those of its rivals. these product and market ( they are typically are not easily characteristics measured, ' (130-31) by heavy advertising characterized expenditures. distinction The commonly-accepted advertising facturers' guided I advertising have than by manufacturers chosen on the on ill-informed (1945,1949) (standardised buying basis each of to He argued respectively. into by retailers they variety by Lewis was applied 'informative' between their of whom is expert intent and*'ccxnbative' retailers' that and manu- consumers or mass produced) knowledge on pushing are better goods and experience his own brand purchasers. 'It should not be on the manufacturer's strident claims has to rely for information that the public much ... by manufacturers is wasteful (because buyers advertising know the facts, already and sellers or when it is false or (1945,218-220) misleading). or 21 In this therefore, view, is it because informative; 'undesirable' The thesis that about is mainly advertising persuasion seemed undesirable, advertising seemed excessive 50s and 60s. is 'largely and the (1958) Harbury in persuasive or knew existed, amount instance, for information conveying to and 30s to 1920s that information with devoted of resources the to information to mix explains and the character considered persuasive. but through persisted is advertising combative 'desirable' as distinguished was one way of they a product is advertising manufacturer it because consumers retail most the advertising is supplied selective'. There one component demand against It 1. 1962; of has been Advisory given formed are 2. It in and "competitive' practice should it is with first advertising be considered and manipulate in not that the theory in which them are largely into enquire, p. 74, & Seldon, ability demand contrary economic does argued impossible could (Harris instance (1967,79)) and changes has been for out, to manipulate the advertising, advertisements of Group demand theory conventional ences pointed at variance are preferences content from'competitive' it that interests. advertising is interest the belief the who questioned 'informative' consumers' Economists 'persuasive' economists isolate to was possible that however, were, to of the consumer's consumers' ignored. Moreover, how consumers' prefer- place. that the is. a matter to draw. as providing drawn distinction of semantics, Consequently, some kind of 'informative' between and one which advertising information, per e. g. `The attention be has to attracted the and his consumer of its function, In order social to perform attention aroused. (let has be us not be afraid to advertising attractive and ' (1962, to. say) persuasive. p. 257) and Alderson: both 'All is effective communication persuasive ... information be presented perand recommendation must if they are to have any effect on purchasing suasively ' (1968,582) decisions. se Hicks: in 22 3. 'persuasive' purpose and rationale of to consumer the (new products; Marris), 'informative' between on a misunderstanding advertising is which about products changing product; e. g. drawn based continually an established of Ozga; is advertising information uses distinction The artificial the the nature, conveying in already are baby - consumers in than wider which changes of and existence products; new itself: product Telser; Kirzner: 'The entrepreneur's task is not completed when he makes information He must also get to the consumer. available It the consumer to notice and absorb the information ... is not so much perhaps that effective needs communication it needs to be eye-catching, to be persuasive as that mind(1973,162) by and re-inforced repetition'. catching, constant Despite these 'informative' between compared advertising plus his that information that with be reports the by independent cost information biased, and unbiased traditional higher the of an independent is distinction conventional contrast advertising a more efficient might of the advertising, Kaldor's with that contention proposal 'persuasive' and Together persisted. to counter-arguments these method of consumer views view of service led spreading advisory to the necessary units. Thus Meade: 'Consumers It is, therefore, are ignorant and gullible. for the State desirable to discourage commercial. private disinterested and to foster advertisement consumer research ' (1964,12). and information services. Meade expanded More recently, this proposal: is course much advertisement of an informative nature is not of But much advertisement and desirable. necessary kind. A tax on advertisement the this would increase incentive for firms by cutting to seek markets rather prices bamboozlement Measures might be taken than by persuasive ... to replace much interested advertisement with persuasive information impartial by the State of through the promotion for consumers' bodies The provision research and education. dissemination by a number of independent semiand widespread information bodies of about the-real of public qualities different the forces would increase products of the market would have to submit. ' mechanism to which the producers 'Of (1975,49-50) A more might forward not extreme be adequate by Lady view to Robinson: that even an independent counterbalance the power consumer; of advice advertising system was put 23'... can never be established as long consumer sovereignty lies For the general the producer. as the initiative with is buyer the consumer run of goods, an amateur necessarily is The great the a professional seller chain while ... influence in imposing a some monopsonistic stores exercise kind of synthetic perfect market on small-scale producers, but they cannot offer to the great a counterweight ' (1969, xii) oligopolists. independent That because the sellers of information Advisory that 'establishing The view The major designed by the by the agrees their with and suggests particular' (L977,86-88). - Association' and Competition barrier service criticism is the regarding summed up by H. C. Simons: in advertising of between relationship to really competitive enterprise (1948, p. 95) to consumers. ' Aspects Economic in necessary propounded Reekie while to the Consumers' of many economists 'A major efficient is was also information of rival and competition advertising 'The (1967,78); little some sort Advertising B1 'too is there biased are consumers by advertisements consequently Group for services provided and is goods Economists view information the post-war (Rev. of Advertising', and period has been Vol. XVII, Econ. Studies, because they highlight which have been of Kaldox's 1950/51). His twenty-five (a) is to provide than a waste the public undesirable from classical example, view is socially the theory investigation and empirical for the the the past that the although information, it 'direct' primary does not function do this efficiently reasons: Advertising advertising some detail and economic debate the accepts advertising three in out years. Kaldor for set advertising controversial of subject of of aspects major are criticisms Kaldor effects economist's defines of resources require with because the viewpoint advertising result This on welfare. of buy more advertisers that contention consumer as a subsidised there are is expounded For sovereignty. commodity which is 24 by the offered there that In consumer is arately, but cannot. easily true evaluate increase in the demand for the seller because as an integral whether known, not cost Therefore, purchased nor the at nil whether is advertising they or not the of want resources his products. and the the, advertising of part expectation sep- consumers product, it, are bought not its and therefore for used economically it. supplying (b) is in consumer is manufacturer buyer. the is cost the be a consequential will words, the other to manufacturer Kaldor that claims fails advertising to unbiased enough provide information. (c) is costly. It by advertising supplied information In addition, it is number small demand from firms of tration to cost entry of of economic Kaldor to of competition packaging, large-scale the new ideas market, which of saving, booms. Thirdly, is which firms, no longer the takes secondary. This gifts of method finance, include long- higher higher and methods and more perfect with advertising), by place coupons, compared by a produced samples, and a possibly i. e. so reducing is it that undesirable, production, (including with new products expense Disadvantages costs 'indirect' the at a commodity considered of of larger and disadvantages selling into in others output might-be to new firms breaking Thus Lord l whole economies high management, spending smaller and more risk-taking. research barrier to by means of that an independent has three introduction and undesirable that but i. e. competition, high the has advantages competition term slumps information £68 m, the more cheaply-by advertising it encourages number-oligopoly-so attractions the some products until prices, that claimed demand from shifts means of other in 1938 cost £14 m. may stimulate desirable advertising be provided around Secondly, undesirable. switches of Kaldor first, which i. e. in advertising could service, effects: is Whereas because dangerous costs prices, of the concen- power. concluded that there are monopolistic and oligopot 25 listic inherent tendencies concentration of market concentration leads into entry for the to like Kaldor, costs system than those (chain consumers wanted. the variety A2 of by the retailer, were co-operative was also would envisaged would brands supply tell who would by both Lewis lead a reduction to selling the distributive and by retailer societies) possible no advertising. that maintained of attracting and other The manufacturers retailer-domination rather large them what and Kaldor in that the Supply supply that argument (1) (1966), existing market unadvertised or point of are these also to goods from and (2) available the been made by Stigler the behind goods extra the has advertising Kaldor's market, a with as there cannot who further product reasoning be lost as long in the attacks Kaldor's would production and advertised pay for of assumptions dissents messages; advertised willing economic joint from separately The basis instance, for between has various is excessive expenditure advertising advertising lightly advertising counts. economies for differential consumers the question Telser 'The there it is without expenditure p. 20) on several last profit this freedom of level if so that degree consequently of a progressive firms, and that cit. criticised separate amount (op. cannot purchase hypothesis. This advertising Joint been to price a higher consumers has been because the to products. The joint usually in reducing It Advertising because large be possible stores, of pressure of hands the a reduction of manufacturers. retailers in would be dominated should which newcomers, Lewis lead advertising, to enjoy than As a means of turn for market new competitors power in firms existing in are the exceed the involved. commented: is not an easy or pleasant assimilation of information task for most people, to pay and they may well be willing form. more for the information when supplied-in an enjoyable' demand for information In principle this complementary and is exactly to the complementary entertainment analogous demand of consumers for commodities and delivery or service (1961,213-225) air-conditioned stores'. 26 f.lil 1', has been It is advertising part of these the and the Kaldor than is supply demand for consumer are the whether as far forms All process. essentially curve it because suggests and remembering argument media real apart as suggests. facturer (1975) is the illogical, the consumer media rather than therefore, to the product, as much as it for example, as separate an input business, to lines similar and with of any other capital, Advertising, Kaldor promoting hand has pointed on the other than rather and it B2. that learning assume that demand curve Lind is higher continual criticisms Kaldor deal a great consumers' consumer by Ozga (1960) argued the advertising would be illogical from the the amount a roughly labour the seller case and buys manufacturer consider of is the it. who supply to consider On Lind's which is the manu- advertising,, delivery vans, advertising determined of -It from analysis possibility is entity as a separate product. similar on exactly to error, those input. or marketing Concentration put who demands it out that and Profits most that strongly is advertising important in concentration: 'The economic effects thereof advertising must be judged in terms of the advantages fore of the manufacturers', (as against the polypoly oligopoly under wholesalers' domination) which it helped to create and maintain ... has been generally advertising after adopted sales ... have been concentrated will among a smaller number of firms firm will have and the size of the representative ' increased. (1950,13) This view that advertised which have seller less has stimulated tried to ascertain, between association the and secondly, ability. :increases i first, is of whether intensity between relationship power higher a series advertising The assumptions monopoly is concentration it would is there advertising the it leads argument to be if firms investigations empirical and industry underlying that than a systematic concentration, intensity that an increase and prof it- advertising in the minimum 27 of firm, size efficient and that are increasing there to returns advertising. increasing Concentration: discussing Before between into agreement (Berle USA in the its of had been evident since industry industry) In the the output development decrease, the and their for by the remain the same. view that emphasised of as well industry (Adelman by official proportion of in firms three/four because the had been growing concentration as its as a result between (the (1974); (1976)). and contested competition & Sawyer century confirmed ratio in by Prais particular were were increasing that 1950s the largest industrial (Aaronvitch forward views concentration show a diminution were , concentration the of In structure not and in in consensus (1948)) conclusions stable into general beginning these research accounted the was'a Galbraith did 1970s that out concentration and maintain was inevitable. showed a very UK was put (1964) Marris (1959)), which do not firms increase and investigations 1954-72, in (1936); which of exist in the economy as a whole, and 40s there Burns Penrose statistics total 1930s and theoretical empirical (1951); increase, to point necessary degree the to claimed viz. the continuing is or decreasing (1932); & Means it is that relationship on whether which industries, concentration that exists factors the in particular In specific has been increasing industry nor the and concentration, advertising no general or decreasing? Bannock The dangers implications (1971); this of industrial for policy. Jewkes has however pointed revised downwards the percentage largest companies while for f (1977) the for Department 1970 at 37.7 per the of year Industry cent. out of output 1970 from in that has frequently he attributes 52 per an official He concludes: Prais cent study to the'100 to 40/41 gave the per cent, figure _ 28 'fq" 'Il . ýý (around 33 per cent) stability of the corresponding is in industry American by all now accepted percentage in the UK we too are informed It may be that observers. figure the higher around 38 per cent, a stability reaching for by our smaller for the UK perhaps being accounted ' (1977,24) American the than economy ... 'The a. .i ýý Other of i that in Prais' limitations the of industrial of firms concentration into and out be expected Extensive Law. data have to sought market and that the that namely, in the size the the process and exist entry of Adelman conclusion find some out maintains understand deconcentration towards firm. the median of to pointed further a tendency failed advertising have Jewkes account and market with (1965)) into by Telser analysis concentration Gibrat's and a growth expenditures advertising Hart by taking the of of Prais, was the opposite (1972; economists mathematical other could (Parkin economists between a correlation structure when he compared intensity for market industries: forty-two '... for an adverse There is little empirical support despite between advertising and competition, association ' (1964,558) theorizing to the contrary. some plausible His findings general industry are take can which a major On the by Mann et A study positive ratios advertising-sales 41 to . 72 among their . 'enough of Maurice that in findings (1969), Telser no correlation the USA. being al. of simple several Doyle sparked off regressions) (1969) and Ekelund advertising (1968), Reekie (1970) industries tend advertising events. found a and average ratios from range coefficients that: and concluded considerable a monopoly however, concentration correlation between gives an firm a given it by historical industries, fourteen that that suggests determined four-firm (the case then which in advertising of the not in concentration the variance intensity to raise an issue advertising These is Telser contrary, between correlation it initiative, without equilibria injections and that advertising persists. towards were decisive, not initial that by' is explained for public policy. (1967,38) controversy. & Gramm (1970,1971) intensity Ekelund & have argued and concentration and Schnabel (1970) report exists 29 similar negative Mann et al. findings (1969) a significant the (1969), Marcus have contended that is there correlation. review of literature the between relationship causal '... Conversely, (1971) and Mann & Meehan In a critical of UK data. with advertising was less Simon J. L. convinced and concentration: it is the decisions industry features structural rather an of by single firms determine than the intensity which '... in any case of advertising on the industry', and added data to a test the existing are not well suited of causality is not very it from advertising because to concentration ' (1975,169) to think reasonable of advertising as exogenous. Thus the It has been argued, to higher profits, higher that that of between a correlation however, but interpretation and the is there or not whether data empirical conditions them conflict and concentration. advertising concentration of does not alone lead important an equally are entry about determinant. between The association first data by noted Comanor Telser, to opposite reflection supplied his to of (1967). (This in differences the is and or was similar used implications contradiction data which paper for conceptual in differences than Their support empirical conclusions. rather adopted profitability & Wilson intensity and advertising the precisely a primarily statistical approaches sample): '... has a statistically significant and advertising important impact rates quantitatively upon profit which a measure of market performance as provide as well indicate ' (1967,423) the existence of market power. findings Their that rate a profit centage the showed investigations sizes profit different between nearly findings Their sample. in exceeded i. e. points, showed an industry; level. Western measures that that and Furthermore, European of market industries with that of other half as high were again as by by the increases Lambin found no significant and advertising had perin industries whose distribution by concentration four nearly other a study countries outlays (1970) Guth the affects advertising while advertising industries confirmed advertising that high of industry the (1975) firm average eight covering association intensity, it did 30 find for some support the capacity general neither link causal systematic nor However, barrier Telser advertising '... countries increases find though that this and markets was studied. show this which and profits: it so simple do not travel were matters why all companies new firms, on investigations has commented between and did prices for the of intensity advertising higher to charge be an entry could advertising that contention firm the of the would be hard to explain the same road to riches. ' (1968,169) In a critical impact the analysed assessment is and profitability to advertising increases to advertising, changes that that serve B3 the present hypothesis in most or advertising barriers really the absence that advertising increasing are preference He therefore impact of flow a causal of durable to new firms. the monopoly intensity that there creates known about earn advertising' no evidence size, when he examined He also problems the is for no support advertising. of as entry (1974), Ferguson ment that to ability (1972) Schmalensee con- advertising on profits. monopoly find firm efficient or nothing in even He can find profits. evidence between a correlation be expected to the minimum returns cludes that available on a firm's advertising He concluded profits. from of the of that contention pointed in the out that the the limited there formidable single-equation, increasing econometric competition also to returns and measuretests multiple-regression decreases advertising are could evidence, which are used studies. Advertising Stigler as a Barrier defines a barrier to Entry to entry as 'a (at some or every rate cost of producing which of output) but must be borne by a firm which seeks to enter a business is not borne by firms in the industry'. (1968,67) already A high level differentiation of expenditure on advertising has been seen as an effective in association method of with product discouraging new 31 larger to available therefore, higher in advertising and the economies of scale has been Advertising of monopoly its through power costs penetration criticised, impact on conditions ` Cave: R. E. e. g. from result firms. extant as a source entry, to contended consumer inertia, of new firms, of is This entrants. '... in the USA has revealed that "heavy research industry by raising worsens advertising" performance barriers to entry and increases market power. ' (1968,312) However, the there continuous has by no means been a unanimity debate investigations work in this The pioneering the influence of to and moderate of sample and empirical barriers to entry low - on the profit industries oligopolistic is field of view - classified rates for of the have which high, as very leading the place. substantial in firms 1936-40 periods taken (1956) who measured of Bain that from resulting a and 1947-51. He found 'product is of at least differentiation the same general to entry as an impediment order of importance as are of large-scale economies production and distribution'. This investigation into the was followed between relationship for 1950-60 and profit rates discovered was compatible Great Depression Bain's results. does inhibit üp by Mann (1966) or of seller with rapid a period post-war Furthermore, who undertook barriers concentration, to determine time that inflation. (1968) Bain the whether of (Ch. 4) to was not part findings has asserted that entry,, had Bain pattern His research of the supported advertising entry: 'The product loam larger differentiation firms advantages of established than any other to entry, sources of barriers and large especially as a source of high and very high barriers in turn typically This firms superiority of established ... in important hinges or major degree upon the susceptibility of buyers to persuasion heavy advertising through or other ' (1968,281-282) sales promotion effort. Schmalensee Bain's (1972,243) conclusion. investigation on the advertising was held however could He further grounds criticised that to be a major it find the original performed source no evidence no tests barrier of entry I- in support of Bain (1956) of hypotheses; mainly when it m ... 32 was intensive entry or when industry on the Bain heights of concept his 70 per industries (1971) long-run from is or more in than of value less the (1971) by Brozen initially later years towards Bain's results incorrect the added, the the showed that A a short- and low profit rates later Brozen's biased if even had been average. by a statistical industries that assumption rate profit industries. high were the firms average this the in largest eight concentrated had moved back the the where collusion fifteen US industries, on forty-two industries an alternative which does not state that barriers rest (1973) Demsetz a measure to the In Demsetz's analysis collusion, or but (1971) relative the to is the in were the '... concludes relative finding efficiency concentration McGee (1971), concentration. that concluded large firms. due to resulting output from is concentration The higher of efficiency arise does not therefore, the industry firms. largest restriction uncertainty or plus by management. 'Since information is costly difficult to duplicate, the for superior rate of return Ferguson all regarding and which', relative performance insight of Bain with of do not profits superior scale have efficiency greater extraordinary of that increase entry and Brozen of to view on economies concentration, of determine to equilibrium. There luck deployed limited judgment critical passed is which industries showed that also resulting error cent because phenomenon work based had facilitated concentration these study these of re-examination in pricing higher was significantly term has also limit concentrated for accounted of 1936-40 highly of (1968) it that opinion barriers. In'Bain`s group voiced Stigler possibilities. the sources if that of advertising (and rates concentration is a barrier advertising (1974,61) power. ' to obtain and techniques firm may enjoy growth and a (1973,3) some time. ' this large view firms of concentration is correct: as a measure to expenditure related positively does not indicate that of return) to entry or a source of monopoly 33 made some fundamental has also Ferguson advertising with monopoly is to possible because and conduct; there is of no measure can raise Since the to advertising justified presumption that the for there which established entry. does not the assess have on appear been reached suggested that policy based of effects either to have unis there no on the (Needham, competition structure conclusions power to any public decreases advertising Theory and the As has been seen advertising may fulfil assumption of exchange as it Since the of means opportunities were, in have a free the real is in that Economics al. ) it 1971; a perfect conceded is - even made in acquisition of is grudgingly information if the On the ambiguous. which market Information providing knowledge somewhat the of has been in role perfect knowledge perfect firm et a useful information constitutes the of (Marshall, do not and sellers theory is, basis empirical to practical studies have is serious collusion; concentration shown by later it are attracting and monopoly some economists Advertising buyers what been of without undertaken market power; of market extent to draw on which studies of theory cost of 1974). Ferguson, that marginal model there causality - the entry and industrial conclusions, cr C. have one-way been concentration-ratios data; the have whether questioned of agreed of the of linking studies of monopoly in advertising variety or of basis on monopoly theoretical significance above between inconclusive, economic conditions a theoretical and the exist, determinant no-generally prices relationship has been or- assumption is the framework and inaccuracies the concerning firms the question shortcomings of doubts indicator a good it e. g. the of investigations these theoretical structure-conduct-performance, structure that power: an incomplete within conducted criticisms the concept of hand, other conventional knowledge costless, where of prices so that or knowledge good. world information about available products is not 34 a free good automatically way of considering economics buyers of advertised traditional viewpoint of the The seminal '... considering of article by Stigler advertised of search benefits the almost entirely the which to the from the as opposed advertisements advertising sellers of the cost theory of in recently on analysing from gain a different and everyone, comparatively by concentrating products approach anyone has emerged advertising information of to available products. the criticised in neglect economic information: for information in the town dwelling occupies a slum ... it is ignored Mostly And the of economics one of ... ... information-producing industries, is treated advertising, for that with a hostility economists reserve normally ' (1961,213) tariffs or monopolists. He illustrated for his buyers: the identification The expansion price. has been decades thus seekers, in mation this devoted to the and time cost of for ascertainment the over to attention search for buyers must it. without buyers the of market two past example, of advertising of in bringing advertising, or make decisions role job of job (Fulop, employees. infor- acquire In certain circum- than the cost of resources of the cost of advertising. there once it information, importance the for and salaries may be more costly Furthermore, for absence ways, other stances the advertising factor, wages and the sellers recruitment an important reducing In 1971,65). of of and current opportunities one important by analysing criticism becomes 'reputation'; to persistence of is an awareness to possible it quality. economises As Stigler why buyers explain on search points the search attach because it denotes out: 'When economists deplore the reliance of the consumer implicitly they the that on reputation assume ... laboratory, consumer has a large ready to deliver information ' (1961,224) current and gratuitously, quickly has also Johnson maintains assumption emphasised that this misconception of perfect knowledge i that information arises in the is as a result theory of the not a free good, of the basic firm: and 35 'The to approach and the general of politicians public is still like that advertising, of economic theory, dominated by the idea that knows what he wants. everyone (1967,14 ) Consequently, '... Johnson maintains ' that: is important, Information and advertising on acquiring, ' information. of providing worth spending is only one of (1967,14) resources the many ways z ,ý. .ý, ._ 36 Alternative II In the Theories is In consumers. the most that assumed scales of which have control technical impersonal only embraces this of been incorporated conditions such as oligopoly, remained unchanged There in the for That paid to the which defects school of assumptions that Marris, Secondly, and a variety of market the has of theory by which mechanisms objective accord motives in achieve behaviour behaviour underlying maximisation perfect by the guided the with a world is firm the of is behaviour do not to theory: the and where is theory behaviour have William of of are more would be imperfect large the know- industry economies of scale, been the growth from tackled economics Baumol, Galbraith it (J. of the Downie, joint stock 'Managerial' accurate to of techno- of ownership First, viewpoints. Value Process, and Growth, Capitalism, 1964). who adopted Marris' regard These company. The Competitive Behaviour (1958,1963,1969) was more separation two different Business Theory of has which as a consequence and the has attention or firm corporation of from insufficient because areas The Economic that inadequate of wide stems by Kenneth proposition the decision the where of managerial 1958; London, basic the developments, claimed methods and modifications d'etre the is and consumers. norm over and control and it cost explain raison criticisms and time-consuming 2. logical Robin world competition situations, least or market-place. maximisations real firms become the the the by producers conditions, to specifying conditions market adaptations theory the and that revenue, net expensive been basic the of and multi-dimensional, complex ledge major of utility precepts too its That to maximise firms three are 1. in allocated are resources Despite etc. method -a given that seen exercised and the products, in classify of market to known. are production has been prices meaning wanted to over adaptations it firm sense Firm the of the of a technical degree the to in used Theory the theory neo-classical competition according to the economy as 1959; 37 operating entirely it treating firm. of attempts the this with should traditional tenet common practice manner the of implication was the be made to not the than revive of theory for the of public policy forms traditional artificially competition. however, Galbraith, his with (there is, for demand, by Galbraith), tributors That i. e. theory, is curve the is (a) that that which Marris' and the power the of explanation made assumptions 'countervailing the to sovereignty between market, the for as a process power' of dis- large corporation economics do not many of that in the traditional shape real have components are demand precisely and which This has been I the of world, competition. a situation its the in known - these are and create than granted theory most expounded been put of forward as well. Managerial process related knowledge, continuously firms but for taken preferences rather (1973), economists decision-making are perfect exist Economics marginal the control which consumer Managerial firms to that to is there by Kirzner directly difference economics advertising consumer nullifies introduced doctrine opportunities by other utilises factors the known, competition fully corporation be utilised uncertainties provide large managerial legislation. than 3. from a fundamental and his should rather significantly and thereby example, how a new product departed the that assertion consumer control of in as operating Concomitant that basis on a managerial to - of a firm two major decide describes which As evidence, concept of cost in concept of cost used the in theory actual based criticisms how much to revenue. is the difference has been contrasted business firms. marginal between with the the are First, theory. traditional by equating internal which on propositions of produce the and predicts cost with economic accounting ý,.-.,.TTý_,., ý ý' 38 it Secondly, firm of cost components decision-making Theory These in behaviour within The first their all as a 'satisfactory its maximise has been and the to for balance are claimed on these directly costs try to advertising In and Baumol with with to its in fixed prices. behaviour theory to incorporate but of 'total not is but important no longer as portrayed goals. than it which conclusions behaviour observed is profit of consistent necessarily or criteria firm to seek sales level the words, alone, as long a company will therefore, these do not that rather a satisfactory other drew firms that and two decision an increase the an expense consumer over which Conventional expenditures. changes or reduce level, a general those is drawn from ' faced Firms at the theory, - namely, theory: conventional 1. this profits, two competing more consistent the reflect and not maintained one objective hypothesis From this output substituted turnover. trying that In towards the Contemporary explain, profits is profit maximum sales as working will of introduced viewed market, to maximising been have objectives to neo-classical of revenue. sales in Problems of by Baucool who concluded level' a firm's of firm. revision energies theory econcmists theory a given and the ). Ill. of managerial within forward was put criticisms Homewood, a particular major (ed. ) A Survey Haley neo-classical firms of individuals the 'Same Basic Papandreou criticisms and other placed emphasis revenue B. F. Vol. 2,183-219, Economics, devote in Firm', the factors such of operating'procedures, in the to view existence be included should (A. the standard which process. the of budgets, fails theory ignores and hence planning, other traditional that argued as an organisation, as management the is costs should not in fixed in the costs form have they theory, lead a firm will either higher of to other alter or prices e. g. some control, on the pass hand, either asserts its 39 2. Baumol also that: maintained 'Sales that maximization makes far greater presumption businessmen to be consider will non-price competition ' (1959,76) the more advantageous alternative. This businessmen for will devoting their it behaviour, theory focusses primarily did It behaviour decision-making supplemented by Behavioural makes decisions at behaviour which has substituted for the neo-classical for maximising observed 'Models to that reveal practice than maximise sales of to It notion the of a satisfactory theory as is Firm', is individual organisational subject solving traditional to the the complex is that level of By abandoning is it to possible with consistent and J. G. March Sci., heuristic model show how decision-making of Behavioural in in to of maximisation. satisficing, of allocation, information a theory humans employ working the market- have been seek is economics or which A. E. "Feigenbaum the of firm the a firm's resource of theoretical portrayed revenue of principle the a different those basis principle Theory into The theories behaviour the in managerial incorporate firm time. (See R. M. Cyert, strand thumb processes in objectives a Behavioural A third seeks or behaviour. in on the behavioural the add as many goals point the of in of the of observed firms of internal theories theories with and prediction output, market available performance while product consistent behaviour the analysis on price, As a consequence, any given do not lengths great competitors, advertising, more upon the and so on. an organisation mechanism behaviour to go to appear as their appears consider not primary etc. Baumol's Although firms energies-towards servicing, as the that asserts which of business observations same levels the at theory increases or contrary, competitive differentiation, place. On the prices cuts price whereas view. their to neo-classical contrast profits; this set in consider increasing support to is conclusion 4,81; programming rule selective, (1959) 95). which of problems. decision-making price mechanism theory. a satisfactory-profit If in firms observed only constraint, or p 40 behavioural theory criterion function. ventional theory decision hypothesis supports the by paying attention can to hypothesis the this of of These theories behaviour, of on this firms, where place provide markets and of Managerial than policy most such struggle facing it the at in changes of the in a firm's of trying on the repercussions consider is fiercely to to meet picture of that influence economics thus has different theory way to keep which the the to of to avoid be the suggests in operate the nature behaviour that finished of of a competition. price as a market It competition. implications asserts to also represent price the prices prefer is this unlikely many of market firm the or not, achieve satisfy competition of oligopolists to theories non-price forces summed it that processes would competitive individual for competitive products firms. economic pricing is as low as possible. As Clarkson as A time. prices decision on their organisational alterations price any point what Under'this time. a number consider organisations a more accurate the make decisions theory. a theory conventional efficient only effects however, and by doing of one of will that One way to firms however the whether premise, only most con- by maximising collected, objectives The behavioural'theory environment. stable the oligopolists more advantageous. large is of any at variance'with and organisations goals is a firm complex have also e. g. these prices by conventional goals competing have not Evidence number meet conclusion also will asserted that a limited are maximise make decisions individuals alternatives possible corollary are setting individuals or that they no longer theories such function. As a result, the inputs to see that objectives. one of firms that firms then Similarly, a clearly-defined they firm, the of up: 'When competitive to have vanished pricing appears and one dominate or two companies an industry, antitrust measures are invoked with the intent of restoring competitive pricing'I to that particular But if, market. as investigations of business behaviour is only decision the pricing suggest, 41 increasing firm's decision the then problems, one of a in firms the market may not have the desired of number it In can be shown that other words, unless effect. in the industry. has a direct the number of firms effect it does that the set,: are not make much sense prices on increase is to to invoke whose purpose antitrust measures ' firms. (1968,66) the number of competing Marris he considered the On this the added writers long period Furthermore, subject to that. is which of changes of neo-classical and/or factors provide the firm the assumption of feature of and growth income. capable these of determined in expenditure none theory conventional date a later at existence to on policy expenditure. and the other hand, general this the relating These factors, level of profitability demand, not are theory, decisions created from which internal is its initiate to demand is arising restraints According distinctive capacity of to premise the its restraints and from dependent employed the that growth although training. On the is corporation marketing tastes, as advertising an opposite i. e. theory, capitalist is in them. pursue decision-variable only concluded of from started conventional finance, the such Marris shape changes although variables other the quasi- of over a of time. Harris is sold, explanation a satisfactory e. g. becomes quantity variation. quality it factors, price assumption influencing demand curve, a static by external time over faces particular, they of assumptions major micro-theory develop means by which own and the the in and Downie; organisations corporate basic of the account by Baumol which one of questioned firm the in their of comprehensive developed ways objectives Marris that a more economics of managerial higher forward put directly rate to individual the need economic, at which the an essential element for e. g. staff prices production efficiency, firm, demand expands diversification, given managerial own growth. by the from the the affect in and techniques profitability. determining - 42 because growth, is there a close and the maximum sustainable decisions on how the variables affecting deals This tinued also model provide between firms, long (b) Management time Although i. e. Galbraith firms forward who put to prepared corporation of consequently, the of the large still and other of and profit rate and valuation individual why, the model why demand can be con- of even if may continue firms. internal in It efficiency business for a the of full the that the main of profit was no longer concept thesis to market is no longer corporation. of is that the the assumption 'Consumer then modern concept if they also influences, corporation and invalid. is no consumer as a pure the behaviour case will do'. '... the theory of the firm in the market has undergone modern would has become of those by the in determining sovereignty market, had been abandonment sovereignty since theory, that behaviour to market subordinate consumer the of maximisation, influences, a valid the of continued conventional He contended managerial significance of constraints consumer. theory principle it the of its for theory assumption to subject of the economic propositions he criticisedthe. economic that subordinate sovereignty making part the basic sovereignty influence the Galbraith's longer of agreed with consumer accept realised include of The second rate efficient behaviour were the particularly have the of that return Demand (Galbraith) of of managerial acceptance growth problems policy, indefinitely-between less the two: price be set. an explanation of indeed. very theory rate, an explanation rates to seeks of provides differential at varies terms with into The former diversification the'rate of capacity. economics. demand should exclusively ratio. of rate is divided growth and problems management, growth model for The Marris between relationship. its revenue and how it maximises in recent endless refinement not 43 decades. This theory that the man who maximises assumes the revenue the revenue So he gets or a compelling share. dairy is not farm. But this goes on a Wisconsin so in the is on a salary large the management modern corporation where and the beneficiaries are stockholders whom the managers have never Although like the large the seen. corporation, is far from new, it has never into been assimilated union, ' (1969,410) the main body of economics. According of technology, duction of have of most raw and theory, mature the cases to flow the the via and the to while pro- separation from pass has of market products. and also is This serve. the to the its the instructions of market corporation materials controls of As a consequence, consumer The demands to means The behaviour the Galbraith what of the above firms is analysis, forward puts three propositions: 2. Once 3. Firms must have to reap rewards. the they help to of have achieved is In the to by large and needed by customer is security of allows management response. assured; in order prices, and markets control size careful larger; themselves their over planning, particular make their size control ensured organisation ensure a great sufficient sold. sales large purpose risk amount nurtured these main from Freedom a well- advertising, design of product deployment By the control which of weapons: 'Means can always discretion within By market; in economic individual time gestation technostructure. as a result The can the by the caused sequence'. 1. of control its of 'revised Galbraith, major caused whom he purports consumer, the has the forward reaches producer of valid. both prices, demise from longer no the been long the and of traditional purchases is producer, the to sequence' by means calls control entrepreneur 'accepted control to has situation scale, of led from ownership the the changed economies which from of Galbraith to these means, planning units vagaries of it with consumer be found workable has become possible sufficient demand to keep exercise of consumer ' (1969,212) limits. control and the for large their over entry of firms markets potential to be autonomous to avoid competitors. the 44 is It such firms of autonomy firms these decisive and where to needed are of of In demand, would because basic the Competition competition it is opolistic from if operations risk. Where only from an illustration the defence of competition the of public in bargaining on the power argued words, consumers have mechanism - had not by Kirzner (1973) for its theory mechanistic as a market the and, imperfect not wants so effective of the firm has and therefore competition. the major weakness of traditional view, these is advertising would a Situation Not neo-classical that this been met. on the of requires to manipulation other a mechanism system However, provides. In of industrial He believes sovereignty. consumer the in managing factor a major attack allocation mechanistic it as a Process analysis In this of because needs A fundamental expounded nullifying be subject not by sufficiency. inaccurate in what been dulled been forms of and development we have For is advertising model developed - wants (c) are The strength is freedom circumstances scale of can be. secured old because to be derived manufacturers, restore such economies on research there the competition innovation. power'. to and thus men want making work and if restore the expenditure large in rely to break to attempt advantages advantages scale trying Galbraith the situation for the to customers. consumer this than one must large on the 'countervailing of rather industries for confront doctrine interest a condition These on a large distributors the which ultimately it. promote conducted large is in and from technology designed industries size depends such concerns advanced by policies in operate Galbraith, to according unrealistic, of situation resources attempts in competition which in the traditional in means that an equilibrium is there In market-place. theory is the concept theory to a particular, incorporate theory has monled to 45 view a misleading theories focus incomes, tastes, on the short-run technology a more accurate regarding forms these of organisation, and imperfect In perfect tising. that of picture competition, and examine are static of economic adver- as of and oligopoly, three all in which competition believes Kirzner assumed unchanged. as a market competition as well can be obtained activity by process ideas or depends on the freedom of those with better better to serve the market to offer willingness with greater (1973,98) opportunities'. 'which In this from departure chief view alternative of competition is theory conventional in the the process as a market of the entrepreneur: role 'His [the entrepreneur's] role only become somehow identified with movements from one equilibrium position to another with "innovations" and with dynamic changes, but not with the dynamics of the equilibrating process [Students itself... have completely theory] of price in exploiting the role of the entrepreneur overlooked discrepancies the awareness of price within superior (1973,27) economic system. ' This deals decisions be simultaneously This view that by the of relevant to entrepreneur entrepreneurship another 'Austrian' has defined the of Schumpeter the for exists so completely, of plans the there participants, other that plans any altered competition economist, of entrepreneur. would is do. and role the dovetail corresponding theory conventional no room for participants assumes the preferred for left is there market and no possibility participants with all correctly each plan nothing in which of because to Kirzner, according equilibrium with When the that arises, omission the has (see Schumpeter entrepreneur a close also similarity p. 50). as: '... the pattern to reform or revolutionise of production by exploiting or, more generally, an invention an untried for technological producing a new commodity possibility in by new way, a opening up a new old one an or producing for products, or a new outlet source of supply of materials ' (1967, industry. by reorganising p. 132). an Although role of important Kirzner the acknowledges entrepreneur difference with between the those them: similarity of between Schumpeter, his views he also on the stresses the 46 _ 'For is the disruptive disentrepreneur from the that dislodges the market equilibrating is for us the entrepreneur of equilibrium; somnolence force to the the equilibrating whose activity responds for tensions those corrections and provides existing have been crying opportunities out. which the unexploited Schumpeter the force (1973, Kirzner's for the theories as a result these is theories based still are differ from these curves. the the of that and imperfect still of For incorporate depict perfect failure Kirzner, only minor an equilibrium demand and supply in competition the reserved which theory the apparent world. and known on given theory real however, competition with and its they they competition: perfect 1920s, the until is, theory conventional dissatisfaction extensive characteristics with of of monopolistic of had developed of criticism major p. 127) of to the emerged as it price correspond major weakness modifications of they situation, and they curves, shapes only to attributed 'Thus by a new the old equilibrium theory replacing dissatisfaction theory the theoretical equilibrium preserved failing the simplest to offer of the old theory while exof thse real-world planation phenomena it left unaccounted (1973, p. 114) for. ' It has been this failure to change fundamentally imperfect competition from those according to Kirzner, such phenomena entiation to be invariably of identified perfect the competition as advertising basic which and product as monopolistic of assumptions elements has led, differto the market. 'whereas if competition is looked at as a process they be seen as strategic weapons in the competitive arsenal ' (1973, p. 210) rival entrepreneurs. would of i .. /` k 47 (III) Replies (a) Conventional The main firm it Theory response from reality divorced to by economists for point reality, reasoning, it and should not is that is intended as a and the allocation industry of not the of criticism price model theory the it competition, conceived surprising be taken therefore, it that its at it: put 'Some of the things economists in for airing are not suitable has pointed Hallett talk to each other about ' (1967, p. 9) public. out: 'An economic model it seeks to explain. should not be confused ' (1967, p. 8) 'Yet no one believes nowadays in in its form sovereignty) extreme (1969, p. 30) device. ' is widely also in analysed such analysis. It competition are the firm as sales would is which real not but would situations a certain more competitive (i. e. Further, that it are automatically be concluded the against criticism argue that can be said closer that of it at the the forms these of from excluded of the forms other of unless consumers of a limiting time case Thus competition) industrial the it against could in are be is situation than practices of competition perfect and evaluated. a certain theory neo-classical model provides to perfect certain competition other that interests of can be compared industry of alternative. many supporters regard in argued promotion a practical hand, form only competition, however not the since price necessarily other would as damaging, reality (consumer that proposition except as an analytical is competition competition On the that recognised perfect competition perfect the with has commented: And Allen .. to that out the that analysis Only Model value. As Johnson It Technical who believe economic to Theory as an abstract theoretical from diverge -a explain Consequently, resources. should in is designed model Firm the economists role is face of Conventional of of has an important technical of Critics the to another. or are not 48 1 1, to conducive approaching advertising, for be tolerated because knowledge. Similarly, many types of this is the price, as the on price of as a result that of forms other disappear. to competition instance, for argued, to and, only imperfect type any other introduced tend best' competition was abolished would an analysis i. e. market, has been this 'second perfect were once On such that It resale of An example of (1949): by Lewis put in conclusion competition from that in emphasis and that apart view the non-type competition, be regarded substitute. maintenance, price would imperfections of to be a poor can only competition. example, has led competition perfect is just 'Coupon trading to non-price an adjunct competition between manufacturers and to manufacturers' advertisements; the product stamp is primarily and the trading of resale imperfection If these sources maintenance. price of market form of trading were removed most of this would disappear. ' (149) In " for theoretical towards the although words, other reasoning firms which model it only should of has often Yet aim. has been competition perfect been as Wilson devised as a goal regarded has commented. 'Perfect it is not a norm, and the fact that competition has been taken for one is a remarkable example of the way in which we can mislead ourselves with our own emotive 'perfect Indeed the expression terminology. competition' in done more to darken counsel has probably than any other '. (1962, p. 119) modern economic literature ... (b) Organisation Perhaps industrial firm areas of rather structure in the real of integration the strategic surprisingly, the and organisation - size, entry theory. of vertical decisions ýt The reason integration taken by firms, the Economics literature which has made little and diversification, conventional and extent Included world subject in Firm the on the the studies Industry economics of behaviour of to integrate attempt conditions, may be that vertical processes decisions and diversification those as to are relating the the main concentration, and decision-making as are of - with the nature among the to total key size 49 and to rate in of growth, whereas these theory because the conventional and the introduced abstraction room for is firm into are relatively limited to unimportant a single theory provide it with conventional theory of the the product, little manoeuvre. Yamey has pointed the decisions industrial of economics how the out structure firm and co-exist: 'The decisions from the scope of of strategic omission is not necessarily formulations from theoretical a defect the point of view of the uses to which the theories are But the omission has meant that the body of knowledge put. has had to find a home and analysis about these decisions in the more applied by branch of economics known variously the structure such names as the economics of industry, of industry, ' (1973,8) or industrial organisation. Despite this industrial ship of between advertising of p. 9; strategic of 'workable' the of conditions This traditional industrial of economics the of relation- from start the to concept theory of and imperfect p. 5) relate their explain of competition to it the concept has developed explain is the to actions competition firm the (Yamey, structure (1970), Johnson 92; made by firms oligopoly how under for possible flourish. to competition the are made into (pp. 23-5 they economics p. competition. with parallel the (1969), decisions from Competition in Allen firm the of theory. 'Workable' Some specialists (1973), theory and competition conventional Concept=of the when investigations organisation, premises (c) separation The concept of 'workable' competition is based on the following precepts: 1. not therefore elements production, 1.; That of is oligopoly ipso be regarded imperfect variations unavoidable in consumer ., as inferior facto competition in many industries. are inevitable preferences competition It should because such as large-scale and spatial monopolies; some 50 other while I 2. 3. of models This concede. mistake the products the economy rather or sooner of in broken The concept beginning the of inevitable and new firm can be there monopoly; and than and imperfect from considering the and from taking over as existing between competition in which of view a short-term time to prepared competition and neglecting view are competition to who try those are monopolies up by new competition. for oligopoly the from that and also imperfect of and these competition be dis- should elements. was first competition by Clark century elements, inevitable the forms and other avoidable 'workable' of a large between and more pervasive a dynamic of clearly try desirable. without monopolists; Criticisms tinguished wider arises than be reserved size promotion to consumers relationship an industry near later 4. should is perfect firms between persuade and sales size. Competition the only no necessary large without or may be considered can be large There monopoly. apply is There inform to or services commodities improvements, as product designed and advertising monopoly such elements who believed rivals potential trusts that were the at propounded efficient were upon check an efficient them: 'When prices of are unduly high, policy owing to the grasping New competition what happens? some trust, appears usually in the field. is seeking Capital but it has become outlets, is hard to find The mill them ... that has never been built be built for if it will already a power in the market: surely is to the effect conditions, of this certainty under certain (1901, p. 13) down. ' keep prices Thus potential competition on the constraint policies restrictive practices etc. ) would stop policy to eliminating 'which counts' is of is background firms. price-cutting, fear Clark's of pre-emption and he wished competition, seen as the to chief was that dealers, restrict public such practices. later Half-a-century the and prices (selective potential in lurking not Schumpeter traditional stressed price that competition the but competition the importance of 51 widening consumer and the choice by competing preferences to response changing consumer firms. '... from the new commodity, the competition the new technology, the new source of supply, the new type of decisive competition organisation which commands a ... cost or quality advantage and which strikes not at the firms margins of the profits and the output of existing ' but at their foundations and at their very lives. (1950, Hence, to according 'perennial gale of creative not could product According the alternative of 'If of conditions, destruction' essence by a was characterised which a monopoly of the original the is competition buyer and seller of ' (1957, pp. 178-9) has Jewkes concept, provide industrial 'workable' of an imprecise which in competitiveness market to both of action. availability courses definition number the withstand. to Mason the '... To this Schumpeter, p. 84) a enumerated a means of measuring degree the of system: independent, do not make agreements on if output prices, or the allocation of markets; is an ever-widening there to the range of goods and services if for most products is a close there consumer; substitute if their substitutes and fresh constantly make appearance; his choices, the consumer is actively exercising and thereby if the growth of the more efficient encouraging suppliers; it in every industry there to are enough producers make but few enough difficult for them to arrange not to compete, to make it clear to each that he has rivals producers on his lose money decline tail; that and if the firms and those (1977, pp. 40/41) that make profits grow. ' firms, Jewkes Furthermore, tests which and flexible may be applied changing or 'administered' demand and supply. to there determine are two First, and rigid, Secondly, 'workable' whether industry. supporting whether and thus whether statistical competition are fluid prices unresponsive the market to shares of remain unchanged. The processes about that maintains in an oligopolistic exists firms otherwise investment, in practice by which a form has been described 'A monopolistic or oligopolistic destroyed by the cheapening of of 'workable' competition by Allen: organisation communications, may be the may come the a' 52 in barriers to international trade, the reduction standardisation of the product, or the appearance of new More the former market sources of supply within area. that generally, with the proliferation of products the gaps in the chain of accompanies economic progress, between substitutes are narrowed, and competition industries may become keener even if competition within industries (1970, p. 92) particular wanes ... ' Thus is the in broader this higher to weak competition, are at so many alternative variance through advertising. presumption automatically choices does not and higher open view to that of profits. the consumers, consumer there competition lead automatically (Where there is concept also demand can be managed ) this concept underlying leads concept competition prices, Galbraithian with Furthermore, the imperfect that presumption and more dynamic to of much public a misallocation leads competition policy of that resources. to. a, rejection monopolist of behaviour 53 Part 2: THE CONSUMER IN (1) The Theory the of Firm and Consumer has been behaviour Consumer THE 14ARKET defined Behaviour by Engel, Blackwell and KoW[Ictt as: 'Those acts economic using the where '1. in are the real how consumers will As Lancaster (117)) the fundamental formed which in since between the on to t2:. -re the consumer theory most we have preference dimensional theory of major provides the of how product and facing problem little firms on guidance to quality and that analysis variation. being as the such of taste', is r'. j way of forced effects an entirely before quite advertising of non-operational the predicting the and after interpret to relationship change. (344) ' assert: 'Perhaps theory of out: forever preference the new products begins market purposes question theory happenings, 'change of concept and goes is theory terms to the is (1978,3) ends: The traditional has pointed common real-life the given. react 'Traditional firm the of Furthermore, world. in consumer decision acts'. are ignores preferences these and obtaining the for and preferences brand including assumes theory economic tb. rm therefore the of theory conventional Static tastes study in involved and determine precede the many respects directly and services, goods that processes In individuals of difficult is'to thing introduce functions, to with do with traditional a new commodity.... had to traditionally functions'and to replace throw away our them by totally no predictable in consumer n-dimensional new-n+l consequences. ' (360) . 54 2. In demand reacts In theory conventional the demand. has Price for theory achieved two reasons: and unambiguous, whereas to measurement. Secondly, theory consumer of flexible by factors First, prices other non-price the welfare in influence price in economic relatively quantitative variables is an economy efficiency less are firm the of way elasticity. of position are theory whereby fron apart and the variable, degree the a pre-eminent maximum economic prices a dominant determined many other world, real is to price is price amenable a comprehensive by characterised may be and welfare achieved. Not . non-price are only butýin demand, influence difficult is an unambiguous indicator in consumer not changes can cause 3. In measure; perfect competition products are homogeneous, as under imperfect economic theory itive variable, the to viable suppress such theory therefore entity. In multiplicity Chamberlin of value (1957): not always for is in products developing usually have occurs been caused more sophistic- as a compet- of have products found theories of by the it necessary competition. In as a homogeneous viewed may be differentiated as indicated made that differentiation variables is is Although complexity changes and quality. product to price and price differentiation assumed multi-dimensional product flexible; assumption product and therefore on demand has price money; of and branding. recognises variables of and when product it consumers effect implicit and economists the to expectations analysis, practice, of are competition ated precludes prices the by advertising unnecessarily the addition, proved to important variables following by any one of a definition of i ,ý 55 'Those from aspects ... all for taste, most 'Everything the purchaser rooý.. That ' tj\ ct`" (TI) there Behaviour the The study of of develop specific A major purpose of standing happens impressions Almost all war period. discipline, for behaviour the buyer's products literature Because all the highly-variable as: money. ' his "ý ^ h 1ý ý.. ýýaa. ý-ýQ ls i v. Mi l eck Over the emergence behaviour - which behavioural is theory the last from mind a has drawn in sciences to on consumer the the on order tc time is so far developed revision and development. has been studied For a variety is he first purchasing contain the of most to has been understand rzceives decisions. from dates still under- our emphasis problem behaviour behaviour increase few years he makes his until from of own. processes: consumer models consumer to affect behaviour. of led the its which price study behaviour decision the about the has of consumer. in for se3ricL" besides especially buyer of service. a product ýw. ýiSSoG. - consumer theories the of influences on consumer placed scope point sources, are ' variables new discipline a variety stages or Theories starting these container exchange ccLLS 084 many other are demand is what licsLlý scS. Consumer relatively " TsýtOWýn or by defining in il-ms (-, design scale'. point gets arising construction, package raw material this whether exchanged mechanical of the emphasised l yc service on a continuous part (1968) Stevenson or peculiarity beyond products the good ingredients, or materials, durability, the of the a relatively postyoung considerable part theoretical buyer, perspectives '^ iýý ý+. 56 have which tions. " 'No single theory hensive this at the has not exists behaviour or model are concepts of state interesting of but explana- partial generally to used laws comprehensive but accepted, describe on consumer diversity a great also behaviour consumer compre- (1971,54) ' knowledge. of to be fully be expected should our a lack only which She*!. which summed up: 'What have, we really and a set concepts a lack that formal of pendent N a number Lunn: e. g. There in in resulted of situation resembles parts of differ wnich this has more than an indefelt once men touching inferences and making and occasionally lived blind seven reflecting have they more, hypothetical variables reviewer the an elephant insular of intervening What is science. Indeed, different a set peninsular existence. the animal is then, the about ' one another. contradict (1967,13) "Research three main which has forms: In the duced each of consumer and eclectic, a greater tö which has has models each taken of of understanding and is limitations I the controversy. KSew1ýý1 a priori from three approach other and explored sciences, Since consumer. general but or empirical; some degree considerable c1 Oýýp- 'ý. .. in contributed of theory a priori; behaviour, consumer subject behaviour buyer into and theories disciplines, for consumer human behaviour, I concepts their mainly value behaviour the strength is in the have behavioural understanding a particular of the*a intro- been priori the aspect of approach 57 in lies harness to attempt disciplines, other fit its and thus behaviour consumer knowledge existing to seek and insights by attempting explanations to previously from developed to frameworks. theoretical has commented: As Kotler I' Depending upon one's buyer, Marshallian buyer ing buyer. of 1956) Denney, 1957), Riesman thes all complex that aspects. of the models phenomena. buyer of in Veblenian Festinger Glazer and It behaviour with be should to true are is behaviour Buyer connection interest- as the 1951). incomplete. develops theory such (Rogers the equally (Riesman, buyer buyer it"is and yet some extent, but grandiose can be formulated, and Rogerian that recognised Less buyer, Freudian buyers (Festinger, buyer buyer, is there predliection Pavlovian and Hobbesian new breeds scientific so particular (11: 10,197). ' N Other examples well-known behavioural of include sciences theory perceived risk Festinger and Fishbein the intensive Howard's(earning theory, theories and attitude and several from borrowing the Bauer's as those such of To take theories. personality two examples: (a) the theory that states which 'cognitive two elements and that contradictory that of an individual might will increase Some experiments of dissonance' knowledge put are forward if dissonant dissonance is uncomfortable actively avoid situations by Festinger they with are the :result and information dissonance. carried out by Festinger exposure to information and attitudes example, it was pointed out that most held and others after decisions refer a decision. involve to the For dissonance, t 58 in the that 'alternative the features. the actually It also will was borne the of by the out more than This 'reassurance' counts, that of is But her A number based been behaviour. Foxall " of 'The which purchased that the in ' for approach by Festinger). A houswife a choice. anxious equally and one relatively 322) b nn have theorie. theory; theory. with criticised, strongly advanced stimulus- These weak association has been is actively might is role So it so important (197', and trait and the people some pride. neo-Freudian their as the a hundred personality theory; such a case purchaser justify concepts: this may take to products? criticised But in to most the a brand of alternative field theory; strongly that assume choice on psychological response they suppose household unimportant notice on several criticised quoted possession which can we so readily justify to had recently been example and reassurance evidence seek (b) to This choice. cars. other (the car one in unreasonable not and the found who were seems plausible an important ownership of to iz car motor a motor the made (1969): Lowe Watson of increase, will they cars has however theory Such an explanation ... purchase the is a decision after owners and some unattractive justifying car about had alternative information about advertisements e. g. predicted example advertisements and read have chosen seek features, had some attractive will chosen was therefore attractiveness individual have will alternative have also consumer e. g. (1976): notion conflict that people with their reject current information preceptions or behaviour also patterns promised some, - 59 ago to years it is frequently to reassure items that they ...... been to of purchaser have made the expensive, a purchase being have helped decision right No method questioned. that assertion of generating made has been for- put (1976,6) ' date. to ward leads that dissonance has the only necessary that Festinger's making. (produced) theozy occasionally-bought and even decision marketing dissonance cognitive " assist " Although the behavioural on the question of " the by Lunn (1974). 'Many the of haue They for Empirical fit focus ' vations part in have they aspects of do, for approach still purpose. have been summed up speculative.. from remote been usually evidence that somewhat contexts the consumer developed human behaviour, e. g. to learning. (197]t, 5O). behaviour The following sought. developed previously has explanations taken consumer 0C This patterns by using to research study. of have researchers empirical of are even light shed valuable approach consumer works, adopted developed restricted a priori While a priori to as they perfect the Moreover, and perception. B been often from of concepts behaviour.... account are. far limitations Some of behave why consumers they that suggests sciences and regularities consumer are has approach panel frame- theoretical as its behaviour to main Tý cl to in by attempting this derive laws behaviour, from for obser- the most data. two well-known examples of empirical research, viz: ,* 60 a. is the widespread can build ing the no specification until comparatively recently has been (19? Di, conclusion most acceptable, an irregular Ehrenberg's but stable not have they proportion to a very evidence stable a pattern of brand buying that consistent preferences which from of has produced in and , general consumer they find this short that in list markets purchasing, of brands with different hypothesis in users the that are from tend people i. e. frequencies, This and predictable. systematic reflected of which results such pattern the a number converts brand are with in behaviour advertising shown multiple patterns (1972), (19$0) purchased brands markets theory purchasing time. frequencies. consumer a number of purchasers, and the brands of individual the buy appears list variously King , many frequeitly He has another. regularly and these the (191 of concept (Achenbaum investigated had could over preference:, (1966,1969,1972)) advertised with consistent one brand to heavily the although sequences, al it advertising choice different of analysis another, a short way at that has been with buy and they assumed Joyce although a product, it et have people been and brand* advertis- In marketing, element. (1973), that reached towards time extensively Ts sure that theory economic loyalty to 1.es by Ehrenberg ,articular in e. g. probabilit purchase loyalty goods prediction. imprecise, in terms of brand McDonald in has been loyalty' -repeat Brand one brand from users defined " brand up durable with 'brand share assumption of convert " Brand Loyalty Brand There and b. loyalty, Brand each buyer frequency with has which 61 he or she buys tively slowly major e. g. (either purchase of availability the reaching varying This terms of acceptance lead to the would the However, on'the grounds ioural sciences; than the bought major changing that (2) valid it does it that in products buying of for composition using of not one of in the panel data than-a the reflecting needs. purchaser's or (197/, ' and (3) is that year rather genctal the periods behav- the employ in 329) been questioned have know if 4-week conclude: pre-disposition consumers period; longer panel. the sufficiently his ever brand others varying do not a later consumer of place to with by Ehrenburg. with i. e. him multiple conclusions deals a period of term: unimport- relationship . relationships observed consumer, who are drawbacks considered (1) in Ehrenberg's of individual certain consumers / validity of experimental, situation purchase of probabilities of the limited of leads This description some frankly degrees ' to relation may take the without brand. a series of 'trial' He market. relatively with items perhaps) Ehrenberg's brands, available in show that - as a result 'preferred of 'We can interpret in hypothesis in behaviour prölongedj consumer alternatives state purchasing rela- petrol installation fortuitously, or the viz. heating central deliberately preference consumer may be quite and frequently ant brand this of studies 'search' of change preferences by Ehrenberg, studied while purchases, period for support markets that suggests these and that time. found the brand, over Lowe Watson one of each consumers are the one of it because same the cannot of who the be 62 Joyce (1967) brand hypothesis hays only to the it buy view of are products to to likely more given good generally 1 'switch' to to by the be performed brand a favourite reasons multi- a definite is find to consumer is one function the where the there until' e. g. change. and probably blates. and razor is physically somewhat types brands or purchasing perform different products and where only until are Joyce: 'Multi-brand used is toothpaste cigarettes, In Where consumer to continue apply, unless brand. the product may not one brand, another there that, out points 'et likely more different different functions of or wash), (e. g. variety the washing they ' and drink). are for powders, buys consumer the where and where (e. g. where food be found to different (197( 219) T'. With these work just (1975) Treasure Target Group include food products but from washing exclude a year period) most less than the illustrate of these Market consumer the 40 per Bureau's Research cosmetics, fields which glades razor and some products, about the brands they that the buying of and in many it fields product of brand, that 50 product of powders, to to buyers. British people a brand to purchase survey asking abort total can advertising buying already into durable The results rule. where their (, a continuous common in general data and drink, a six-month is of that concludes people non-buyers uses interviews brands the proportion Index and analgesics, over Joyce products converting simply 25,000 of as much by persuading a higher devote than types survey cent of indicate users use several is, that buy more than, 63 one brand is From this evidence '... In exceptional. kind the for by a person behaviour have is -around mental list of (This mnnts. by Howard and from several main reasons. from within to occur have brand Group consumer brands of Index diary through bought or changes in she has from in the the she carries brand, her meet which hypothesis a few brands in her ) (6 - to meet because the forward from a luggage mental The housewife. 12 months) differing for three requirements brands though because and thirdly, a require- put of purchases. but similar likes she stock. of 6v that of preceding months sources actual most frequency J2 , from either records confirm that set' time of periods use collected panels before over of one can picture a singltt available ways; in to a subset choice secondly, different analyses of Target family; a choice has a period because slightly Furthermore, patterns over is brands is more purchasing such useful most 'evoked which a consumer First, her in used have (1969) brands the devotiön the she makes her which buys to similar are reason, but made (1976, '266) 'purchaseable' several that behaviour a passionate which for spent, Purchases one product... uncommon. ' that money is advertising multi-brand, purchasing and Sheth field product than than believes not is which consumption brand a housewife's her are personal relatively with in buy more therefore, of concludes: markets be single to Treasure, of typically consumers likely Treasure period purchasing of time, consumers such as the in overltime purchases alterations of of in of sales those and only turnover who a small 64 through part of data from brands the not share heavier buyers devote Target a major with smaller to brand Like Joyce, than .; thein of analysis personal " between those with a are buyers these the general, former the tend field product share to to is of the experience to of their it but using or this to from that fields, least at to purchases follows brand, the require this the that by housewives seen of not product, many product being does This brand a given who use it - those Treasure, in of sales new consumers purchases products about example, Previous have bought a high of most brand frequently; show similar, buyers tend confirmed; and a number frequency of of to who already the consuming to product relationship similar There emerged. buying buy most of other varying size purchase the advertising, in regularity brands into behaviour purchasing degree that (1970) and exposure, them was strongly one favourite less patterns consumer evidence and repeat by McDonald undertaken purchasing findings field in advertised. a survey for that users a larger and recent in frequently. more behaviour such that, of because purchases existing According consumer of advertising In to but 'converting' total devote brand. particular being their buyers concluded by only use it to from Analysis time. others. to persuade - persuade have not increase to to revealed the se, their of therefore Treasure occasionally per first the differ a market product for also because share rather by trying them the buying Index of primarily of may be increased but Group share a greater that by people purchases behaviour. only a few brands housewives tended brands which within the distributions; was, to they product the'buyers ' 65 who buy at a further the King the degree short Loyalty' a survey of three of that remain months - even'in tea. of of Three Months ý" 2 brands only who bought: households purchasing 3 or only more brands 50 26 24 41 26 33 Washing powder 32 33 35 Breakfast 19 33 48 Tea Toilet paper JWT diary Source: In cereals order directly to assess to advertising 4 products these in paper 2z per 4i cent. At and 'brand an inverse product cent; least loyalty'; relationship category. degree these relationship in ascertained, washing for of the expenditure, 1977 were positive particular Mintel the whether toilet per MEAL, study, 250 1 Over 1 brand the housewives which market, Percentage Product to period Table 'Brand from demonstrated as a conservative regarded are a product-field two brands, has small over for one or (1980) relatively one brand to is what who buy only study households loyal common frequency most buyers regular In the four these particular which depends tea viz: products between was related the there per cent; appears cereals to there characteristics be no ratio advertising/sales examples on the 2i breakfast cent; for ratios advertising/sale: 4 per powder loyalty brand appears of to the be 66 further -King of a long over purchased buyers the light particularly Brand share A feature of purchases'of of " reaching help firms out those which food products in - groceries In the period markets the from be tend to that consumer ili as consumers only that in the goods months, the peak, this 400 new of cent had dis- by 1973, of 78 per and 44 packaged - the typical pattern into three time-periods. the and of e. g. per marketing as a result particularly out are cei. c Fassie) as advertising try the of tzat cent. per stage an early because time, 1965,49 cent achieve nationally, a short in test be divided approximately initial for at necessary introduced pattern a new product, predict some 60-70 69 per 4 js o. is viz never by 1969; &i to to to consumers This typical This n. and then a peak investigated position nationally chemists as well their are is up to positi. of new products, shops could build reaction many survive three - from and they cent product. has been a product. test and distribution rapidly of showed first be to some 10 per 'period on new products generally a better of new brands for be in introduced (1964) Davis research the of a 5L r, by 1975. particular a new brand rate are from appeared the one brand alone; an equilibrium of sales tried of new product and to failure brand the understanding high that marketing better the *potential a lryear: buy test buying consumer just prediction before decline buyers for rare Over period. a brand of is it that maintains and sales product. third decline to of promotion, During the of the sixth depending products co'sumer the sales sales second rise : _-" `: _;:e decline month. -sales on the of growth degree to which 67 the new brand drop in sales remain guides from 1. at If his as high about 3: 1 in 2. Unless fail of similar results slows gradual process, met or is is of month, sixth 'rule thumb' of is exceeded. for by at sales stable the product aggregated sales will basis. from individual records of patterns results. in data from Britain Great A and B- 3 million finally, with a rate exceed probability 3: 1 that about derived which the level target gains he.)useholds); after of about only 1960. after were about the of analyses in gas, measured, many households market down; being wcre (1971; ) used two examples triers the sales level, on a long-term data provide Panel the research panel on the these per this .:: two new brands months it e. g. two build-up target probability Consumer Consumer target target-sales & Collins Parfitt sales exceed the cent, of behaviour percentage irrespective after derived Davis the itself, country, period, initial the the of sales to maintain curves. the of stable. stable favour peak The results third during stage as the 50 per least the brand the that research: any twice area less more or to each In advertising. is The evidence related same in the approximately of directly is sales weight buyers. satisfies When the first their prepared to'try then rate the 6 months, 1-2 it per Attwood two them of of (in gaining becomes cent progress new a very households year. I With " tially, these the two brands, launch of A was successful, the two brands while was almost B was a failure. equally successful Ini- 68 'because . Brand A and 15 per third and pared to factor the and the failure of Sixteen weeks after it, it compared B. had bought between However, cent an with households more 6 per extra the to make it B was in Brand average cent the were preto prepared success, The permanent success having once which as high. a potential of. consumers, household cent of The figure type. times respective ä brand of it, tried to it try initially go on buying depends 16 per A was at Brand continue B had household's do not they A rates. Brand had tried households Enough but repeat-buying that for Brand of success eventual their 6 per only product three nearly enough. which the the determined represented of purchases cent, Brand 2 per about households of A. However, bought only B, cent had bought cent Brand try 19 per months month sixth Brand try " three after on-. the it often willingness its' purchasing Pýcýý. ýa eotlý Az: .... it do not brands be recognised should reach that a substantial levels share satisfactory of proportion and are ' withdrawn. (1974,88) Thus studies that the ability the brand is the launch. of The evidence sources (e. g. the factors what two determines the development to from J. the feature critical study of H. Davidson which the in the success from (19761; Nielsen (1965) success rate who have among those failures buying new brands of brand distinguish repeat purchases buying repeat sustain the often the of are from tried failure of many different failure a product or show (1973)) is that because this with better is 69 and distinctiveness, performance while price is , not. of such crucial importance. (1980) : King 'Very few new brands one of more often Furthermore, the of a survey which products they asked ' with had recently which How Young % of Housewives Found Out 16-43 25 Advertising 18 ,C Until JWr New Housewife the had found to the success of in the results of out about new Nre Products Recently Tried 8 answers Eclectic contribute 9 sample Source: and"word-of- saying: Recommended Other distribution 'X About 43 Free far tried. shop Saw in is women married between problem may be seen how they Table " of advertising housewives the (1980,20) importance communication compared a new product disliked; actually indifference. relative as channels mouth are Survey 1967 Research middle of the sixties a priori and empirical research 70 formed basis the has been the the be brought theories, a co is that it and findings findings, to relevant the (Andreasen, 1968; 1974). of its i. e. Howard The strength of perspective, but dealing this with too 1969; and Sheth, lies approach brings it with research market the 4972 1966; Nicosia, in and comprehensiveness danger the sciences 1965; Engel, Kollat 51n et1,, " and Blackwell, those behavioural with of distinguishing Its' to. synthesise various and concepts and sociological behaviour ants academic. practical a priori The cornerstone weaknesses. attempts consumer of riori framework. in there behaviour. buyer of strengths psychological in concepts appear that the their avoid together therefore, feature, which is approach eclectic 'should to More recently, theories incorporate to but theory. comprehensive attempts research empirical of emergence this Basically, behaviour consumer of of complexity undue and inter-relationships. many variables V N feature A characteristic decision to given. processes itself. act purchasing purposive, seeking behaviour, and going him uses to the tions least at notion move from alternative concept of through various decision to funn-l, through and culminate Thirdly, consumer i. e. that the in. the effect predispositions of the the as: consumer purchasing solution; the emphasis of secondly,, he predisposi- consumer's of and-evaluation selection help which processes search he stresses the the through some optimum i. e. the pioneers representing goals. the feedback, and use upon in typical the one of certain generality brand. is is and follow precede fulfil to products, particular both which approximate of approach eclectic Nicosia and is approach, eclectic the of of one the importance of the the experience of purchase towards particular products. ýý ', '. 71 This has been work may be applicable less A further tion are who have highly sive devised model integration models, i. e. -feedback, consumer the different the This model consumer which the it it products, is frequently. attitude and motiva- have, has its: of buying is the to guided propositions whole, buying problems. a detailed as the act matching the - extensive, of they products, limited of experience by distinguishing process the importance and usage particular :. " as in consumer, and stressing purchase of behavioural several process as a comprehen- spectrum a wide that portrayed has produced individual towards the is to is researchers process from decision of many ways and attempts motives, trying already on the these includes and Blackwell in similar and Sheth on the the effects dynamics of model positions focussing Kollat Engel, inter-relationships, predispositions consumer and some of tests, of and evaluation Howard consumer's kinds that search and seeing the to consider and and whilst purchased criticism-of Finally, Besides products are of process theoretical of sciences. upon the and their variables that specific the of is a decision 11 rational. other which search expensive definitions the work eclectic Nicosia, as with that over-rational purchased goods the unsatisfactory. Nicosia. of cost is criticism A second, major that low for relevant infrequently to that grounds is as represented process evaluation on the criticised also between and routine solve. in research have provided been a variety rigorously favourable of product tested. support fields These for the theory - 72 _ w have instruments, measuring the At to need theory jf[Ad Hoc no generally to the complexity stage in the development shortcomings are which hoc tion the tests original products employment importance compared product the of of with eclectic in exist behaviour try to rely market and ensure often of a selection that course be modified will on ad and rromo- price the con- firms standard tests, During consumers. concept and the continue using to order early theories, these and taste in relatively of the such and adapted findings. histories case and a retail are more accuracy. theories, a new product marketing eight market, date product to the behaviour consumer i. e. their of The following the into be acceptable as a result service, to marketing and test will product. buyer of which techniques, tests, as underlining comprehensive human behaviour, of considering investigations ; research accepted with the Research Market Owing sequent weakness and methodology concepts is this regards in weaknesses behaviour. buyer of certain Nicosia combine there present also firm background marketed, different different distribution the of illustrate how new, products conditions which competitive types of aspects under influence and the promotions, of marketing, varying (e. market r:. g. are brought how particular the situation, a products, relative relative advertising, conditions. " to S 73 CASE HISTORY Product: Macleans 1 toothpaste Beechams Firm: The market has been First, it time. Three 80 per cent 78 per " for reached the first were in time since 1941 12 per for these to year, Term Share share has varied `-.. per shares is this throughout variations in market the the from cent in 1941 was the of the and oder Trend of shares market 7.6 per 1970, brand has This for full by Colgate, of cent in 1941 to per market., a stable and exit in details). 30.4 cent Macleans significant both C'kar6', (See For brand per in leader cent 1978. toothpaste and many brands of and companies the cent, per ' resulted brands 9-10 the of as a whole. "ýý, firms (Stafford The entry with four as Sensodyne impression the held leader for accounted share 31.4 for (particularly surviving and to had share (DOBs) cent 1941-78'overleaf their responsible a new competitor own brands per period were Of the such period. had market. of products give Gibbs) the cent misleading. the 1975 of of Crest) -hors' 2-3 they period & Gamble with societies) remaining and Elida by 1960 in market. a long over and by 1972 entry 88 per distri! toothpaste Colgate 1955; (Procter specialised market, in the Co-operative the firms market, for cent, selling occurred 42.5 an enlarged - With Although the of in sales 1978 rn. sponsible Miller) year total cent. and firms by a few (Beechams, 88 per and the static dominated the of the characterise manufacturers cent remaining Boots features distinctive Several in Long example, in 1978, 1963, Beechams, with from 24.1 to which per 1442 1941-1-942 1943 1944 1945 1946 9- 7 1947 M C k Z MMACLEANNS REG/ 24.1 FRESHMINT 17.3 19.3 119.5 22.3 22.3 22.9 ._' EI 8 23.1 .1 Sts 45t1 1951 11952 __"ý '23.1123.7 26.5 23 0 .0 'm 1953 1g 20.5 21.6 - 1955 11956 1957 1953 1959 19ýil L961'; 1962`'ß. 963 5., 1964 1365 1966 . 1967 . 1968 1969 1970 1971 1972 1973 1974 1975 197C 1977 '978 X' 19.7 16.7 19.3 19.6 17.4 ! 9.4 19.0 23 20.6 19.7 17.9 17.4 17.2 16,3 14.0 13.0 11.5 12.0 3A, E 11.8 11.2 1.2 4.6 4.3 4.3 6.5 6.1 6.5 6.5 7.4 7.7 7.5 7.0 20.9 22.5 21.7 21.5 22,8 20.1 19.5 18.0 19.4 18.5 19.3 18.2 1.5 5.2 7.6 6.4 7.5 7.1 17.1 193 . 17.6 .0 SPEARMINT N°AF G TOTAL 24.1 M.4CL£ANS 1.7.3 19.3 19.5 22.3 22.3 22.9 2?. 4 23.1 23.! 26.5 23.0 21. E 19.7 20"5 17.1 16.7 19.3 19.6 17,4 . 9.4 19: 3 -11.6 19.0 20.0 20.6 C p AQUAFRL, H ý,.. T:,, TOTAL BEECHAMS E COLGATE (CDC) 24.1 17.3 19.3 19.5 7.6 8.3 9.4 9.9 22.3 22.3 9.8.5 22.9 23,4 23. X1.23.7 8.9 10.4 10 S 26.5 11. '7 13.4 R; ULTRABRITE N s 23.0 17 ,6 20.5 21.6 23.0 20.5 ,. H R 16.7 19.3 19.6 17.4 9.4 19 26.2 25.6 27.3 27.0 30.5 26.6 !5.7 25.7. " 21; 8 17.6 8; 6 0.6". 19.0 23.0 24.5 26.5 7.3 5.6 20.6 20.9' 22.5 21.7 21.5 22.8 20.1 21.0 23,2 27.0 24.9 26.8 25.3 27.6 29.0 27.2 26.1 26.0 25.3 25.0 21.9 23.1 21.8 20.8 22.0 23.8 11.8 1 13.6 12.8 11.8 10,0 8.1 7.2 5.5 6.6 7.6 2.2 2.5 1.9 4.7 2.0 30.4 31.4 31.4 4.9 1.5 8.8 4.0 3.0 CHERISH ' TOTAL COLGATE GIBBS A 17.1 r COLGATE FLUOR ý: S p` 19,7 7.6 L1.2 SR (SIGNAL SIGNAL 8.3 12.1 9.4 11.8 9.9 9.7 9.3 8.1 8.5 13.7 8.9 16.9 10.4 19.2 10,5 19.6 13.4 ! 20.1 20, u 17.6 18.4 20.5 16.6 J2 3.0 2o "6 26.2 22.7 J 2.0 1.5 26.6 5.7 26.3; 30: 4 31.8 2,1 32.5 34.5 39.0 37.9 42.5 40.6 39.0 34,4' 33.2 32.3 25.6 27.3 27.0 30.5 21.4 22.2 23.8 22.5 18.3 8.7 16.4 14.0 15.7 35,8 17.4 17.2 15.0 14.8 12.9 12.0 10.9 9.9 10.0 9.4 9. S 9.5 9.9 4.5 15.1 5.4 13.6" 10.6 11.1 12.2 11.7 12.1 10.2 11.2 11.4 10.8 8.9 8.5 9.4 9.6 8.9 8.2 9.2 0.4 9.4 12.8 10.9 7.3 6.2 3.9 2.6 31.4 30.3 26.3 24.5 21.6 21.7 0.6 0.7 3.8 9.9 9.8 10.1 2) E CLOSE bp GIBBS T axýz 5.11.9 FLUORIDE TOTAL Clsas L1.2 12.1 11.8 9.7 8.1 13.7 16.9 192 19.6 20.1 20.0 18.4 16.6 R GLEEM Eý N CREST Dp OTRE.q ý r fam. TOTAL 2o .62, t" . a i7.1 1 00 . 61.8 100 59.5 100 60.9 100 60.3 100 55.5 loo 51.3 100 4'ý 100 Z 7 :' 46. P '100 44,2 100 40.1 100 40: 1 100 41.3 100 5,9 4 21.4 22.2 23.8 27.0 33.9 12.1 . 12.8 9.9 7.9 6.0 23.8 21.0 20.0 15.0 16.1 4.2.35,36: 5,4 5.4 3y 100 100 100 100 100 90 5 4.1 ; 3.2 14.12.3 101, 100 100 . 8.0 6.1 4.9 "3.6 2.6 34.8 X2,1 7 33.0 32.5 27.8 2.5 12,2 112.9 1.6 11.9 I00 I 26.4 23. E 23.2 29.1 12.1 10.7 14.0 12.2 13.4 11.8 12.6 13.3 10.6 10.2 10.4 11.5 100 100 00 100 100 100 100 100 100 100 I0o ]00 100 .. CJ 100 75 cent the of share 1978 its and in In market Elida brand leader cent share " in the (Danning), Three firms third the high (for instance, on a turnover between declined to marked be directed discount; packs Price where 'flash' and r 1960's 1941 to 21.7 brands per declined but all were - introduced unsuccessful. 1975 but withdrew it associated with a high in Cherish, dramatically. and Colgate Gibbs during (Elida-Gibbs), Close-Up of all continuously Although' 1977 advertising and each 1973-77'the more 18 to this controls on price to 12 per (TPRs).. manufacturer. - 7p off to revenue cent. caused margins; led than extent approximately advertising squeezed se which £4 min to amounted spent has been period per a'-larger offers of which Reductions both manufacturer remains still expenditure expenditure proportion than during price and Temporary Elida has been in emphasis toothpaste and to share, by particular have expenditure. decline increasing the in cent 1963, Macleans with of in cent 1977. from first, per market held (ICC) & Gamble, £37ý min of cent share 11.2 The sales widely. market advertising per 1970. market the per largest cent per a new brand, of factors: the of in in market The relative in market - Procter level sales 36.6 17.3 of 25.3 from ranged and Kolynos this £1 min), has 1963 with introduced Secondly, ture the toothpaste Colgate from 1978 with share Si-Ko fluoride reached has varied period share had share the of Moreover,. this Gibbs a market share market and Acuafresh. had market, by several to promotional in expendi- the past to tTPRs take two forms; and retailers - where the the secondly, contribute manufacturer deals trade priceto the offers 76 to a discount two types of toothpaste relatively in the importance the from Together Claims. banded In the trade, change toothpaste and the in traditional four toothpaste Co-Operative -,. ýý_ the such and the uncertainties cent per Offer coupons, of structure that expenditure sales achieving toothpaste of to promotions. changed believe in to as competitions, to be devotcd competitive the of share than a in the of sales in evident 1970's. Boots, for to 1960's 1979, another responsible accounted 8 per cent. the to relative the retailers. from toothpaste The 13 largest are in of chemist, multiples-: competition retail by large-scale held in shift prevalent of increased market manufacturers Societies activity independent was already sales. in die-plays. 1979 on Bargain manufacturers the consequence the during-the major of a Fdrmanent in shops accelerated the share outlet, The increase chemist kind is market has been There participation and on advertising. the growing gain and the effective declined escalated some 7-10 1970's the of competition have prices, in offers, been more expenditure similar lower promotions toothpaste has on promotions This climate economic retail other These TPRs can be attributed 1978 was estimated in revenue sales of of and special space introduced and money-back offers the with shelf even legislation the surrounding for retailers which manufacturers decline relative ) price. 1975 TPRs have deals trade form major Since additional promotions, pressure the means by which To some extent net to resale recommended manufacturers. chief retailers' the constitute promotion between become from shoppers but their supermarket. indepe:. this customers for 50 per for 18-20 Tesco dent development of each cent of per cent of and and Sainsbury 77 together their the of share for responsible are 15 per is market Toothpaste of Multiple Different of Types 40 8 4 Groups Independent 4 Grocers Boots 18 - Other (multiple chemists 5 & independent) drugstores Discount 9 5 Woolworth Other. -6 outlets Trade-estimates source-: This to a wholesaler's in the type margin retail of wholesalers have promotional activity multiple per has increased between 7 to per selling 28 per during gross promotions Retail years. brands cent. in with Not per toothpaste, addition of the change through the increased wholesalers margins for - and the gross surprisingly, in sales Moreover, a small. cent, Because cent. and margins, The traditional prices. declined. reduced recent including toothpaste, 10-15 by manufacturers, cent in of outlets has a decline selling contintually retailers some 20-28 to was 33 and a third on toothpaste margin led and retailer manufacturer retail has siuation competitive lower and in'1979. Retailers of Societies Voluntary sales, I grocers Co-Operative " Market toothpaste of increasing. Table Share cent and market the to retailers small number margins large of on all promotions branded share, varies :. gross margins of "- -" . -" 78 the end of upper margins limited Since 1973 manufacturers terms by 7 per cent; through the margins the consumer's range have at the brands of toothpastes of the at are higher far with turnovers, and sizes take lower selling prices in cent. their reduced same time various special have retailers reduced retail countries the real lower accepted designed promotions has which attention range multiples 7 and 12 per between of while range, a more and selling a wider who carry retailers smaller Lo attract still prices further. Thirdly, compared is relatively low. of toothpaste more tion was estimated U. S. A. British the out of with public might year. More U. S. A. Fourthly, the to be only (about 29 per natural teeth .ý. per toothpaste cent (a) in'1978 more ý only to the cent still to are population Censuses & Surveys) frequently; and (c) of (b) people use -TU. S. A., the in the the throughthe packs U. K. amount than in 26 - U. K. expand cent are amount in retaining people the lower England 37 per head show that The main annum. consump- per regular packs continues with of studies is production expansion bought for require toothpaste annual one-quarter more people compared total amount 19 standard per demand for this 36 standard viz marxet per of the family the despite international recent - West Germany, Population slightly half be expected some 1-3 rate, but to provide continuing-growth--are: of doubled, or West Germany, packs slow than purchased standard 1948 and 1961 Between and sufficient toothpaste the some other at-a albeit reasons own teeth their had no and Wales in brush trading for 1968, Office their teeth up to a larger / 79 the concerning to by consumers toothpaste contained in the toothpaste itor. In Crest, and this the function of breath, the decay, There are amounting to of were minor Finally, for per In cent. considerably brands, pointing specialised I. fluoride a new compet='-- the (b) U. K. - it on the emphasis and freshen and clean helping of on effects toothpaste, from theme of cent universally of in is very the to prevent is toothpaste market, relatively inelastic, the addition, smaller suggested for the noticeable toothpastes which the major and development industry for an average viz; the Furthermore, elastic. money on research p 47) to of ". K. manufacturing with compared lh brand white toothpaste sums of (HC 125,1978 Toothpaste ton large an aver-fie säles, features brands individual companies teeth of among children demand for total Fluoride advertising advertising distinctive spend industry keep therapeutic other demand for of to its largest manufacturers' particularly the although of launched fourth toothpaste had two major entry tooth in 1971 some 15 per the 1970s early to prevent fluoride was almost stimulated & Gamble toothpaste to it now the theme tooth cent (a) market: it development This 1975 Procter changed by 1978 e; the acceptance In rapid. in water of The subsequent fluori:: is inclusion was very toothpaste. drinking to the same purpose. toothpaste debate and public fluoride of toothpaste. use more interest-in the included to controversy addition stimulated fulfil them intense the Fifthly, decay leads which pack size of 2ý per cent U. K. manufacturing Price that major manufacturing brands economies appeal Commission of compared Report costs with on per the scale. to particular "" _,... segments of 80 have consumers clinical of condition by the recommended for With regard to DOBs, ised around 10 rQr for account some other with of the manufacturer sumers The manufacturers: for caters it increasing; Other relatively a semiis widely toothpastes specialist (1) branded toothpaste provide entry the promotion with point of of the to value the price con- constant the of schemes a s,--ries seem to in (2) DOBs; additional and sales its increased responsible would decline relative stabil1- by DOBs compared held share the has of consumers at Two factors market fields: Boots, retailer, market. product to have appears market one multiple small the the of toothpaste reductions and price share advertising manufacturers is teeth with cent and inhicited and aggressive major which profession. their the of cent instance, and successfully and smokers. children 6 per four the of sensitive dental cater for for Sensodyne, of share and established brands the alongside profitably market introduced been major offers attractive sale. The product Macleans toothpaste was introduced supplied toothpaste to on the tube toothpaste designed for retail were introduction. j Small at 6d for to between scale The first those of the name of small and is other 33 and 5o per point-of-sale advertising Before for size the proprietary cent which advertising campaign the that, the was no fiv'd there Woolworth's) at similar margins general. .`jý. sale sold 1928. the with Although and carton. Macleans prices chemists in chemist retail firm printed price,, (originally larger brands were but higher accompanied started These size. in yielded than the 1930 with was 81 posters and display When in 1938 Macleans 6d. The effect cent but larger volume brand. Thus the retail margins sales. In doubled whilst caused of a virtuous company to the rate to invest of sales be reduced; immediate advertising in post including expenditure Toothpaste -': -_Index ':: r'Index Year in the of sales trebled; that the establishment to'rise more turn of Macleans toothpaste that new brands than steeply reduced stimulated after of national enabled in but the out-put growing methods prices war period expenditure 24 and 27 per by advertising stimulated Table Macleans created; is large extra advertising production and lower advertising competition followed retail by sharing earnings had been circle and the to between margins their had Beecham Group, was 10ýd tube increase that sales Underground. by the trade narrow could higher costs; increased was to the encouraged large the retailers London was acquired reduced: were prices on the cards sales. Q 'of -Sales g" -" 1931-79. and Advertisi; of' Sales :ý Inde,: 1931 1938 100 600 100 450 1946 1952 1150 1850 300 . 1150 1959 1961 1965 1970 1973 1975 1978 2800 3350 3852 3785 . 5259 7068 11825 2350 2650 4213 2941 6068 3392 9699 öf--Advertising The competition Between " market the 1930's dominated and-1950's by three firms Macleans (see was- the table 1). brand In leader in 1954 Colgate a became I 82 leader, brand the it a position has maintained, Share of viz: 5 Table Manufacturers: Toothpaste since 1954-78 Market 4,_Year' . Fi rms % 1954 1967 1978 Beechams 20.5 20.9 25.7 Colgate 23.5 34.5 31.4 Gibbs 20.6 32.5 21.7 Others trade urce: (Aquafresh); new brand 12.1 11.5 - to spearmint of section share the a market 20-25 around cent. per introduction of advertising, and a continuous of variants a proportion pre-empted the cent This share has main brand: a programme the of 20 per of share of expenditure development 1967 Beechams These had on advertising. spent Product At have which promotions in 35.9 Beechams hovered since by the maintained formerly that shows and has 1954, been - estimates table The above in - 10.0 & Gamble Procter the introduced'a their market two variants of the of market beginning j of second originäl: mild which preferred the around the main 1970's mint brand 20 per the flavour flavour to toothpastes helped cent, firm but to toothpaste Macleans of to appeal with a mild unable concluded from the flavour. Beechams stabilise were - to its expand research it. 83 findings further that be achieved by high, As a result the more economic blue to despite of firm's the Procter development led to share Share Crest of Fresh Macleans Spearmint trade Although the sales of the has shown Colgate's the entry 1975. by (%). Brand 1973 11976 19.7 13.0 '10.8 11.2 1.2 6.5 7.7 7.0 6.4 7.1 24.9 25.3 21.0 1-1978 estimates compan; has un, 'srtaken a new brand . become. apparent. all 1978 by cent 19677 20.9 17.6 has not in brand second accompanied --1.5 Source: from 25 per to which Market - Total designed Li. Toothpaste Aquafresb the market on a out carried this of as a toothpaste Aquafresh, of toothpaste 17.6 Mint had been launch the of share which fluoride :. 1963: ' Macleans firm's expenditure Table Beecham's the the of only brand a second The introduction promotional & Gamble's introduce the would expenditure. to work freshness. total heavy the increasing gel brand Maclean unprofitable was taken of striped to mouth appeal raised decision method and white the of and probably, 1973 the In market. expansion On the existing that proved Fluor the built are whole brands, introduced up, it appears of method the in a third of that expanding 1962 achieved 8.6 has pattern some sales weakest. brand how discover to research no consistent particularly introduction a successful trade "re drawn Experience by a manufacturer market per cent share, of e. g. the market 84 following the it cost In of 1975 both the the at the time Besides its of toothpaste, Beechams by reducing the offer pack if expensive effort sales fluoride of feature was little high market. of in response had brand the in interest consumer were Aquafresh Although competition from Crest competed against this by a consumer price; promotion; by increased from sales force chances have by introducing newcomer had not fluoride provided four is discount cent ways; a twin- an effective, and by increased advertising who were in a fluoride 1976 i. e. in promotion a 40 per by providing which and the introduction. the meeting there of and Aquafresh inclusion this and difficulty the a competitive Crest. outset, drastically mass -market, toothpaste the with the because stressed, in & uamble's from due to the Macleans of market Procter fluoride contained been variants of in adequately declined share probably sufficiently on the entry is this a brand promoting its thereafter 1975; atingbrands re-introduced to in was withdrawn differentý: but year, with _ additional incentives. Advertising Two significant advertising in has declined ratio of often now in price competition the reason for to advertising shopper at ratio of the point over proportion of expenditure of sale, a particular the need of to and provide brand. past decade. in advertising expenditure Whereas on promotions. was formerly 40: 60 because with the place promotions combined purchasing f to relation the the First, policy. taken the 60: 40, growing attract her Despite the it is the more emphasis on attention ý%ith an immediate this relative of 85 in decline advertising Beecham's is toothpastes advertising is advertising has been sing Secondly, the during the to the teeth and in teeth, the been re-introduced is the however, of in to 'of the been on the healthy to an improved in decay the benefit of and white on whiteness; and Aquafresh tooth preventing is fluoride is generally more once Macleans toothpaste has (which has been patented) fluoride against from teeth Aquafresh while claim, firms, advertising entirely toothpaste of adverti- the toothpaste toothpastes, all of cost in emphasis value television was changed Macleans value in toothpaste other was almost stress on a freshness concern 1950's leading since in the less inflation). of most decline by the toothpastes the fluoride more protection gives in the with rate Whereas 1960's to further advertising means that which (This with Beechams had and included promoted which along of -hanged being that . 1970's of 1980, In accepted the toothpaste, with the emphasis decay. than therapeutic. inclusion the with faster toothpaste Macleans cleaning still for medium formerly. than accentuated theme advertising cosmetic of risen chief on television, still undertaken has which the expenditure and help= to remove plaque ; consumers. Promotions As has been than on advertising ure and competitive Macleans' Wider ture Beechams seen, two in the conditions, on a promotion on advertising. the nature position these in relatively spend of the retail toothpaste the can be more is This past. firm more due to trade; believes effective the it as the market than than on promotions that changed is also second a given a similar structdue to brand. expendi= expenditure '_... 86 buy On average consumers fore, 26 opportunities have Since another. brand leader, Iloyal' it with and gains In the addition, than incentive Many of to these buy more the price of the next pack of offers '7p'off' send these promotions, painting book. Such an offer a display tion the to in is and/or based are retail heavy of reliance price own promotions. and more intensively to an additional those of its rivals, customers. designed to a coupon 3'packs of are as the offer 50p in although expensive, with a 'free' of lighter magic to be sufficient may nevertheless help and thus to 7p off worth and receive interspersed are for two packs e. g. and then tops the, shoppers encourage toothpaste, supermarket an integral Temporary outlets. Price and part a trade on negotiating by advertising in places is ý. -'^... of number it the than market att: act atten- product. These promotions which the such to that in, preference they one brand and type retailers' promotions sales, costly achieve in there- number ensure with pack, particular and less to shoppers Macleais this purchased; Colgate, existing are of the more, frequently provide Shoppers, a smaller in brand loyalty increasing in effective to one pack one; Because cash. order its on-pack than in pack the sustain like promotes to purchase and to Macleans, the of influences fact from switch share participation firm on the Colgate a smaller retailers competitive, to a month. has by definition and this employs. deals on trade has it Colgate, twice annually Macleans customers, pr'motions toothpaste Three deal so that promotions it firm's with (TPRsl, Reductions promotions the of promotional retailers and then a year are run on price supporting may make the policy the deal maximum effect on Macleans tooth-, rt. 1,. 87 and each paste, these six promotions intensively year. the to required recent firm timing of in development price-marked other the fit pack is laternated annually one or However, determine these of with of the finds the the less than easy because promotional the force sales brands it be made available it calendar. exerted pressure for 6n Aquafresh; a promotion toothpaste a promotion, has been to enable with to promote throughout in is the past the to increasingly of on the one retailer A retailers. firm for a only. r f4 88 2 CASE HISTORY, The product: Jif The firm: Lever scourer non-scratch Bros. The market: Non-scratch scourers floor includes part are cleaners., powder household the of liquid bleaches, scourers, market cleaning which scourers r and washing-up liquids. these by housewives for products Thus purpose. of part and bleach. effective in However, since they for 'soft' unsuitable because is they modern the Scouring scratch coloured two kinds-of kitchen such and damage the for such boards, it such is a specific discrimination by an for i. e. off are very food. they surfaces,. are steel and stainless while bleach and stoneware sinks, Similarly, porcelain to powder and burnt-on surface. the cleaners as Vim and Ajax as laminates as plastic 1. Which? March 1977 pp 187-9 listed das up liquid one category) plus five Rid of Dirty Marks. on Getting household dirt considered cleaner turnovers. stains the use of of 'consists and bathroom, cleaning the characterised small removing surfaces surfaces consumer becarseit by grinding clean effective draining by low also powders, cleaning'surfaces, particularly and wooden in surfaces 'serving with products housewives*haveused many hard is them-as supermarkets many disparate Traditioriälly. scourers typified in one type substitute regard The market she. Lving"pl. an in arbitrary clean is market interest. and consumer most this overlap considerable who often do not because'they another is There unsuitable for most baths. 23 cleaners soap-filled (including pads in its washingreport i I 89 Since 1950's the modern kitchens 15 per cent been number and bathrooms. of installed porcelain a growing 50 per cent had declined sinks (as percentage 1966, for By contrast,. cent only had they traditional homes. of Installations. homes) total of Year estimates - 1973. 1976 1979 1981 1983 22 28 34 34 42 50 64 71 73 75 11 14 17 19 21 Showers - separate ' units. 7 8 10 11 12 bath 13 14 16 17 18 89 90 91 91 92 ritted ' with instance, by 1974 Year h equipped 1 Bathroom and been sinks, homes. 9 per to Table Kitchen steel of have in Whereas homes had stainless in houses of kitchens Stainless Plastic steel sinks baths to - plumbed Bathroom suites (per Lavatories household) 1.2 1.2 1.4 1.4 1.4 t Source LBL Because of Survey. harsh their scouring powders changing requirements introduction in removing same time of action on stainless of minimise and stains the steel consumers new types dirt houscwives of sinks and baths. provided scourers as their damage to had gradually the which an Thus cpporunity would predecessors changed stopped types be just but of would using the for the as effective at surfaces. the, 90 technical Initially, aims these reconcile problems effectiveness inclusion hard levels they scourers minerals to ensure and scourers but is powders quartz as powder less, scratched difficult proved in in a scourer scouring such than abrasives of of by firms encountered by incorporating The cleaning of were also detergent. achieved by the When lower in included less cleaned suspension a stable liquid felspar. were liquid It effectively. in abrasive of to who tried liquid; a the tended abrasive formance. on separate Difficulty was in out further liquid if surfaces soft to time and experienced in included the scourers variable give avoiding perscratches hard traditional minerals. The product N " Jif been The first of for by two earlier preceded version justify economic The formulation of cleaning which Jif used agents. It of in than in is marketed Unilever company but this consists those had been more 1967, in marketed 1974. market 1961 proved was not Tt had been then introduced was version second had which in withdrawn. to be ahead specifically large enough to production. of Lthan Calcite the use in bathroom versions was test which demand; consumer was launched ream scourer .: non-scratch -a a dozen since of powder scourers, a stable, successfully 1968, a slightly creamy in and which mineral softer product France a blend with combined based by the - on Cif, French by 1973 was being marketed countries. I In 1972, Lever Bros. decided to investigate whether Cif, \ which ý. t` i 91 be technically to appeared British market would Consumer research required to to the enhance British French colour to access Furthermore, by the ience liquid as being stronger more the purposes, ordinary who regarded powder required, and extravagant. This prei_"dice of potential by the evident value of c1 extent mitigated on modern surfaces. by housewives surfaces that evaporated centage already once of this the respondents a powder (Conversely, who either are indicated of do not scratched) sceptical housewives preferred scourer, the be diluted, is it to their a cream trial usual that was to seen tests a 'mild' therefore consumer towards in scourer some properties non-scratch product in as scourers buyers Jif's it; Cif incorrectly, and Fortunately, used with household liquid own any new surfaces, attitude exper- familiar a cream believed, version was little very could of they dominated and recognised then As a consequence, -Whereas been had were effectiveness attitudes scourers. housewives if in 70 years. a liquid it .0 product. housewives and which, about bottle. squeeze French efficient housewives sceptical the cleaning and more and economic efficient in British French general British cleaners. were for cleaners Lever a difference did Bros. because had for the addition, Cif market products, In towards-cream. so that scourers liquid of cleaning was included some fluorescer revealed housewives were from used research and British powder mineral housewives. modifications formulation. on the available British of slight e. g. slightly the U. K. household the only U. K. the of consumer by French that then products requirements product, differed product have not the meet indicated the to superior as 'irrelevant' or if these also research scourer. a high product. perIn ,. 92 further consumer for performance its tests of i. e. kitchen sink, main reasons housewives it surfaces; variety gave Jif also of in the gave the bath, gave to Jif surfaces. it did traditional for consumers a wide later were comments The damage not was suitable The inclusion advertising). reassure and work were: (These tasks. tasks, cleaning and it surfaces; cleaning to liking acceptance of scourer powder wash basin, for level a high gained of ammonia of tts in cleaning/ qualities. Subsequently, which traditional theme appeared purifying the a shine into incorporated product cooker, household of the product 1973 Jif into was entered encouraging could be sold these tests a mini-van estimate that some 4-6,000 in initial years. the test market, tons per annum w As a result end of The of 1973 1969; per in product the the at U. K. 1973 it competitor in the and similar Continent. to Belgium) At sell and had reached-more Ajax were scourer time, cream order to on Batchelors -See Case History testmarket, mini-van p also or market, that Colgate in the enter Instant were had already U. K. the been to the (imported, market Custard brands for Lever's a introduced trade as it before 2,000 than launch to since market Colgate, that about announced this two smaller or became apparent also product this and in steadily in years; several established There In for well-known had been growing market. Intention I trs name had been product) paste annum by 1973. competitive from brand had been sales on the the (the Gumption as a scourer main and launch to manufacture decided Bros. competitors Liquid tons Lever and research, Jif on their happened, seemed explanation of the ' 93 dispense to willing seemed an immense There launch the Jif of considered to Jif. plant in to test reaction supplies decided was therefore were would to pre-empt about it However, moved quickly. the of in consumers the market from be available not was still the 1975. until country Colgates that Levers Moreover, this marketing. risk unles necessary place It test with to the minimise cost importing of (made Jif I to the British Formulation) of the country - Border the establish the protect in which 1974 of At France decision The major until the cream then results before the the This would ely. because obtaining of the launch the , a larger to share in of Jif. of Ajax import of in test market for a growing in market with in market the short prospect long be would the the time months several the This obtainable. strategy loss national. were 1975 by which cream by entering but the operations were place financial import to delay to The alternative supplies, potential marketing until the procedure. plant launch in and more necessary whether British the a larger expensive competitor Thus contained was still two the mean a heavier need marketed an national been similar. to be taken from introduction forestall proved had was very to and their of area first identify to that of - which it time of the have would London which mean delaying advance wa:, test this and supplies available, in small a very two purposes; secondly, countries product had strategy market; theme in marketing This the - Greater Jif. from supplies to the area customers Ajsx in product advertising significant would TV. some Continental summer of launch by test run. immediat= term of 94 The national launch Ajax cream. The reason the knowledge that distribution frequency might not Over the number . doubled. of all (powder 40 per of the period of for to cream (on averagef stock 1974-79, this achieve the that of market was widespread owing scourers twice than more in before to their Supezyarkets a year). one brand. market the of in sterling quadrupled; product) liquid volume, market. has market the using sales and liquid) of like be first to be difficult to By 1979 sales cent 1974 one month urgency group purchase households scourers in place the could be willing bf Growth it took a product of low Jif of accounted and 54 per 1980, By early turnoVer have and consumption scourers of Jif the for of. the cent (the penetration both 37 per total was responsible cent scourer for marke L. Table Non-scratch Cream Scourer Market. 1974-79 Year Turnover £OOO Frequency purchase of per Volume Penetration (Tonnes) Consumption Index annum. 1974 1750 1.9 4300 22 1.0 1975 3500 2.2 7700 32 1.25 1976 5150 2.2 10100 33 1.6 1977 6150 2.2 10700 33 1.7 1978 8600 2.5 13400 39 1.8 1979 11900 2.5 16400 43 2.0 Source: trade estimates. (Milos) 95 Over this as chiefly Jif period has been of a result a major average above No. 'of homes U. K. 'in Jif Penetration Penetration. 1974 18.3 min 4.03 min 1.72 min 1978 19.1 min 7.55 min 4.59 min 3.52 min 2.87 min " trade Source: estimates. 4 shows Table Jif over the the growth period of sales, Growth of Sales, Consumption Year. and consumption penetration 1974-78. Table Turnover Growth £000s " viz: 87.167 $ ' penetration. Market Penetration increase " in increases growth '3 Table Year to market contributor 4. Penetration of and Jif Penetration % Consumption Index 9.4 100 91 19.1 95 4798 32 18.9 127 1977 5397 12.5 . 19.0 135 1978 7328 36.0 24.0 145 1974 1900 1975 3635 1976 Source: trade " estimates of 96 in The expansion another competing the ant, size combined with the of further entry Liquid of However, has market (Cleen-O-Pine) Distributors' of companies. the of product relaunching introduction the the the technically small complex competitors made by well-known nature of this the of and the chemical market, product makes unlikely. Table . '.S. " Shares Brand Cream of Scourer Brand Ajax Market Year ($) Cream Liquid 1974 1975 1%76 1977 83 47 47 51 54 51 17 16 20 20 15 20 31 29 20 22 20 6 7 6 3 2 3 Gumption Cleen-O-Pine 6 Others trade Source: Promotion Sales promotion price Rail ticket of couponning, marked "4 -1978 1979', estimates Sales sampling, " of size entry a disinfect- 1975 as a cream, in Own Brands relatively includes which Gumption the encouraged packs), offers) has Jif comprised Temporary Price and promotional viz: a combination of Reductions ( 'flash' schemes advertising, (competitions, offers British and 97 Between 1975-79 has advertising to being the in (2.5: - obtain Each encourage consumers the particular display of and promote although company has been to by means of'TPRs, increased share these to firm's it, forms of in a still promotion and to Jif and rapidly have been a new product encourage occurred to according as sampling, competitions in another of policy invest use and purchase brand, to ) and leads policy product the have variations promotional sales etc. competitions, wide Basically 1) between spending TPRs, one situation. brand of corporate from switched to 50: 50, because market. in , been distribution order ratio couponning, year market dominant and to year funds average (sampling, promotion from the the advertising couponning - growing deployed to category, retailers to stock, viz: 10 `A -' ., z 98 is Sampling " its rivals. emphasis the Unlike after Jif, they tried 8.2 1974-79 min samples Continental it liked 1 min to and wished to help (then has once Between increase both Gumption Cream) great use it. been not from ' most had shown that experience (Sampling liquid of samples has placed Jif distributed were if distinguishes which competitors, and consumption. penetration Cream; two major on sampling consumers activity promotional ; fit used by Ajax have been distributed). When the bottle the was introduced product to enable costs housewives to a bottle plus such of mini-bottle was placed inside :.-as limited because that 20 per of cent was devised of in was the of her . the most of the for the increase important approximately differential is Furthermore., actual liquid product in which powders. has been is the because an envelope the as'versatile the of price cream helps to less than kitchen) the sampling first the product took wave experience purchase. evidently which scourers cream of of After provides, cream for method that effect containing-two other another. The price the for a its but Persil, accounted encouraging proved distribution, of pack confirmed against experience not form This a sample However, of after in times. distribution bathroom, sales a mini- pack Eventually double less this country prejudice of time factor product, usage a large to provide several door-to-door distribution. the of housewife's long for out and cheaper sales. doorstep one area sampling Trial Persil (one application sachets . place at it try As an-alternative uneconomic. firm-wished the scourers, 'but powders, scourers are allay lingering as powders and very cannot dispels is based, on instance, for the much actual economical. doubts that cope with a 99 jobs. tough More recently, domestic at the sample equipment cream the if scourer speed with scourer housewives it to protect them, sampling continuous process a shc_t-term dependent for new types of house; .a hence distribution to launching on the expansion of surfaces and wish as a long'-term aLe regarded penetration for method a proposition. and resampling increase to for i. e. scourers, the around sample to appropriate and efficiency with switch such Similiarly, versatility is market in most swtich appliances. may now be an economic cream is to prone on a mini-bottle which than the appreciate work which the or included been a sample mcst she can experiment development households is new equipment can best Since because as cookers when she purchases have Jif of when a housewife time housewife sachets and consumption rather a new product. Advertisinn Advertising, forms other " of aware the the of analogy effects demonstrate as safe and effective assurance to consumers and probably, expensive on television, as all demonstration. for non-scratch of these a cream three tested their the to secondly, the it and who recommend products Advertising illustrate to to mention Jif, scourer objectives ice surfaces; and thirdly, who have equipment. the to by using Jif of and sampling first, properties on'new Jif, with objectives: scratching cleaning that conjunction major scourers used equipment three blade powder varied of the of in employed has skater's of the manufacturers been promotion, make consumers damaging " has which will thus not providing harm has been can best their new, predominantly be conveyed. by, 100 Distribution factor A major been its has which to contributed distribution, widespread viz: Cream of Stores per Among Multiple the of has market ' Scourers Co-Operative and "(70 share 6 Table Distribution Jif's cent of Societies trade) total Brand Year 1979 end 4 88 Jif Gumption trade Source: This high Lever of grocery into entry Bros. Lever Bros. 3 proofs both a promotion, a distinctive prominent display in retailer's advertising, the of period contributes retailer, the to promotion. towards the cost one or enter store df joint a Ford advertising for 'key' specific Escort as the of a combination to such customers attract to obtain the in price the such by a in a scheme, with 5 In competition). a reduction in distribution with and participation Furthermore, factors products, who wishes towards of general Bros. the seeking manufacturer contribute the Lever offering who is retail the low relatively promotions from required and the offer, and joint with a cpmbination other in purchase were the due to a competition of products a new brand market, Alongside (For multiples. prize, this has participated Jif first of has been awareness early instance, distribution of trade/consumer strength 68 Cream -stimates level including 69 Cream Ajax during Jif retailer '' 101 is which funded from by the A further promotion joint 80. (In for return 8 Lever of When a railway This It and customers. floor, shop the space at especially retailers during. time when pressure consider to them; It effect, firm's . the Pricing Because has promotion own sales they attention one that force are price acknowledged warrants towards prepared change adequate the favourably space of to sold in the at a to allocated Jif vis ä vis and expanding Ai space. and thereby product to devote shelf and by Jif offered continually status on positioaing, as an established affected the the being as important retailers contracting display Participation just sales; or to special reductions. leads space are reductions price increased also this retailers lines, volume which a be exchanged achieve large 1979- a voucher. among'both time'to products of the match helped has become and hence for in one or could interest for reserved lines existing promotion retailers. brand, on shelf dropping this only voucher first the By virtue to has not promotion for by parallel promotion this Jif usually low prices. the received immense customers %Aerr mooprepared customer ) enabled associated'by the same value. aroused a space from Jif of Rail and British purchase this the of products;, brand. of 4 proofs be will distribution the Bros. purchased, promotion particular the Bros. ticket-was ticket another in sending Lever its in affected hoped is and interest favourably between it that sales display, which promotion combination for additional increased generated was the the a side of attitude the the selling it. policy of the prevailing conditions in retailing 'during the 1970's '"' :' 102 and increased between 'flash' of offers the e. g. ensure bargain After the account, of price year, and to Ajax the to this .,; over and pricing 1ý-2p scourer market price 0(Food) rate this campaign Jif 197C, responded the of 1980, by lowering their straight by overprinting to taken i. e. Whereas prive price marked than slowly Retail Price relative a dramatic their below share price price that of this the Index 1978 was 150. ) their their this less to influence of of cream in some 8-lop part Cream, index Cream began Jif of non-scratch place the 1978 differential price scourer in order that with Gumption the have away and reduced their (I. in attribut- probably a price of a price The decline compared that than can sustain Cream is favour Jif. cream lose Jif into taker higher slightly although in been product consumers. reach have price hand, of inflation, prepared its in the of rival. Ajax of share increases Ajax was not closest occurred market, growing its on sales of was 193 in At the beginning show that other frequently effect the models over On the little in has been increase period. bonuses times specific trial reductions Jif market relative has had rise price of at as such reductions price encourage and trade price the to for manufacturers and couponning cleaning offers in 10p has up to packs, pack up to 5) marked manufacturers Cream, Table (see on intermittent that competition between competition relied spring average differential able has - Jif intense consciousness, and intense retailers space shelf price consumer share of reduction Jif. of Since market, by a similar they amount packs. (7p off) 'flash' With the retailer at not more than the offers can sell With less the money 'off' from the manufacturer. recommended price is the to reduction marked packs a significant price price contribution from list from the retailer, discount prices the manufacturer's required being perhaps from recommended prices. the discount only half 103 It is likely of penetration liquid ' cream not scourers demand is to appear reduced difficult be ample household to scope can be taken experience households cent of with 43 per cent in with predict. for. using the U. K. other, cleaners, the There would, of expansion e. g. non-scratch in such each as a guide, were may lead in although compete only level price scourers, and many other scourers of this that 1979. this by but with powder, of elasticity degree still nevertheless, if market Continental Holland scourers -''- where market a complex 1978 in cream increased to _- 72 per compared ` -_ 4 l I ' ' I 104 3 CASE HISTORY The Service: Golden The industry: British Rail Rail The Service in extended in number of 1974, booked 141,000 by Islands has grown Total Rail Holidays* adapted introduction introduction of of 27,000 from by 1979. in and short- additional and Stratford-on-Avon. 1978 and 160,000 Golden has been it by the and the Table Year then notably Channel the holidays to Since holidays, including resorts 1971. respects, several and self-catering stay in (GR) began Rail Golden The 1972, to (See Table 98,000 1) 1 1971-79 Bookings Breathers** "--- Self-Catering 1971 30,000 1972 27,000 1973 60,000 _4,800 1974 98,000 5,000 1975 114,300 12,300 - 1976 94,300 12,000 - 1977 111,000 16,400 1,600 1978 141,000 19,800 5,600 1979 159,000 22,000 14,100 - - - * More than 5 per cent of main holidays the peak are now outside season. ** Golden Rail has not so fax offered holidays to London; Breather these are organised by Stardus t, another Rail. of British sector 1 w 105 However, virtually with basic the half full or 2nd class and resorts; board all address and return Manchester and Glasgow). Inter-City services a voucher giving a radius and, where by pre-booked 1st stations a 50 per cent reduction and holiday choice of hotels on payment of a traveller's local appropriate (across whereever and at London, on possible; resorts/inland day on a rail concellation to station reservations seat labelled main accomodation a wide class taxi; at 100 miles; of from individually - GR couriers of service from (or remained comprising available transport supplement); holiday holiday travel rail scheme have the of an inclusive unchanged; either small charcteristics centres; trip within and curtailment insurance. The objectives A major at objective periods off-peak extra designed services customers makers order to contribution The introduction is part to of the open rail of costs to senior to during are seats in specific. to passengers by the involves markets range which of potential families, students, meet marginal a wide of to running only introduced from apart need and businessmen; subsections the minimise summer season, generated BR has up additional holiday- would make a receipts. GR as an inclusive objective. the additional order off-peak citizens, passenger general attract commuters decade past appeal - shoppers, in - even empty the Hence over to week and year fixed and filling trains costs. the demand of peak short-lived is Rail exists High a few Sat.: rdays. the of which capacity spare British of ., holiday package The contribution of in the GR to U. K. ' rail i 106 receipts Other b. from under 4 per cent rose objectives To help had fallen foreign have counteract between car travel with c. The introduction holiday of coach the this but GR could help rapid to in 1979. GR was regarded mainly ownership A GR holiday the and would convenience as a suitable of of the domestic beginning enab-' packaged non-existent. dominated and were means of dmounted'to only were 50 per around car was practically holidays operators of tours. proportion time from which holiday. of that 60's some degree a packaged at by train travel expansion of to some 5-6 by coach cent operators, this promote per market on coaches. that of homel but and convenience regengrate segment who might it of the be persuaded that was anticipated interest in rail who do not market by an inclusive offered by* no means least, to holiday and late combining away from reassurance in package a proportion holidays Finally, the country, based To attract take 40's a sizeable and tour energetically d. that which in holidays both late 1070 packaged in Although of capture market decline particularly advantage BR to the due to cent the ling the holidays, 1974 to 14 per cent GR were: of 11 per to cent in to do so by holiday. the advent travel. Organisation In the first and funding 1 in year of 1970 the did not people GR. of British operation However, in order British Travel-Association take holidays away from Rail to undertook benefit from had estimated home. the marketing the expertise that 20 min of 107 of an experienced operator's own business. in Furthermore, the extent, at instead order to the railway number these arrangement helped Rail's was confined it GR to enabled choice a wide or difficulty of booking procedure. houses, publicise the the as well venture, were S end of the 30,000 from not weakness major in which year which holidays entry Hotels and guest houses of local authorities. had been into had'to policy the resorts, selection and houses. had been sold. packaged comply beset in of GR also a slow hotels agreed by a Postal associated Several with valuable strike a new lessons holidays; with the minimum It be the could result in had_ guides. difficulties unexpected this in of it Furthermore-, and guest participated holiday their hotels British since hotels. and could co-operating resorts first GR's of room reservations, scheme as the drawn the This business number a place rent, placing a large, of and screen side. affiliated customers Besides the loosely and standards ensuring and guest At its prices that was recognised of number which A policy GR could coruait bookings adopted; 1' on either broker of tour fullest the resorts recruit where financial that the cf was enlisted. houses the to offer was not committment minimise a large with hotels to the block of helped and guest to network Officers officers any prior without role Resort into procedure of GR brochure the hotels of operator number the of by which was evolved created utilise tour in to be featured customers year. knowledge the large the were one and two week arrangement, throughout a limited in rates incorporated were this Under conventional reduced were offered were functions and these out, and booking administration operator, contracted holidays '. tour standards to 1 108 1. GR holidays, for holidaymakers. for therefore 2. off-peak during 3. ". required to change hotel supplementary charge it and could extra not passengers a high booking their to below that result Saturday GR holidaymakers of of travel the reluctance of the that days. that any extent away from holidays percentage as the partly for it home; which segment of hü3 become market make GR economically would it that evident viable them. initial Despite rooms, teething the sales, rail in from which this its and verbal operation attacks of the and booking outside also tour GR, in of I of operator that had resulted in over this would the accompanied that as confirmation the in domestic these holiday from the functions. in by market meet (The apprehensive had withdrawn 1972 BR took that of holidays packaged a foothold holidays which regarded competitor a shortage for exist objectives. by competitors GR were become an effective did a range marketing included summer months potential build could satisfactorily the which and GR had achieved country, it troubles in particularly 'frustrated' After attracting day, attracted a price attract 4. (b) run; of season, on that take not years several long the objectives holiday peak GR had not does in disadvantages two major for static by summer purchased periods. had travelled to from suffered scope BR's had been part, had been an additional the hotels it little towards Despite most market (a) offered contribute during This future: the the comments launch it and had market! ) administration a 109 Since GR has been then, BR, hotels, tion however, Holidays Experience had shown that and if main scheme, periods . the this GR began the " were for the up to main Wednesday scheme; these included to those taking ý.. This feature issue two brochures; April and October; the nights could three 5 nights, covering, which include and would apart from the week: of l outside days were available inland several distinguished it There brochure a small over-lap, were standard with centres could the main main designed the with compare' the elements. however, were, in stipulated named, if holidaymakers compared the outside the one second holidays Sunday) holiday offered be extended, Breathers: (excluding travelling with all insurance. features first the as these holidays off-peak holiday a second seeking 'Breathers', resorts during its to addition holidays stay year. and Saturday small-scale in if, holidays holidays, fewer A pilot be achieved people to be generated, were season of on any day of travel sales by offered period. to distinguishing several but the a minimum required, of of remainder to between out-of short scale short holiday of be encouraged. into holiday. and two week holidays offered large would appeal would traditional and administraBR. of type original if GR diversified which As a result, the was to that scheme confirmed interests; - Breathers. travel off-peak three The operation responsbility sole be broadened to GR required boards, the Short-Stay between on co-operation tourist and resort GR are, of based scheme, to appeal summer period. from its competitors. ik^l 't ,ý I 110" Pricing Structure Although the the First, Secondly, and summer. been based GR becomes compared and the to contribute the days the the offer rail financially, they risk Sales of benefit had inclusive of Although this season holidays longer the prices subsequently those other and travel the of during short-stay holi- because total price means that journeys than holidayleast benefit of convenience arrangements, your- charged Rail policy hotel/guest an unsatisfactory hand, British also a 'do-it- with otherwise and short obtain Hotels precentage pricing distance the holiday. compared to a higher GR assuming and they reduce house. Promotion 1973 £1000, O00 was expended A large end June), holidaymakers to On the periods. booking choosing below prices nevertheless for responsibility the high to season, structure (and resorts the advantage constitutes holidays. who take makers holiday financial most element on longer of advantageous financial and winter pricing period low the mid-May by a system more out-of-season by reducing shoulder original groups was simplified i. e. three, of further). more this holiday self' the range as a pricing October,; end of a do-it-yourself with travelled to still financially to a wide structure was abolished was replaced stations drastically reduced to to offer pricing four whereas this on zones 53 charging from from (mid-September shoulder the Easter theirnumber reduced GR continued of hotels, of two directions. which In programme and selection prices in main part of This " expenditure on a sales re and advertising on printing half campaign. a million bro-''.. 111 including magazines, the magazines, womenls to send off to telephone railway for Other at In guides. to the As a result of GR holidays doubled group predominated in pally their Breathers Whereas to Cl, Breathers appealed holidays take proportion to of holidays holiday welc in me it readers encouraged at media were 'resort of leaf- local with hotel and hotels authorities and promotions, for, viewers displayed advertising especially holidays Breather in from 2 was the and South taking Breathers main scheme. as a change more main from Coast. Many people princiof Holidaymakers the Trent scheme who tend compared who take the taking main Furthermore, owned cars cent significantly. background River main 65 per than scheme appealed South-East; the the _heih. S +, age differed geographical of for were constituting and the north cent Although two schemes. East the 97 per 1973¢' in scheme, Breathers4 the the London living original composition ABCls widely people those also distribution which schemes, Similarly, Ds. on the taking 1 2 both came mainly most *of socio-economic varied participants and interested provision tourist centilwere attracted C2, for made to. the 60,000, to schere, total, the Advertising changes and 3 per the for and and posters. press the Digest, and posters publicity costof holiday of included holidays. short Reader's made, through authorities the newspapers which a brochure; participating towards out-of-season limited resort addition, contributed for off national coupons television promotions to cost the incorporated The inquiries stations. lets' Times, brochure; the between; Radio which or write monitored. " was divided Advertising chures.. to , a higher with people a Breather driving. The number of Breather 1Holidays is detailed on Table Soc: o=econoAo(; IPA lnecl Readerships A5 Can°., aje <a -4eosys c. ' 112 Further coach principally was higher than In addition of respondents the of seats; provision of " the the taxis impression offering of first to and from Research class. from this to the and therefore travel in transThus station. as a caring-operator, by the in appreciated description high to order travel to describe the absence was misleading customers another wallet; 'and to be confirmed it proce=. transit; railway supplement th. t its the research a small booking stations, seemed tu suggested because holiday travel, organised hotel the who paid also railway major which passengers GR as a packaged of connect holidays, quality proportion to in yrovision scheme which GR representatives of the personal provided cent was considered with the 95 per that showed the were: information services in 'loyalty'. and satisfaction association attitudes. GR emerged of GR in The elements these operators. 'Convenience' holiday. business repeat tour attitudes service. holidaymakers port customer's of transport, of proportion customer two-thirds means of inclusive of comprehensive reserved the attribute towards the of their enjoyed a personalised dure; into other by other achieved research contributed and that that GR showed of away from taken as a measure valuable most operation and car, that was taken This the had been business the into research . be more would p. and appropriate. accurate These market Although that rapid expansion destroy favourable expansion might the very cent. however, of attitudes faced customers be possible, would the outstrip attitudes so far. - Consequently, 25 per findings, research the S. for Two new resorts which had contributed 1974, the aim was to were added a dilemma. towards GR suggested was feared it handling availably GR with to the capacity to increase scheme, that too rapid and'thereby deve opment by bookings and the '" 50 I I '_, 113 I cent per it Furthermore, more on the in that of GR to satisfy booking to hotel reduce two inter-related and (2) the a more highly rooms, of GR: in in to (1) the the through summer season. selection have of in resulted former the of who sent organisational changes place depend would be confirmed not led These system. operation controlled could sales popularity. holidaymekers particularly aspects booking expansion potential which its of view successful 'frustrated' such in changes hotels applications of in was continued was recognised unavailability The need voucher ability completed the rail reduced voluntary system. 1. Hotel Selection "" Originally GR offered This centre. has resorts number the to now confirm in 1974, no hotels have fewer hotels become a more has been high if. peak of as to fire strict GR has a closer relationship since not 1974 in by hotels rooms in the of rooms taken to customer which more popular up. on behalf This place the these has must 1977, Since Secondly, with and has hoteliers, A pre-reservation of the raised standards-intro- former had not proved resorts a deposit system it regulations. with of of first, n volu'ary them. of number contraction inspection. without important the effects: Board's accepted season are Tourist holiday each scheme because the been percentage they English as well The radical in in although has had two hotels of introduced allocation the the reversed, expand. resort per standard general duced to continued hotels of selection has bean policy hotels of a wide system voluntary In satisfactory. reserves a GR, and a penalty is incurred be extended to all will resorts " -114 in the a certain for 50 per of GR to a hotel in factor ributory high the hotel off-peak proportion fewer of a hotel's the hotels to -GR reserves anticipated hotels, GR is The growing year. an important cont- GR during to rooms allocate now turnover, has been out-of-season persuading to in thioughout cent. season according business their to In each a substantial can amount importance the in By concentrating responsible which 1981. rooms of number demand. from progxaume main season. d 2. Booking System Until 1975 bookings phone inquiries were The installation booking a new computer phone bookings in the main "March, Holidays, and bookings an overall scheme by inquiring The reduction has been in the of 'frustrated' rate 1978, changed contributing the national in season improvement the installation to undertake bookings for holidays after in rooms teleholidays mid- booking the booking an open-ended has other of once available taken). of number operating which hotels the per booking resort, combined scheme helped 35 per cent in methods were doubtless from sales 1977 to trend) high operates a hotel a computerised of for. GR still time low-season planned whether introduction These More recently, publicised. and billing' pricing staff tele- and although was not undertake for of allocation to sufficient Breather facility this with procedure.. (To some degree system. its dealt has released scheme, as part be made by post, only a computer of up the speeded could reversal resulted in from the the fall in economic lower the 13 per cent to 1974 to the with in one factor sales (contrary recession in of to 1976. 115 Sales Outlets for Bookings telephone or post GR holidays railway selected British sell Rail agents is travel agents holidays in have the risen outlet in future. Developments in sales . sales The relatively of high of important component of GR holidays The value of is more important days in those In first who did by the ble 1978 of heard the high customers former customers which media of is GR to proportion in this that send of in to their GR bookings cent list. business recommendation and probably GR_.holi-. half whereas the an per who bookea made initially provided a copy 1978,26 awareness, them by work-of-mouth, therefore annual therefore, personal of'. those had been the additional generating half of 1970s the the'mailing via generating shows in shown that during comprises, policy. in a holiday book request to was a feature which has persisted promotion to the has to ý former research A coupon media. people view not for cent be given will travel through 40 per around The despatch satisfaction than Research days satisfaction. sales sold from evident bookings. of customer also through bookings bookings repeat of early to were is its customer automatically who promotion in brochure averaging and more emphasis proportion GR holidaymakers as a measure steadily, scheme, main booking However, advertisements. agents has been biaised strategy of by 300 GR; through 1700 appointed the facility the direct channels; of sales Hitherto, although sales, mentioned in and through tickets. three headquarters the stations; direct towards York, to made through are aware brochure " ', of of to GR ena- friends. which emanate from the ý; 116 Midlands in London the it where area promotion and 50 per found in used television the those in on advertising ratio has continued. to continues division 50 per of country radio The original the discontinued the Areassof conmercial area. expenditure cent in cost-effective; London has been advertising and concentrated has been be widely sales North, and the total of on brochures, cent The Competition Two factors for market this direct inclusive holidays short to the Secondly, domestic those economic holiday lower priced switch to which .. Metropoli- negotiated from other in specialises Besides reduce has This the the reducing have many holidaymakers holidays. hotels, 1974 onwards from situation trade. taking continue have competition and Stardust, faces London. on holiday, going (e. g Grand and which BR, and indirect with coach GR also groups, holidays as Sealink BR such of many hotel have Travel holidays. tours firms other Bus Company and other coach holiday package citizens), and Co-Operative package the rail offering senior Galleon short-stay fares tour sectors to organise which (principally introduced from firms of number domestic the of competitiveness The National market. competition tan) the Eder. Vale, have operators the Saga Besides as Cosmos, entered the First, GR. has grown. such increased have length led of total traded them either their affected adversely annual number down in to of order choose holiday, or holidays. self-catering X Demand for have holidays to responded I is this therefore very situation in susceptible several different to price, ways. and GR In 117 formerly by the pricing There either the main low for three Widening the GR has been " been two increasing in to encourage an end of October. order and the at on many hotels were during Railcards Citizens completion successful its Channel the It comprises minimum the counter Islands to appeal of the a pilot of effect has been period fastest holidaymakers the holidays holiday I were major cent are bookings half approximately with in holiday sector some 28 per number Among the holidays growing self-catering the of inflation reduced and the of the a static of the total in holiday had risen to market, camps, Families market holiday and the which market. 14 per cent of By 1979 GR self- approximately Because GR caravans, self-catering domestic of Further, or suites additions 1977, in camp operators. part taken children. chalets, recent Avon. children in included resorts most and Stratford-upon- leading with constitute is to the increased. self-catering naturally 1979, turnover, continuously co-operation catering instance, Market the introduced in sea- competitors.. As a means of widen the after since to nights of to weeks, and high for reductions Senior of low changes, mid-September additional holders holidays, policies have period between changes between season' price price than 1978. On Breather from between too, scheme, season scheme in a 'mid abrupt flexible was made more much si44l1er holiday peak business made available very of now fewer the of of expansion policy by means of are side pricing introduction periods son. In 198Q, in particular, average 14,000, size -of of whom 118 the self-catering more revenue passengers party than either booking, per is 4-5 holidays or these persons, Breathers in the with main holidays generate scheme with 2 people per 2.38 booking. R t - 119 4 CASE HISTORY Product: 'Superfry' Firm: Van den Bergfis Superfry was a gelled frying. Its for fat, cooking like and that in solid 1972-74 Between carrid and towards had proved into marketing national of discover further from levels. the market of market 6-8 for market the concept, In 1974 it they operation the in incurring although were failing the the brand production the to reach try sales, was finally -1ý, product the expenditure to and small-scale were 1976. product, a national sales investigations were was first miniature lower-than-anticipated product, the their 1974, which packaging, When this - end of a tub tests of of a jelly- used. pricing, representative place. in research viz, duplicates However, post-launch a modified in the without the market of to had been and fats. which months After causes tests the launch. after the test of not advantages was packed product, towards situation a national satisfactory, to in test it towards oils satisfactory, an area the of performance and reverted product series although firm facilities distribution predicted cooking the the after high the with when heated, attitudes a town which, oil and deep shallow were'its Furthermore, aspect every enabled risks melted container existing in marketed test it and consumer advertising, launch, was a cooking a comprehensive into out it when cold. state as a storage acted put that for suitable characteristics distinguishing frying, oil vegetable and initially their and and" withdrawn was 120 n ý .ter Superfry lard, are compounds, fairly also place oil, static; remained the Fats/Oil for the and During and cakes. market by around 4 per cent: constitute this variations L, occurred which this which stable,, oil frying and tested, declined prodi'. cts which pastry i. e. market, and cooking and deep developed volume three changes White shallow extent, relatively from resulted for being sales of the of Cap and Cookeen, a lesser to share relative market as White when Superfry'was period part by housewives and also, remained the comprised such used primarily roasting, the have would the which did of cooking price take viz: 1 Table White Product Fats/Oil Share Market and Price 1972-76 N 1972 1973 1974 1975 1976 % Price % Price % Price % Price % Price 4 (p/lb) Lard 'Compounds Oil Source: A feature Brands the trade 8.2 15 13.9 15 14.3 15 22.3 22 18.2 25 18.2 24 26.7 60 9.9 61 (p/1b) 16.7 (p/lb) -63.19.0 61 18.4 :16 23.1 16 23.5 21 24.8 23 30.8 estimates market is (DOBs) of cooking oil compounds (p/lb) 63 this of (p/Th) market, I there the high which are share of Distributors'. amounts to some 50 per three main brands, viz: Own cent. ' In I 121 2 TABLE Compounds 39 Cap White c. (1972-6) Share Brand Cookeen 33 Trex 14 DOBs 14 Source: trade estimates The product had certain which When each time of to frying; be very fat, many added or margarine was not while oil those who do not advantages users of a very important may choose-oil use oil a cooking seldom fat. fats factor. because consider in of basis It was also its health the health butter oil of or health, evident advantages, or for shallow when they and occasionally on the cooking and a few roasting, but same and lard for oil and onions food, the ascertained, oil used for eggs, to grilled some women chc`se cooking many it lard or scrambled fits majority house- their also were and occasionally own dripping not butter and roasting the At response. by housewives, tested market. of sample of each on the products favourable viz, white omelettes, although ýýýl lard, vegetables, was frequently being similar, many use their margarine; most fats, new cooking existing frying grilling, three by ä representative the were products but frying, over was tested received regarding and found cook these as these habits deep advantages Superfry wives, it had developed 1972 Van den Berqhs In purity or did, lard; for that 122 Once Superfry were they the The main not spit feature of the lard or oil that it A further or foo4i asset as a substitute it melts not in was preferable that several times, the even On the other by the group, hand, because it looked It new. this varied ment over The cooked the its with was a general agreed texture, of to of appearance was generally the where the product it lard could because it because hardens that packaging a means of even when reused results was easy product the dislike to did that a matt maintained the not product look finish fresh, would Despite be although criticised that disliked and t:, e of and it was also were product and texture, was stored. women all combined problems. features oil', by food. it and provided the notice characteristics a bottle; cooking like'hardened texture S good into indigestion with There according its wrapping some of tub. the preferred. to paper did Superfry with oil to contrast absorbed and oil, cooking be that to because compared back principally of with currently they favourable Other be poured food and that quality or them. gave but was not fats convenience product by people digest clean to require storage; for was desirable and in versatility; white and compared and does a tub lard, of it that they Another smell; any to be its of was considered flavour and it a variety proviso fat or burn. neutral and dry, to be its quickly, it women noticed properties considered did the in product for that oil Superfry the analyse with cooking of nor was seen to women intimated as the crisp be used housewives there tested, product Superfry, was its the the buy advantage product many of were of splash, few of left number bracket same price did the to favoured most with like would purchased. it large A very reasons in discussions group detail. as the emerged some disagreeSuperfry 123 have should a 'whipped because were criticised into was poured container should housewife can (3) and the 'judge tub Several be easier price of the suggestions of group members the the round so that tub would take Superfry lard for forward be given on the quantity should be a creamy for that reassurance the (1) the up less room; and oil improving the the be to was estimatcd put wanted that groups and stack. prices colour when hot fat of store of prevailing the cooking; to a pound were should types (2) an ounce'; would between instructions instead The tubs margarine. and melted by was suggested be brick-shaped The anticipated somewhere It soft broke easily they them. like texture' soft respectively. viz: product, different for required The off-white. for wasp su table product t S+ " baking the as well consistency would to not this spill, main first, best of solid margarine, and would melt consistency Three after conclusions that the qualities chief of merit lard housewife the opportunity purposes; secondly would to prefer that use oil, into a bottle. that many women who buy reluctant to This spend 0 of that texture and the be easy would be should to The product quickly. from the store, should revert. product lard only do not want eliminated and cheaper money on fats, could making, buying although discussions: was that it many housewives but group product and pasrty of these and if and oil, roasting frying use. emanated frying, shallow and, deep as shallow' it would lard fnr deep for all for deep these frying it struggle pouring the problem, and finally, they fats would admitted and the offer to cooking the combined bn used one product who use it that back be Super- 124 had advantages -fry In 1972 while March between choosing lard. over this three representative comments on them as above, into taken ing in the butter discover to attitudes general to build instance, all possible may be well up a composite the aware e. g. frequently difficult it used more a deficiencies or for its flavour. the fat, cooking features the weigh out is but "-or"; srell reasons. a housewife while lard As an example, versatility. their to weight a particular positive market. in health for oil fats, one fat than because of made it cooking vela*ive pröduct the the the with each product cooking give each because economy of to of the of criticised number of these of combined categories, towards used and orasting grilling and weaknesses picture respondents to buy she continues negative, product under- (includ- fats cooking frying, strengths respondents and weaknesses strengths large the of the however, proved, relative towards for general some housewives Only cooking. It the of housewives in was being of research piece was detailed their and giving another of An analysis products. For attitudes and margarine) order fats, cooking housewives of sample it purchased by A respondents. ,, Then in housewives qualitative describe two groups are more 1972, June towards to concept änd their the and name the likely the to was-undertaken study of supplement housewives to This product. to try into the to reactions if discover, involved to restricted be willing research the new products the a how to discussions age group than of rroduct, possible, group younger attitudes older with as these house- wives. The study concluded that the word or description 'jelly' was an in- 125 adequate and incorrect suggests a wobbly associated concluded that and far more transparent. former the Testing to frying this of therefore an acceptable des- pursued specific more solid that while that a product many housewives their latter making make it would easier Superfry. of assets pastry formulation product that habits current for further report, the understand The report welcome changing and the and concepts marketing oZ the The aims for in and is suggested and fats, oils difficulties was undertaken, housewives and often both of As a result and cakes. for function the furthermore it Superfry, be made slightly could appreciate conceptual employing it and find try The study to than transparency. to because product, consistency greater until the of solid was premature product the experience work more with appeared can perform of it the of housewives " but generally cription description mix next piece of research. in undertaken May 1973 were three-fold: ' to First, the brand assess the - - as used aging strengths whether Superfry the total of of white the fats newness for the and south such r in these the a product of the areas; product a short country to concept pilot half ., viz; of products, consumer was undertaken among those I to establish present and lack study pack- identify market, as their of parts and the and finally projected oil various product Secondly, the and cooking of the four e to the of advertising, package. was acceptable knowledge north the concept, in acceptability relative and weaknesses kJ purchasers Because the in who use DOB oil, I 126 and half among those using full-scale sample, who were shown TV commercials, views of the Since it was only product, the product the housewives' ising. to the of it uses had than extent the level of of %jualities of associated in a manner which of The research identified three 1. 2. these required emphasis. a majority. was something thought it fat to the of a high the advert- propensity to but and performance had managed advertising of separate two elements i. e., the"product, or lesser suitable for a greater housewives and cooking other brand did connumication since to behind the had produ, 6;%s, and secondly, minor, the recalled enough idea the that was equally appealed white advertising. that of nature oil on their who purchase oil. important nevertheless, of those !: ho were shown the anertisem_nts spontaneously The initial product, home, at areas: Only 43 per cent more both with Own Brands in the but fat, Distributors weaknesses these the cooking cooking from that Furthermore, the the a of product impossible expectations the the copy proved in recruitment a questionnaire to concept interest first, those it showed successfully, it complete the of the test advertising research product. generally presented reactions and a high communicate that and their initial a high quality to assessment the to asked be communicated, could purchase then before and asked through However, generated fats white of than was a margarine. not the a 'type' describe sample of Superfry thought cooking that suggested name which that oil, it adequately the product and many to ' 127 3. ' There was. a definite as the venience asset high of had achieved against the weakness. with its been On the experience the tried Housewives the watched think into was accepted (i. e. cooking that characteristic The or the not that, traditional could w:. tte or the had product usage. to or be identified to in product this generated rejectors they cannot Super- Whether product existing any other had product. the the one which of they expectations no relation fat) the although on balance, but and after had tried the patterns bore the after that, reach a good product l %A came up to rurchase they found appeared rejected it was satisfied - acceptors to prepared did housewives of two groups hand, it is their that was disappointing. and after other It Superfry that usage into were trial, advertising. integrate fry in frying. was found, However, to purchase be divided on the well performed it and that product, TV commercials, The rejectors, sample by advertising. The acceptors rejectors. by the the propensity could main deep and shallow completed, the whole, of created expectations had been con- its than rather in identify to level a satisfactory of response measured L identified standards, with packaging as the 'ActioxD only claim performance trials product housewives for basic product's quality in-home When the tendency specific research. packaging As anticipated, housewives. Action scores the packaging The company had been standards are generally must reach those levels a did not reach aware of the the set before a test to be acceptable. expectations defects in commences of the and then 128 packaging before therefore instituted. The other major larger of (pro sales the factor housewives London were the " Following the of of tub design been the testing the original was pre-tested it explained the factorily of basic the isement, the was devised the high than level and shallow frying. the for product a high generated the its research interest the purchasers cooking oils, i. e. the lowest 0 the primarily, addition, company over- whether made viewers proceeded in of price to test the were showed purchasing white fats, underadvert- original rather in deep be achieved were attributes that the judge to tendency continued other satis- communicate and these could which despite However, among both the to revised as convenience perceived of performance of it to as in just was still future, Before product, Unfortunately, level This establish appeared the of convenience In appreciated. to and whether advertisement claim main 1974 pane and it. features by housewives. stood post- a modified advertising, product, in the in than ai; the evident advertisement in the interested The new version north research. advertisement sufficiently the product come some of the weaknesses which, had been-revealed. adequately in instance, for towards was was that trial product Lancashire, had not this the of disposed of results version shortened In south. although stage advertising the favourably more trial, after be achieved would in than country emerged from the in-home that rata) into and an investigation the test, also advertisement the product and the in users the of DOB Pýoý. market the product'in October .1 129 1974 in the further tests product, wise Harlech/Westward'TV during First, possible. WestZ which for pilot plant were deep fryers at home for It in was available jr used the food. This test, town of panel kept factory. the who had been staff test area market commercials which awareness it that in a tub in pack and recruited 44 employees diary a usage as well as deep ributed to its setting and Harlech I in trial addition, of the TV area*and it that presence; that it is money-off brand: 300,000 900,000 lop October and 21b, in was advertised brand the - lb sizes 30 second and about properties; frying. encourage in market two in area market The brand 45 second consumers told of has with test the 28p and 56p respectively. at distributed in time a fortnight, launched was eventually selling of laboratories; development were albeit To date, a_pilotplant. a trial company's conditions. a questionnaire. Superfry oil; the of Superfry completed simple the be produced could was undertaken, from firm's the from they 1974. in produced test proposed market product production involves sample out test actual the of plant by a small tried under on a pilot The products because to Superfry that as - Haverford a town the than other- as early in marketed scale verifying evaluation scale, production of satisfactorily haä been Superfry was test the might which two May, in be rectified could on. a smaller purpose a further on a limited market in year, any deficiencies and distribution product was clearly the Secondly, test the and distributed the the that earlier so that out techniques production emerge area, carried were area, television as follows: is - a vegetable suitable for coupons were 6p coupons coupons in shallow distwere Westward 130 (100,000 TV area the that to redeemer they 1. In coupons and interviewed requested on the names and addresses be contacted of research were the area. into the about test This was undertaken. coupons so ) product. women in each consisted towards undertook group Many housewives had experienced the their shops after They coupons. also There additional in it be romparea In particular, products. pound oil users expensive:.. who used cooking fats needed-to made in than expensive this value if it other forms qualitative could of also cooking. weights her be used for The group by advertising it and it stocked, ww whereas many housewives it oil, into was stocked liquid and price cooking had diffiequivalents with their the oil; :that Superfry might baking, roasting, members also present housewife was not The suggestion Superfry so that reassurance product. that research in and promotion. understand usual food. displays wanted than of Superfry some housewives quantity was no more of finding where cooking in Superfry much more that to frying aroused of Furthermore, the in even to The majority and deep lack of next fats. translating could that difficulty Superfry cooking alongisde culty find to expected find brand. had been because to the difficulty complained discussions group of Superfry of progress six shallow interest was difficult was the of launch the examine on the research attitudes consumer examine to commissioned 1975 qualitative January that latter the and all research Two pieces Superfry their provide could Post-launch former the of was be better and perhaps expressed a wish 131 for information more on the be poured back into as long " ion a stronger oil erature could suggest- a higher information for to wait was the withstand required can necessary point Finally, Superfry of Superfry temp- was regw frying shallow to waste. avoid In that be preferable. amount last the to container would on the uested 2. Related before i. e. was it the container. as suggested? that interval time 1975 another February W took study and non- among users place (A to users the establish to frying and therefore frying and for placed cooking oil far housewives in its qualities; and finally ." Superfry who purchased wives that which it those appealed received housewives who had other frying agents was convenient, purchasers showed favourable this used it opinions fat, R the in to relation it could to level the of usership brand. the it of frying; was superior the less caused the than more test to mess, Superfry product to those oil; Among all price; house- was also concept cooking be reused, packaged. was an objection oil cooking that thought most and shallow product who used brand the deep who used and that because of who had tried were: research for to housewives an encouraging how and understood particularly from and attractively there had re- it oil. Superfry tried Superfry of deep determine to how those qualities by hour-wives favourably aware for used how far respectively; to'asses emerged more who used white were its and cooking facts The main general which fat and white understood fat white shallow was being it extent market and also 132 Lapsed Usage During the market area months of caused concern a result in reasons for early deliveries of interest for portion share of At this brand, admittedly if in a4 Superfry brand per cent that As the repeat that showed however, problems proportion to subject of of the time an estimate a consider- of 5o per cent was loyalty share of the market. had indicated had complained purchasers for a substantial the brand. showed that into for market. survey high; remained accounted the of would result research product the search the of summer which likely the The results the rejecting of error, assumed this Previous in and price long-term degree brand. to re-evaluate by the level in brand the of low a very was initiated and to the taste the reasons able decline, for to relating development the 1975 a survey August to test the but encouraging, fall to into Superfry of extremely had begun level level likely were about the launch the of weeks 1975 they purchase the Check that the pro- a certain had a 'peppery' product Z taste although could have thought inate samples frying version ha.' not appeared been that the it Accordingly, housewives with using the in reduce there was a suggestion any of effect acid. In the that oýerlect-P and cheap Superfry, this adverse worse lard housewives than the help might and with version effects. who use alternative of On the cooking version. was to fir elim-'. deep an alternative that tests this among oil cooking in-home alternative taste it product, was undertaken of that the research Since problem. the acid version a different would taste who use original was no evidence See agent an alternative'hydroxystearic there adverse by a setting caused problem. of to be a major the took place product contrary, oil found the 133 As a result the this of research the company decided not to proceed with product. A y' " It been the have in the result that taste change could probable due to raw material costs which reformulation product of a slight the development product, of took place of at a very advanctdastage i. e. when the pilot product early and that plant was established different investigating been had therefore a slightly research product. is I 134 5 CASE UIISTORY Product: Persil Firm: Levcr_ Bros. The washing Purchases annum, the powder of market higher risen £224 min "" of Furthermore, suggest for almost past 20 years by the made washing have washing With development form part of the and the ironing. o ,: for figures these dishwashing specialidst the of example,, washing than used for task, or higher per reflecting automatic little was formerly the 1976-79, an easier somewhat no longer they purposes, been of washing tonnes annually, owners require powder cleaning. cent clothes which for 347,000 to Between 5 per of features. exclusively prices. powder materials becruse these of purchases and household used by an average have which the distinctive several 1979 retail at grew predominance, powder over consumption machines has market washing have clothes Automatic products washing powder " market. is The market distributors' or Procter 'own name' brands of international develop to potential Colgate-Palmolive, (Middleton) Wilson, by two major (DOBs), own brands To3ver Bros. several dominated the & Gamble. multiple of Besides which products for the (who have acquired and Teneco (who have bought distributors companies and the there are technical U. K. market, B. P. of by chains, the of manufactured two these have a number plus are which and supermarket branded manufact.: urers A none organisations Henkel, Limited) manufacturers Robert up Allbright own brands). i. e. McBride & 135 Furthermore, this (synthetic dtergents, detergents, ations suds existing in types enzyme and by frequent pace and in based reformulin developments with fabrics, of innovation solvent addittives, powders), keep to products technology, machine washing by product characterised with powders and low of has been market the washing powder washing market. Two major types of factors washing in machines, have affected powder, viz: machines, washing the temperature the predominance different the particular types and at (b) which of of consumers' (a) the in changes clothes man-made are front-loading types of fabrics and the Ownership washing automatic Furthermore, because declined to tendency mix of loads of 1 Washing Machines. 1962 197 1978 J7 74 76 34 18 ILj- tub 12 3ý 3d Automatic* 1 ýS 32. Total of washing. Table aý different fabrics. has washed for ownership growing of purchase preferences home ownership of TYp Single Twin tub * Of the cent 1.06 were min automatic front-loading. washing machines sold in 1978 over 90 per 136 Shirt b. materials 1977 '1962 '1975 7 31 10 90 23 28 3 56 60 Coloured 20 80 88 White 80 20 12 into two broad categories Type fibres Man-made Cotton Mixture C. lour Source: Lever Washing powders light duty. consists of such duty heavy past can be divided The heavy designed cally the pros duty products for sector as Stergene, delicate washing held market predominates: by each and duty sector light the and Lux Flakes, Derft manufacturer has specifi- The share and fabrics. clothes heavy - changed over the decade: Table -Share Lever of Heavy Duty Bros. Procter & Gamble DOBS and Others Source : Trade The most significant 2 Washing Powder Market. 1969 1973 45 47 51 52 44 40 9 .7 1979 .9 Bstinates change in the heavy duty market over the past of 137 r decade has been and Surf t, '. tomatic by Procter matic machines expense types other Market of 1970 1969 Lever Bros. Different' of 1971 21 20 Radiant 9 11 Omo 89765542111 Surf 5689 Persil 20 Types 1972 20 washing ,r and Bold front-loading of (Persil powders and Daz Autoautomatic washing washing viz: powders, 3 Table Share Bros in for-use of low-suds of by Lever Automatic & Gamble) the at introduction the of 1973 Heavy Duty Washing 1974 1975 1976 18 19 10 10 Powder 1978 1977 19 18 1969-79 1979 18 16 15 14 19 23 976642221 Drive 98887 6- 12 7644 Low Suds 123468 Persil Auto 12 10 11. Surf Auto Procter Gamble 12 Daz . 13 13 . 14 10 9 9 9 7. 6 8 6 6 7 7 6 6 15 14 14 15 14 13 12 6 6 5 5 4 12 .. Fairy Snow 10 Ariel. 22 6666 Tide Low 999 18 18 17 6 6. Suds Bold Daz Auto 4 5 6 ,6 6 6. 1 .9 1 138 The tonnage 1979 low of sales duty heavy low-suds of suds washing powder comprised i. e. £75 min. market. powder ± le 3 siýöws. -r washing ( between dDubled powder washing ib s -iok 34 per for larger Bros. higher their compared this of the of share 1969, with (See Table share i. e. is market total 44 per cent cent the of . factor and 52 per -;, .- -r,-A accounting in 1979, cent in market powder 1969, t"' Pýwý"er thts major washing in by c.`a,sky*% ý3- -Pow wC.skc Lever 1975-9; 1979. 2). The product Automatic Persil lly formulated. for front-loading have to unsuitable drum causes excessive washed of foaming, then to onto only clothes Low-suds powders the the get powder be able to dispense with the smaller amount machine it must becoming machine floor. washed high high-suds washing the rotation to either to order washing of the. being clothes foam and/or clogged water clog from significantly and disperse not suds suitable the avoid is powdei risk used properly. performance of in If, of differs and has different may lead especia- country to make it because machines amount this Conventional which kitchen a small washing must washing or do not these foaming in powder performance machines. for inadequately spilling washing a low-lather washing are powders first was the used other the characteristics: automatically, in up the a front pipes of washing powder and when combined loading the automatic machine. As '139 o1 these a result a more complex Persil Automatic the the of their well-known A new opportunity loading the rate market Continent as the predominant ily in occur had become had not the it was not major technical, to develop work already who owned front- (see same. scale product Persil. marketing a new brand 4 Pat, was was neither the In to modify. order to and financial it Table out by other 1 a), of the necessar- twin-tub machines which because Furthermore, a low-suds formulation resources that Unilever would a development major to the become established of the avoid adapt to of Although grow. this that elsewhere. was decided forecasting would ownership front- disadvantage had quickly certain was of ownership of machines it if market, difficulty the be economic- not would for market powder as the rise characteristics possible carried made fulfil to it one particular was not because country washing restricted machines it type, on-the found 1 a) a product purchase available, this to these of estcblishec specific brand, ownership firmly of was the so early this occurred of Table as a result the However, front-loading on the then the be expected expanded. wh ch the at (see specifically Although because could machines entering in a new product. ' sales to unable advertised; existed straightaway successful,,. time technically obtainable. clearly of viable ally is houswives product little readily nor introduction powder that manufacturers suitable and At of who were detergent distributed poorly but machines The only 1968. a minority comprised major needs. in was introduced washing either washing product, U. K. market loading low-suds requirements, washing of Lever powder, Bros. of expenditure would British companies in be necessary requirements Europe into 140 the formulation, technical washing suds to market the distinguish new product it it market Then powder. from as a variant flexibility designing in be made whether needs. to conflict with this course avoid that initial the promotional Bros. of action size levels it of would or to whether courses be a greater degree had For for without of had two action be confused that most the expense of ibility would would of established be lost need ý. to of sales be taken the use of an existing an image to create However, First, might in attitude deciding this consumers ran be at some degree consumer account in names which Secondly, existing into similar brand an existing advertising. new product brand. as the resources. disadvantages. with the adequate economies the example, important difficult of achieve of would help by two brands the to promotional investment heavy limited make it would be major would unsuccessful and the variant indi- experience pröve difficult the established and understanding limited there and presentation. product market of be compromised to However, available with to meet have would the prove some modification -- of these brand that of well launching successful, would awareness brand name with brand Both might of might for case if that, advertising risk brand. brand. parent a new brand of The alternative might powders, brand the consequently addition, distribution course which washing brand aspects of small up adequate In all the resources to build the had to a new name and pack an existing No aspect consumer were decision major an indep_ndent of brand. the Lever of The advantages because policy and disadvantages. advantages cated and advertising with other a low- packaging the of to the the flexthe basic presenta- S 141 tion the between A decision A. variant the for approach of both approaches ment resources ties return the area which Since the and with to be examined first of however were which target group. Unfortunately, target group's shopping stment it trade, grocery and anticipate growth in ected the it of 'low the product and distribution was decided advertising consumer to would awareness key' Last among its the of the about pattern inve- little Since the through a low level success would stimulate distri- of a slow whether take brand higher through raise was lower trade the sales test failed market levels of some sort to dis- unsuccessful; group grocery 1966 were in Skip was clearly abandoning and thereby circul- for target the discover the low distribution marketing approach Before Yorkshire area. through level. predicted the of The brand's the coherent aim of brand. proportion be deduced. possible*to in results appointing. awareness widespread that distribution The preliminary secure was only bution substantial could chance advertising comparatively no similar manage- difficul- the small, was very habits to was available by'a that U. K. population. the of with read ations in marketed cent the independent the - customers potential a few publications to was confined 10 per about Since long-term fewer was test product decided offered which successful, constitutes number approach or make without and tested. if the name'Skip the to was therefore It be developed to limited, were difficult was clearly evidence. have would brand (an independent alternatives brand) further of was sal,, ected Under two these an existing accumulation the'greater new variant. than to -attain altogether in investment of exp- threshold an acceptable of level. / k 142 .' This introducing bution. the trade special Both these did improvement to Persil test reasons; long-established Its association the early for 1950's widespread 1960's it machines 'introduction effect lather concern in I' which gave the and sales new brand of Persil. develop- despite that in cent of vehicle at a better machine washing the total with for fulfilling the the performance possible Furthermore, detrimental as the market than machines. was its of middle the relationship aimed front-loading in result a suitable be was a high-suds technical changes direct it also could it 25 per over specifically these about image cn the for was this powder Persil detergents synthetic parti- and recommended the with made Persil a variant products The major of It which of a low existing powders, it found although with from dating strong, incorporate keep pace temperatures. all at for an equally with manufacturers to and lines Bros. clothes machines, of Automatic. Persil was soap-based, accounted market. washing for it degree the market, brand machines distri- cost. was very machine washing to washing still powder need in penetration washing machines washing use other washing reformulations and in technology the established had enablec, Persil ments the was a long washing Frequent powder. Lever it Because front-loading brand, for but test an existing and and availability sales; the to for in from time, stimulate investment extra preference when washing purpose. of in with this used of to awareness withdrew reputation suitable cularly firm a variant was chosen several the first the order level the justify the As a consequence, decided improved measures not in activities and subsequently product, for on. television advertising entailed "143 characteristics performance could confusion Persil it users. brand also in On the other types of First, the risk market had to Persil was relatively in short the test high as, if not area test carried to Persil name could for market the area national test which had Automatic because chosen the of was important it use, be as should Southern average. Automatic, design, market since the how far consumers and their attitude would. be an packaging were between likely towards in the had been reserach differnece be resolved only in an area Persil in the therefore criteria. emphasising to the be confused the, new brand market two place and not situation. be asked product these package test for in the Persil could an artificial lather parent considerations. in since machines tLan, met in two brands, standard low best be minimised, potential machines higher by two Secondly, limited these of However, The price the manufacturers machine and preferably lather-intolerant. on the questions small, a, very factor products. by the had to marketing out important Persil weak. term o%Tnership Before by washing was 3etermined be fairly that Television that The Persil and up-to-date. by was successful, by demonstrating market to few relatively in image Persil's new brand the this withdrawal and even if different, were machines. The choice `these hand, to be recommended of Automatic dissatisfaction had become more modern continue all result improve help would Persil of for two Persil reasons. was more Automatic First, expensive, was higher the formulation and secondly, for than for the small a size 0 144 of the were which The brand was advertised educational approach. Automatic keeping up-to-date leading manufacturers washing machines of the Persil about the dispelled by Cie our the after Persil, Persil this was found that Automatic; the due to brand there was little favourable results matic quickly powder pated introduction keen the that J with carried away from sales because but because frontloaders washing between of its It machines. and Persil dersil were mostly Persil Auto- machines Automatic. the firm distribution. in name, washing Persil the a competitive Automatic of of confusion stimulated Persil growth in used front-loading of rapid of national for similarity was investigation was taking association be accepted should suitable was also before into brand previous on Persil effects research front-loading of These Automatic most and its existence the the lather the adverse advantage and the up rapidly, a market Although non-owners of of an important indeed, built possible results was not low relatively brand's and that front-loading both for was types. quid4y Sales developments, Persil other very name.. launch. had been unaware as for as well Persil that stressed mächine now recommended scale and Persil Persil was also new washing was obtained using concern with of a straightforward between it explained; economies powders. with The difference the of tonnage on television was clearly. Distribution higher by the enjoyed benefits the allow would.. not market. to It market washing product should suds-intolerant extend that was anxious as the machines by its become brand of Persil washing before the antici- major rival. It firmly established 1 washing machines weakened 145 the link close for was suitable important that to Persil washing Automatic than brand the and the of also pack Automatic by the in This in the manufacturers a commercial very little be used to to supply her newly entry of for future a smaple with acquired competitive ; roducts. established as the dealers. because prrposition Persil front-loading as the brand brand tried expanded market By the end of recommended from 1971 it until At washing first had also It of with every machine was machines,. position be the would in purposes. educational was negotiated that-it ensure front-loading for the safeguard a contract the 1970 by outset with was sold on advertising. had anticipated, Procter In Southern formulated was still it was not long entered the & Gamble, 1970, and tolerant) market most'Luif-, why it explaining 61r automatic the emphasis nationally be educational manufacturers 1970-79 competitor, been powder. expenditure Competition the washing and electrical been in any other had become Automatic market. for Persil was considered front-loading compatible to was to and encouraged As Lever machine was more order housewife Persil washing continued manufacturers machine. of some degree, to machine endorsement powder washing same time, the it to that years addition, continued advertising several In had been launched Automatic Once Persil the the obtain up over machines. washing machines built had been that Procter & Gamble's Television for all doubtless area. types of because considered too washing small Bold, Persil machines front-loading to their low-suds brand, Unlike the before justify major washing was test Automatic, (suds powder marketed it had intolerant washing a specific machine washing f 146 This powder. housewives that .I By the specifically for was selling 24,000 heavy duty formulation of the Since low-suds to in quickly tons of powder low-suds euch (Procter A combination of competitions, free . it 'gss been brand, a nca devices discounts deployed build to and profit from rate be of 10 per is seen primarily term used educational J'Awrýk CoMMO,, front-loading of cent by informing most 4S Daz viz: Bros. ) samples, Temporary share machines of sale, market. In economies achieve the of of volume sales increasing was still annually. as a means of the effectively. go, up the increasing washing and and principally to has in 1978 and as advertising, such the Furthermore, (Lever Automatic and Surf Bold. firm Then, share of the market. of the in introduced were powders cent to market. an expanding costs, long can as each as possible Advertising the intense, as quickly unit the has been of 1973 in enzymes competition trade offers, per difference to it Automatic brand, established competitive Persil some 6/7 addition Automatic 1979 ownership at firm In nationally to apparent machine major washing & Gamble) have Reductions lower share 12 per cent achieved Persil was the market washing The major market. became machines, amounting a second a larger 1979 respectively, Price powder of was relaunched washing two brands the DOBs of Automatic Bold it once type which annually, washing secure 1974-75 for suds-intolerant washing sought time introduction the was withdrawn uncertain were was intended. Bold of version consumer The t-Ica"Iºnj tsSeoý Nýcý. 1 _LýS kt1 the what advertising w0-4; ý3 b14N: demand over stimulating brand theme w%, gL4A4nf-s ýýý rw and how offers, has Lgve oP+KghC--4%. 6e-# mt 6come, QA -Nk Q 147 11 sýi. ýsreýýý. goo"ý_ increasingly Closely from the drum of the time to promotions additional incentive feature in are in are organised annually the brand, to manufacturers Bros. one or, more Lever are etitions g. e. a specified as well gains in In the participation retailer's I in of proofs from receipt in including the advertising. conjunction participants of purchase the retailer's the retailer. with the to and gain four Persil machine British with from collected Automatic. to required Lever This trade _Compretailer a specific are from (which Automatic Persil tokens about view washing promotion with promotions seven competitions between an of point consumer's own promotional Furthermore, purpose, consumer or of a joint for machine be included to space, products return products, instance, this number as a till in has been among retailers e. g. link close use Persil washing at Six on it, machines); organised also Tesco. the ticket rail, Automatic change the as prizes washing a 'free' provide display may not advertis- machine all the interest. interest trade emphasise and front-loading of which of a different serve Persil washing machines. own promotions. featured sometimes to additional retailers' focus but and to generate provide participati'n Rail to particular to Automatic washing purchase purpose with machine initheir use housewives Persil haS washing a new washing of employed of for continued packs to brand, the have have Automatic long-term the purchase advertising short-term ýnd Automatic front-loading their As a complement ""' sale, they full-size for manufacturers Persil encouraging and negotiations recognised, advertisements with in samples Persil addition, the associated of value Automatic in in who recommend machines. the In . participated manufacturers ing, ý-{5, Bros. send products, tie-up exclusive schemes, bonuses in are and nego- _ý ti ý_ -ý 1 148 tiated with and being the Automatic is major in retrial of the most shopper, sales distribution of been of to of of try Persil Persil Lever sales penetration Penetration of of Automatic July Jan July 1978 1978 1979 1979 Jan 1980 Suýrce; ýe. ezfiw f "eS the with force Persil are in as the scale trial and has retailers accelerated, made through encouraging as the as well four purchasers less loyal have distribution general helped Automatic, Low-Suds Persil 1977 has 'price- Automatic. combined Jan 1977 Jan between consumer, promotions, Bros. space on Persil or encourage trade retail sensitive Year July to sensitive off' on a larger introduced Table Distribution 'money either TPRs can be effective price floor and expenditure and as competition sales outlets. DOBs, the strength product, cent distribution *These have shelf promotional TPRs, of and concentration 50 per brand These of has become more price 'intensified, of form gaining advertising. retailer. proportion the packs. consumer e. g. in featured However, marked' as a means of retailers to ensure a widespread viz: 4 Washing Automatic Powders, 1977-1980. Bold 63 47 66 48 70 52 70 55 60 47 70 53 73 55 149 When Bold were frequently more of Automatic Persil to volume achieve discovered duty from washing was pursued The following took bett'een " of two further Lever Bros) DOBs. " 1977-9, brands which table seem (Daz the and also Automatic, to principally of Low-Suds Washing using Persil Automatic Bold 0 Daz Automatic in of market DOBs Others Source: trade estimates I washing share which Automatic, the market share of y Market (Volume) 1977-79 1978 1979 58 60 59 25 21 24 3.1 6.0 1.8 2.0 15.4 13.0 8.0 1.4 1.4 1.0 Automatic heavy Surf & Gamble; reduced was introduction the 1977 0.2 it front-loading Year Brand Surf still 5 Powder margins because changes have hold of 1978-9 were effect sales reducing of in Procter TPRs those whereas policy the 'mix' reductions, had purchased Table Share cent, many consumers its of by offering price further shows promotion deployment deliberate they although powders machines. place that Automatic and sales deeper still Persil of particular, by 100 per This research in and with cent. sales by the and, expanded by 15 per incrased however, Bold, than 1973, advertising techniques promotion sales by its 1975-8, Between in market affected adversely campaign. of the entered 150 Case Firm: In Foods Batchelors and Brown old this and Poulson established brands custard of. instant introduced - were Foods) - Batchelor's custard 1979, April name in a famous an instant introduced also into simultaneously almost In market. (General Bird's market, custard Ltd. 1978 two competing March the Custard Quick Product: 6 History powder. Quick Batchelor's dried milk this mixture both is a mixture sachet. it liquid Furthermore, the addition of milk consistency of to The for need saucepans traditional unlike is and sugar added custard. the because is water and sugar powder, custard to reconstitutes eliminated. greater of When boiling and labour-saving time powder, guarantees a foil and stirred and washing-up custard in parked is product is Custard which required not end result: The product Since its introduction an instance by Bird's, with Its history increasingly Over them have stocks to three times of a brand hot pouring 63 per cent in their a week. the the name which of larders has become was served inter-war sauce; at most cent when it serve times. of it dominated synonymous as a cold period 75 per housewives has been market custard custard from dates as1a way. this 1839 Originally, a product. modern in is custard, Custard pudding. was taken used in and most is served of up r 4 151 The market The custard was in market first 1969 when the until During this the stimulated 1956 level. to During was little prospect the period of in growth; sales this and not 1960's, some £13 min totalled nevertheless there (at 1977 prices). . cgveral factors custard powder. the the market; incomes to prefer towards I ghter had combined Among these tendency result decline of of for canned a technical the stimulated desserts, Year 1969 at and the followed 'afters' on and with rising of work change in taste the of 13 first by Birds later market, although by Ambrosia in the 1975, slow viz: persisted, Market £ min years total as the became possible canning) - aseptic several powder Custard (which custard advance; expansion custard of facing competition choice wider many housewives Table Value the the sweets. and then and Heinz intensify were convenience The introduction of to 1 1969-77 (at 1977 prices). '-.-, -Powder 90 % its seemed little as there market to contraction. the during which it short-lived long-term the cans. custards and restored cent contraction in made by Bird's flavoured of against 1952 least at were was however sales slow no advertising decline a number market from was introduced custard by 7 per in expansion stabilise or of 1958 of decline this stem temporarily market latter the to in This sufficient convenience efforts introduction the with period long-term slow ! _:~-Canned 10 % 152 Source: the of trade in Thus the 66 16 1977 1977 estimates custard 'some market; consequance canned 34 of of the by value, predominant custard canned cutting. price custard and powder in expansion intensive the retained still powder packs sales share of had been The relative importance and servings are outlined below. Table Custard " 2 1977 by Value, Market Packs (%) Powder Value £10.6 Packs/cans £50.0 (pints) Servings Source: It for can trade more than the various of two be seen one third servings sectors brands ($) Canned min (34) £33.0 min (40) £25.0 min (4) min (6E', £5.4 min (60) min (96) . estimates therefore proportion In £573.0 and Servings were: of that total of were the whereas still custard canned sales in the value, from, custard market in in custard 1977 accounted overwhelming powder. 1977, the shares of the 153 3 Table Powder (value) Share Brand Market Custard % Canned % Birds 61 Ambrosia 36 Own labels 28 Heinz 30 Others 11 Birds 27 Source: It trade estimates was into introduce i_e this custar in preparation thickness the familiar, it success. them ensure dried producing and distribution if Birds develop would to strategy. be taken it that it future account date, in because setting of the important technical handling trade. grocery which that could aware other prevailing this ' Finally, the not that firms financial and and vegetables) had an efficient and that product, was un- several the soups the however, it which was confident advance of added. water had it (e. g. to degree the possessed First, was, a similar Nevertheless, I It speculative into with company was a technical subsequent, a market geared the by competitors. of Secondly, organisation product quantity products successfully. as important, imitated need was entering would packaging this the believed in of by varying, be involve still e could to canned over advantages and determine custard nevertheless expertise and just had several the housewi the of company which which decided Batchelor's that situation packaging, required Although Assets market Quick Custard lo. a es ý ca ,4 ighter , the 1977 formulation easily at be some particularly factor targets conditions would and in food 154 manufacturing decisive factor marginal to - severe by excess caused leads costing their homogeneity of margins distributors own brands it sold more cheaply than the target intense competition in technially are hand, other pressures to multiples introduce to on seek out can be copied are, then DOBs which brand, but at souzces, not least manufacturer's by increasing When new products easier to simple followed the competitive food tendency and a consequent grocery (DOBs). find financial by competitors, and the stimulates retailers easily a firm's capacity On the supermarkets distributive be the - when products discounting. price the introduction speedy can often advance whether one hand, On the manufacturing copy determining in can be attained. for a technical and retailing a higher retail margin. mew products fortuitous quick technical in custard general research laboratories. to needed from emanate 1970, for being undertaken It was not be added to hot among a sample In present the Custard was the applied to the new product marketing quick of the the result firm's product, new process. I was a spin into proceeded milk, of dried no doubt of version the by the the a firm's mix custard unacceptable proved housewives. different soup product link with recalled and therefore version development a technical instant foods taste and the a off-from because with and significantly of first The company's instance, had no direct department custard of development. when tested 1977 a variety the its quickly - which of Quick had been 'Cup-a-Soup'. earlier previous Although research, experience recognised the the with a significance 155 In 1977, its undertook housewives to formulation, factors In discover how fur tests viz. familiar needed; scored tested the that to texture to Quick and easy form; consistent product considered the Custard usual was three-quarters of the company's the compare the for these the a variety the of thickness of the in cowparable that-it taste and to serve custard. Quick of quantity and was quick traditional served had respondents be prepared would same, as the - the Custard housewives period, preferred a pint no milk Quick attributes samples they of good quality; was served; than relative no messy pans; respondents since The results Custard Canned Custard, September showed but that preferred was easier standard Quick of - Heinz products Custard to was Custa'-d of contents custard. and evaluation custard; that that suggested Custard a stipulated frequently per which these extent Quick end result; was highly custard also As part for for prepare; after Custard and that more to home for at Research canned of samples was acceptable custard On all instance, Quick prepare; pack and quick quick For market housewives of inexpensive. can be varied; highly. samples canned powder, attributes, potential the by asking of large with and to what and price, company modification. product merits texture tests Custard Quick the was marketed product research market taste, evaluated the standard required the easy before therefore, and Brown Batchelors and quicker in was liked because it two a test equally In did competitive Custard market with addition, not a comparison Instant & Poison on sale & Polson. tests against was, undertaken 1977 had been to Brown research market need area. Heinz canned Quick preparing whisking in a 156 bowl, led and its to Despite in knowledge the dessert the from research this were technical process considerably of for custard powder (a firm were lead had a technological in already Batchelors the for market Quick Custard a factor which well-known Confident be some time. the* that work had become was based the stimulate would also were and would own development their Custard. Quick of and blancmanges) custard, from on which simplified, in the in stage controlled the marketing conditions marke of place where the unavoidably artificial the acceptability of Test marketing the assessing larger known, last & Poison they evaluation entry competitors. The next the Brown aware routine and flavour colour superiority also This that that product Batchelors the an instant launch to maintaining " market preparing in changes some small was lower. price notional nine testing performance test of the of or methods the a product is a year, which the in are used a real-life and which has to forecast method of before situation incurred. laborious from .1 conventional is performed product different instance launch a long how the invariably first is area national marketing months in are the from away move and discc, ver circumstances a television expense however, up to in process. testing, a product was to As is process several well which may important 1Batchelors, however, the Marketing Mix Test which is also undertakes between the individual an intermediary tests stage of research undertaken on formulation, name, price, advertising pack, and so on, and in the market place. testing It has been designed to test consumer to the whole marketing than the individual response mix rather (Marketing Mix Test', K. See 'Marketing elements. Services -Clarke Manager, Batchelors) Resarch Society and M., Roe, 1977, Market Conference for further details. Proceedings S`.. drawbacks. In it particular, to competitors enables find out 157 in forthcoming the about instance, this in activities findings. In distribution to refuse in area the - Research Ltd. ' an area number of launch. national test years market area of Quick mini-Van Test' this market, that its the valuable to Custard to introduce expanded Custard with total under has their assets knowledge product. custard the In market in a making more realistic in if a television of Market many important has to a a to predictability advantages respects shown over guide a reliable comparable even launch. in experience provide test marketing, by Forecast diverges method test a full-scale marketing - operated being of method These a similar the of test of results Mini-Van and confidentiality. Batchelors risks nevertheless Besides economy, about the branches, use any method, an alternative Although test to anxious procedure employed judgement conditions are often their of only market adequate multiples disadvantages reduce normal Batchelors preliminary from to order the of place firms test achieve national a selection acknowledged because imperfect, in the to These product. invalidate because market a product these persists In a test stock Despite etc. it in promotional up the may be difficult it addition, their and buy effectively often as had occurred a product, of intensify to area, particular tactics competitive them enabling the launch national of a speed,, were particularly that a competitor was test, Quick the Mifi-Van by over 10 per cent. (1) sales -The major features Mini-van test are: of'a are made from a (2) a panel of 1000 housewives is utilised van and not via shops; instead in a test of the random selection, of shoppers market area; (3) these housewives for the first time of a new. product see details by means of magazine in The Home Shoppers Gazette, advertising sent (4) test to every panel member each month; in 16 completed usually weeks. 158 11 weeks firm most important, In view of first decided in followed these the This took place with their launch of Instant test marketing in sales from the in had been order later weeks in planned only test, be to & Poison Brown three in was Mini-Van 1978. March Custard than was earlier repeat nationally product shops. believed of housewives of cent. signs encouraging introduce to level a high the Batchelors original by 23 per was purchased and, achieved. the brand the Moreover, which their programme. 6 Firms product " this to eager to be ahead because of the are sustain sales satisfactory to Between March the unless advertising, and 20 per cent* promotions comprised in reduced price. the with market and consumer alone, however, is itsalf has proved 1978 also a new trial unlikely Sixty per 20 per cent. smaller specifically included samples demonstrations retailers the to voluntary product, Quick groups pack to buy to trade; and at a some E4-5000. Custard, a promotion and independent and a leaflet the display advertising, amounted to on The consumer on the off' press stock sum was spent promotions. '2p on reductions enablatconsumers trade addition, for of which this on price of offers was expended of cent. flash was launched Custard some £600,000 on consumer and in-store designed Quick was expended In i distribution product advertisements To encourage trade 1978 when Batchelors television couponsr rivals consumers. and marketing. " promotion in their factor This and December nationally material quicker ensures. normally of which gave grocers details of I- the promotion sales to trial encourage Once Quick rapidly, effect been Fv. 1 r. Q ra S ý sales custard a,, ý r... Custard of Custard Quick into effect the had {cLT sales _ 4 1978 July-December, 53 Powder Canned major custard v.ýoºý fin? -ý (Value) Market canned powder; c very simultaneously almost custard Its The entry market. affectedl L j -h. 1978. of custard of adversely hove. half second Table. Share coupon expanded sales nationally instant of on the however the total the two brands little ýa in expand of have was launched particularly mpsket off purchase. Custard to a 25p. and incorporated campaign 159 22 Custard + Instant 25 Custard 100 Source: In Trade 1979 early custard price market cutting some of the of the the took place, by all the slightly competitive major promotion entry lower brands with 2p. has the led of to trade with off This intensive increasing deals of emphasis at the by all expense promotions. a marked maintaining brands, own brands. and consumer offered was situation some power-prized expenditure purpose instant as distributors Batchelors the the sparked market. on promotional instance, off in as well quality, situation for into Bird's introduction 'particularly 1979, of and immediately by the manufacturers advertising, end of predicted further accentuated This estimates pack competitive At 160 in prices grocery trade. By the beginning in. volume further traditional 1980 of compared had expanded powder 1st. custard Instant of Custard Market 1980 v. 1st Canned Index Quarter Source: Over Trade the on a servings custard 12 per instant As at leading 20-25 custard 100 82 the 84 relative basis still I of powdered custard exists custard 3 per ample different the cent. scope for types of 85 per cent; instant which would seem' the expansion of powder. the within - Batchelors, cent. share were: and canned there 1980, brands per cent; that March '79 estimates same period suggest custard 154 powder powder custard to and 88 custard Traditional canned still 1979 Quarter powder custard of sales instant 1st Total had declined market 5 Performance Quarter the of cent. Table Volume sector volume in whereas 50 per by custard 1979 as had with custard, powder total the independent the and also accounts smaller share of the instant custard Bird's, and Brown market; while market, Bird's each & Poison of had - the three some had an additional t(, ( 25 per cent. the the market severe competition brands, particularly In marketing this has not introduce provided their r date trade opportunity own brands with the of market between to multiple a worthwhile the small, in major individual of instant was divided surprising low prices for flavoured The relatively hardly discounts the situation, the is has occured which in cent. and DOBs. by DOBs to into segmentation 10 per brands smaller held its through The remaining custards. between share. share view of of the manufacturer retailers. manufacturer organisations price 161 differential. )rands to 162 CASE Product: Mr. Kipling Firm: Manor 7 HISTORY Cakes Bakeries Ltd. The Background The development the Manor in regionally the and it 1950s early faced strong guarantee in competition flour, integrated business. a large number of regional these bakeries selling varied packaging Bakeries and difficult was a gradual required local control. packaged cakes were In of view economies of because and degree 'tray selling diverse the con- high 1960s the quality, British but operation, business the of nature brands unadvertised had achieved these had quality, type, very a Most During two small marketed, continued to facilities, clearly existing products. into that decline new sources the of limited only facilities Furthermore, the of turnover the the for specialised main marketing instance, in sales, An and profit. be related should company, they of bread volume company's position closely to possessed its con- and flour- flour, assets the of and financial advantages, any new product Although in and weaknesses strengths marketing production products. slow generate conducted revealed based being the needed investigation siderable Although partly some were making & Spencer. process chain, businesses. wholly cakes), this As a Bakeries bakery the milling, regionally. company production Marks the gain almost on rationalising concentrated distribution for cakes to though unwrapped flour up a bakery and local some were delivery packaged standard the 1970 by market. By 1960 British cakes, widely: (daily fectionery' it were build to and partly acquired was in declining a slowly was formed for outlets more vertically of in and nationally Rank business Joseph the Bakeries British result, of 1967, Bakeries. In to was launched brand back to 1960; cakes dates of Mr. Kipling and concept of the company 163 a large comprised: of a short delivery of stock stemmed from the knowledge of had been operation into undertaken either consumers towards branded The financial introduction many competing factor which industries biggest individual bakeries amount of basic which the the than On the little three the selling the company also pointed which was a products hand, because had been research market and system, advantage other into grocery the marketing two to life shelf short the requires or could make use company value food of attitudes there could which the owned one of facilities, were A further plant. a product company acquired production existing investment for the towards was available capital the research had been of introducing of was that development process of investment resources existing utilise which in emphasised for necessary marketing basis, the of although demands of cakes. a product because a section A further cake market, position of facilities, the daily van tastes. on a local the and expensive experience consumers' in cake marketing system. company's distribution no more of of controlled rotation with equally life a shelf the experience connections were for essential as cake; characteristic a carefully an efficient this has is which factors these basic of detailed such which cake This operation product and close All packaged weeks. force products; trade. retail of life shelf sales van and some of had undertaken food the a certain work. The Cake Market Since should product drawn the included revealed the that early 1960s cakes were indicated investigations preliminary be flour-based, up which In it all a short list of potential a future that cakes. the available a large data and trade market, i. e. published and expanding 5 per cent annually. Packaged cakes were the fastest sources at was worth more than £100 m. per annum and had been growing about was products that time in value expanding at f-i` ii ý 164 sector the of distribution firms like Brands. & Spencer Marks The two most the to raise in this as was low, products The standards. Own of Distributors a number firms important conclusions the proposed new product revealed the growing through multiple Several bf ments sector market Lyons were in a merchandise if cakes it life national brands pressure would market and the lead be further national brand to retailers to If the policy tray Although latter greater flexibility, retailers it - the of which was adopted of from the shorter suffered from production the buying major power the daily disadvantage the need superbuild demand, this of cakes, distribution. brand personal of with to delivery a national closer of brand to bread tied runs, and consumer a national over 1963. and this margins, traditional advantages say, of DOBs compared on continuous cakes, than, Own Brands suggested rely requirements in basis prices market firm's had certain these more on a test establishing and packaged both Bakeries by the distri- and efficient on profit could it. confectionery the pressure stock would. be a departure both to a brand stock Furthermore, types. provide lower brands duplication, to by Distributors the particularly of number prepared had which distributive product cake British accentuated up a strong persuade to occupied feature This of cake market that avoid require- grocers, this the make a large would position would groups. range favoured which suggested also to The ability who had entered supermarkets Since be more would cakes essential. The predominant through limiting field analysis economic sales of a complete of seemed to be factors Cadbury, policy product included system of cake supermarkets shelf short bution that the and supermarkets. any particular implied this from basic the about reached were importance grocers pursued stocked the of had helped important more & Spencer. Marks of quality and included well-known becoming were the general fragmented, was very market In outlets. although and grocers cake market, higher - links with distribution 165 Besides' costs. other of economies advantages packaging a national brand long In the competitive, DOBs were expanding (2) The Bakery Division led to drive and a vigorous (3) After into national test higher than through quality (4) The McVities onto the diture market In view large other the the in Taking assets, into took the leader, margins in place in competition was restructured sales of in cakes techniques, promotion range products little expanded with was deliberately on product introduced butter; a range but By 1967 the subpriced were made with advertising, level. Cadburys launch was based promotion the 1963, this and supported all trade a large claimed cakes of expen- turnover annum. developments, competitive companies cake market absence appeared of brand fact the plus by its loyalty, a new brand many and potential present the that diversifying to be considering attracted introduce should as quickly nationally at these packaged brand This very up profit the market; of United'Biscuits 1965 with grocery company that claim E8 m. per of 1965, cakes; division and a relative size, that the of on merchandising had reached into range importance, distribution; expenditure. Lyons control, market. aggressive range in intensify to of the of their distribution advertising stantial share improved marketing enable ' expanding of Lyons, for would of most developments helped which their number quality to build opportunity significant introduction the Perhaps, several demand. although (1) and this several business cake the which better standards, had a larger namely, production advertising. on consumer 1960s cakes, of quality provide based early packaged an already would run the and more brand a national large-scale of higher to production improved the delivery and economies stockists, consistent in daily over distribution, of decision on a worthwhile was taken scale as possible. account the analysis when in 1965 the decision of the market, and of was made to introduce the company's a national brand 166 of higher quality inevitable. its if this differentiation market could economies of this at ularly in multiple The data be made in could stage could it before grocers, suggested, Entry get on especially into this established, partic- by a few became dominated that moreover, production. to for capitalise expansion, brand the enable could for many opportunities provide seemed opportunities more The company and advantages. scale market offered bread. it display for suitable market than skills existing this into Entry product cakes packaged large brands. The Product The consumer to form findings research a picture the of cake market, and the the breakdown - helped and commissioned - published consumers' towards attitudes cakes. Attwood section 'small hand, section revealed and brand. shop type modest data panel the of cakes' the of with including somewhat surprisingly, it share of this market eaten as the Large-scale Market the Research kind of facts last cooking, appealed linked of a trend t to showed with to adults packaged pride prestige lighter, and an Odhams Survey, Perhaps meals. for appreciable a quantities meal. attitudes, revealed that other it. were' responsible and that a fragmented in and at what cakes cooking 1961, that the the of Survey types, only On the . by Lyons. Food that constituted specialising than children, into in competition The research evidence emerged research cakes. particularly on who eats course Bureau brand by product buying as the most as well National the some basic are largest no major provided larger and was dominated the were instance, for rolls, market market, data, Survey Swiss of how housewives cakes would home-baking, and creativity face more of cakes, viewed from than There usually cakes, and home-made other housewives, and hospitality. fancier out by British carried forms of and was was also made from recipes, 167 whose visual appeal feeling home-made that ideal! the are there As a result, interviews, plus for still their discussions large e. g. and that sponge tinction almond could easily cakes, fruit must cakes, than not further and if table friends it the be too regular. top of cake cake, and this produces placed on the plate, ready to be picked stages are the negotiated to from those to for the many to referred be made at this dis- preference for the senses a factory. of be judged the is first cake in visual a visual home-made made into Finally, the a second piece up and the satisfactorily rather to the symbolised the as a treat Although denote a cut the Group 'Modern' importance and freshness. texture value. referred unlikely to Secondly, appreciated made by consumers tarts. again the are preferred battenburg. appeared the cakes regular home and had been those made in those food The latter jam did from even were be made at they and that its about baker cakes, and individual their cakes. emphasised First, to judge made into eaten. tastes cake of If cake cake in is cut is which these all good before it mouth. When this initial - as dull, Cakes was also mini-rolls, rather cakes for especially cakes sequence. - grandparents on the shops"). than 'traditional' precise, cakes, in local the very judging reaches strong information. this A distinction slices, The research order or discussions feelings strong was not home-made it was a very considered cake bought and taste from more unusual e. g. to against revealed 'modern' fancier, in were 'group "too'long appearance and cakes of cakes home, existed manufacturer. between years, parents a bought added "stale", also a food, kind observation ("dry", purchasers the cakes putting research, attitude Prejudice than by one's bought about There tea. Small-scale more - baked cales were misgivings came to important. was particularly research research into into the consumer market, it attitudes was possible was combiped to outline with the the i 168 features essential to The brand should At nationally. least at range. The cakes there held they reasons: 'heavy' and brand Furthermore, e. g. cherry with Almond Production the a quality was decided of marginally cakes their were would, Although they Mr. competitors, price facilitation than by the initially higher into had been market cakes. rather manufacturers' policy were unique a small ranges, would avoid were launched to Mr. Kipling. number of ) to units those Cadbury Kipling's the Lyons (a) of Lyons; on'some should lines through existing of The prices firm was selling It advertising. justify might be made of the by be comparable should they those above the name and heavy prices by utilising were competitive. eventually maximum use be determined extent, prices extremely although than a large to Lyons' were higher backed On distribution, distribution this brands, that House cake with develop- process (When they ranges. be concentrated Lyons. product, firm's this since several by bakers' all the popular 'non-standard' in virtually and Manor policy, local minor dominated produce sponge, were the of for of-scale. leader, price of Cadbury's those Slices economies cream other should on pricing most jam'and cake, competition initially included for cakes they segment and was still be made to Within innovation, for scope sales. of number quality. market; and there feasible on small and this should lines; level minimum average the of offered they cakes be the than share competitors 'standard' the the required available cakes of seventy be concentration a large efforts than gain policy had a reasonable to specialisation; by its neglected range selling which higher should buyers; cake were considered be of should range, product lines were a full a complete Lyons time, thirty-five lines cake comprise that Some twenty direct marketing Policy Marketing ment and the it. launch were new brand, the of a quality the bread to a appeal. company's delivery 16 9 the stores required the drops) the ensure larger such retail outlets plus and production, that packaging to cakes. finance to on the to selling of through distribution of based be necessary would distributing be utilised and improved advertising, larger because economies should prices (i. e. force sales This to merchandise salesmen Finally, force. advantages be achieved, van a specialised sales cake economic would higher by establishing existing company's that (b) and system, higher cakes, quality help would to somewhat the extend shelf life. In order was competitive, it mould it that be difficult and its was decided that were material money than Product by modifying new types of cakes; in the of Although to of design of and introducing sealing were convey the cakes the by improving recipes in used ensuring required distinctive cake firm and the with one better provided improve value quality new materials fill and/or and protection shelf-life to of consistency the gap which existed and cakes. that consumer and the the introduced believed advertising. importance the in the features of the as opposed to a manufacturer, i. e. also be the the visual product, the of the name of The company brand, would quality product acceptance, be reflected to the new machinery; to were puddings company pack, be made advertising but ways, brand the that introduced) could packaging, of the brands. was enhanced between succeed only it if between were cakes of a variety consumers difference the easily that was required, products quality, in quality the factor specialist product and new products market aspects other diverse new types would employed conveying of objective if even brand the of (that of the cake market conditions demonstrate to As a result, display basic a range competitors, distinctive. for the basic to satisfy it brand Advertising Packaging, Quality, Product wished to that it was made by a that it was made by ._ 170 traditional high cakes since the like - Mr. variety, job, to 'came housewives than and they the basic and preserve the product, did, the requirement the it because suggested attention. personal to believe ready that a man it as he was doing name intriguing as a and different. it packaging""that was designed justify would The name finally bath' the as long of pack it. a range types cake line no single giving were they thought Besides in for in change of establish traditional, somewhat better rate because and partly that confirmed full-time contained to be suitable required a rapid - apparently company, make cakes is expenditure Kipling a specialist Research it and that machinery, was also there advertising sufficient could product because partly people chosen on up-to-date ingredients. quality The name of of but methods protect should lettering with and with / that an appearance feature unusual treat sections with the showing and tear the major from it and especially of presentation headings, van the it could the visual livery, create a consistent provide a valuable of including salesmen's and cumulative moving on the for picking up and eating, its as a showed pack texture was to poster best a and and moisture; of being 'Mr. about Thus pack uniforms the were advertisement. as the into the the e. g. Kipling' all theme most characteristics cake, cut design, symbol. the re-inforce was selected. express appeal cakes cake-maker. brand picture television talking he was a specialist cake of a large advertising pictures and a voice-over idea the convey an competitors; opening. aim of medium because its from to demonstrate cake of to already As a result showed close-up eating, that food; ease name and pack. brand, film the than the of for strips appropriate the cut inside Finally, of rather brand the intended handle was the or a gift cake distinguish would advertising sections ready made the point aspects display of in for for the material integrated The vans, of order instance, letter to 171 The Regional In Launch 1967 the Manor company, twenty-one have would of the This required fundamental the of for point it London The regional launch and poster advertising, stimulated vigorous particularly in from was now the Although sales started was evident according to plan. logistical plant, some of than and it in making equipment the costs. completely were introduced; competitors, the that van were market. things below that efficient addition, and the In view of the launch, the reappraisal the difficulties use of ingredient was were not going target, in making involved intense was very as distribution rapidly stage , perhaps of the that were investment capital as well costs elaborate were as higher forecast. Steps were taken were its in brand It had been under-estimated, In to cane activity. objectives. most in period that opposition became clear the faults An immediate and vehicles start-up had been financial surprising. place, experienced per had been which altogether volume its meeting took from an early the establish areas. from cutting; second a short promotional to grow quite Sales exercise was not situation in price After other opposition which it being and trade of as the was accompanied by television, of Mr. Kipling form the in alter- as soon as entry would which and operation was chosen any major experience McVities company was not correct competitive achieved, this to organisation which of launch a national was an unrealistic launch a new of and a new range South-East and the setting-up to market competitors. London the the which market rolling be possible should in commitment London potential and utilise press test a national and forestall brand Kipling, between changes company's As a result, starting Mr. the with place was a compromise and a small in view took a new brand, cakes. possible. light Bakeries, company, native launch regional to remedy these weaknesses: uneconomic packaging were withdrawn; costs improved were reduced several lines production by simplifying that techniques packaging i and packaging of launch the place from eliminated in on others some order to to reduce on some cakes were modified had been bought on distribution dominated because the they refusal found van-selling operation uneconomic, and in some retail regional the drops launch regional an area of Mr. outlets. to the stock an inconvenience; below the of level a certain a high area other An analysis cakes. since independent chains grocery stocking that revealed towards operations in In distribution the bias intervals at affairs. of grocers, marked of interest little showed state by multiple showed a relatively was due to chains of board and showed an unsatisfactory cakes brand data audit country Kipling This were on packs costs. Retain the in and formulae competitive; ingredient handles e. g. introduced and film products, remain material, 172 were of drops low level proportion were unacceptable. factors Two. key of due to sales below this overcame in 1968 to were stores Perhaps, used January sales important, was needed and the system fully most for 1969 to in firm's the communications. size became clear bread vans. Mr. West, owing deployment Bread Kipling to the As a result, a valuable that the for vans, local pragmatic example, delivery were successin was extended for difficult population bakeries drop. average specialised launch notoriously few major distribution ,a more of salesmen of the This Journeys better of when the a region in and numbers the area Midlands. was distribution. increase it launch the and resulted factor To overheads. north obtain relative South the were made to the distributing of many products extended to high of well was working plant tightened efforts order area key relatively by extending support, supervision in that increased were The second field the disproportionately advertising Intensive in multiple meant and a limited sales. increased. factors sales minimal realigned, be corrected: consequent Lancashire, to approach above problem was done with addition the with capacity to needed centres bread vans van and began 173 to for account a substantial had been company problems Finally, Kipling highly three Early in 1970 distribution As the brands of cakes, had refused to The planned due to cipated tight retail changes but Lyons leader lines of development. the entering in ahead in 1970).. the small from twenty More of McVities During cakes to important, its with financial it (the second had become expanded in various objectives to sections cake Kipling more had by 1972 However, Mr. anti- in response and had also forty, around regionally. had become the period who which noted, and Cadburys section, as had been than business Kipling this additional distributed activity. - Mr. intensified multiples major already of its stock of distribution those was slower competitive market to was only and modifications, and intense had merged brand number of after behind of which the the as it the. rest cake market extend into of Mr. -Kipling expansion to entry as long the reluctant essential gain brand the margins years brand handle to order into by stages in increasingly to make in the operation been compelled five in as possible quickly had proved which factories. situation was considered techniques factory original was extended appeared it its automated competitive grocers and multiple in manufacturing moved from to country. and inter- once administrative sales solved. uneconomic the of improvements significant when Mr. occurred share were its stages being achieved. During in several the 1970s the marketing in situation the cake market changed respects: 1. An increasing percentage grocers., and particularly through of large cake sales grocers. were being sold through 174 TABLE 1 Cake Market Changing Pattern 1961-76 of Distribution, Year T ype o fO ut l et 1961 1966 1976 33 54 6 39 46 6 47 35 7 7 9 11 Grocers Bakeries Marks & Spencer All other outlets Source: 2. during Trade While been due to a large the social formal high 2.85 including pattern life of tea; during static by some 38 per 1969 to factors increases relative declined in head per changing extent, due to oz. was relatively consumption a combination'of the slimness; cake market cake 4.58 from decline the 1970s the estimates oz. per the growing in a revival in cake prices based the cake market has of frozen cream in 1976 has emphasis has which The cent. head 1960s, the on to eliminated home baking on fluctuations of cakes in flour prices. 3. sources, 6 per cent bakers' i. e. the introduction of the total but promotion of Marketing Board. their the DOBs has declined Societies' more sale of fresh chiefly cream other hand, through the and the to branded cakes tendency cakes. cakes from which two main held by 1978, in stabilisation sales of by some 10 per cent between 1966 by the stabilised (On the own brands, emphasis had declined share intensified and the cake market; The latter sales. and 1971, give in Competition the fall of through mid-1970s in conjunction with the market share in of sales several of other the the held active Milk by Co-operative multiples to 175 TABLE 2 _ Share of Cake Market Kinds of Different Cakes of 1978 Frozen cakes Fresh catering packs Loose cake '(bakers' Own label Branded Source: Within Mr. to the to and competitive and the sector specialised has grow, of cut cake the market of that also sales market as they packaged cakes - small to continued and sponges) of are - in (contrary expand eaten often cakes as or desserts. 1976 Mr. In the branded Brand cake market, in Shares leader. By 1979 it Packaged Cake Market 1978 z z Lyons 26 24 Mr. Kipling McVities Cadbury 12 13 11 30 6 6 Hales 7 7 Memory Lane - 4 31 24 others These Source: percentages Trade The leading been due to the position viz. packaged cake market; concentration usually by hr. established successful is Own Brands Distributors Estimates pursued, turnover exclude had one-third viz. 1972 All NB: became brand Kipling packaged TABLE 3 where 45 cakes has Kipling experience snacks of 15 cakes declining continued which own) Mintel this have 6 2 32 implementation in emphasis faster the of expanding on distribution which helps Kipling cakes the marketing small to cakes larger to minimise appears policies sector grocery the of to have it has the outlets ever-increasing 176 cost of van in again order operation revealed with selling; of the cakes, combining, where to make distribution the business physical on the more original and psychological and presenting these appropriate, in economic; consumer qualities an integrated bread and basing research consumers sales, and van the which had associate and consistent form. 177 CASE The Product: Catalogue The Firm: Argos 8 HISTORY showroom shopping Distributors Ltd. The Background introduced Argos in 1973, a method established in some 30 per cent of to The idea the across in the of retail of competitive and retail the of in Ltd. ) who was This method same time, to of feature would i. e. the it and in buying, it skills shopping consumers strengths, existing catalogues; property, resale in one type launching Prices Resale of still Act permit the had develwarehouses operating (RPM), after a number trades e. g. products toys, which in which In the price was being competition individual enforcement early 1970s jewellery, sold existed introduced had been competition equipment, The opportunity price the competition another. gardening such merchandise outlets. in of price and unpropitious. propitious 1964 had abolished of merchandise because retail company was both the price-maintenance or non-existent, sell producing then had become a dominant the from establisbments. The time itional in retail acquiring on its and build possesses At of competitive back of Argos' be attractive would 1970s. at brought Stamp Co. business. which system merchandise founder Trading it for accounts this of had-been (the original the jewellery well- costs. shopping Shield assets: in branded of environment to utilise it range showrooms already d'etre The raison Tompkins the but country in distribution Green two major this and Canada where showroom expanding distribution expertise equipment, a wide the price however offer company, company Since turnover. catalogue to have oped in the by Richard ways appeared States Atlantic associated seeking of new to economies in seventeen showroom shopping retailing United by effecting prices the of the is distribution catalogue there were remained weak some sports mainly through therefore not was already widely tradonly prevalent, to 178 and to with compete enter well-entrenched fields product where Less fortunately 1973. of crisis anticipated was appreciated by the the with rancour Two significant in First, then 1978, were which could be exchanged at for qualifying were to Argos and led Argos the eighteen in showrooms to with discount of 50p off of its of Green weeks sixteen Shield Green cent; showrooms, those with combined by 40 per outlets an additional each stamps filled discount Argos the saver " price. in Secondly, 1979 Argos became a wholly-owned of the company began. the had two consequences: converted any of that shortages stock since occurred of Argos This firm's the in concept new shopping happy oil higher were sales than the with press. have resources showrooms increased book and the company. was less resulted changes the associated Shield's public; public it but the to also been negligible. initial that that but coincided company indicated which conditions economic prevailing the of The company was gratified had been than launching the had hitherto competition price firms, retail well-known 1979 the subsidiary of number of showrooms and turnover to ninety-one, by B. A. T. was acquired B. A. T. Industries Holdings. Stores the throughout situated had reached £105 m. per this of Ltd., and By the end had grown country annum. The Operation The major first, with the economies control enable reduces bulk the to are merchandise because less in rent obtained, and lastly, catalogue does not require manufacturers, staff replaces which displaying are assistants to to be wrapped. retailing computerised stock large-scale sales Storage that ensures in products lower costs four-fold: traditional Thirdly, required. with addition, than are Secondly, and rates. staff of distribution space be placed In the method occupies number pilferage. retailing J saving orders maximum discounts reduces system shopping a consequent in than in showcases traditional some extent, costs are also and 'l 179 lower to many items because enable to customers The basis can be taken which browses through is form that the home and studied at leisure operation the by giving required. The customer staff that the check is paid to the the for in by cash, despatch then cheque, counters and quantity number the service and that the register purchased purchase finally The customer is where points accurately, cash card. item the where special or on an item a selection completed the a catalogue showroom, on the one of Then at or credit the product, to has been stock. counter, the of obtains from has decided proceeds form customer available details order is item requested catalogues When the customer completed and furniture wheelbarrows them home easily. transport one, of in the showroom. e. g. is the of flat-packed, are to ready moves be taken home. The four-sequence because minutes and in"the the latest the service that the purchasing entered price is that and indicates how many of that requires than The facility balance screen mini-television supplied with matically stock the simplifies batteries. from produced and sends the age, are based it or to size on the the of Plessey showroom, lightpen providing the the counter of in confirmed other system in stock, customer stock operator's are ordered is a ticket the stocking belt. Depending stock verification a manual stock board. The Catalogue The catalogue is the major I communication vehicle autothe shelves for systems or the of this at confirms room and a member of from by conveyor checked an instant any items stock item case The service whether in picks stock is is on order in sale is system item the as three computerised, form order stock. of indicates equipment despatch the is When the immediately room staff item re-ordering also is showroom stock-verification accurate, one. the customer's a Comet electronic point more in system when the showrooms in as little can be completed procedure method of on 180 The 1,800 -2,000 retailing. described the the Double-pricing selling is - In retail side. asked are to based on the price at lower Argos traditional the price run That is It pages. is is promotional tool than twice free to in the guarantee showroom has copies is which and the product, retail an issue, is retail Similarly, sold. the price. and August. some 230-plus of the through customers suppliers price in February a year along- quoted Argos' then comparative has become available and by advertising is price that being two million distributed Argos of the against a purchase Where a manufacturer lower generally to given catalogue of catalogue. no RRP exists published more a new catalogue display rights). margins is (This suitable. is procedure to return customer national-retail-selling is quoted and include shopping statutory where retail is the are showrooms and emphasis payment, (RRP) the product the exactly the a suggested The catalogue The print in price supply which chief instances those not the described, addition, of customer's explained fully enables is it - the also a recommended which if days and above over methods guarantee fourteen In ordering. as the as well money-back within is for code number in available in colour, in the catalogue illustrated the 'lines showrooms. by window pu1licised press. national The Showroom The average in the ratio divided early reliance it of showrooms very room, from as well the to area in than few products that buy. as passers-by, displays. 10 -12,000 were addition, visit As a consequence, placed Argos is area, retailing. In on display; k to wanted showroom all which and the selling many people the ft. in the catalogue. many customers In sq. traditional on the illustrations was placed deciding a showroom public was soon discovered before is of 2: 1 between stockroom a smaller providing the size However, see the merchandise living on impulse showrooms near a show- and choose now display 181 in merchandise Originally, main of they shopping prime factors facilities, more and that 130,000 than that major shopping 10 per have should be sited could their pur- in possible Other important convenient parking catchment serve off importance the wherever multiples. centres of ) of now sited are cent selected In view location showroom can showrooms would are of merchandise displays. consulting showrooms items while cent that showroom. alongside sites determine which the however, 75 per shoppers large cabinets, estimated was believed visited trade, is of because centres before passing it too, shopping chases (It are made as a result purchases glass Up to sites. on display. now be viewed and in windows, on island displayed are their areas of people. Merchandise The Argos including catalogue bedding; toys and photographic cameras range a wide and cycles; including furniture, went; offers do-it-yourself equip- goods; hardware; equipment; jewellery sports and office; equipment; auto products; electrical garden textiles, of merchandise; and gifts. the first Since number were and type of the The following profit in the sufficient catalogue; manufacturers easily, supplies whether are the amount e. g. rate of white willing is at which goods, a well-known to which determine space can be obtained it lines has which a year compared catalogue. catalogue: the a reduction of two catalogues in the place 4,000 initially some 1,800 -2,000, are the main factors generated; can be handled now number annual original a product Whereas stocked. products by the introduction been facilitated with catalogue these stocked, in 1973 changes have taken supply. to that it it sells, and the occupies; whether see also last the inclusion the manufacturer below; six of gross it whether months' life brand; and whether of the 182 After freezers audio higher to price range. e. g. jewellery This the sales difficulty easily servicing jewellery judge the value from have products which products as rotovators the specialist retailer for various reduced is prices a lower total of of customers begin selling the remainder from product to withdraw the levels The basic that the 1980 on all Argos from white customers because catalogue of white the the product customers regard made direct facilities Credit above Other £55. range and was once more being delivery purchases sale's of delivery goods showroom. (washing goods on account and with of via which psychology the -successful, and carpeting. from been dropped At the same time alogue Hotpoint, in re-introduced the this 1980 a selection instead one-quarter in reduced down to for con- of such lines. anticipated In manufacturer, also at firm the may once more service was taken their solely of Argos freezers) problems. introduced were selling reaching not by the and providing refrigerators, machines, a study that purchase has proved assortment by separating decision and to and traded now account once demonstrations was evident rings, products, has been completed 1977 the In it at a specialist preferred and where jewellery, stock goods jewellery of cannot in change area, refrigerators, had shown that As a consequence, these However, expensive was audio e. g. consumers a selection-of bf and fancy jewellery buying compare stocked turnover. sales jewellery, goods, staff, expensive surroundings! lines of number were With preferred lines of experience products and knowledgeable traditional more and white equipment these of be provided. sumers i. e. groups, product number machines. level trained the operation and photographic price shop with could four of equipment, and washing With of in photographic equipment, more two years drastically revised the first the include as the such province of only. as certain reasons, other lines lines have been dropped have been excluded from the catbecause of I r 183 the refusal of certain claiming that because Argos would not be able it would they the a result, never been other hand, to indirect from sources, As certain and have On the and Tissot watches from direct and not that or cosmetics. Omega, Seiko Citizen, sells of Act of firms, certain brands well-known Argos obtained from and watches Prices service. supplies obtain by range, after-sales necessary to full their operation Resale the under stock has been unable purchase although to the provide lines to able be prepared a discount supply do this to entitled not audio are supplies are company goods, sports to manufacturers the manufacturers. Policy Promotional The main promotional and the new showroom, Since the the compare combined the vouchers £45. than to of the catalogue; six customers Local to visit of vouchers their also lower opening a of are are valid intended showroom to products advertisements costing more six weeks first the following for to and obtain announce of Secondly, an item the as- advertise- price. the for valid be alerted a number Argos £3 off e. g. used the new catalogue, of therefore nearest are the of vouchers are catalogue, should a new cagalogue, vouchers the announce customers the values, these and radio press that with the remaining These weeks. price to a new catalogue. illustrations First, certain - Some of to publication announcement of devoted press of anxious the recommended with include is two forms. take ments the publication company as possible quickly in by advertising supplemented is expenditure encourage the potential new catalogue. the opening its inflexibility. of a new showroom. drawback The major Prices allow must for competitors be decided I catalogue three in a position selling months and binding. printing are of before is the catalogue Then when the to adjust their catalogue own prices is issued to has appeared, accordingly .- 184 the whereas catalogue drawback this some extent have been which special advising 'Star look to customers for for these the further. Since Argos that in life 1979, reduced Supplements the at the end of these in designed same way that Autumn issued in copies were will 300,000 which be sold decision the ITV the at that the neighbourhood the at prices stocks for of a sale copies and sometimes of pub- in May 1979 was also the pop- potential to include at Christmas lines which them 1979 were The mini-catalogue two million almost of Argos showrooms; a limited are holds million autumn. features: available until 250 toy of life the end of was taken supplement strike homes in reduced cheaply during showrooms, 1 unlike period the previous merchan- cleared. and Competition Policy of discounting The practice price to discover 130 out of the have prices available are showrooms supplement exercise prices were competitors supplements Three the An additional to to retailer seasons. in before toys delivered still and reduce the a traditional 1980 had two distinctive June and a further supplements research following ) catalogue. e. g. VAT which products The first press. Catalogue. slowly selling has and towards midway are made available reduced substantially issued Summer and Winter electronic of the Pricing the daily the the period. issued the firm of are as a market ularity dise a limited supplements licised in in catalogue conditions a and exacerbated changing details giving for prices the volume, stimulate a catalogue of to quickly showroom, demonstrate to order products or constitute conditions, has been in those in products inflexibility of the (To months. period, in market therefore, can respond to order drawback six by marking badge However, under rapidly-changing increases, next a limited Value' out the overcome for price a red with offer, has been in reduced fixed are prices has been the 9 major factor from the manufacturer's in the rapid expansion recommended of Argos. By 185 1978, instance, for that discount cent share always sell houses, the of easy has achieved knives, 12.0 cent; lines, Price Commission's in TABLE 1 Gross (1976, types on Domestic the retail of gross Boards Electricity margins Appliances, 32.0 28.8 26.9 . 21.7 19.4 21.1 14.8 16.8 houses Discount showrooms 18.2 15.4 electrical of the estimated stores. stores and catalogue Commission retailers and discount retailers 36.4 Department stores Retail co-operatives (1979,256,23) discount Large Appliances 19.8 11.1 As a result . increase in had declined to The expansion share price at the of the Retail competition, by 1979 the that has been mainly whose market on 1975 24.0 15.0 Price In were 24.4 gross level sales expense has consequently Business margins of multiple those of department of through of been Argos independent eroded. a appliance Multiple electrical retailers Independent retailers electrical retail margins wholesale margins Source: cent. margins. outlets Electrical houses order per provoked retail Small Appliances Mail fryers electrical of No. 18,. 10) fat 10.0 naturally lowering a general firm the e. g. cookers multiple not may only deep cent; slow cent; is appliances discount-firms different Margins Argos 13 per competitors, to Report appliances electrical fields food per it Although electrical mixers 20 per almost in many products, and other led estimated penetration major has held and Comet, in 11.0 makers their and this retailers, the from response cent; of Argos No. 256,23) and some product high coffee 1979, appliances. electrical nevertheless 13 per The success Argos a market, a relatively electric price in trade three (June Business principally define to two or per Retail and other electrical 186 from Discounting in instrumental It fields product aware where toys, some sports price has provided reductions, competition more the of it sales of watches. an effective quickly introduction had previously equipment, and stimulating f Argos domestic an even more valuable proved consumers recommended manufacturer's expanding has probably making the of than they might technique way of otherwise to with have done. e. g. a recommended price publicising respond in in weak or absent, The comparison retailers appliances. competition price been very has been electrical marketing and shorthand traditional price to this ýý ý\i. 187 3 PART A COMPARISON OF ADVERTISING AND COMPETITION IN ECONOMIC THEORY WITH CASE HISTORIES OF THE OPERATION OF FIRMS IN THE MARKET-PLACE AND PUBLIC POLICY Introduction In Part tising and- competition theory of of advertising with Part 2 of Part In operation findings addition, (PC), The following major consumer examples advertising the empirical from Monopolies aspects of the and Mergers of Fair towards also from on advertising advertising advertising (CH) in the marketin outlined Commission to Part of publications (OFT) Trading effects Case Histories the research sovereignty, together and competition be included will theory conventional adver- on the of the firm. of with studies and empirical of policy of of the theory and Office of public concept and discussed, with the notably Commission the attitude of examples bodies, official Price the compared concerned was outlined findings major are and the place, theories of critics 3 the theory economic of value, and competition) and competition 2. and the the literature In in (theory firm, the in literature 1 the (MMC), illustrate and. competition. and competition be will considered: I II that The effect of in advertising (a) barriers (b) (c) product differentiation, information; (d) retailers' Competition to entry brands and price; oligopoly and prices; (b) non-price competition With regard this very products and services. and brand loyalty; and competition. (a) small on Oligopoly under to practice the and oligopoly. in Case Histories selection represents Nevertheless, Part 2, it a'balanced they do include is not suggested cross-section of examples of the 188 forms main competition of (British monopoly (Macleans Toothpaste, are distributed carefully researched failed ment, employed expenditure characteristics Kipling Cakes); (Golden Rail); are of joint low determine Another cost the i. e. they purchase which every stage in the market place (CH 4). the compete, a product (Persil limited forms its develop- which affect promotional of competition e. g. such as short in which life shelf Jif; (Argos service being after histories case and other Automatic, proportions of in the market different at history at number Cleaner), Distributors). case of many others, oligopoly branding, where consumers which tested to demand Household statutory spare Catalogue different (Mr. capacity Discount sales promotions combined. - the structure large-scale retailers pricing policies Cakes), types to goods and the firms to and Argos areas and conditions by firms, frbm'a are most prevalent, limited their help which price Showrooms) Cakes, product and rigorously despite Jif the type and amount of advertising competition, - the Automatic) Custard, typical many of the factors besides (Persil a fortnight. once to get established Furthermore, include include (Superfry) a product ranging differentiation e. g. described industry Kipling convenience intervals, frequent (Mr. histories case and product widely Quick Batchelors competition these advertising1 and a duopoly Rail), and monopolistic Some of prevalent-in enter promotions a market - the changing the demand for 1. Packaged cosmetics consumer as buyers (Macleans of (Batchelors habits, some products, food, (intense of retailing competitive (Jif), Quick tastes policy product and exerts from of DOBE) affects and as suppliers Toothpaste), pressures influence (Mr. over Kipling the decision Custard). and life-styles and provide drink, household stores, half comprised approximately in the 1970s. advertising opportunities of consumers reduce for toiletries and of manufacturers' introducing 189 (Persil new lines competitive Automatic, environment Jif, Batchelors the and encourage Quick Custard), into of new firms entry the alter a market; -', changing market conditions, power between manufacturers otional policies discounts, (Macleans competitions - the threat into of-entry of the Toothpaste, Persil size, balance the price of and promtrade reductions, influences firms Automatic) potential the Jif). by other entry (Jif, a market regarding certainty potential Price Temporary e. g. in shift determine and retailers firms, of the -e. g. the is even when there and rate development of timing un- of that market; - the rail tickets, (Macleans - the Batchelors of Instant Custard, developments Distributors) to compete more (Jif, Mr. of competing and economic Golden Rail, contribute Jif, to the firms; of technical requirements Quick significantly Cakes, Kipling automatically stem from a combination social Automatic, firms which widens number (free competition Automatic); a market the which changed and which Persil Golden Rail) and thereby and the (Persil Jif, delineating innovations - rival consumers Toothpaste, of competition which help samples) difficulty by non-price performed competitions, effectively! area functions specific of Custard, Argos between competition firms. I The Effect (a) Barriers to Entry Economic theory maintains as a barrier an additional and unnecessary concentration, and enabling without fear Practice and Prices as technology rewards in of Advertising that to entry. to of the competitive as important at least Advertising is then considered deterring entry, re-inforcing' in factor firms is advertising set high effects. prices and reap (Part high 1, Bain, Cave). as 190 Advertising may therefore and limit entry, and lowering 'industry. polistic cent per cent the of a leading in in brand 1978 were 1941 three no new firm is has declined from inelastic oligo- responsible for had risen 12 per cent over to market cent of 88 respon- were this entered 18 per of a typical share high: cost more manufacturers by 1973 their market expenditure proportion 88 on a sales, five years, 1973-77. is As toothpaste is technology been tising toothpaste share the of the market appears expenditure & Gamble, has entered and smalli, have experienced sectors this market, of three/four occurred the three the the little it. within firms Shares). in only mass toothpaste successfully stable one major entering been advertising either market, in difficulty have High securing although The has changed some of which Brand ineffective and static stable major introduced, and existing feature advertising of this by the consumers have shown less paste of competitor, (large firms the specialised and profitably alongside giants. A further consistent of Furthermore, shares. or market have on Long-Term been has apparently contributing characteristics to have remained been have and in has adver- question. by each (CH 1, Chart short-lived. Procter held complex How far entry. newcomers, many changes new brands radically; brand on this market to Several impinge decades, several deterring concentration? market to manufacture, easy as a barrier in effective Although over technically unimportant increased towards the is 30 years than Advertising this although demand as a result. in up the demand curves of manufacturers Whereas For more scale. from Four 43 per cent. large (CH 1) turnover. of for sible by making competition Toothpaste by putting competition cross-elasticities Macleans per price curtail market major concern than consumers in other has been that firms for countries. until brushing despite comparatively their teeth heavy and recently with tooth- 191 An important continuous characteristic firms. existing of the products, high and/or product find in a niche this The determined improvements in knowledge innovation that a new brand This fluoride First, the by the public decay, whereas in Secondly, and this & Gamble. 1975 it effects 1960s when established both However, Macleans responded of fluoride to leader which deals. This the Procter & Gamble had replaced it in country. reached 9/10 because of Although, per the cent were as the brand had been of its profession, consumers. introduction like the achieved competitors. because American share dental advertising, fierce leader of by the by heavy of withdrawn. as competitors endorsed Crest's therefore, response to was particularly experience by 1979, 'this immediate also a similar dental the it the with tooth preventing subsequently of rapidly was accompanied that this eroded rivals. awareness introduced commending new competition retaliation feared in its over in were get introduced firm general fluoride endorsement advantages the and trade cutting brand these the with-a brands to by competitors. When this firms the be difficult would one a major imitated of the factor toothpaste This profession. that had received has been introduce coincided continual has been minor, had two advantages brand the an important proved competitor for firms important it copied, beneficial the brand the could Procter in of the entrant was quickly demand was so small toothpaste price of toothpaste of more it before introduction publicise a potential however Perhaps be easily not experience Crest the could for toothpaste brands, their a would-be established was the brands to newcomers. unless to advertising has existed by existing and variants that As a consequence market. search deterring and intensive scope and active improvements small of of new brands. marketing little the shown by the major incorporation the on R &'D, expenditure improvements, factor in has been market and development research has resulted This to to to commitment this of might market where be repeated of the at a high market cost had 192 Three major in concentration of the the as well brands, and this to date not be imitated static has been away from be relinquished to attributable introduced. they of is paste threshold of position where of losing sales by larger now fairly to attract share will on toothpaste is market to this is market number of one of its firms to order dominated none major for p. 83 of that products is price frequent toothminimum requiresa the to maintain the experience ) Moreover, sustain of Aquafresh advertising economies of competition has been prepared might low, Thirdly, by oligopolistic which to make were and therefore characteristic in sales unit necessary. ineffective. proved to maximise the (see brand brands, on television expenditure need some twenty-five and the are the as they consumers have switch brand the has been there toothpaste, choose advertising of could which need expenditure known to product; a mass market a small will established Secondly, is and that consumers of interest Finally, between to reputation has been deployed scale. because advertising newspaper they first, opportunities the low a innovation firms, and variations frequent reminders a major that aware factors: annually have competitors. of advertising several Secondly, opportunities of new readily. improvements product are programmes to which of introduce them to a market established the level Similarly, in level R&D and variants entry of high the the enabled the absence newcomers trade of have Thirdly, easily. First, improvements the for account market. has forestalled potential share toothpaste as continual there seem to would manufacturers established brands, not reasons to be recovered risk only expenditure. Although advertising no one toothpaste expenditure has occurred through supermarkets have itional`channel of' firm as a percentage changing replaced, distribution, market to has been of prepared turnover, conditions, a large extent, the chemist. i. e. sales This alone such to reduce a reduction sales through change through the in trad-' the :,,. 193 pattern of distribution among a few retailing food between has discounts and trade paste manufacturers in participation Price retailer discounts, and other In 1978 the prepared, perhaps 1975; Price the as being dental informative consumers on dental diture as a percentage inflation through condemned prices, replaced had risen between 1974-78. when these earlier of prices however, If, persuade the toothpaste as it by at least factors advertising had concluded than were its Reports teeth during price general the situation to entry would rate (HC 436, 'L978) 'Consumers the Commission of years several perhaps concluded: in the sanitary protection market are particularly They have no to a lack of real vulnerable competition. but to buy the products. for They purchase choice mainly high than price reasons other and the prices paid reflect costs the of advertising and promotions main effects ... (of advertising) in this type of market are to apportion the static overall market between existing manufacturers a have cause protection products. In the competition; and the on sanitary or expen- advertising it than profession the in & Gamble advertising declined absent, as a barrier in dental was toothpaste of Procter intermittent quickly budget. (HC 125) their structure PC had been considering marketing brush had steadily turnover, Reductions, 'therapeutic' by the retail changing less to issued care Price of reduced has been level entry to councils; toothpaste the to promotional high the accept deterred led and Temporary of on Toothpaste had commended the booklets and had been total the (PC) Report to use has again Tooth- displays retail widespread profession health 1970s prices. on advertising in promotions had not in on Temporary expenditure improved for which packs Commission it likely more by the competition pressure lower food of intense special expenditure reluctantly, because advertising Marked to for competed reduced increasingly transferred exert has resulted promotions As a result, trade also concentration and the them to which have growing firms, led and Price Reductions prices. high large-scale retailers terms the outlets, of i by establishing competition to effect as necessary and to limit of expenditure In its Reports earlier retail recommending charged in ... inhibiting Commission the More high in market changes than one-third and half the '. of of between introduction this level the had pointed of preled had which 1970-78, between a few years existed advertising that out had not new products. of had changed had not market that Furthermore, cent. firms established the of acknowledge expenditure by type product to by 18 per advertising the market certain overlooked failed 1970-78 and the the in despite itself Commission and thereby The description instance, levels shares, products Moreover, being prices or desirable', market. between competition active vented of practice 'higher of cause necessary this for overall', toothpaste as with manufacturers' seemed to have of had increased sales and Supplementary competition. as 'static retail the as the is than some shops characteristics and product market (RRPs) very high levels ' (para 5.10) entry. (No. 9,1975, market had attributed prices retailer However, to it No. 26,1977) Report, on this 194 earlier. the expenditure, a new competitor in recent the market another entered years, has made an unsuccessful to re-enter. attempt manufacturer is currently A further test marketing'. manufacturer has (para Then a few months test market these which should Report to suggest from-their RRPs '... it how the Commission of view"of recommending lack from entered on promotion of and price had reached that or alternatively in or data analysis this one manufacturer retail in competition RRPs, and recommended products was little cent. the the on these There practice a newcomer m. expenditure resulted maintained with fl criticised be abandoned agreement the with Report the of new product. had also either by 10 per reduced the marketing The Commission this publication (Johnson & Johnson) the market without the after 2.11) prices the apart conclusion, who had abandoned tends to put up I shelf prices'. The Commission'added: 'We share this view'.. (34,14). 195 in Evidence new on sanitary firms reason that these for range for The recommendation happened to been at retail surprisingly, from this time Report the of to RRPs was retailers through Supermarkets, chemist. and. price reductions RRPs was accepted their who were stocked competition, price were in packed willingness prices. Unfortunately, retail suggested usually valuable, CH 8) operating social were only a confined alert the in the sanitary in to 'double to a higher protection price field, RRPs had and other open competition counter. possible in for brightlyfor the them at would reduced (where pricing' reference types products the under and sell when other not these responsible time with Commission, the had made it stock average recognised stocking from had and that regarding also had lower. prices the by the manufacturer) that what on open display very experience discover Supermarkets which shown next consumers it and served actively or recommended therefore, prices, proposals interest paper When, retail Although as well. the in rise situation, supermarkets is price the original attitudes at to in wholesale rise by voluntarily of RRPs was considerably had been primarily of as has been to in'1977 trade 1975-77 brown and which packs actual this market to be promoted products products. had shown little increased (see of multiple predominantly declined. forces market other retailers coloured the the protection its that changed had been changing such margins of most incidence the than rate to when they It that concluded of display the had consequently margins effect sanitary prices, found a lower contributed abandon re-investigated The Commission gross the lines to of manufacturers Commission the gross was relatively lines. to these most competition At sold limited the fast-selling of being outlet, responsible primarily adherence still distribution traditional narrow were price 1972 and 1975. widespread products the products: between the that revealed protection had declined the Report the price have been of merchandise was at last the Commission had 196 the recommended abolition or the Commission's Furthermore, high costs have failed of consequence advertising to take of the that account characteristics of had been prices paid para 5.10) (HC 436, lack of this product factor a major of RRPs. '... stricture and promotions' into recently) paratively in value reduction reflect seems to (a competition retailer group until level the affecting comof prices. Case Histories, In several in established market required to Cakes); (b) could inhibiting achieve entry, economic of a similar product, the the appear Kipling which rivals before the (Batchelors on investment return other (Mr. speed with and DOBs would well- and organisation cost distribution predicting an adequate achieve (a) e. g. with compared and widespread difficulty the introduce would firm in by firms expenditure insignificant has been a market factors advertising Quick Custard). (a) the Mr. Kipling Cakes. with a brand cake market fragmented and with a DOB (Marks The most short shelf-life market range by retailers; power of multiple The chief shelf high product, inevitably life cakes in the expenditure J. no advertising entering contemplated it 1960s, was very The on advertising. Lyons, which advertised, the expenditure; a number of DOBs, regional to were and' remaining brands, and shops. a wide accepted would the little between formidable viz. packaged Bakeries a manufacturer, with was divided by bakers' cakes'sold barriers, were & Spencer) share market of relatively firms two best-known When Manor of hurdles cost of entry setting and operating lines the be squeezed from the knowledge by the distribution of up a distribution system it the economically; outset that lower a series as a condition profits prices in this of for need .a to being market of DOBs and the buying food firms. product - means that I characteristic distribution of packaged necessitates cakes - their a carefully short controlled 197 and expensive rotation to In to multiple chandise policy but ment to to compelled limited entry combined achieve range of firm from begin with a minimum space into this Finally, therefore, show little a large to brand cakes require- it In to was the indicated cakes . addition, a became well because was essential loyalty depend extent, This competitors other of slowly; distribution widespread to appeared brand. supermarkets before market The mer- brands afew lines. twenty was desirable stores. up a range of in stock stock it drop larger a particular building allocated an efficient an economic was to retailers a wide with who owned the the established. consumers to order such offer shelf speedy system retailers of prevented would selling system. sell only, van towards cakes, on availability in and sales the retail store. 2. When Batchelors long-term e. g. decline a growing change in decided because in the Custard its 1960s helped (1) market: to the grocery in the formulation could get be varied, less easy to Advertising manufacturers custard (2) of Quick and it two in (by Heinz, was in conditions, choice of sweets, total and indicated market, form of did not it was lighter it Quick custard. require to a saucepan, home from carry to attributes short-run and later Ambrosia, and distribution Custard, enter company believed market competitors would as a barrier to this and the the organisation had a technical the geared advantage if that find it it distribution. was unimportant of wider important the in first achieve housewives, because handling trade; established and. social convenient still an efficient it market economic the expand a more possessed custard sweets. to for could Batchelors shop. lighter was more convenient thickness changing of canned custard a demand existed that the enter of working towards The introduction Birds) of percentage taste to canned custard powder had practically advertised the ceased advertising Although entry. leading brand as sales the of of the product 198 began in to decline. food manufacturing products by retailers, by excess caused introduction the and retailing, capacity other to seek but at DOBs to out a higher sell retail by severe a lower at influence its financial advantage which products, the the which retail determining Histories reluctant also (Jif, marketing brand, a"market. These is likely is different from of in feature in the or cost the degree skills and to own (Argos its its by utilising retail in acquiring which establishments company associated include established catalogues, operating then with retailing producing of to prove profit- expanding, easily as the position a variety can acquire and decision to entry to stock an increasingly enter a market is into the additional and risk the of market brands were having Mr. essential on their prepared insufficient important has been reason Custard, Quick why some firms period years This Batchelors early explains com- multiples that compared market a new method by retailers. considered and the grocery a distinguishing the a market buying, enter consumers or and in recent the acceptance On the Green Stamp Company). Trading Finally, speedy the manufacturer's reveal the product - expertise in its stemmed from Shield in established property, to to which operate to possesses possesses strengths existing how far appeal will company Distributors decision product extent to expertise a firm's the their margin. resources, whether able, costing marginal supermarkets than price manufacturing discounting. stimulates The examples from the case histories factors food to price of margins competition distinctive for to copy) homogeneity on distributive in tendency simple followed increasing the pressures petitive technically are for search competition and a consequent by competitors hand, the plus intense the were intense the viz. (when products leads barriers The two major to why in the before to ability several Kipling factor Cakes) firms retailers shelf-space. shorten their test of gain Case limited experience in their became It 199 product's in the market performance before launching the product nationally. In view the wide when deciding account would of appear whether to be attributed in public to entry variety policy of factors to enter to advertising publications, firms which a market, take undue into significance as a barrier expenditure viz. '... by existing a high level of advertising sellers will barrier the entry often create a significant against of the into it is possible Consequently, newcomers market. that high advertising may not only raise costs but also unit ' to excessive contribute and prices profits. l (Parallel Pricing, Monopolies Commission, Cmnd. 5330, July 1973, p. 26) '... forms of entry by barrier have been uncovered various & Merger Commission which found that the Monopolies they interest high level A the public were against of expen... diture on advertising or other sales promotion also act will ' to discourage new entrants. 2 A Consultative (A Review of Monopolies & Merger Policy, Document, Cmnd. 7198, May 1978,3.44) The high level of expenditure on advertising and promotion 'not only results in wasteful but also deters expenditure competitors potential who might otherwise a safeguard provide ' against excessive profits. 3 Monopolies (Household Detergents, Commission, HC 105,1966, p. 39) 'help Advertising to create the and promotion and maintain in which it is possible kind of market have subto ... ' freedom to determine stantial prices. ... (Monopolies Commission, Breakfast Cereals, HC 2,1973,88) Furthermore, several these important factors public which policy appear pronouncements reduce the extent to which to overlook firms can raise prices. ... 1. In an increasing number the private brands of multiple Mr. Kipling Cakes, Persil a restraining influence of markets (e. g. retailers Automatic, firms Macleans in face the case Toothpaste) on price. 1. All subsequent references will be to Cmnd. 5330. 2. All subsequent references will be to 3. All subsequent references-will Cmnd. 7198. be to HC 105.. from competition histories which act as 200 2. In many markets immediate from dessert a few name only canned custard, sales of manufacturers are influenced types but by the wide products of from but a market, Thus Procter the market i. e. resources for technical developments firms operators, investment, and to the the entered competition packaged 'know to holidays the custard investment and There requirements market when it Brown & Poulson when new opportunity. rail existing in this are expertise market the package holiday by coach and and financial how' appropriate the capital above toothpaste the they face high. Batchelors, entered presented the of cakes. distribution the to cakes, the for resources become unduly entered distribution Golden Rail additional who possess possess com- and other for firms was propitious. with capital Similarly, addition & Gamble situation and DOBs, offered in in Kipling, bakers' cakes, only, the fruit, such as Mr. are aware that not of Similarly, can substitute prices range manufacturers firms who possess competitors potential as well. and/or profits fresh other cakes, financial the whole is from one another which large other (CH 6) powder. frozen the existing besides should enter felt variety expertise, advertising branded cream cakes, competition management and custard or near As part Custard from emanating the against and biscuits, cheese e. g. fresh that substitutes liquid. Instant packaged In most markets potential other of competes competition custard, of existence not only by the competition of*cakes, 3. to besides than wider washing-up yoghurts, items, far instance, for Batchelors market ice-cream, with petition the of including cleaners, and sweet instant (CH 2), Jif substitutes. of household because rivals, is competition market package country. and holiday 201 (b) Advertising as a Source Differentiation That through product the literature of Robinson, 1- is is ability of differentiation clearly (Part entirely occur. It to practice is on the latter not possible also of washing implication, fluous, however, trivial or The disapproval that competition which requires service, in indifferent up of of consumers. and sustain monopoly prices, the between all identical p. 20 ). between of brands are is for the super- unnecessary. as a cause of the model many sellers circumstances, the sellers critics There each. were no longer be different stem from are would should of is advertising powder, differentiation there it of washing there differences to informative the of There why if explain whether one type concept defined ever differentiation and therefore that is from one brand appears the neither to to discern only of product the market theory only negligible, in or building higher loyalty or whether but imperfection product to claimed interests in persuasive believe powder, brand product be available, should is Comanor & Wilson separate differentiation instance, and persuasive a_product viewpoints of conventional and rely product that nor made in in A further the the to result these of p. 20 ; possible loyalty, differentiate claimed 1, Robinson no attempt types then ) which demand against longevity the product also brand to Chamberlin, informative particular of many capacity. and excess Despite in latter part a period Braithwaite, between imperfect more an integral over and Wilson. Comanor advertising is which market has been Chase, literature the and manipulates loyalty profits Pigou, Harbury, the the making and competition differentiation, product the brand Meade, made in advertising. reputations, for and branding Marshall, It stimulate a device on advertising Lewis, distinction is is Loyalty differentiation (Part years. It and Brand advertising Product of so that and has no reason of of the every (other perfect identical buyer is than price , 202 to choose advantage) markets, and, sellers above homogeneous to flavours, in durability, the depth of their delivery their car parking their provision of Product attempt to make it fitting economically (CH 8) development, Act and the acquiring with a formulation retailers the cater not only and extent of they provide, service of their too the width available, and the carpet, in will is and retailer from service or changes and tastes i. e. increasing Persil it that that the their of identify will appeal to occurs automatically it as customers sufficient a new form awareness to and stainless steel for being machine those as a replacement unsuitable Argos over time. retailing of through because i. e. of Resale Prices Lever consumers. a Bros. to meet the needs of consumers who of washing from of legislation, computers, price different (CH 2) was developed which take place Automatic a new type which were proving require- by competing manufacturer differentiation introduced technical were the viable. product (CH 5) developed worthwhile convenience, merchandise, credit product and that and preferable 1964, the by making changes in technology laminates to their typically Distributors of it roams. distinguish Moreover, of their not incomes and to meet shoppers the thickness differentiation competitors, different facilities, are packaging, the amount of personal service, consumers Similarly, of personality buyers. find and comfort all different requirements consumers. degree the ranges, of 'quality, design, on the quality geography, manufacturers size, in practice, because occurs and preferences needs but also of of needs preferences, price, groups varying on price, and varying service, of different reasons As a result, time. over for different In another. therefore, variations provide for different the and have change ments identical not differentiation, Product which are all, than one rather which on the currently for traditional the new kinds installed a detergent required Jif market. household of surfaces, in homes during cleaners i. e. the-1950S. ` 203 (CH 6) was marketed Custard Quick living and tastes and desserts. travel holiday expense trade, demand, the segments of created, but Argos constantly are which changes established firms which may thus Quick Distributors, competitive provide Custard) technology the in have Product overlooked. into by giving (e. g. a market intensifies same time the fill to tastes or to order Firms opportunity entry at firms on existing pressures in as a competitors. of for may have car packaged new products looking which the can be viewed entry a means of in 1950s and 1960s. the the sweets travel, growth of expansion develop firms the to of rail combining differentiation forestall and to market differentiation during abroad, styles convenient more Rail and the train, Established an industry outside by British then product device. changing meet the of particularly To some extent competitive -a changing holiday packaged - was a response the at Rail to response a demand for had created which Golden and hotel taxi in additional consumers choice. differentiation Product sumers brand an established (as Robertson security comfort in buying of uncertain because its a pack by a brand stockturn marketed the under test name Skip, market With limited and trying marketed expenditure a known under the the on advertising, than in time are product. name Persil retailers spiritual real of a shovelful brown powder and decision-making and wholesalers were justified can be, and the and performance, Automatic distribution is offers known. retailers only become familiar selecting of retailers standard When Persil because the potential finding cocoa and performance of 'There rather To many con- purposes. have they which the time and cost increased. in of other serves explained: and saves quality advertising. with (1958) origin'), Similarly, reduced also (CH 5) was originally to reluctant a small stock expenditure consumers experienced When, however, Automatic, readily rate it of test it on difficulty was subsequently again with little stocked it because of its 204 brand a long-established with association to try and consumers were also willing to similar one with With is a faster serves two further in future to which branded aim of for to order the scale is 'Loyalty` of which customers. tuting other too readily. (a) the sales The importance through the need large-scale economic of of return several for of quantity the for price high to and/ product will which habit, when the original i. e. to unit which the secure costs. investment economies have been Firms of may be imitated of 1949): regularity. accentuated the, potential unless reasons by substi-. (Lewis, twofold are inertia, of turnover competition reductions 'loyalty' of and lower capital his of including price (b) of many manufacturers from manufacturer to be achieved, a time 'loyalty' buying; economies operation the 'loyalty' elements a way of blunting The economies economies purchases. costs. unit incentives long-term repeat assist consumer a product manufacturers their is a measure of the rate It is also to technology may persist them have passed. It of present-day of for and performance value a degree composed and irrationality is branding and lower making avoid or unsuitable since products, by consumers to unsatisfactory customers the secure advantages of economies of in economies consumer as an incentive acts their of the found been satisfied upon up a reputation for to reduction, identified be can permits also quality The fundamental in or name have Branding depends success it should constant ensure enable which products It purposes. CH 4). 2, build stockturn a price leads the manufacturer identify easily more in costs. The ease with (Part be a well-known preferably (CH 8, p. 177) inclusion a line's determines can then have lines operating the should a brand name with Distributors such as Argos which customers since and such it that a product reputation, familiar. were firm criteria chief catalogue brand, discount a retail the one of they which a high name with cannot sufficient economies get an customers 205 can be attracted be able must repeat with identify to if purchases is loyalty Brand theory to purchase a product 'management the inevitable but decision the and the corporation techniques its manipulate wide variety the disposal of than producers are Furthermore, number although a product, of make a repeat purchase in market The changes switch the stable come incorrect of fluoride it is if the shares timing toothpaste with of through in less first to (CH 1), different launch place a ensures more of rivals, to available that Nor short and consumers. the stimulate over a product, in the 1960s by three of the periods the in continually can advertising well-known to (CH 4). consumers e. g. initial consumer unsatisfactory brands. of corporations where encouraging testify also the of ensure situation choices has proved take modern production firm inducements of large the to make. a market capable to because employment The large may successfully which the the of employed firm with an effort alternative of is large competitive advertising markets and experiment the sovereignty Consequently, represents to vulnerable large initiation has decided exist the the techniques. otherwise as of operation from period it oligopoly the to associated consumers, products 1, p. 42 )'who, of the limited more advertising the by consumers. promotion of dominance consumer risks the and hence might of widening apparently the consumers also (Part had eroded with lengthened is prevalence was the of persuading It proposition from advertising practice, purchase it financial of whatever 'loyalty' the this purchase sales of Galbraith of the that to purchase markets, capable economy which high has which to In to thesis has become incompatible market product modern According consumer. shift the the is accepted who propounded in corporation the theory, conventional unlike to make implication the and permanently. demand' of than concept advertising blindly shoppers satisfied. limited a more means that and encouraged products, been have that conventional than a firm's they This regularity. sufficient over- introduction firms was 206 because unsuccessful, of fluoride. properties Jif 1960s when few people In public of it policy is the the 5330,1973) took it which was market. little awareness varying preferences appears to meet an attempt the in the early for from there in uninterested new surfaces was soon withdrawn The MC (Cmnd. consumers. the were introduced was originally pronouncements differentiation product consumers had acquired as a result suitable; time, that at the in that view that oligopoly: 'Costs inhibit firstly, because the factors that may be higher, in active from engaging sellers competition price them to compete in other ways, for example may encourage in advertising or in minor product changes. ' (p. 26) styling Then in Consultative the made between (Cmnd. Document worthwhile and undesirable is a distinction 7198,1978) differentiation: product '... the new and better while which are one of the products innovation from the desirable objectives of are usually customers' point of view this will not always be the case: be improvements can obsolescence planned and minor styling t discourage to wasteful and may even operate competition. 3.15) (para. Thus, combined, differentiation only is differences existing of the to or nothing planned with new models because they being constantly technology, meet judgement There is differences no in will product between the living appeal by economic differentiation by the by the practice, advance possible of product types a product may be slight, in and styles in not different development and variations is it introduction add little which in Improvements standards to in changes means of predicting The desire curtail although and modifications changes In that suggests differences merits. made possible that product negligible with made out-of-date by some consumers. may be valued theory and superfluous intrinsic brands competing obsolescence to make such an arbitrary differentiation of that theory conventional of deliberately minor their view consists are products the with which of products new materials, products of are are living of products new made to consumers. with minor consumers. theory and by public would policy statements seem to be an attempt to to oblige 207 to sellers insofar competition. But dardised and requirements needs be less Public of practice by advertising Secretary the that ensuring for State of Conference Annual wants perfect the unstanit consumers, would can be artificially contrived Shirley Mrs. in difficulty the overlook Protection) (then Williams when addressing in May 1974, Association Advertising thesis: 'You demands, in many cases create up worlds conjuring of fantasy' and the EEC (1976) to and Consumer the for cater of techniques. Prices of to of market. appear also sales Galbraith the supported 'perfect' consumer and other fail would model and preferences statements policy theoretical the as this a less than efficient to closely more conform by artificially, view as the basis the Galbraith seemed to accept of behaviour: consumer in '... but can anyone refute Galbraith's that assertion between producers the the relationship and consumers in that balance held by the producer, of power is often ' (2) "suggested" him? in fact, the consumer's to needs are, The basic weakness the exaggerating in implicit in the degree of if although to large these r the been are by an increase over control the generalisations demand. In of the and sweeping as relation so extreme from and planning accompanied made about market stems requirements effective situation ignore substitute are corporation have gain and these hypothetical from technical theory are also too are able conveniently, often economy. unrealistically, competition to concern based on a static this to of demand' generalisations them invalid, render In the many of the production producers industrial modern 'management to which large-scale ability particular, to of the decisive can the manufacturers marketing retailer products, factors 'manage wants'. policies in brands the reducing There is of their rivals and overseas extent to which increasing evidence and firms, the 208 from of and detailed painstaking industry Galbraithian assertions 2) which (c) Advertising consumers under perfect there is for selling techniques perfect and/or con- and advertising failures and the ease Information in have and sellers in the real techniques production although knowledge perfect world is information because either that theory conventional nevertheless necessary information, conveying First, on two counts. and, criticisms have sellers led information services expenditure because £68 in. the more cheaply, around of to goods some not the require £14 m. ), to provided and is costs are Kaldor, and that information about (which) products would mechanism to which the lower such bodies producers by advertisements is substitute (whereas would biased. that These independent for advertising advertising could by an independent the real increase is pp. 22-23) by advertising supplied on advertising consequently 1, has been advertising expenditure be an effective could information according that (Part proposals their however, information the secondly, by the '... in buyers where indivisibilities designed i. e. also of markets. criticised cost is theory behaviour product Conveying advertising, are As a means of high of conceded competition and the in 1938 be provided information disseminate service, widely qualities of different the forces of the market would have to submit'. (Meade, 1975,49-50) 1. the with brands. switch as a Means of no place expansion rate experience inconsistent been economy, the that economistsl on consumer high the has been generally It too findings particularly with the about of USA have UK and the the by research tradicted (Part in both studies Among others, Professor John Jewkes, Sir Frank McFadzean, Professor Professor Harold G. C. Allen, Demsetz, Professor R. M. Solow, Professor James Meade, e. g. G. C. Allen, Economic Fact and Fantasy, Institute OP 14,1969; of Economic Affairs, F. S. McFadzean, Galbraith University and the Planners, of 1968; Myron E. Sharpe, Strathclyde, Galbraith and the Lower 1973. Economics, Macmillan, 209 These of advertising to convey market, because This is to offer Moreover, in formed are theory, does it market, e. g. the from consider in changes half-a-million and who are'choosing the for a variety of In products. regarded this its Mr. are only not damage new surfaces to in effective powder the cleaning scourers cleaning of Similarly, try and dispel are of a lower (CH 3) advertising diversified into like housewives with Mr. - Kipling Cakes belief widely-held a cream the made known to a new activity, home-made consumers i. e. the advertising With packaged holiday Jif for was used cakes British also as traditional factory-baked that did be as could who recommend variety. machines. it but scourers, had scourer a cream scourer the about washing and as economical (CH 7) Custard. Automatic front-loading powder that Quick Persil that is Persil e. g. as possible that existing advertising Batchelors the manufacturers appliances. than that surfaces their quality Rail, of a annually, about techniques, e. g. traditional dirty information illustrate Jif of by publicising the owners in is used for advertising as quickly purpose, for up house a new product, Golden made aware advertising show sceptical of and its Not the launching a static time. conveying selling is who set show that other Cakes, formulated specifically tried the Kipling properties did with for way consumers product, been conjunction Jif, from apart as essential Automatic, In purchases, it of the-first Examples from the case histories how consumers' consumers composition where ignored. into because newly-marrieds many products demand theory enquire nor, place, and services. them largely does not first the on the on products in be only a consumer conventional and changes should already of information demand theory conventional preferences given products function primary be derived are preferences the and purpose d'etre raison about consumer functions the of its that comparative seems to viewpoint consumer the same way that the association to view imply they information in a limited take proposals per Golden Rail to se Rail had market, and 210 by offering hotel the a combination accommodation, many products to be reminded need together the recreate is Advertising to order in extended its in to order with convenience of turnover expand through market new surfaces in specifically designed e. g. year, time the Distributors the latest at that subjective factors interested them. addition, increasingly stock quickly advertising Cleaning time, are twice-yearly to discount established to enlarge its and Islands. Furthermore, Automatic and Jif of washing that the who enter or machine, of products available. in at certain order to the of periods purchases encourage Similarly, to, be highest. likely. is holidays, newcomers made aware their catalogue nearest a new type of is Channel that ensure use when consumption other had revealed appeal Spring designed as Persil products it once self-catering the their intensify and where Argos encourage potential shoppers showroom and pick up a copy to of catalogue. With In for advertise their visit Jif home are the Many firms include to acquisition a product introduced continuously the for such do go shopping, frequently bought well consumers when they or variations to resorts but are brands. switch improvements holiday is which Rail which be required; existence necessary 1978 Golden be advertised must to also announce e. g. item cost may be tempted consumers brand's the of Toothpaste as Macleans may no longer a low of particularly market, such information established at to was endeavouring travel, car. With in and taxi train of products about almost under recent products Mr. did consumers to consumers, their like a cake all not Kipling the market case and encourage it extent them to it research" was the was considered a treat illustrate that histories conditions but to a large information; require - that (CH 7) market Cakes firms advertise to stimulate provide that not only retailers favourable - to displays. to 211 In instance, this can be a means of advertising a faster achieving *4 Besides the information varied try and retry sales the have been Macleans decade, past changing a smaller proportion the stimulate in consumers particularand its a product of one reductions, and importance of these to how strongly according as a to consumers and retailers housewives services the advice and to a product, of this in, -,.its decide by consumer as the empirical of test to mix' represent formerly, e. g. how far repeat consumer reports journal is to services sole of source Which?. range During p. 69 ) that shop the talk among reputation. be made. will has become well- Association on a wide 2, in newspapers articles body advice shopping including continuous sales Consumers' (Part shows establish that proposal information and friends, It the information of sources helps the in research extent, country, monthly expenditure than experience. a large comparative tends assumption neighbours 1957 an independent in implicit on a variety to which, advertising on advertising and previous and magazines publishes relies the 'marketing the Automatic. be replaced should rely retailers, Since promotion is. the there in factors that result In practice, shoppers established Persil consumer information. of to combined different the sales of Toothpaste, much advertising of are appeal the with Furthermore, that as only stimulant. Over that intended and diminishes they will and advertising price The efficiency increases think manufacturers temporary characteristics position. competitive techniques selling e. g. for account show advertising and which reflect which proportions would of such a service offers, the a consumer and which clearly special a product, which replicate techniques, bonuses, trade changing hardly . advertising between the costs selling of a number to of the case histories expenditure, samples, penetration. nature could service the wide discrepancy of distribution and a higher stockturn of that (CA), which products and time member- the 212 has reached ship the region range of 3-4 m. ). of occupations broadening that Its incomes and the find information its of sometimes in more underand to appears a dangerous and detailed technical a narrow enlarging membership too much knowledge to and old CA has experienced representativeness many people youthful in much higher to be confined the with is readership tend members The difficulty represented. (although 700,000 around thing, than signify and the they understand or want. Furthermore, were pointed its test sampling which time simulate of members There are not easy for required difficult the earlier criticisms instance, to overcome the problem that are them, consumer by the selection testing depend on interpretation to such as convenience omitted, through not assessment of with consumer a piece the research needs with procedures cost and the at or brand negligence the the or of research of consumers. ostensibly If name. oversight, then the Thus objective of it make conditioned are If other drawn undue sources price styling, of certain but of results may be even test and reliability questions of is satisfaction taste, novelty, from from emphasis many shoppers durability, expense length conclusions of maintenance, for and prices. and judgement. a tendency individuality security, accord the testing with reports which conditions in compared test constraints, changes questions, be overvalued to of products or is There misled. of instance, for price, market and the questionnaires. comparative financial e. g. with largely given in weaknesses the on placed as possible, by means of collated is emphasis use as closely volatile still, serious increasing ordinary testing, Over overcome which remedy 1781,1962). which to keep up-to-date to More to procedures efforts inherent also testing (Cmnd. Committee be representative, may not experience is For reports. user panels it by the Molony out its in limitations are CA has made strenuous years, of there are a different a report seriously-intentioned procedures has will not 213 because limitations interpretations and value because be obscured be compared. judgements. since the sole has had no independent source kettles and contradicted each detect points in reports the other designed the of consumer of which to build (HC 436) it. can 1963, and the consumer Both on electrical It some points. was also through running once surprising various the is appreciated. tests up brand informative reported not in compare to it which publication to disagreement is with reports, which at satisfactory on Southalls The PC Report ceased instance, other two journals, of devising difficulty tising Guide, subjective has tended a competitor comparative with for and Shopper's to of alternative Which? possible has Guide Shopper's involves Such subjectivity no longer Which? Ever has been Which? such all inevitably testing condemned the compared with loyalty type the of adver- benefit to advertising: 'Advertising has been directed towards mainly establishing informative brand-image; advertising which aids the conThis marketing sumer has played a minor role. strategy, based on strong brand loyalty, by heavy and reinforced advertising and promotional adds to costs. expenditure, in recent We accept has included that years advertising but noneto consumers, a growing element of information the overall theless, to be marketing strategy continued it designed to build thus up brand loyalty restricts and ' (2.11) competition. Apart from tising in social attitudes the this to informative these products, fundamental particular market, towards sanitary advertising for The Commission 'Market difficulty until instance, in fact of the defining PC seemed to protection very recently. continues acknowledges 'informative' have products overlooked adverthat were not conducive. The advertising to be banned on television. that has shown that research carried out by the industry information consumers have not sought detailed on products from advertisements, of sale material point or the outside information detailed is Accordingly of product packs. inside in leaflets To mainly conveyed product packs... this are actively through supplement consumers encouraged to write to manufacturers advertisements and pack leaflets, ' (2.17) for advice ... of 214 In other words, because of the is conveyed in a more discreet information including tisements, Furthermore, has been able mobility rather (d) the to raise offer costs, less risen Retailers' Brands of than should those like (p. 20) be dominated of (chain Lewis of manufacturer using his shop windows sales promotion. the pressure variety of as 'desirable' advertising persuasive. which the brand of this market, combined retailer and display it who would because, the was or shelves Lewis would Lewis to 'informative' because expense a modest only form a reduction of that envisaged in the advertising retailer with by publicity principal compared it the eliminate distinguished retailers them what tell and Kaldor than rather large supply comparable as his lead system brands with achieves both was 'undesirable' distributive would Kaldor costs selling and by retailer reduce Finally, because that drastically retailer-domination products. advertising inflation. of and other societies) Furthermore, of rate retailer, advertising expenditure, the adver- because has been a feature The manufacturers and thus advertising to which extent competition advertising co-operative wanted, consumers the maintained by the manufacturers. stores, through and Competition As a means of reducing (p. 25), product, than manner and restrict loyalty the of by samples. trial PC overestimates than brand have and prices the characteristics manufacturer was combative or 215 These large-scale certain & Spencer) Marks for their the introduction past of retailer concentration (see between the distribution during (see Chs 4,7), The growing large-scale of This many manufacturers. (particularly in any longer refuse large-scale for are shoppers increasing prepared competitive than from retail to the rivals, out seek brand manufacturer's DOBs help to among his customers difficult to achieve distribution. C - both in the but factors present to towards which the up a that result The supermarkets, has are a higher stimulated then retail some degree, in an increase have become organisation some advertising. These with too, and have built margins DOBs. capacity period, particularly differentiate and may contribute this extensive outlets, to few manufacturers that with on distributive pressures retailers same time his of important excess names, retailer has made retailing with prices of in competition absence, In DOBs without try in their become household. and competitive to of brands. of increase the intensity has meant private have homogeneity cheaply the pack been development combined manufacturing) quality many large-scale At to retailers reputation and the food factor, power' the concentration or propitious The distinguishing have period retailers, appeared fields. increasing (notably 'countervailing CHs 1,2,5,6), and the retailers. orders this of fields. the in many product success own brands trends product quarter-of-a-century features brands in the of their when distributive a time at on an analysis in promoting retailers has arrived retailer based were widespread Over the conclusions of more margin. a retailer 'loyalty' increasingly retail sold 216 i Moreover, the the favourable 2 Protection, are not ' Association, both although necessarily the of has been aided shopper they have received publicity Consumers' as the DOBs by the of acceptance from consumer bodies and the Department these bodies have also same quality as the Prices of such & Consumer DOBs that acknowledged leading by manufacturers' brands. the development Nevertheless, means uniform degree of their a particular in cooking cent in breakfast In leading grocery A variety likely to for goodwill of including differentials instance, established discount their four a higher proportion predominantly on sell who rely policy Of the field. 50 per and 5 per liquid, in differ and Tesco ASDA and Kwik-Save factors Similarly, quickly. Sainsbury from DOBs vary washing-up product and even within brands. be introduced retailing, the of and price market, to with manufacturer stocking a particular multiples, DOBs compared in cent Retailers-also cereals. DOBs even within instance, in the exist groups, product for 28 per has been by no Wide variations different groceries, (CH 4), oil towards of in penetration market. cent distribution. retail across brands of private retailer in product determine a particular usually manufacturer manufacturer the extent Newcomers product to rely on the brands in brands (CH 8) because order reputation to build can be a valuable they enable consumers of DOBs are to which area. prefer size characteristics, into and up sales sales aid to 'Last 1. we found that by buying year, own-brands you could ... 12p in the £ on groceries. This year, the save yourself fell But, with to 81p in the E. overall saving some items, Our have the saving was much more than this tests shown ... is often that the quality, as good as branded of own-brands (not always, )', "Grocery Prices", though versions ... Which?, 1976, p. 219. October 2. into A pilot the Department's survey price monitoring scheme that claimed savings of up to 20p in the £ could be achieved by choosing the shop and using own-brands cheapest where ... in price. Circular No. 4/75 however, these were the cheapest 'own brands'. that retailers also recognised were not necesthe same quality arily of precisely as the leading manufacturers' brands. 217 identify reductions price In technically few retailers sets, they are Furthermore, for the is distribution tionery, razor is with of maximise is in factor to a uniform are generally scale. inhibits important this than the hand, other be a cannot In the of price On the branding show differential price fashion. more the factor sales. where e. g. on a small if a worthwhile establish and confec- (CH 2) retailers this then expanding product, introduced Similarly, (CH 6) DOBs with easy etc. low chocolate turnover small DOBs. very e. g. been consumers Where widespread name. sales, because service. infrequently purchased only a relatively introducing price, colour, to after-sales a well-known introducing relatively guarantee of and television own brands their necessary products DOBs have an essential DOBs are the undertake brand from to ventured security in manufacturer's which introduce blades, interest retailer have required In a market little such as refrigerators high-priced with look often complex products to unwilling easily. styling, area a manufacturer's brand name. With certain characteristic'of For the most that (e. g. they become well are CH 7), prefer the outstanding introduced normally in established seem to retailers to once manproduct. a particular the avoid risk, I resources, promotion necessary instead expertise the DOBs is part, financial trate exceptions have brands ufacturer notable in large-scale increased competing for on retail locating and market innovation by exploiting sites, power and promotions to Although, many retailers introduce on the sale of the leading acquire from more benefit gain better manufacturers therefore, own brands, manufacturer terms, skills continue concenand Moreover, and pricing. from using his advertising than rather when the they ' and to their buying merchandising, may well products. innovation, product sales and extensive research, successful retailer bargaining allowances, product by introducing opportunity to rely occurs predominantly brands which have a high degree 218 of There is in intensified instances the share increased retailers to that possible brands the price with associated identify Where DOBs are may formerly is introduced they reduction prominent there manufacturers to order easier for the leaders and replace of has also their in once a DOB the remaining stimulated competitors in increasingly made it distribution to-achieve has development It variety Whereas retailers two brand distribution. to consumers in a decline ahead seems been primarily of a product, product their product. theory. This In an established field. product When they retailers, introduced are to good value turers that actual competition DOBs have there is has been It DOBs. have of brands their a new brand for difficult growth l by these held or five own brand. introduce wide ensure the stock the on a uniform in conventional four and Tesco. firms it since price-cutting market through the competition of Sainsbury these of a price minor brands by their to than brands have stocked as price through extent promotions as envisaged 1970s, the grocery packaged rather manufacturer and compare of products the a greater of manufacturer sales i. e. multiples, of during the. introduction with the degree of although DOBs declined comprising two leading schemes by the that quickened 1977 onwards from instance, retailing turnover of proportion food support. promotional for some evidence, concentration both and active acceptance, customer is their the marketing from shopper, policies the brands become an additional little to evidence of DOBs can be extended 1. TCA/AGB Report, f ipso DOBs are selectively, and act must of facto that to take account to of potential factor in many products the success of limited the whole of and Although retailers. field the to manufac- as a warning large-scale competitive date profitable categories retailing, or 1979 t 219 the consequence, theory conventional facts about The view system growth rapid rapid on the they want, assumption of know and already UK advertising that than from advertising which the widened price specialist of service types of area of has reduced on quality towards fewer but stocked by retailers. Caspar 'Fresh or outlets Not cost has widened least, the structure Brook (then Director, Deal for Shoppers', of to the retailing in the has, The trend range of products growth in overhead and emphasised Consumers' Association) Observer, 11 February, some compete competition and price. relative resale of and shops so that convenience have combinations some retailers individuality, of stocking varying products for of and stimulated who offer scope on range, larger the the the towards retailers, of radical The abolition trend firms retail the and leisure mobility competition. the retail of to a more and structure organisation The homogeneity become more concentrated has changed of most at expanded related consumer the retail expansion directly by non-specialist and price. products This the has accentuated new types one another in has retailers increased geographical merchandise emergence Within is level place viz. maintenance expenditure. retailers. low taken distribution, retail food a very have has been the been borne not also advertising by non-food of has if be reduced would costs by retailers 1970 retail expenditure rate changes of and selling dominated were Since area advertising, 1. based know what consumers advertising practice. out'in costs is products. that distributive with it because could Advertising Retailer of that brands manufacturers' century to be realised, seems unlikely the the As a that prediction 'By the end of be a rarity'1 as food. such category one product across even uniformly in 1962. the 220 importance of improving or value to advertising the operating value of transfer of advertising through advertising special displays the stores aware Previously, in (Williams, illustrating the in Finally, distribution, their than a corporate their retailer distribution price advertising, image, in for return as hypermarkets advertise low prices, away from by retailers advertising £5.2 furniture instance, for widely and convenient located are and Whereas m. that in the of 1976 to to manufacturer and manufacthree £5.6 major m. retailer the varied have changes-which have it found alert to extent necessary promote their to to of voluntary in other product areas), firms undertake more Such retail shoppers in occurred their adapted own brands, policies, and to competitiveness. the system should I such amounted from ranges. to large- of 1979). In view of the many factors of to and to a lesser formerly increase retailers in discounts manufacturers. retailers product and some extent to methods (e. g. the establishment operating extend illustrate emphasis to response and/or create in to appliances) local amounted & March, in food retailing to 1976 change groups advertising branded many established their alter to MFI and Queensway) (Fulop advertising. largely by the advertising retailers ranges, centres. was confined and/or power manufacturers electrical their of shop resulted outlets when these advertising advertising retail especially shopping turers' of the promotions brand. furniture, traditional national from a manufacturer's facilities, parking has and additional new types to make consumers consumer enter better giving The bargaining manufacturers expenditure (e. g. to purchases. allowances of Moreover, discount ä vis vis stimulated shoppers more individual their as a means of capacity and has profits, encourage retailers scale full at influenced have which supposition lead to lower that the expansion a retailer-dominated advertising and selling costs a 221 would take affect seem to into stem from account how firms the a static changes compete in concept in the of competition demand and supply over which time cannot which market. k JF - 222 II Competition (a) Oligopoly In the Under and Prices theory as less regarded desirable, feature (tacit their interdependence mutual in perfect the situation demand. in affect in operating impersonal directly the such rivals. of and other will of to compete both advertising of competition will be higher will profits Although changes have is higher distinction rigid under is and sluggish prices to resemble less and parallel - although inherent is firms that sales forms of' may encourage behaviour the and/or level. independent that if particularly cost demand is have conditions industry changed, per disciplined price to prevail or less leadership and barometric parallel those which would emerge where there se will Thus and weak competition. more be a price and prices an oligopolistic likely and will aggressive pricing blunted to advertising, structure unlikely, profits are setting market where made between prices are competitive are whether higher firm agreed by economists and except prices, where the oligopoly agreement that leadership likely less than oligopoly by means of be effectively is generally inelastic relatively there it but an oligopolistic expenditure of interdependence as these high forces price innovation Since competition. by price Firms personally The second from will respond but a leading (unlike firm competitors. not outcome prices. follows its of of policies pricing competition with parallel not and product promotion perfect The inevitable which. oligopoly prefer as in i. e. following, its of price result by each therefore will by a few firms. the diminution awareness that structure leadership, price the brought as a direct -the -policies and . a market their emergence due to market; forces is of oligopoly competition) market to feature the an industry of among such firms or overt) generally 'imperfection' the domination the is competition particularly i. e. The characteristic competition imperfect firm the of by oligopoly, about Oligopoly the where price - are more are many sellers. 223 in The products Automatic Persil Four firms were tising of into the entry share the of second successful own brands, the form of High expertise a product innovation. largely are enter by this down. its 7 per cent this at retail did First, through which predominantly through multiple for should there toothpaste is chemist of sales. are a major sold; shops, of fell price a new firm major other and distribution to occur opportunity have retail HC 125,1978). entry resources and thirteen retailers, cent (PC Report, factors has been through 50 per selling and there further Three by vigorous the in largely at manufacturers' the have Sensodyne. toothpaste deter has leader, of not or has achieved intensified prices. Brand four after manufacturers, financial the with Long-Term product price its market Societies specialised 'real' the the Stafford-Miller, reductions, by the following brand Co-operative between which in of the adver- cent). withdrawn one time and the which sales evidenced changes and then at 1977; & Gamble (See Chart introduced market sold responsible by Procter and significant of in as is competitive, share sales of companies to formerly 7 per seemed propitious; when circumstances outlet for characterised and promotions expenditure advertising and margins (of and brands. price more than pharmaceutical sales competition price temporary and by rather retail the 1973 and 1977 between of Boots as a result competition cent and one company, in growth indirect 20 per toothpaste, brand. become the is of 1975, Macleans significant cent cent been have by oligopoly. turnover companies other years. There in is 85 per highly while market. for is 10 per market Brands Shares). five. an 8- Jif, instance, cent, industry the achievement 12 per Custard, Quick oligopolistic for comprised for in operate a duopolistic responsible accounts Nevertheless, in market,: expenditure promotion Birds Toothpaste, operates The toothpaste Case Histories the of Macleans viz. markets, several helped change whereas it is multiple As a result introduce. to keep in the prices type toothpaste of was now distributed organisations Macleans has` 224 been to compelled compete participation in competition between petition. Both level. retailer DOB of factors is a product stitutes. Nevertheless, advertising expenditure, another for reprimanded high product competes the In shown the as quickly who have the conditions need for R&D in since facilities of of to DOBs. rivals. to pressure instant of from well-known develop existence retail In consequence, have led to a competitive these situation sweets market and experience and technology almost food manufacturers auto- advance, distribution capacity milieu (CH 6) Custard will their excess competitive technical a similar to facilitate of of for success acts substitutes quality any degree to In many powder product ) by no means Quick custard other in brand near available optimise DOBs, and a competitive to stock closest Batchelors leading inflation. course, products expenditure. variations of the were competition of real sanitary manufacturers or viz. network the substitutes, substitutes addition the a firm competition product, a firm's of variety distribution a competitive retailers wide in rate is, markets market, addition, attract an efficient supply in prices promotion new firms, sub- reduced the overall or near high and sales the existence as possible, matically the the immediate with a well-known with has been severe than from on prices, its desserts. has emanating that categories in retail industry no near with advertising less rises have HC 436,1978) in many product as a constraint factors category of new products, Competition confined opigopolistic too there market and price to of on price com- the at no substitutes with conditions (PC Report, to the introduction shares, in this market their in this However, of price cutting price influence category product products protection to and intensity the has accentuated led the displays special chemist. Toothpaste (In have has been get Secondly, themselves retailers there a multiple terms. to rivals promotions. these Finally, its with which specific in which to of encourage stimulates marketing the manufacturers 225 have activity promotional be economically Jif, bleaches, liquid able Basically, Cream. invest to and hold rapidly growing held market reduction campaign Since was not they Jif responded such but the 1. of major price may lead where to demand is difficult products which housewives to date, (2.5: scourers share not 1) has a still of the of share price that the of likely that household amount this in although compete with each cleaners, predict. Jif has regard been to take into as acceptable equally successful Jif. market by a similar market, only Ajax of of below share is market penetration larger price It the a dramatic their their packs. to category, not, of and many other product have part intro- share cent some 8-10p price do they scourer of brand the a much enlarged cream scourers this firms marked share an increased counter and reduced powder with in lose consider- because and distribution to their to prepared market of Thus by lowering is scourers, and Agax Cream were Cream instituted 1980 Ajax powder There 20 per can much larger the of cleaners, dominant the that 1 The cream the with and other prices by housewives obtain order part By 1979 the Jif to order lowest liquids. advertising, In in level price elasticity prices compared in their a complex other, cent straightaway by overprinting reduced same time. of is floor 1975 when Jif policy discounts purpose. the market. by Jif, the products a specific sampling, down margins in (CH 2) includes these from the in trade and retailers. and washing-up dates was 52 per resulted scourer which use of approximately at by Jif been the effectively duced held market them as serving regard market cream scourers in overlap have to by manufacturers a non-scratch cleaning expenditure which operated household not increased been devoting account the substitutes; in attaining The absence of an automatic between oligopoly, correlation in the food trade is illustrated advertising and higher prices in a study (King, 1978) which showed that the prices of the 'heavily food brands - those on old-established advertised' in 1964 and spending the market over £250,000 on advertising in 1977 - rose by 220 per cent between 1964 and 1978, compared ) with 309`per cent for food prices generally. 226 market their present market rose by 140 per 1973-9 do not and therefore share have whereas shares; the cent, same interest the the Retail of cream price in Price accepting between Index by 70 per rose scourers cent., Golden is Rail an example in a very operates price and near substitutes holidays, catering par competitive substitutes, packaged coach car, tours, coach which because of the prevalence area, e. g. a service of excellence independent of self- etc. *** in the short Except disciplined Over social of of new firms, large-scale own brands, potential entry associated demand, static or only characteristics all to industries main of therefore factors characteristics industry (these products The prices toothpaste). are likely suppliers threat e. g. inelastic and similar market, of power emerge that to be influenced by conditions. Furthermore, degree growing apply the the as These market companies. some of as well bargaining is Case the at many instances, there leadership, price slow in entry several developed growing some products override disciplined from oligopolistic market to the and, international strong with as buyers and with by other sufficiently three both In brands. has the by manufacturers, is there by changing about by technology, cutting offers' competition), seems unlikely. persist brought retailer price 'bargin retailers, their of intense (including price retailers' demand are introduction to order and-. in supply conditions, instance, for in which environment market in requires changes and the level retail are time, and economic Histories, of leadership price a period term the stable of in practice disciplined homogeneity price among the is unrealistic, leadership firms e. g. firms in would an oligopolistic are not equally seem to imply industry efficient a which and ^l. 227 aggressive in production-distribution successful at innovation; Under rate. such or or a product variant, the relative to Mr. of on which policy of effectiveness look the time element in provide their spend the market is which effects means, affects firms. in a market be more will illustrate Instant Custard, competition with Rail, Golden in-a firms wide substitutes or near substitutes have tended to ignore however, the market structure, most likely which pricing help to to undermine to policy most on Parallel under the constrain and particularly The MC's Report of in many money. in many factors leadership. price surveyed are pronouncements, the which competing it will instance, for position Case Histories the which an oligopolistic disciplined which can consumers in from firms markets of their firm prices. (e. g. Batchelors Cakes) other Public prices higher markets Kipling variety by a variety as examples oligopolistic improve to equally at a uniform other policy the all not expand reductions, marketing of are one or price a more vigorous about sustain Finally, affairs, of introduce vying do not shares and profitability can be brought difficult Jif, or constantly are market state to stimulated positions Where firms which their an unstable be compelled they and marketing; over- efforts at Pricing oligopoly concluded: 'However behaviour, their choose to co-ordinate oligopolists is likely the result to be a level of prices higher than would prevail number with a large and profits (Cmnd. ' 5530,1973,13) of sellers ... and to prices this alleviate and costs will in the Likewise was claimed situation often recommended be the appropriate MMC's Consultative Government that practical Document (Cmnd. control remedy (p. 38). 7198,, 1978) that: '... from high concentration the market power arising may Also, to be made. permit excess profits market power can in a misalloca in the sense that tion of resources result does not reflect the pattern consumer preferences of output ' (3.20) or changes therein. f of it 228 is There little an oligopolist the per large other from entry in markets own brands, implied large firms quite different its has already Price when the was justified on the leadership' was increasing However, is there more, no_attempt price leadership, prices are often is in industry nor to acknowledge ways in which this (Part disciplined that competition 27 ). from Further- and parallel oligopoly under con- barometric leadership price 1977). whether p. for of State 18 March, 1, policy lead the taking companies powers 'price among economists distinguish made to and given prices, and Industry, agreement increasing view. (Under-Secretary Trade can little concentration, big with Protection, no general has been centration pricing' the loyalty is individual of increased that grounds brand was strengthened the danger of monopoly. and Consumer Prices Commission however, there that support of distributors of is, that although investigation 'parallel and to threat who see opportunities There been noted by advertising, new and more detailed for demand. consumer the influence the own, from competition or industries other their Case Histories the Finally, in from permanently from industry, that pronouncements from either particular engaged that assumption evidence in firms these of either be insulated se cannot and changing be enforced in recognition exerts its effect. In Review, there a review of the work the of 1978) Lord Cockf ield,. its first was a need Price Commission chairman, (Three 1973-77, Banks postulated that for '.. facility the community to protect at large a permanent in the field in this We suffer country of pricing ... from market domination, leadership, parallel pricing, price the lack of effective to compete competition, unwillingness ' ( p. 3 ) on price. Although main of oligopoly factors firms to typifies most which counter the control prices in k industries, ability the long of run. this markets proposal dominated To give the overlooks by a handful one example: a 229 feature of of present-day distributors' own brands as a deterrent acts tendencies over influence to to shopper try out brands, Retailer from comment view would advertising (C=d. '... also for and favourable media. assumption for responsible and marketing of a static can raise the can be wholly costs a advertising. in an oligopoly firms appear sufficient and the and the that a household publicity bodies competition with extensive consumer a beneficial that concept largely or the consumer is asked to pay as sunned up in the MC's added to the price Report of is branches, development monopoly and exerts widespread in the argument impunity retaliatory receive and private public curtails without marketing This a retailer of his widespread retailers. merchandise, brand moreover, economy implicit prices of in a private The restricted with range display the advertising, The reputation on prices. and a prominent name, by large-scale excessive a growing is distribution retail 0 5530,1973) But advertising which merely seeks to expand one seller's market share at the expense of other sellers' to be partly shares is likely self-cancelling and the is then likely to cost of unchanging overall unit output be higher than it would be with a smaller expenditure on in unit Such an increase advertising. costs would represent a waste of resources a serious and would constitute interest issue. ' (para 77) public : The. süpposition to buy one brand sumers unit costs is firms all for their turnover in market that than shares and other I fallacies, is if e. g. types successful, that to fails compensate to d'etre of of promotions can lead are there no firms for in cost that quality no of changes practice, to is can expand the deployed to better higher be expanded; acknowledge competition con- demand for that and that methods, in results the or-inefficient; it persuades and cannot saturated efficient raison and hence another proportionately the are share which, than particular, merely expenditure cost-reducing In advertising market equally more advertising. rather merchandise of are advertising on several introducing scope the based types particular that that and increase merchandise, 230 improved service diminishing (b) of market the reduce therefore the Since consumers all offers, costs form only of competition and profits to and other may then be argued competition is evidence of of competition, is the of sales of on price model competition. informed presence uniformity this price competitive that 'imperfect In minimum. analysed forms It concentrated be perfectly to assumed is the competition no place. to price with is there competition perfect so that of are advertising inferior firms to as a stimulus and Oligopoly model and services will and act shares. theoretical products which servicing, Competition Non-price In or all competing have promotion forms other of and thereby competition', viz. 'Under takes place by oligopoly competition no longer but by means of packaging, means of prices, samples, that might be concoupons, gifts and other attractions ' (Kaldor, Part 1, p. 24 ) sidered secondary. in Although perfect of is premise a practicable non-price it correct, is are unless imperfect to alternative competition invalid no more than either competition a poor substitute competition. price It of is competition or methods for this a sense is now generally industrial increase In structure. and retailing where recent competition in both price the latter may serve that accepted in years the areas form prevalent of manufacturing has been there which competition an that suggests in generating functions some specific the intense has been most and non-price is oligopoly competitive activity. Various products indirect in many of price and multi-unit innovations. types of non-price Case Histories. the competition pricing, competition ' such samples, are These as temporary competitions, employed include price in forms reductions 'free' marketing offers, of (TPRs) and rival 231 Price Temporary TPRs are Toothpaste. more important in developments retailers of their consumers The growth retailer concentration thirteen retailers, has led firms) whereas the particular they make to the With price-marked recommended prices imposed margin being perhaps on the is the for and the retailer often Persil increased now (CA 1). three power price firms to growth of retail the the half only by the the consumer has benefitted discount reduced. discount retailer's discounts the the retail to this are price from lower the price from recommended case even both on. further. consumers, no more manufacturer. the reduction list prices The retailer's passed prices. at discount from marking. In the the have can sell contribution manufacturers' to necessarily from the price not off' of that ensure through retailer 'money a significant retailer, to would shelves promotional passed the through on the manufacturers price retail transfer to to promotion actually through sold supermarkets retailers' of by four sold positions offers particular Toothpaste through in list less and in Automatic special are 'flash' correspondingly discount bargaining and(3) participation price retailer enhanced major advertising retailers packs from required of TPRs enable With same effect. due to of Macleans who sell manufacturers' reducing than is cent competing 'In the TPRs are has been retailing, cent through and gaining activity. discounts (50 per promotion supermarkets, large-scale of 50 per TPRs as a means of led Custard forms of promotion the activities; manufacturers their some of (2) has which the Quick (DOBs). own brands 1. (1) manufacturers; own promotional distributors' decade past Bird's instance, and other distribution: ä vis Jif, for toothpaste, the use over retail vis consciousness intensify With Automatic, than media advertising increased Their of used by Persil widely and Macleans (TPRs) Reductions permitted manufacturer's Moreover, the -As a result, X32 2. At a time have manufacturers have proved such extra impersonal the, consumer her sidering point of low price DOBs. turers' brands quality image at a low price the of amount can be varied, the of The extent to which inter depend, has by definition major brand, brand to and also the a means of attracting supermarket when she is competition has stimulated con- in Persil Automatic low-suds washing at packs were price reduction, the carrying and the less for is expense brand In its order to major competitor; the imitate. to gain price reduction. to brand leader in use the as large than varied market share a market cent amount which the were TPRs. growing 100 per the it and consequently on promotion although promotion by Since'Macleans the packs TPR the worthwhile customers (CH 5) period device and intensively all leader a short of of it than more frequently length the of competitors position. 'loyal' of TPRs for market cent duration find will number of of powder. manufac- promotion much smaller, market the the sample some competition may be more noticed reduction the share 1979 40 per and the easy on its to promote e. g. reduction a manufacturer a smaller necessary sales and consequently alia, to shoppers the at the same time maintaining price has a smaller as possible price makes them an overall, it less brand. manufacturer than finds of promotions in use TPRs to meet to while an intermittent Toothpaste the brands, are TPRs can be a flexible which Furthermore, TPRs will Automatic TPRs can encourage manufacturers consumers of retail e. g. Persil the the of Secondly, they in types switch customers. sale and retrial influence to offers purchases. manufacturers, For her consumers, 'flash' trial other to self-service, The intensification 3. because the at than of and packs consumer help they existing of environment price sales persuade of consciousness achieving First, 'loyalty' the price reduced in consumer and perhaps sustain for that securing as advertising. loyal of found more effective and thus products increased of of of its the it made 233 more difficult The selling Macleans technique Toothpaste. cost part it is for a addition, customer Other sold. the exactly. longer includes a coupon three of to when single toothpaste to the to packs which by used the reduces transaction and In the customer. the 'loyalty' of the the brand are units of to shoppers encourage 7p off e. g. 7p off say, to is two' of average retain designed also the of stock an effort than price a promotion of value Toothpaste, worth, the holding of are Macleans in the period promotions for an example cost an example buying sends is by raising of continue 50p in retaliate 'three of It selling of transferring sumer to rival Pricing Multi-unit unit its for this pack which also when the next purchase: the manufacturer con- she receives cash. Steles With but an expensive this means, more quickly it average issue of would of will method otherwise occur, production. In a firm Persil rivals. powder were years expand it is a larger before a means of as trial. By share the quickly by consumers sales hoped instance, for regarded be accepted will addition, to gain three consumers' and thereby Automatic, for and samples competitor, brand the are samples stimulating of that enable suds washing Automatic) Persil anticipated costs its than major is samples low the effective than lower market (Jif, new products, of and that the the in had been arrival of its its consolidating position. With domestic with brands the used in Jif and Persil equipment exactly at conjunction buy a product this the with with Automatic, that they purchase them. which include ensures time they Since are have contracts to manufacturers As a result, products. to both samples consumers the are equipment many consumers unfamiliar, been in negotiated their enabled which to try will may be reluctant a sample allows them be 234-, to experiment to the most like to it without in the future. it buy wish with informative issue if seems inappropriate As a result, type of advertising size of their the and make a decision payment, samples which to describe therefore would the samples would it expense; as 'a be to appear many manufacturers justified market they whether secondary attraction'. The aforementioned intersperse therefore, turers, interest on the the attract two further Secondly, equivalent. products the of manufacturers to In a specific a competition the retailer was prepared the products in the in where, for return Lever eight the 'loyalty' the than their hi-fi e. g. the cash which equipment washing and Jif with were three-fold, viz. special displays, feature effects products have the as prizes Automatic manufacturers' price promotion. to of the the promotion first supermarkets, a free its of rail For a valuable Jif, the selling one or Automatic on the was designed to, give from Persil ticket a joint organised purchase including brands. time Rail and British proofs brands towards for retailers floor company Bros. four Bros. sumer was entitled of less are they by Persil the the give of addition, and front-loading and to, match period In 1979-80 Lever For Tesco, and thus Offers Free of to In brand the organised advertising, during reduction machines, washing chain, supermarket cost trade instance, may feature competitions between link the emphasise machines. of prizes focus for Automatic. the expensive supermarket, Competitions, by Persil less to the Manufac- costly. and in a display first, advantages: lighter be sufficient attention. purpose but effective them with achieve product, this are nevertheless, consumer's for employed helps may, which promotions promotions to secure the brand trial promotion a special position any combination and Jif, purchase which promotion of the conticket. a rail and a degree stimulated display on the a low volume. 235 it difficult that the finds product is promotion established brand of retailers policy limited shelf the of force. Rival Innovations flow A continual only a small ation to of the entry may take e. g. to opportunity the is later competitors, a later the over first the to order obtain provides entrant a superior into competitive activity, a firm the brands. Under first have the existing a product distribution than found them to the field product change Both product. a product trade in arrival adequate tempt with and the consumer customers to of because weapon brands these a significant competitors. The changing Batchelor's to that can offer type the retailing, easier competitive the with be more difficult entrant can give This and subsequent and provided will risky, any other product of it find to it satisfactory challenge its second of likely advantage if promotions. and structure field factors or a static of forestall and in field response rivals. than emulate establish arrival organisation unless to reductions price before longer (of which in out to market, the one or a combin- diversify a product can be an effective, Innovation it into against effectively to an expanding competitor for effect with developments, consumers, of on their the market CH 4) e. g. when the reputation reaches technical of into area product more compete successful, as an and favourable brand's the Jif accept lines existing the of important is which innovations requirements a potential of are to An indirect enhance as a result changing or declining to of rival proportion factors: space new brands. with consequence prepared to replace constantly has been promotion is more shelf merits is Another achieve. trade retail which space sales to habits and opportunity Quick Custard I and needs of consumers provide for innovation. A technical a constant advance (CH 6) to meet the changed preferences enabled of the ' 1 236; in consumer made it desserts the for possible of retail towards Argos At the same time markets of have, generate the of the the packaged cakes cake market, and grocers were was found It outlets. in and become established, food retailers only (CH 2) was introduced which consumers traditional in were installing in of scourers were types was introduced to meet instance, however, each (Vim, products market The entry market the heavy the duty washing from several functions: time hope (samples); that, once powder the market encourage have shoppers introduced (CH 5) favour to their try try the the share Bros. promotions a product customary of suds washing of Lever that the entry has altered in In before the low the rival to the which pre-empting Jif surfaces existing shoppers been persuaded of Automatic illustrate from brands. of firm's the into held as large-scale machine. and were main early of washing replaced Case Histories detach they its market type Persil a new type Automatic of the homes and for as a means of ahead in sector as dis- grocers, unsuitable; of Persil of years The examples perform first three their the enter a handful changes deter- expanding important more stock capitalise. Two factors fastest to to to distribution the products viable needed were respectively), was economically powder needs these and Persil competitors. of the (CH 7) in multiple to response Bakeries market. to these of slow cake essential replacing continued becoming willing appeared result particularly particular means of and decided and profit, packaged habits the of British sales decision: tribution as the in view Thus and advantages, by entering this mined of consumers the provide decline, to about turnover of skills existing facilities, are of bread volume new sources on its a new type to meet the changing innovations such or innovate requirements. changed-. consumer in to the changed attitudes firms that consumers, which decline introduce to competition. price and needs and legislation automation (CH 8) Distributors in response outlet Similarly, market. brand, particular for the in brand 237 they will period of season`s wish to the year it purchase (TPRs); to catalogue; to stimulate of offers); differences to in retailers (gift the obtain the certain at new pricing, ('free' product when only marginal customers between products exist turnover (multi-unit displays interest to encourage more 'loyal' to boost consumers retail achieve to maintain competitions); (TPRs); again or money for in three sending tops). The basic aim of and they share, marked difficult and slower dictable, vary during this market at other hand, the their of may be more more competition can be given Finally, competition or initiate in or the on the cutting, imitate and can outlay process a" lower to be noticed; and it forms may be more on a price may be obtained efficiency according of may not price may help in to building In addition, the benefits of of competition. non-price types reduction; of non-price reduction. through and reductions effective and possibly and importance and diminish price than as a price As a result, advertising) by manufacturers weapon; many of the effects, increase in an advantage to, addition as a 'gift' enough 'loyalty'. (including the With and exactly; Price be preferred as a publicity effective than the equivalent competitive and unpre- and retailers. gains to isinore and efficiency skill directly imitators. skill for, substitute that initiator may also or dramatic is possible and the com- of (see CH 2). competition consumer are more varied retaliate potential Types because it price) by manufacturers the a firm's form effective with consumers cannot period immediately be significant the to to can be a more promotions no special because more value it by competitors. rivals requires as a retailers sales retaliation value expense Non-price secure to imitate, to intervening take place it lead however, competition non-price competition they are implemented which with in of is (or used in conjunction than price increase forms all competition, of non-price petition all non-price to how strongly manufacturers 238. think e. g. they will compared with The functions which increase can trading operate to under Thus the by different competitive activity have been competition oligopoly in the types competition fact the it way that does in Board non-price its competition and changing in that under public latter the perfect Report policy be regarded to continues 'The if the area consumer would benefit at the expense, price could be increased of outlays and promotion on advertising cannot competition. on Detergents, of competition if need be, or of profit. on either ' (Cmnd. 2791,1965, The MC in although its Report one purpose does product sales that: suggested this stimulant, of disregarded despite and Incomes of varied under consistently non-price price Prices importance increasing the as a sales advertising. Instead pronouncements. and consumers performed circumstances as inferior retailers illustrate Case Histories promotions to appeal not on Household of mean that to according its sales Detergents is promotion consumers will not did to seem aware not trial secure then Para 65) decide of that a"product to purchase the merits. 'Lever Bros. & Gamble seem to that and Procter assume ... be moved to prefer the housewife will one brand to another less by superior washing powder than by the competing daffodils of plastic as compared with whatever attractions "gift" brand', may be offered concomitant with another and that sales promotions distract ... demerits'of In its Consultative could petition the customer`s ' the detergent. raise Document prices because attention (HC 105, the from the p. 33) MMC concluded they are merits that an additional 'The or non-price cost: involve, forms of non-price various to competition a greater or lesser resource costs and these in extent, turn can mean higher The creation to the consumer. prices and defence of a position of market dominance can also involve resource costs which do not necessarily yield a Thus the accretion social gain. of market power through in a range of practices greater concentration can result by dominant firms which are unique to markets characterised interest'. which are potentially the public against (Cmnd. 7198,1978,3.40) i com- 239 1 There is their costs they in various have will pensated in no recognition found by the ways, Associated imperfection turnover fully, view raises free are to claimed thereby necessarily, the (Consumer or retailer. EEC), the the prevents confusion for between relationship Council, e. g. the that of competing choice unoffers, of merchandise Office of (statement, Council They consumers. and value price Commission, Consumer the example, com- may be reduced. argument confuses comparison Price than as Temporary Price satisfactory most be more as a market further claims because costs unit the offers, be generated, will techniques offer complicating will competition is there prices, obscure that of non-price, and. bargain gifts they manufacturing employment of such selling Reductions, Trading, the with which widespread and this more bargain that add to manufacturers advertising, and error sales additional that statement e. g. by trial may be utilised plant this Fair 28 November 1963): I... is undesirable which makes any practice difficult for consumers to compare values'. The Price Commission (HC 657,1978) Report it more (my italics) on Lever Bros: '... believed that the scale consumer bodies we knew that tended to activity of the company's promotional and nature in to to the and result consumer as general price, confuse ' (1) level higher than prevail. might otherwise a price issue 'consumer Furthermore, the legislation, i. e. under the Fair trade practices misleading put forward of 'adversely affect them' or confusing confusion' Trading the economic proposals in the case histories 1. interests General in 17 (2)) of of Fair where consumers Trading by can 1 to prohibit or modify Over the past decade two particular corollary 1973 (Section Act the Director included has been 'double - Recommended Retail pricing', ' and Temporary This is the practice where the next to a higher reference'price mended''by the manufacturers. them. sales Prices Price which promotions feature (RRPs) and its Reductions actual retail price usually suggested When RRPs are used is (TPRs) shown or recomin double - 240 been have the subject-of investigation considerable on two main they confuse and whether counts, generally subject to the which price investigated retailers with RRPs and double pricing sanitary and Tampons (No. towels 26,1977); (HC 650,1978), 1977) supplement that but it to a homogeneous that of that they were adversely for electrical the changing household these effect of including Report (No. appliances factual a wider 18 1976); (No. study appeared that diverse phenomena. 25, attitudes pricing, on sanitary appliances the products were but However, particular, number indicate a part this and of fluid did study not or behaviour. for protection sold commented products often Commission rarely conclusions, seemed to which on individual although In 1969 the practice conditions. Reports p. 194 static emphasise easy permits in findings to anxious subject MC's or consumer double one example of RRPs because (cont. into the products by RRPs had changed, market Commission's against quite a monolithic not stimulating and Supplementary Report the with covered products research All separate compared and constantly include of or extent Report. RRPs do not type 1. the MC's fact-finding noted (see and undertook the over PC investigated household The Commission's a combination the 9,1975) electrical form divided individual on several small and beds 1975-78 being still RRPs a complex inhibiting towards (No. competition were found and manufacturers Between competition. RRPs when they The Report contributed practice hinder they whether and official consumers. in many trades. observed matter viz. or mislead The MC (HC 100,1969) controversy public different products. recommended at the reasons, ) the On small abolition recommended ) in one they are claimed pricing to confuse consumers inflated of three ways: (1) where RRPs have been deliberately by manufacturers to enable all to to 'cut' retailers prices (2) where the traditional some degree; mark-up used to calRRPs has become obsolete culate through changes in the structure RRPs have of distribution; and (3) where variable been introduced for a particular and calculated at product the request of the individual. price; tý 241 N RRP s were as a result impulse buying, Unfortunately, to estimated not follow for account that Furthermore, secondary from shopper the likely brands have been in in sales was each discounted to in inferred brand leaders product group. it Report; the in the no market- halts effectively pricing does same degree. the behaviour consumer double that view prohibition to be discounted was simply whether around. the around-. shopping Similarly, most ascertain support cent shopping on twenty-five of lines confusion consumer would place some 30 per the are was made to attempt for was based which encouraged and discouraged consumer survey price leaders brand Since prices, Commission's-recommendation the by its weakened the confused to as a guide valueless the it on beds1 Report Commission's was recommended that 'double tising periods should Despite of sale and in media at the point pricing for prescribed should be prohibited except duration RRPs for and of limited ... ... (para 13). be prohibited'. this bought generally double pricing Report also at did found 'market the not Report the recommendation, adversely affect that behaviour. The earning excessive was a survey into not were consumers indicate seemed to consumers' bed manufacturers that that revealed also which price' adver"sales" beds profits. feature The distinguishing beds relied to buy, were This Reports. earlier behaviour and buying attitudes on several and where the two most advertising. which showed, sources it, to buy important Two out more shops. Although 1. Examined under the of not of information i. e. window three Price with conflicted shopping looked was important Commission in them choose and looking if in of what around and television at beds determining 1977 which Act and, help purchasers by press followed purchasers double pricing to be investigated basis. prohibited on a sectoral to consumer depicted that that unexpectedly, sources, price Report this of necessary, in three the enabled or shopper's 242 1 selection of factor. Discounts, trusting a retail of elements on the whole to PC's detailed to 'flash TPR, by the National it hand, of accepted the be abolished. should confusion were for or patronising was important in the and design quality including claims, choice were'also At pricing'. apparent their such whether in OFT's offers carried 1974. On the to proposals out other 'flash that became apparent, weaknesses made by one type caused conclusion the it investigation Groups Federation's and contrary same time confusion on the Consimer TPRs, the investigated a discussion RRI's suggested of prohibition When, however, examined on RRPs into debate reliance placed Federation had not of had not It but aspects the the reduce offers'. consumers mislead price the 'double strengthen proposals factors while offer for recommendation to proposals bargain of area and knowing choice. OFT had widened 1975 the In the Similarly, in facilities, important also bed or mattress, a particular showed it was by no means the only survey and credit shop were outlet. significant of 'sales' a particular a particular the outlet, offers' reduce and they were v I shelved. In 1978 the OFT issued offer the to claims Secretary Protection. Whereas to double strengthen indicate This pricing price is to prohibiting seller's ban double TPRs and flash RRPs: them to which had considered price cutting, This flash pricing offers less had the since offers that of could form price. no longer could Consultative as a suitable to effectively manufacturers how they when used a recommended effect the RRPs were most be prohibited than designed by removing device should contradicted and had suggested M on RRPs had been OFT now concluded they on bargain action and Consumer Prices as a competitive that the for proposals and recommended proposal I. original the that relate State of and vagueness, ambiguities 'notional' its for two recommendations of Document short be made less term confusing.. 243 The OFT's based on the sumer from shopping for this statement. into account that double k technique marketing of an effective that they are useful contributed for introduced being they retail of a more economical provide the the effective less such offers into account given from arose proposal these that since they intervals the element are of retailers; and when price for selling for advertising event, either provide associated with which is of making OFT had failed the the RRPs, or whether experienced over beneficial items low value they had been offers reductions price which confusion to make clear of abolition In (CHs 1,2,5) by retailers and that the previously offers other and that failed difficulty confusing. reductions; discount than with a noisy field; TPRs and flash of proposing the of as catalogue method the consumers. prohibition of take effective OFT 1978 recommendations side-effect unintended to reductions price PC seemed to retailers entering a product such was price particularly into no evidence by providing firm con- intensification the their the has been pricing competitiveness are outlets, the towards the little-known is OFT nor mark' of they although publicising lack the reveal Furthermore, those has that communicating the comparison market-place; some new types whether or way of to (CH 8) pricing and shorthand help 11), the as a 'bench they competition (para around' dissuade to be seemed to pricing is Neither which that crowded intention by acting competition double abolish 'their that assumption further provided to recommendation generate to take and above consumers, bought is to at likely frequent to be small. In of soaps 1978 the and detergents TPRs and flash product difficulty picture for PC commissioned offers. (HC 1) a consumer The results and brand conscious, in assessing of widespread its value survey indicated into that and seem to be satisfied for money. consumer confusion into investigation Nor did the the effect price of consumers are mainly that they have no. the survey confirm which the Commission attributed a 244 to 'the frequency 3.53). The PC Report TPRs are unlikely Despite the these earlier Price products, be investigated voluntary basis), cent inter prohibit, annually their com- Department double of the eventual on pricing other could products (In TPRs. trade to price However, that proviso relevant of alia, 1978. with variance Order by the and permitted by the at a draft offers, the their and that were which end of that confirmed prices. 1979 permitted (with was signed 50 per than the Order on a sectoral also was published at four from agreement no more to offers Offers) lower (para purchased' confusion, surveys and price Protection apart in on RRPs and flash (Bargain Marking consumer TPRs result that is product (HC1 125,1978) recommendations and Consumer of widespread RRPs and flash with parisons Prices cause consumer OFT's the type on toothpaste conclusions implement all to this which indicated survey price . with 1979 a that associations carry would packs members' TPRs). The conclusion of recommendations seemed to be based sole factor she is believes These surveys which the reasons with of survey revealed besides price, both these instance, for were 20 per price, 6 per only not, almost the purchasing because around the of all that shoppers PC on detergents shopper to do with the the chose a distributor's housewives double-pricing took a retail outlet. (including respectively reasons quality of for choosing the powder buying those of own brand With so. of factors In other beds, into the account, words, TPRs) was only for compared "It who did a variety consumer and beds detergents with unexpectedly, when selecting by the confirmed and not cent cent products however, more often Moreover, price. when making shopping by the later brand a particular than were assumptions showed that, price pricing a bargain. getting commissioned is and proposals by double confused that viz. inhibits double-pricing decisions; were by shoppers account PC and the the of consumers on two assumptions, into taken Reports early OFT that the of the with one factor - 245 among many others in seen this of appears shopper which develops social specialist merchandise time The shift in (1969-79) illustrates trading the widespread as a substitute to price competition. because fact-finding type of Trade "1 ýp .' to cars and (the sale consumer for facilities the a short legislating affecting resale difference of price under that so wide changes have by RRPs which, introduce them, and the varying product fields. apart the has reflected rate RRPs has been and are misled place from at which often and the actual as the taken of and as. a hindrance of consumers period, because They were abolition the changing Originally, consumers maintenance, the of period competition. interests between revealed, different the them by manufacturers. for to trading RRPs over of adversely to of and speedier of difficulty intervening retailing, in emerged issue the Act Descriptions of the covered products new forms has the In study better by past. on the has become price have More recently, by them! confused to appear possessed ownership retailers), the adherence e. g. by non-specialist as contrary regarded recommended and has become more perfect and which compound without condemned recommended shopper, would knowledge advertising, emphasis conditions RRPs were consumers the developments, shoppers in than prices time over retail As a result comparing to underestimate and economic widespread movement. the of reduced. policy telephones, decision to mislead ability Public through buying the affected their context be considerably the which Price. in the Commission's number incentive the price impact and the of of competition 246 CONCLUSIONS The discrepancies and practice of element well to advertising in and fallacies time, of aware, of the the importance of in validity firms to attain in order (3) Finally, the same manner of to mental of consumer the misleading is price welfare, have entry little the of and dis- and widespread economies of scale. of model that conclusion perfect form any other detri- and thereby shows that in compete should conditions under can be an effective competition to increasing the abstract practice and costs. influence recognise an imperfection whereas were on advertising 'loyalty' the the advertising shown to oligopolists under is prices the of to omissions as a barrier and achieve that operating from non-price oligopoly a failure sales assumption to apart competition distribution the economies of as firms has led competition of retail in raise theory Marshall of been have The neglect to maximise the to (2) resulted also like as advertising loyalty several ability firms of brand market-place. has the the omission economists limits such from The basic which ability premises and structure competition tribution and the 3 between Part stem firm. practice durable of the organisation need for in (1) Furthermore, and as a creator and competition theory demand, in emerged the and which determine have which means of competition. 1. advertising is level petitive acts enables as a barrier durable brand 'Barriers and/or prices based to on three that entry; loyalty; and that is to entry' practice where variable compared with decision to enter instance, for The conclusion, main all a market,. be higher premises, advertising firms that. viz. in factors e. g., financial and even which resources, that the com- advertising automatic a static a more complex and varied the other than can create operate one, theory conventional to profits may be only advertising of and market. concept in an insignificant influence a firm's the complexity of 247 the technology, size potential All tracting. fact, reputation and sold the as long overcome. in remain have the fail brand in fail fluctuations expanding to entry' endeavour which is for are up their distributed, well protecting firms Conversely, known well of consists to and acceptable they that it that will to need is this assume that would some degree. to build well granted obstacle con- or to as a means of it only ular brand. the essence of their the and who on occasion, reasons and that variety, or promotional competitive offer. the on1y"`the price established a short she is of purchasers market brands for the to is the share one brand The latter offers will of a different this occur differentiates when in to the them. wide fact a partic-_ constitutes made up of an intermittent become equivalent or the promotion is in to groups, two or more brands behaving due to loyal completely from purchase brands, a brand, consumers a product established in many product of may advertising purchase This shares. or market-place, to make a repeat With where practice Although willing to purchase have in shopper are in out which between decide borne period. the market purchases The two major get can create advertising not a few months. The remainder, part major is their a proportion that loyalty unless in theory stimulating after occur that only instance, will to for successful first who vary brand either existence been in assumption and durable many products for firms is competitors. take already competition! automatic the from the have firms price a major of groups The implicit the is this and that Both 'right' whose brands competitors consumers, 'barriers as a product a market firms market whereby as possible entering established in at the act mechanism with contemplating of the and goodwill advertised, themselves factors distribution, achieving existing whether scale, these is this of whether market, of economies reached In the of difficulty or ease the customers same product, group. - product way is price order customer the desire reduction to remain so that ýýý 248 Under devoted these to circumstances, encouraging more frequently, is in or directed often and who are tisement against of and brands that is consumer take into bodies, experience of economic and social retailer advertising, of media, sales demands and fluctuate to severe in the - supposition of through the tendency of many other sources of friends and'which, the future knowledge ownership that have the proved which consumer because cars take learn' consumers which of to secondly, and, of they practice, 'in ignores theory, and and relations, has become more perfect e. g. and advertising acceptors thereby products durable can assure explicit on a purchase; developments, of certain and telephones, etc. the tends theory promotions. from introduction impose and which the consumers and which and structure predominantly the economy which Conventional organisation shares advertising arises from deciding time, brand time over the habits, sometimes promotion before over types fallacy to develops 2. that and underestimates unsatisfactory, from consumer cause and passive and reject adver- and since market, market, -'and available the the a advertising. retailers, account view a static from gullible sales viz. the assumption This isolate information, of implicit the are which from the promotions. to factors power with consumers first, and changing with durable can create competition of advertising product. a static impact the the do"so to familiar made in promises advertising implies also all on the loyalty sales that to are Associated brand of be withdrawn to limitations own experience brand means that already who are compare to and products, These This is advertising the purchase the loyalty vulnerable new brands tastes. quantities. assumption brand are larger able their The tacit firms who already customers of proportion those towards product, automatic a high of retail to overlook distribution Conventional supplier's viewpoint, the effect of on advertising theory considers and seems to the and on advertising ignore that 249 may be a beneficial advertising Just Advertising While to stock purchaser that the current to prefer likely the purpose for worthwhile loyalty facturers under In shopping, diminished at the same time accentuated .ýýý, in for led 'loyalty' conditions of which production have made it for the will sell an surprisingly, retailers in the com- is least practice, is Like- to make it that advertising the overlook need and of manu- has become more necessary and distribution, to impersonal and the mobility of retailers to expensive capital achieve investment success prominently. merchandise, ability is well. is an brand retailer In more difficult instance, take advertising theory to to Not promotions it There has been brands. conventional unless distribution, store the product 'and a firm's that in a product to display has shop. Conversely the of many manufacturers' synonymous local a manufacturer's that in avail share. selling of a product, little product market space popular the need to attract 1 its of of it. to buy preferred confirm the persuading prepared their turnover. retailers standardised the if her are a rapid distribution, retail consumers histories function developments many market in find'it conditions most and retailers be of will consumers. consumer awareness and cost shelf insistence are present-day this a major with the the stimulating create case in as essential product obtaining the store The implied brand on retailers. distribution limited to reassure the advertising it, try the an important designed of are substitute brands eliminate therefore, wise, is stock to effect as in competitive for petition or widespread factor essential to can easily Many of achieving information on many occasions brand unavailable. in to consumer potential alternative in promotion of may. successfully the evidence the a product advertising encourage the ignores and sales retailer is it as serious, source the of of shoppers economies traffic. which, achieve. methods and high maximum customer but 4 have of 'loyalty'; overheads have In their l 250 to efforts of stores fast-selling handling their operate rivals, own brands, promotions, have Manufacturers ments, in On the other the cost hand, expensive has manufacturers primary objective display, and to to the the the task of of aid to of-promotions buyings; point turnover at larger sizes. lessen substantially retailers to give of trying entry into times Other conscious To some extent price of advertising expenditure, them. to the notice such expansion manufacturer has to in order shopper, the expansion repeat field; boost and encourage between is stimulate product as temporary shifted manufacturer the of led the shoppers to try price reductions'. the manufacturer to stimulate. out trial by the expense customer. of although of consumers. attention differential indifferent a prominent the the where has whose promotions from a new product; own brand and/or is This year, ä vis vis superstore an established promotions the the gain of the of the and the assistant. trial brand and the distributor's the price to can encourage Furthermore, and this sale, of a product directly retailers. of supermarket encourage certain retailers induce heads and purchases. consumer a sales facilitate and repeat reduction distribution. production, manufacturers large-scale a price the if develop- utilisation of the of intensive more development the over to with to in retail' the to and towards retail large-scale of be achieved a few of provide service competition without led is consumer impersonal faced power intensified concentration to make regular customers The growing from offers' by recent affected economies can only machinery sufficient increased result which range manufacturer. been the. potential their 'special has as competition likewise from themselves of by costs advertising, frequency a particular by the particular savings trend with promotions their and the a further with operating and differentiate have, increased retailers lower capacity, merchandise, distributors' exclusive full at promotions has been advertising is Moreover, widely in these at used,, to bring examples, of non- 251 price competition terms and advertising lines in chosen usually of, place than other increased have promotions sequence of employ in changes the Non-price conditions of non-price identifiable twenty past tasks Sales price. years as a con- chiefly and structure organisation com- selling techniques'including the and not with, trading types certain their retailer conjunction current have to and the particular selling over keen are in improved with reduction. place Under can perform more efficiently they price they retailer competitors, takes often and retailers because their competition. price manufacturers petition to manufacturer's therefore, competition, in the matches because allowances preference the support manufacturers of retail of sales distribution. and importance The efficiency increases promotions turers and diminishes Just stimulant. risen the over Non-price react will on price lead will Instead, for to the advertising In inferior fear is leads the has instance, have expenditure manufacturer and has been years recent its squeeze war, tends and sales promotion theory competition to to non-price because the compete means such increased competition for Under these sales analysis-sales promotions including is purpose samples, which regarded of indirect as turnover. as simplifying, i the directly and be self-defeating. by other achieve the how his in motion spiral margins, compete to to not prefers profit consider or output. prices a downward price of setting because oligopoly under oligopolist usually oligopolist price in widespread changing oligopolist a price conventional to before the circumstances, for stamps, retailing food expenditure"an-promotions. firms of in manufac- as a sales consumers Similarly, declined competition interdependence trading same period. by increasing replaced years, the to appeal expenditure has relatively on advertising rivals five past to how strongly according will as-advertising during disappeared they think and retailers forms different of price ` n 0,252 free competition, of category ceteris has led Non-price industry. direct the of to welfare. and sales promotion unpredictable, retailers and more difficult to retaliate consumers, the at an advantage The conclusion adds to costs view of the of conventional and raises to shop and the keeping promotions prices must prices 'is the ipso non-price retailer means of down. facto to flexible it and is less or an for appeal efficiency and important, more the initiator gains competitors. theory that non-price helps competition and to has The argument be transferred based on the supposition on a static encourage reduces a competitive in competition to brand, the competition based a misconception and innovation factory, may be an effective is prices If market. 'loyalty' consumer his of the On ability but 'Even period to be advertising a promotion in them. expense their an identical have this tend will more against and during similar. exactly, implement they by rivals, marketing, competition emulate in developments). in vary time to retaliate are their of and manufacturers which with aggressiveness of competition can be followed technical of do not these nature price competition effectively since the direct and particularly forms to in an industry calibre these campaign or takes expertise, are it price the be could once more prevail. from and major in vary only rivals advertising aggressive innovations firms Not for of product innovate. in This form of organisation which conditions consumer the imperfect of inherent refrain with to relegated as evidence would however, and speed ease hand, other higher competition is, are 'imperfections' these tacitly outbursts to confined and in price when cost (Occasional it if that view competition particularly the and regarded as detrimental Oligopolists because it the etc. which has become the prevailing oligopoly easy paribus to then eradicated the competitions, and therefore competition error gifts, that to that consumers all turnover sales cost of in in then value, increasing the costs sales the form manufacturers/, of 253 are retailers equually introducing for retailers for Since the cost-reducing can expand pensate the cost there are in reproduced to modern competition which curbs to the is no scope no manufacturers/ to proportionately limits on the 'perfect of non-price degree which may be more applicable oligopoly com- types particular function expand and then recede, and perhaps under changing market conditions in the can be than competition or market-place, likely is it that by'other be replaced is direct therefore, non-price of which varies Legislation, prevails. to competition' competition its techniques there promotion. assumptions eliminates or and that practical industry, that more than sales obvious where understanding likely turnover developments trading price without of inefficient, or methods, their theoretical abstract according efficient to sales be detrimental to consumer welfare. in Part Finally, in the theory in Nevertheless, 3 it theory the of market non-price is the firm have policy competition Part the of 1 it been firm and the such as oligopoly, competition. 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