Download ADVERTISING AND COMPETITION IN THEORY PRACTICE AND

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
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', '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.
I
demonstrated
my examination
that
inappropriate
make it
which
evident
the weaknesses and fallacies
was shown that
of
public
need
public
policy
to
by amny eminent
policy
curb
product
economists.
in
pronouncements
is
prediminantly
or
eliminate
differentiation,
for
as a basis
based
on the
imperfections
advertising,
in
and
I
254
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