Advertise with Eye on Competition

Consumer psychology research findings from long ago can still be filled with hints for you in today’s competitive retailing environment. An example is a study reported in 1928 by psychologist E. J. Asher. He found that as a retailer spends more money on advertising, consumers became more familiar with the store—but only for certain types of businesses. The correlation was there for drug stores, dress shops, real estate companies, and car dealerships. But when shoe stores, restaurants, jewelry stores, and music stores spent more on advertising, there was no strong increase in consumer familiarity with the business.
     Why? Further inquiry showed that it had to do with the amount of competition for different types of stores. With the types of stores where advertising did improve familiarity, there were a number of competitors. Lots of drug stores, for instance.
     The chief reminder for you from this study conducted more than 80 years ago: If you have limited competition and consumers are already quite familiar with your store, it could easily be a waste of money to advertise with the objective of increasing store familiarity.
     There are some other lessons as well:

• Choose objectives for advertising that you’re confident will improve your profitability. This study used as a criterion of success an improved familiarity with the advertiser’s business. Will increased familiarity improve your profitability? If not, evaluate other advertising objectives.
• When developing tactics, eyeball what is likely to be happening in your particular target markets. The Asher study conducted in the 1920’s used as participants a total of 112 Austin, Texas high school seniors. For these kids, there was no real competition among shoe stores. But members of your target markets in 2010 in the localities where you do your selling may have a different view of the competition.