466 The Marketing Book
growing doubts about the cost effectiveness of
advertising in the face of rising prices and
increased advertising ‘clutter’. A recent con-
sumer survey (Croft, 1999) provided ammuni-
tion to those who champion sales promotion.
The survey conducted by RSGB on behalf of
Mercer Gray revealed that:
only 16% of people in Britain admitted to
paying any attention during commercial breaks.
Twice as many say they treat the commercial
break as an opportunity to nip out and make a
cup of tea. 25% change channels to see if there is
anything more interesting on the other side and
17% talk to other people in the room.
Just under a third of respondents (29%)
said they bought an item because of a TV ad
while more than half (59%) admitted having
bought something because it was part of a
special offer or promotion such as a two-for-one
or a competition.Developments in broadcasting technology have
also eroded television advertisers’ confidence in
their ability to reach target audiences. Remote
controls make channel hopping easy, and where
once video recorders could allow the viewer to
fast forward through advert breaks, companies
like Hitachi are now marketing recorders that
edit out advert breaks automatically.
Over time, the emphasis placed on adver-
tising and promotions within markets and
firms often resembles a pendulum swinging
backwards and forwards across that imaginary
line. Each time a blue chip company changes its
marketing communication emphasis towards
one side of the line, it is interpreted as the
beginning of the end for the other. At the start
of the 1990s, the swing towards promotion was
exemplified by Heinz, who in 1992 cut their US
advertising budget and transferred $100 mil-
lion into (mostly trade) promotions. The result
was an immediate 7.3 per cent market share
gain for Heinz ketchup alone, reversing a six-
month sales decline. However, this prolifera-
tion of promotions created concern about
‘overkill’, and a swing back towards advertis-
ing in many markets.
This concern was reflected in the high-
profile move away from promotions by one of
the world’s biggest promotions user, Procter &
Gamble, with their 1996 Every Day Low Price
(EDLP) campaign. Faced with declining cou-
pon redemption rates and increasing costs, the
company decided to test a zero price promotion
marketing campaign. As a substitute, they
offered ‘permanent price reductions aimed at
adding extra value and fostering brand loyalty
so that the consumer’s decision is made to
purchase before they even enter the grocery
store’. In practice, the EDLP concept was not
accepted by consumers. In the UK, P&G’s sales
and value position dropped, and in the USA
the trial was ended four months early in the
face of retailer opposition. P&G’s couponing
policy was not only reinstated, but some
consumers and retailers were scheduled to
receive compensation from the company for the
losses incurred (Gardener and Trivedi, 1998).
Ailawadiet al. (2001) provide a longitudinal
study between 1990 and 1996 of P&G’s strategy
of decreasing deals and coupons and boosting
spending on advertising. Their analysis of
customer and competitor reaction to the strat-
egy concludes that: ‘The net impact of these
consumer and competitor responses is a
decrease in market share for the company that
institutes sustained decreases in promotion
coupled with increases in advertising.’
To some commentators, 1997 was like the
beginning of the end for conventional advertis-
ing, which came under attack from some of the
key brands that sustain it. Dominic Cadbury,
Chairman of Cadbury Schweppes, rebuked
marketers for their obsession with the ‘froth’ of
advertising. Niall Fitzgerald, Chairman of
Unilever, stated that ‘I do not find today’s
advertising agencies being much of a match for
tomorrow’s marketing opportunities’. Paul Pol-
man, Vice President and General Manager of
Procter & Gamble, the world’s biggest adver-
tiser, attacked the 47 per cent rise in TV
advertising costs between 1992 and 1997 as
‘unacceptable’. The decision of Saatchi &
Saatchi, a brand synonymous with above-the-