10.14 notes

• branding

– Miller Highlife “Champagne of Beer” 

= most money to date

= new conceptualization of market: target women

– Miller Lite versus Coors

= instead “American’s Fine” rather Miller on “great tasting” “less filling” “premium”

– post-prohibition

= premium bracket: Schlitz

› versus “back alley brews” and cheap = potentially deadly crud

› status advertising

= initial 19% gain, from new bottle design & color scheme

› could charge premium, too!

– versus costs: shifts share

= if lower costs, then could “buy” share without losing lots of money

= only real difference “purchased” identity

– advertising: claim national brands benefited more than regional

= TV ← → increased industry concentration

= buying shelf space: “facings”

• Anheuser-Busch: bottling

– received approach branding in saloons

– cans!!

› cheaper to make

› cheaper to ship: lighter, more compact, no backhaul costs → more than 50% reduction

• innovation: other areas

– first movers tended to do quite well: shipping

› refrigerated shipping

› interstate systems

– these worked even better if had established market

› do larger firms have more to gain from innovation?

» cannibalization of own sales versus creation of new sales

» capitalization that makes new facilities possible

› 1st tier or 3rd tier: systematic R&D versus “hail mary” strategy

– process improvements ← → cost reduction

– constant innovation serves as an entry barrier

• why concentration?

– premium partially insulates from cost disadvantages

∑ why concentration?

– does tech change amplify random initial differences

› of course not everyone does tech change equally well, see for example the various family succession disputes that brought in good / bad leadership

– are certain sorts of tech chng more important for large firms and other types for small?

› a large firm benefits more from reducing costs

› a small firm sees less cannibalization from new product ideas and new brand strategies

∑ branding and advertising?

– can there be too much / too little product differentiation?

cf. Hotelling where 2 varied products leave more people getting items closer to their preferences than two identical products

– can we have too much advertising? too little?

› what is the strategic equilibrium? there are lots of potential tradeoffs, and as always what is good for producers may not be good for consumers