University of Southern California Dissertations and Theses

A Positive Approach To Advertising And Publicity As A Function Of Consumer Preference

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A Positive Approach To Advertising And Publicity As A Function Of Consumer Preference

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Content This dissertation has been 64— 2563 m icrofilm ed exactly as received BAYLOR, Aly A sgar, 1923- A POSITIVE APPROACH TO ADVERTISING AND PUBLICITY AS A FUNCTION OF CONSUMER PREFERENCE. U niversity of Southern California, Ph.D ., 1963 Econom ics, theory University Microfilms, Inc., Ann Arbor, Michigan Copyright by Aly Asgar Baylor 1965 A POSITIVE APPROACH TO ADVERTISING AND PUBLICITY AS A FUNCTION OF CONSUM ER PREFERENCE by A ly A sg ar B ay lo r A D i s s e r t a t i o n P re s e n te d to th e FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA I n p a r t i a l F u l f i l l m e n t o f th e R eq u irem en ts f o r th e D egree DOCTOR OF PHILOSOPHY (E conom ies) June 1963 A POSITIVE APPROACH ,’0 ADVLAVISIMG AMD I’UPLICI :’Y AS A PUMCTIOI' OP COMSUi-ihA P; iliPKarAiCii by Aly Aspar haylor 31*4 4 Wheeling Avenue Manhattan heights hi Paso, Texas All r l . ’iit r e r o r v c d . Mo p a r t of t h i s book t.iay bo rcpro'b]ce*'J J a any rori.i, by i.ijneo- rf.o’i or ei.;: o ti ,<■: r ;.v:£r.r , v;i thou t poruiis - r. lor. ;; v.'r L t f r y . : : ti;c w r i t e r . JUKC, 1 - 3 UNIVERSITY O F SO U TH ERN CALIFORNIA ORADUATISCHOOL UNIVERSITY PARK LOS ANOELES 7. CALIFORNIA This dissertation, ‘ written by ....A ir .............................................. under the direction of h...i*.Dissertation Com- mittee, and approved by all its members, has been presented to and accepted by the Graduate School, in partial fulfillment of requirements for the degree of D O C T O R OF P H I L O S O P H Y o ........ Dale......June..1963......................... DISSERTATION COMMITTEE k m ir m m n * TABLE O F C O N T EN TS CHAPTER PAGE I . INTRODUCTION ........................................................................ 1 S ta te m e n t o f th e P r o j e c t ................................. 3 S ig n if ic a n c e o f th e p ro b le m ....................... I 4 . O b je c tiv e e o f th e p r o j e c t . ............................. 5 L im ita tio n s o f th e r e s e a r c h p r o j e c t . • • 7 Review o f th e L i t e r a t u r e ................................. 8 S ta te m e n t o f th e R e se a rc h Method .... . 10 D e f i n i t i o n o f C oncepts and Terms • . . . . 11 m S h o rt R eview o f th e W o rk ....................................11 I I . ANALYSIS OF THE STATE O F CONSUM ER BEHAVIOR THEORIES..........................................................................15 C l a r i f i c a t i o n o f B aslo C o n cep ts and T h e o r i e s ..................................................................... 15 V a r ie ty o f t h e o r i e s ............................ 15 Some B a sic C o n c e p ts ..................................................17 The o o n c e p t o f u t i l i t y .................................... 17 C a r d in a l v s . o r d in a l u t i l i t y c o n c e p t . . 21 U t i l i t y T h eo ry of Consumer B e h av io r A cco rd in g t o A lfre d M a rsh a ll . . . . . . F a c t o r s a f f e c t i n g consum er b e h a v io r a c c o rd in g t o A lfre d M a rs h a ll • • * . . 2ii i i i l l CHAPTER PAGE R o le o f m a rg in a l u t i l i t y c o n c e p t i n M a ra h a llla n a n a l y s i s . . . . . . . . 28 The U t i l i t y T heory o f J . R . H ick s and Use o f I n d if f e r e n c e C u rv e s......................... 29 B a slo id e a . . . . . . . . . . . . . . 29 The r a t e o f com m odity s u b s t it u t i o n * * 30 M a rg in a l u t i l i t y and in d lf f e r e n o e o u r ve com pared................................................ 31 C r iti c is m o f in d lf f e r e n o e c u rv e a n a l y s i s . .......................................................... 33 C o n c lu sio n and e v a lu a t io n o f I n d l f fe re n o e ourve a n a l y s i s .............................. 36 The R ev ealed P r e f e r e n c e T heory o f P au l A* Sam uel s o n .......................................................... 37 B a sic a s su m p tio n ............................................... 37 The Von N eum snn-M orgenstern T h eo ry of Consumer D ec isio n -M a k in g . . . . . . . I4 .0 B a sio c o n o e p t ................................. I 4.0 E v a lu a tio n o f th e von Neumann- M o rg en stern t h e o r y ........................ C o n c lu s io n . •• •• • • • • • • • • • • I4.6 I I I * A POSITIVE APPROACH TO CONSUM ER PREFERENCE AS AFFECTED BI ADVERTISING.............................. 1*9 iv CHAPTER PACE L im ita tio n s o f D e d u c tiv e Method • • • • I 4 .9 Use o f deduo t l v e m ethod by o l a s s l o a l e c o n o m is ts . • • .................................... I4 .9 C om plexity o f econom ic phenom ena and u s e o f s u rv e y m ethod...................• • • 51 In o re a s e d Use o f S c i e n t i f i c Method S in c e 1930....................................................... 52 H is to r y o f p o s i t i v e a p p ro ac h . • • . • 53 A p p lic a tio n o f P o s i t i v e Method to th e P r e s e n t P r o j e c t ................................................ 56 L i s t o f b a s ic d e te r m in a n ts used i n th e s u rv e y ............................ 56 L im ita tio n s o f th e p r o j e o t . • • • • • IV . ANALYSIS OP ASSUMPTIONS A N D AXIOMS USED IN THE SURVEY.................................................. 6 l D e f i n i t i o n o f th e P r o b l e m ..................... 6 l C o n o e p ts............................................................... 63 D e f i n i t i o n a l c o n o e p ts .................... 6lf T e c h n o lo g ic a l o o n c e p ts ............................. .... 65 B e h a v io ra l c o n c e p t s ...................................... 65 I n s t i t u t i o n a l c o n c e p ts . • • • • • • • 65 Axioms and A s s u o p tlo n s ............................... 66 Markov p ro c e s s a s su m p tio n • • • • • • 67 E x p ec ted Incom e e q u a tio n ...................... 67 ▼ CHAPTER PACE S a le s deo ay c o n s t a n t . . . . . . . . . 68 S a t u r a t i o n H a l t ................................................ 68 R xogeneous v a r i a b l e s v e rs u s en d o g en eo u s v a r i a b l e s ............................. 68 W eight o f f a c t o r s ............................................ 68 V. OPERATIONAL PROBLEMS OF THE SURVEY PROJECT......................................................................... 70 E s ta b lis h m e n t o f th e S am p lin g Model . . 70 Zone 1— H a w a ii. ....................................... . 71 Zone 2 — A la s k a ..................................................... 71 Zone 3 —W a sh in g to n , M ontana, New M exico, M in n e so ta ....................................... 72 Zone I * .— O reg o n , I d a h o , U ta h , A riz o n a , Wyoming, C o lo ra d o .. •• • •• • • 72 Zone £ —C a l i f o r n i a ............................. 72 Zone 6—N ey ad a. . . . . . . . . . . . 72 Zone 7 -* N o rth D a k o ta , S o u th D a k o ta , N e b ra sk a , K a n s a s , Io w a............................ 73 Zone 8 —O klahom a, A rk a n s a s , K en tu c k y , T e n n e s s e e , V i r g i n i a , N o rth C a r o lin a 73 Zone 9~~T*xas .............................................. 73 Zone 10—I l l i n o i s , M is s o u ri . . . . . 73 Zone 11—L o u is ia n a , M is s is s i p p i, A labam a, G e o rg ia , S o u th C a r o l in a . • 73 ▼ i CHAPTER ' PACE Zone 12— -W isc o n sin , I n d i a n a .................... 7 1 4 - Zona 13— M ic h ig an • • • •• • •• • • 7 1 4 - Zona II4 .— O h i o ..................................................... 7 1 4 - Zona 15—F l o r i d a , W ait V ir g in ia • . • 7 1 4 - Zona 16— M ain e, V erm ont, Now H a m p s h ir e ........................................................... 7 1 4 - Zona 17— M a s s a c h u s e tts , C o n n e c tic u t, Rhode I s l a n d . ............................................ 75 Zona 18—New Y o r k ............................................. 75 Zona 19— Penney I r a n i a .................... 75 Zona 20— Now J e r s e y , D e la w a re , M ary l a n d .......................................................................... 75 Zona 2 1 —W a sh in g to n , D. C ........................... 75 Rand oat o h o lo a o f a d d r a a a a a ........................ 75 A n a ly a la o f th a Q u e s tio n n a ir e a . • • • • 77 Consum er Q u e s t io n n a ir e ...................................... 78 Q u e s tio n ! • • • • • ....................................... 76 Q u e s tio n s 2 -7 .................... • • • • • • • 78 Q u e s tio n s 8 - 9 ...................................................... 78 Q u e s tio n 1 0 ........................................................... 78 Q u e s tio n 1 1 .......................................................... 79 Q u e s tio n 1 2 ........................................................... 79 Q u e s tio n 1 3 ........................................................... 79 Q u e s tio n l l * ............................................................ 80 ▼ 1 1 CHAPTER PAflB B u s in e s s Q u e s tio n n a ir e ................................. 80 Q u e s tio n 1 ( a , b ) ............................................ 80 Q u e stio n s 2 - 3 ....................................................• 80 Q u e s tio n I4 ..................... • ...................................... 81 Q u e s tio n 5* • 81 Q u e s tio n 6 . . • ................................................. 81 Q u e s tio n s 7 * 9 ................................................. 81 Q u e s tio n 8 ............................ 8 l V e r i f i c a t i o n o f D a ta R e ce iv ed • • • • • 81 F a o tu a l T o r l f l o a t l o n . • • • • • • • • 82 I n t a r n a l c o n s is te n c y o r fa a d b a e k m ethod. • • • • • • • • ......................... 82 S t a t i s t i c a l v e r i f i c a t i o n s . . . . . . 83 C o n tro lle d e x p e r im e n ta tio n . . • • . • 83 VI* COMPILATION AND TABULATION OP DATA. . . . 85 O rd e rin g th e D a ta ....................... 65 The p r e lim in a r y c h e c k s o n th e q u e s t i o n n a i r e s . ......................... 66 L e g itim a te , e x t r a an sw ers • • • • * • 87 T a b u la tio n o f d a t a ......................................• • 86 T a b u la tio n o f Q u e s tio n n a ir e s o f th e B u s in e s s F irm s . ....................................... 91 V I I . MATHEMATICAL ANALYSIS OP DATA......................... 116 v i i i CHAPTER PACE C om parison o f Two S ta n d a rd D e v ia tio n s * * 117 C o r r e la tio n A n a ly s is ............................................ 119 L in e a r c o r r e l a t i o n o f q u e s tio n #10 . • 122 On th e C u m u lativ e and P erm anent E f f e o t o f A d v e r t i s i n g ..................................................... 12l|. V I I I ,.................................CONCLUSIONS.......... 126 Econom ic T heory and A d v e r tis in g .................... 126 Need f o r econom ic r e s e a r c h on ad v e r t i s i n g ............................................................... 129 Some s u g g e s tio n s f o r r e s e a r c h .................... 131 The need f o r a new econom ic th e o r y o f a d v e r t i s i n g ................................................. 133 Some F in d in g s o f th e R e se a rc h P r o j e c t , • 135 P r e s e r v a tio n e f f e o t ........................................... 135 C o n v e rsio n e f f e c t o f a d v e r t i s i n g • • , II4 .O A c tiv a tin g e f f e c t o f a d v e r t i s i n g * * * ll|£ A d v e r tis in g and th e c r e a t i o n o f o l i g o p o l i e s * ..................................................... 1I4.6 A d v e r tis in g and s o c i a l s t a t u s .................... U+7 A d v e r tis in g and consum ers* s u r p lu s • , II4.8 S a t u r a t i o n p o in t I n a d v e r tis in g * , • • lij-9 Summary............................................................................. II4.9 BIBLIOGRAPHY........................................................................................... 1^1 APPENDIX..................................................................................................... I 63 C H A T TE R I INTRODUCTION I n econom io th e o ry some tim e s I t I s assum ed t h a t th e consum er i s an "econom ic man*' mho c o n s c io u s ly o r u n c o n s c io u s ly g u id e s and e o n t r o l s th e eoonom io o r g a n is a t i o n o f human s o c ie tie s .^ * I t i s th e r e f o r e assum ed t h a t consum ers and p ro d u c e rs d e te rm in e th ro u g h t h e i r c h o ic e s and th e p r i c e sy stem r e s p e c t i v e l y w hat s h a l l be p ro d u c e d , w hat q u a l i t y , how m uch, and how th e d i s t r i b u t i o n o f p ro d u ced goods w i l l be m ade.2 I t i s f u r t h e r assum ed t h a t co n su m ers, p ro d u c e rs and o th e r g ro u p s and in d iv i d u a l s c o n s t i t u t i n g econom ic o r g a n i s a t i o n s , a l l e x e r c i s e m ore o r l e s s freed o m i n t h e i r c h o ic e s and d e c i s i o n m a k in g . A c r i t i c a l e x a m in a tio n o f th e s e b a s lo assum p t i o n s r e v e a l s t h a t th e consum ers a r e becom ing m ore and m ore s o p h i s t i c a te d i n t h e i r c h o ic e s and d e c is io n - m a k in g . They a re in f lu e n c e d by v a r io u s f a c t o r s ( l i k e g ro u p i d e a s , p r e s t i g e , s t a t u s , a d v e r t i s i n g and p u b l i c i t y ) , th e ^Alfred M arshall, P rin c ip le s of Economics (eig h th e d itio n ; New Yorks The Macmillan bompany, 1953)* pp. 2 6 -2 7 . 2 Louis Baudin, T ralte D*Boonomlc P o litiq u e , Tome Presdere (second e d itio n ; p a riss L lb ra irie H allo s, 1955). PP. 33-35. num ber of which is increasing.3 Consum ers as in d i v i d u a l s to d a y do n o t alw ays know e x a c tly w hat th e y w a n t.^ F r e q u e n tly t h e i r n ee d s a re o r e a te d r a t h e r th a n m o tiv a te d by t h e i r p e r s o n a l c h o i c e s .5 I n o u r c o m p lic a te d econom ic system * t h e i r i n a b i l i t y to judge q u a l i t y and a l s o to u n d e rs ta n d th e e x a c t w ork in g o f th e p r ic e sy stem i s i n c r e a s i n g . M ark et p r ic e i s n o t a l ways a m easu re of t h e s u b je c tiv e v a lu e o f th e consum er* n o r i s p e r f e c t c o m p e titio n th e m ain r e g u l a t i n g pow er and f a c t o r i n consum er i n t e r e s t s E v e n r is k s * g am b lin g and h a b i t a re o f t e n f a c t o r s a f f e c t i n g th e consum ers* c h o ic e s The num erous f a c t o r s l i m i t i n g freed o m o f c h o ic e and d e te rm in in g consum er d e c is io n -m a k in g in c lu d e : la c k o f in f o r m a tio n on th e p r ic e s t r u c t u r e o r la c k o f p e r f e o t ^ L ela n d J . Gordon* E conom ics f o r Consum ers ( t h i r d e d i t i o n ; New Y ork: A m sricE h noox uompAhy* * p p . 28-29. S v i l l a r d W. C ochrane end C a ro ly n Shaw B e ll* The Econom ics o f C onsum ption (New Y orks M cG raw -H ill Boole” Company* I n c . , 19$6 j , p . 1 3 . ^L . C . D lokinson* Econom io M o tiv es (C am b rid g e: Cam bridge U n iv e r s ity P re ss* 192k)* pp. k o 4 -2 0 5 . ^G ordon, o p . c l t .* p p . 2 2 4 -2 2 $ . 7 'H . F ried m an and L . J . Savage* "The U t i l i t y A n a ly s is o f C h o ices I n v o lv in g R is k s * " The J o u r n a l o f P o l i t i c a l Economy. V o l. VI (1 9 4 8 )* p p . -28C-- 2BT. B ern a rd F . H aie y (ed.)* A S u rv e y o f C ontem porary E co n o m ics. V o l. I I (Homewood* 1 1 1 .: R ic h a rd D. I r w in , in c .* 1 9 5 2) , p p . in f o r m a tio n on th e s u p p l i e r s , s p e c i a l c irc u m s ta n c e s due to c o n t r o l s — in c lu d in g c o n t r o l s by s e m i - o f f i c i a l and o f f i c i a l a u t h o r i t i e s and c o n t r o ls b y I n d u s t r i a l b u s in e s s c o n c e rn s — r e s t r i c t i o n s on incom e, la c k o f p e r f e c t i n f o r m a tio n as t o s u b s t i t u t e s an d o th e r goods a v a ila b le * heavy I n f lu e n c e b y a d v e r t is in g and p u b l i c i t y , s a l e s te c h n iq u e s , c u l t u r a l i n f l u e n c e s , e t c e tr a .® I* STATEMENT OP THE PROJECT The p r e s e n t p r o j e c t d e a ls w ith a d v e r t i s i n g and p u b l i c i t y a s a f u n c tio n o f th e th e o r y o f co n s tuner p r e f e r ence* I t u t i l i z e s a p o s i t i v e a p p ro a c h to o l a r l f y and a n a ly z e t h i s phase o f th e com plex p ro b lem o f consum er p r e f e r e n c e , by d o in g a n a tio n w id e s u r v e y . The p r e s e n t p r o j e c t t r i e s to d e te rm in e th e d i f f e r e n t f a c t o r s a f f e c t i n g consum er b e h a v io r , a s w e ll a s to e s t a b l i s h a q u a n t i t a t i v e e v a lu a t io n o f th e s e f a c t o r s w hioh, f o r th e l i m i t e d p u rp o se o f th e p r o j e c t , c o n s t i t u t e th e s e t o f o o -d e te rm in a n ta o f oonsum er d e c is io n -m a k in g . By f o llo w in g th e g e n e r a l f i n d in g s o f d e d u c tiv e econom ic r e a s o n in g , th e s u rv e y t r i e s to v e r i f y and c o r r e l a t e th e w o rk in g and c o m p a ra tiv e e f f e o - tiv e n e s a o f th e s e f a o to r s * a L . B au d in , " O b s e r v a tio n A P ro p o s d ee M o b iles dec A c tio n s E eo n o m iq u es," Revue Des S c ie n c e s Econo ml q u es ( L i e g e ) , M a rs, 19^7. S ig n if ic a n c e o f th e p ro b le m . I n o u r m odern econom io o r g a n i z a t i o n , consum era* freed o m o f e h o io e c a n be d iv id e d i n t o n e g a tiv e and p o s i t i v e freed o m o f c h o ice * T h is d i s t i n c t i o n i s d e riv e d fro m th e a ssu m p tio n t h a t co n sum ers n o t o n ly have th e r i g h t to consume w h ate v er th e y w ish b u t sh o u ld a ls o have th e p u rc h a s in g pow er and i n f o r m a tio n n e o e s s a ry t o buy th e p ro d u c ts and s e r v ic e s th e y d e s ir e * P o s i t i v e freed o m o f c h o ic e I n d i c a t e s t h a t e v e ry consum er t h e o r e t i c a l l y h a s freed o m o f c h o ic e , a l l th e in f o r m a tio n a v a i l a b l e , and th e p u rc h a s in g pow er to e x e r c i s e h i s d e c is io n w ith o u t any s e r io u s r e s t r i c t i o n s * N e g a tiv e freed o m o f c h o ic e i n d i c a t e s t h a t a l l f a o t s and f i g u r e s w hioh would e n a b le consum ers to choose th e p ro d u c t o r s e r v ic e th e y w ant have n o t b ee n a v a i l a b l e to them and t h a t th e y a re i n d i r e c t l y g u id e d i n t h e i r c h o ic e s * As a m a tte r o f f a o t , th e t h e o r e t i c a l a ssu m p tio n t h a t consum ers a r e f r e e to ch o o se w hat th e y w a n t, and how m uch, i s m o d erated f l o t i o n * C e r t a in l y any e x p la n a tio n o f th e f o r o e s o p e r a tin g to d e te rm in e th e p r i c e s o f goods w hich i s b ased on th e assum p t i o n s t h a t th e consum ers a r e f r e e to c h o o s e , and t h a t i n c h o o s in g th e y f u n c ti o n r a t i o n a l l y as econom io m en, i s f a r fro m r e a l i t y * ? One im p o rta n t f a c t o r w hich a ff o o ts c o n su m e rs' f r e e dom o f c h o ic e i s t h a t th e y a re ex p o sed to a v a r i e t y o f goods f o r w hioh th e y h av e n e v e r f e l t a need and h av e n e v e r ^ L e la n d J* G ordon, E conom ies f o r Consum ers (New Y ork* A m erican Book Company, P* s e e n b e fo re * T hese new goods a re i n c r e a s i n g i n o u r m odern econom ic sy stem i n an a c c e l e r a t i n g m anner due t o p r o g re s s i n te c h n o lo g y and p r o d u c tio n , on one h an d , and a d v e r t i s i n g and p u b l i c i t y on th e o th e r* O b je c tiv e s o f th e p r o j e c t . A d v e r tis in g i s a n i n d u s tr y w hich i s gro w in g and ex p a n d in g a t a p r o d ig io u s r a te * I t a b s o rb e d , f o r 1 9 6 2 , o v e r 12*5 b i l l i o n d o l l a r s o f n a t io n a l e x p e n d itu r e , o r ab o u t 2 . 3# o f g r o s s n a t i o n a l p r o d u c t * W h e n t h i s f i g u r e i s com pared w ith f i g u r e s fro m p re v io u s y e a r s , g r e a t i n c r e a s e s i n a d v e r t i s i n g c o s ts a re n o t i c e a b l e . F o r e x a m p le , a d v e r t i s i n g c o s t s in c r e a s e d 6# o v e r th e 1961 l e v e l and w ere more th a n o n e - th ir d g r e a t e r th a n th e a d v e r t i s i n g c o s ts o f 1955* A d v e r tis in g c o s ts i n 1962 w ere more th a n d o u b le th e c o s t s i n 19$ 0 * ^ The f o r e c a s t f o r th e f u tu r e g ro w th o f a d v e r t i s in g h a s e s tim a te d th e f ig u r e o f 20 t< 2 $ b i l l i o n I n a d v e r t i s in g c o s ts by 1970* T hese f i g u r e s w ere re a c h e d by th e r e s e a r c h d e p a rtm e n ts o f t h e two w e ll known f ir m s o f M oC ann-E rickson Ino* and J* W a lte r Thompson Company#*2 *°Bdward C* B u rsk , T e x t and C ases i n M a rk e tin g a S c i e n t i f i c A pproach (Englew ood c l i f f s , N. J .x P r e n t i c e - H a n , i n c . , I 90Z ), p . 2 7 2 . 1 1 » T o ta l u* 3 . A d v e r tis in g a t 12*5 B i l l i o n p e a k ; $20 B i l l i o n S e e n a s Economy G row s,• A d v e r tis in g A ge, V o l. 3k» No. 3 ( J a n . l £ , 1963) , p . 6 . ---------------- 12 S ee th e p a m p h le t p u b lis h e d by M oC ann-E rickson, I n c . e n t i t l e d "The D ecade o f I n c e n t i v e ." The •oonom lc a f f e c t s o f a d v e r t i s i n g on A m erican s o c i e t y i s a v e ry im p o rta n t p ro b lem to s tu d y . E ven to d a y n e i t h e r o u r s o c i o l o g i s t s n o r o u r e c o n o m ists h av e p a id much a t t e n t i o n t o th e b r o a d e r s i g n i f i c a n c e o f a d v e r t i s i n g * ^ I t seem s t h a t i n t h i s f i e l d a v e ry s m a ll c o n t r i b u t i o n la w o rth th e e f f o r t . The p r e s e n t p r o j e c t i s a r e s e a r c h on a s p e c i f i c p h a se o f consum er d e c is io n -m a k in g a s a f f e c t e d by a d v e r t i s i n g . A d v e r tis in g i s a m a jo r f a c t o r i n i n f lu e n c in g consum er d e o is io n -m a k in g i n th e c h o ic e o f new b ra n d s* lif I t i s u se d i n m o n o p o lis tic ,^ * o r e s p e c i a l l y o l i g o p o l i s t i c and m o n o p o lis tlc - c o m p e tltio n m a rk e ts , to in f lu e n c e and a t t r a c t c l i e n t s f o r th e f ir m s in v o lv e d o r " t o g e t th e f ir m a l a r g e r s h a re o f t o t a l s a l e s . • I t s h o u ld be s a i d t h a t th e econom io e f f e c t s o f a d v e r t i s i n g i n a c o m p e titiv e economy c o u ld be o f co n s i d e r a b l e v a lu e i f a d v e r t i s i n g i s c o n s id e r e d a s a t o o l 13 P r o f e s s o r C o ls to n E* W arns, " A d v e r tis in g —A C r i t i c * s V iew ," A d v e r tis in g A ge. V o l. 3 k , No* 3 ( J a n . 15* 1963)* p# 2 k 7 • ^E dm ond B u rsk , o p . c l t .* p . 280 ^ C la rk L ee A lle n , Jam es M. B uchanan, M a rs h a ll C o lb erg * P r ic e s * Incom e and P o lic y (New Y orks M cG raw -H ill Book Company, I n c . , 195k)"* p . bB* ^ ^ m illa r d W. C o ch ran e and C a ro ly n Shaw B e l l , E conom ics o f D e c is io n M aking i n th e H ousehold (New Y ork: M coraw-HUL Book com pany, i n c . , l^FfiTT* P* 386* o f d i s t r i b u t i o n and s e l l i n g . W ith o u t a d v e r tis in g * th e o o s ts o f tr a n s p o r ta tio n * a c q u ir in g s e l l e r s and d e a le r s * and in fo rm in g consum ers o f th e e x is te n c e o f a v a i l a b l e goods c o u ld be tre m e n d o u s. E ven when i t i s a d m itte d t h a t a d v e r t i s i n g d o es c h a n n e l consum er o h o lo e and d e c is io n m aking* i t l a t r u e t h a t i n many c a s e s new p ro d u c ts a r e o f g r e a t v a lu e to oonsum ers and s h o u ld be made known t o them . A d v e r tis in g d o es make p o s s ib le t h i s d i s t r i b u t i o n and c r e a t e s co n su m ers 1 s u r p l u s . T h ere i s a ls o no d o u b t t h a t a d v e r t i s i n g h a s b ee n an o u ts ta n d in g f a c t o r i n c r e a t i n g m ass p r o d u c tio n and m ass c o n m u n io a tio n w h ich a f f e c t s th e econom ic sy ste m c o n tin u o u s ly . L im ita tio n s o f th e r e s e a r c h p r o j e c t . I t i s e v id e n t t h a t th e p r o j e c t h a s some l i m i t a t i o n s w hioh w i l l be e x p la in e d i n C h a p te r IV o f t h i s w o rk . To make a summary o f b a s ic l i m i t a t i o n s one c o u ld m e n tio n th e fo llo w in g s P l r s t * th e q u e s tio n n a ir e m ethod was th e o n ly l o g i c a l o h o lo e f o r u se i n th e p r e s e n t p r o j e c t b e c a u se th e re s p o n d e n ts w ere g e o g r a p h ic a lly w id e ly d i s p e r s e d . The e le m e n t o f c o s t i n f a v o r o f q u e s tio n n a ir e v e rs u s d i r e o t I n te r v ie w m ethod i s a ls o an e v id e n t c o n s i d e r a ti o n . Second* th e ty p e o f re s p o n d e n t re a o h e d by th e q u e s tio n n a i r e s o o u ld be a g ro u p who a re e a g e r to a n sw e r; c o n s e q u e n tly a good number o f th e o h osen sam p les w ould n o t be i n th e d a t a . To r e c t i f y and a d j u s t th is * d i r e o t In te r v ie w s h av e a ls o b e e n o b ta in e d i n d i f f e r e n t a r e a s o f th e c o u n tr y . T h ir d , v e r y d e t a i l e d s e t s o f d a t a e a n n o t o f t e n be se c u re d th ro u g h th e u s e o f th e q u e s t i o n n a i r e , as som etim es a p e rs o n i s n o t w i l l i n g to an sw er a l l th e q u e s tio n s * On th e o t h e r h a n d , th e same i n q u i r i e s made th ro u g h th e a c t i v e work o f th e in te r v i e w e r c o u ld s tim u la te th e re s p o n d e n t to e x p r e s s h i s d e e p e r f e e l i n g s and m o tiv es* W ith a l l l i m i t a t i o n s , i t s h o u ld be s t a t e d t h a t a c c o rd in g to known a u t h o r i t i e s " th e m a ile d q u e s tio n n a i r e h as b e e n v e ry u s e f u l i n s o c i a l r e s e a r c h i n th e p a s t and i s l i k e l y to be so i n th e f u t u r e , a n d i n t h i s p r o j e c t i t has b e e n o f g r e a t im p o rta n c e and e f f e c t i v e n e s s i n r e a c h in g , i n a lim ite d tim e , su c h a w id e ly d is p e r s e d sam ple o f p o p u la tio n * I I * REVIEW OP THE LITERATURE The q u a n t i t a t i v e a n a l y s i s and f a o t u a l e v a lu a t i o n o f th e eoonom lo e f f o o t s o f a d v e r t is i n g h a s n o t b e e n a fa v o re d s u b j e c t f o r th e e c o n o m ists* The m ain r e a s o n p ro b a b ly i s t h a t th e r e a r e g r e a t l y com plex f a c t o r s i n v o lv ed i n su ch s t u d i e s , a s w e ll a s th e f a c t t h a t t h i s i s ^ W i l l i a m J* Goode and P a u l K* H a t t , M ethods i n S o c ia l Re s e a r oh (New Y orks M cG raw -H ill Book (Somoany* TSo i ; ' 1 95 2 ) , p* 1 8 2 . a v e ry naw and dynam ic phenom enon, and th e r e f o r e I t n eed s more tim e to a t t r a c t th e a t t e n t i o n o f th e m a jo r ity o f t h e o r e t i c a l e c o n o m is ts . T h e o r e t i c a l d ev elo p m en t I n s o o l a l s c le n o e s , su c h a s e c o n o m ic s, o f t e n p ro c e e d s from th e a ssu m p tio n t h a t ■ a l l o th e r th i n g s e re e q u a l•■ I n a d v e r t i s i n g to d a y , h o w ev er, th e v a r i a b l e s a re so num erous and t h e i r oom blned I n f lu e n c e on any e x p e rim e n t so p e r v a s iv e t h a t p r o g r e s s tow ard a c c e p ta b le t o o l s f o r m e a su rin g a d v e r t i s i n g e f f e c t i v e n e s s h a s b een a lm o st n o n - e x l s t a n t . i ' One can m e n tio n N e ll H. Borden* s book. The E co nom ics o f A d v e r tis in g , p u b lis h e d I n 19^-2 by R ic h a rd D. I r w in , I n c . , w h ich i s r e c o g n is e d by many as th e m ost a u t h o r i t a t i v e book on th e goonomlc f u n c tio n s o f a d v e r t i s i n g . Many o f th e d is c u s s io n s a r e d a te d b u t i t I s s t i l l c o n s id e re d a v e ry v a lu a b le c o n t r i b u t i o n . ^ T h ere a r e a g r e a t num ber o f s p e c i a l s t u d i e s and a r t i c l e s w hich d e a l w ith a wide v a r i e t y o f s p e c i f i c b u s in e s s th em es on a d v e r t is in g m o tiv a tio n s and consum er p a n e l s . I t w ould be o f i n t e r e s t to m e n tio n th e s e academ ic c o n t r i b u t io n s s "An O p e ra tio n s -R e s e a rc h S tu d y o f S a le s R esponse to A d v e r tis in g " by M. L . V id a le and H. B. W olfe p r i n t e d i n O p e ra tio n s R e s e a rc h . V o l. V, No. 3 ( J u n e , 1957)# PP* 3 7 0 - 18 R lo h a rd D. C r is p , M a rk e tin g R e se a rc h (New Y o rk : M cG raw -H ill Book Company, i n c . , iys>7j, p . "& 'll. „ ^ N e i l H . B orden, "Econom io E f f e c t s o f A d v e r tis in g # * A d v e r tis in g Age. V o l. 3&# No. 3 ( J®n. 1 5 , 1 9 6 3 ), p . 10 3 6 1 ; and S id n e y H o lla n d e r , nA R a tio n a le f o r A d v e r tis in g E x p e n d itu r e s ,1 * H arv ard B u s in e s s R eview . V o l. XXVII ( J a n u a r y , 19^9)* PP* 7 9 -6 7 • A lso R a lp h M. H agen, A dver t i s i n g Im p act R e s e a rc h , A nnual M a rk e tin g R e s e a rc h C o n fe r e n c e , M ichigan B u s in e s s P a p e r s , No* 27 (Ann A rb o r, M ic h i g a n ! B ureau o f B u sin e ss R e s e a rc h , U n iv e r s ity o f M ic h ig a n , 1 9 5 3 ), P P . 1 8 -2 8 . The few books c o n ta in in g r e l e v a n t d is c u s s io n s o f th e econom ic e f f e c t s o f a d v e r t i s i n g a r e : R u s s e ll H* C o lle y , D e fin in g A d v e r tis in g C o a ls (Nee Y orks A s s o c ia tio n o f N a tio n a l A d v e r ti s e r s , I n c . , 1 9 6 1 ). C la ir e S e b l i t z and o t h e r s , R e s e a rc h M ethods I n S o c i a l R e la tio n s (New Y orks H enry H o lt and Company, I n c . , 1 9 5 9 ). I n th e b ib lio g r a p h y many o th e r s o u rc e s w i l l b e i n c lu d e d . I I I . STATEMENT OF THE RESEARCH M ETHOD The r e s e a r c h m ethod h as b e e n b ased on a p u re p r o b a b i l i t y sa m p lin g o f a l l U n ite d S t a t e s p o p u la tio n . To o b ta in d a ta and in f o r m a tio n i n th e m a jo r ity o f c a s e s a s t r u c t u r e d q u e s tio n n a ir e by m a il h a s b e e n u s e d . To a d j u s t and r e c t i f y th e sh o rtc o m in g s o f th e p u re p ro b a b i l i t y sa m p lin g b ased on m a ile d q u e s tio n n a ir e m e th o d . 11 p e r s o n a l in te r v ie w s a l s o have b een r e g u l a r l y co n d u cted * I n C h a p te r I I I th e r e i s a f u l l d is c u s s io n o f th e method* IV* DEFINITION OF CONCEPTS AN D TERMS I n th e p r e s e n t r e s e a r c h p r o j e c t a s e t o f c o n c e p ts and a ssu m p tio n s a re u s e d . To a n a ly s e and s tu d y a com plex econom ic p ro b lem i t i s in d is p e n s a b le to s t a t e th e b a s ic a s su m p tio n s o f th e c a se and to I n d i c a t e w hat f a c t o r s a re to be ta k e n f o r g ra n te d * T h is to p ic w i l l be d is c u s s e d i n C h a p te r IV o f t h i s work* V, SHORT REVIEW OF THE W O R K C h a p te r I I c o n ta in s an e x p la n a to r y o u t l i n e o f m a jo r t h e o r e t i c a l a p p ro a c h e s to consum er d e c is io n -m a k in g and consum er p r e f e r e n c e * T h ere a re v a r io u s d e d u c tiv e m ethods and in d u c tiv e s t u d i e s a s w e l l , e a c h o f w hich a p p ro a c h e s th e p ro b lem o f consum er d e c is io n -m a k in g fro m a d i f f e r e n t p o in t o f v ie w . The c l a s s i c a l t h e o r y , m a rg in a l u t i l i t y th e o r y , in d if f e r e n c e - c u r v e th e o r y , p s y c h o lo g l- o a l - b l o l o g l c a l t h e o r y , .r e v e a le d p r e f e r e n c e th e o r y , th e von N eum ann-M orgenstern game and p r o b a b i l i t y th e o ry and o th e r e m p ir ic a l t h e o r i e s w hich have b e e n advanced i n e x p la n a tio n o f consum er d e c is io n -m a k in g i n econom los are a l l p r e s e n te d i n th e o h a p te r . The m e r it s and d e m e rits o f th e s e d i f f e r e n t t h e o r i e s a re sum m arized. The p o s i t i o n o f 12 th e p o s i t i v e a p p ro a c h t o consum er d e c is io n -m a k in g i s th e n j u s t i f i e d * The n a tu r e o f th e p o s i t i v e a p p ro a c h , th e m e r its and d is a d v a n ta g e s o f th e m ethod, and th e e x a c t w o rk in g and c o m p a ra tiv e v a lu e o f th e p r e s e n t s u rv e y a re e x p la in e d i n C h a p te r I I I . A ll n e e a e s a r y a s s u m p tio n s , a x io m s, aim s, d e f i n i t i o n s , r e s t r a i n t s and l i m i t s o f th e p ro b lem a r e p r e c i s e l y e x p la in e d i n C h a p te r IV* C h a p te r V c o n ta in s a t h e o r e t i c a l a n a ly s is o f th e v a r io u s p o in ts i n th e su rv e y q u e s tio n n a ir e m a t e r i a l and an e x p la n a tio n o f th e b a s i s f o r e s ta b lis h m e n t o f th e p o p u la tio n sa m p lin g m odel* A f te r lo n g s tu d y and two in d e p e n d e n t p i l o t s u r v e y s , th e c o n c lu s io n was re a c h e d t h a t one c a n n o t s in g l e o u t th e p ro b lem o f consum er d e c is io n -m a k in g from th e fram e o f r e f e r e n c e of o t h e r p e r t i n e n t e le m e n ts and s t i l l a c h ie v e a p r o p e r q u e s tio n n a ir e * One c a n n o t ta k e f o r g r a n te d as a c o n s ta n t f a c t o r a l l o th e r e le m e n ts w hich a f f e c t and c o -d e te rm in e consum er d e c isio n -m a k in g * I n o r g a n is in g th e su rv e y i t seem ed l o g i c a l to a n a ly s e a l l im p o rta n t f a c t o r s s im u lta n e o u s ly * The v a r i a t i o n s o f o th e r c o -d e te rm in in g f a c t o r s on co n sum er d e c is io n -m a k in g i n r e l a t i o n to th e v a r i a t i o n s i n a d v e r t is in g and p u b l i c i t y a re o f th e u tm o s t im p o rta n ce* T horough a n a ly s is I n d ic a te d t h a t i t would b e l o g i c a l to c o r r e l a t e th e ch an g es o f a l l f a c t o r s r e l e v a n t to consum er 13 p r e f e r e n c e w ith th e v a r i a t i o n s o f th e a d v e r t i s i n g and p u b l i c i t y * A ll th e q u e s tio n n a i r e s have b ee n e s t a b l i s h e d w ith t h i s b a s i c aim i n v ie w . C h a p te r VI c o n ta in s a c o m p ila tio n and sum aary o f r e s u l t s and an sw ers o f th e f o llo w in g s u r v e y s t 1* S u rv e y and in te r v ie w o f oonsum ers s e a t t e r e d aro u n d th e U n ite d S t a t e s and c h o s e n by p u re p r o b a b i l i t y sam p lin g * 2* S u rv e y and in te r v i e w o f m a n u fa c tu rin g and a d v e r t i s i n g firm s * C h a p te r V II o o n ta in a a t a b u l a t i o n o f th e r e s u l t s o f th e r e s e a r c h and a n a n a ly s is o f th e d a ta * The u se o f adv an ced m a th e m a tic a l t o o l s h a s b ee n som ewhat lim ite d * The d a ta o b ta in e d i s u se d th u s s i 1* E s t a b l i s h a f u n c t i o n a l r e l a t i o n s h i p o f r e s u l t s i i n th e fo rm o f t a b l e s o f d a ta * 2* E s t a b l i s h a g ra p h ic i n t e r p o l a t i o n o f th e d a ta * 3* E s t a b l i s h f u n c t i o n a l r e l a t i o n s h i p s o f th e d a ta * It* D eterm in e w hat w i l l be th e n e c e s s a r y f ix e d I l v a lu e s f o r th e c o n s ta n ts * The e v a l u a t i o n , c o m p a riso n and c o r r e l a t i o n o f th e d a t a o b ta in e d fro m th e s u rv e y s g iv e a r e a l i s t i c p i c t u r e o f a d v e r t i s i n g and p u b l i o i t y a s a f u n c ti o n o f consum er d e c is io n -m a k in g * C h a p te r V III p r e s e n ts a c o n c lu s io n and a I k o o a p a rls o n o f f in d in g s * The B ib lio g ra p h y i s a e l e c t i v e and p e r t i n e n t * I t i s hoped t h a t i t w i l l be o f some u se t o th o s e who a r e i n t e r e s t e d i n g o in g f u r t h e r i n t h i s f i e l d * CH APTER I I A1ALT3I3 07 THB 3TA1S OF CONSUMER BEHAVIOR THEORIES T he t h e o r e t i c a l e x p l a n a t io n o f oonaum er b e h a v io r an d d e c is io n -m a k in g l a a c o m p lic a te d p ro b le m . I n d e a lin g w ith oonauiasr b e h a v io r , on® l a c o n f r o n te d w ith a number o f o o a p le x v a r i a b l e s . To a c h ie v e a s a t i s f a c t o r y th e o ry o f o o n iu M r b e h a v io r , a l l o f th a a a v a r i a b l e s , c o n d i tio n s , an d r e s t r a i n t ® s h o u ld bo s im u lta n e o u s ly s tu d ie d w ith an a p p r o p r ia te w e ig h t allo w ed f o r e a e h f o o t o r . Many o f th e p ro b le m s and o o n d ltlo n s w hloh o o n s t l t u t e th e v a r i a b l e s a r e I n th e m s e lv e s com plex and o f t e n u n q u a n t l f l a b l e f a c t o r s . A s a t i s f a c t o r y th e o r y o f consum er b e h a v io r d e p e n d s on th e f e a s i b l e e x p l a n a t io n o f a l l th e s e I n d e p e n d e n t v a r i a b l e s . I . CLARIFICATION OF BASIC CONCEPTS AND THEORIES V a r ie t y o f t h e o r i e s . I n t h i s c h a p te r a l l w e ll known t h e o r i e s o f consum er b e h a v io r a r e sum m arised I n th e l e a s t t e c h n i c a l te rm s f o r th e p u rp o se o f g iv in g th e r e a d e r a p r e c i s e I d e a o f c u r r e n t econom ic th e o ry o n consum er 15 16 b e h a v io r . C o n s e q u e n tly a tte m p ts w i l l be made to e n a ly a e t h e u t i l i t y th e o r y o f A lf r e d M a rs h a ll (who was in f lu e n c e d b y th e t h e o r i e s o f S t a n l e y Je v o n s* Monger and L eon W alras)* Some n o te s o n th e m odern s o h o o l o f c a r d i n a l and o r d i n a l u t i l i t y * t h e i n d i f f e r e n c e c u rv e a p p ro a c h o f H icks* A lle n and o th e rs a l s o w i l l b e d is c u s s e d * The r e v e a le d p r e f e r e n c e th e o ry o f P a u l S am uelson* t h e t h e o r i e s o f von Neu mann and M o rg e n ste rn * and th e id e a s o f o t h e r s who h a v e c o n tr ib u te d new d im e n sio n s t o th e f i e l d w i l l be e x p la in e d . W hile s tu d y in g t h e d i f f e r e n t t h e o r i e s o f eonsum er b e h a v io r and d e c is io n - m a k in g i t i s Im p o rta n t to g u a rd a g a in s t th e i d e a t h a t o n e c a n a n a ly s e consum er p r e f e r e n c e b y th e u se o f a s in g l e f a o t o r o r b y a s i n g l e s o h o o l o f th o u g h t. Some e c o n o m is ts b e l i e v e t h a t oonaum er b e h a v io r I s b a s e d m o s tly o n l o g i c . O th e rs b e l i e v e t h a t e m o tio n a l a p p e a l and p s y c h o lo g ic a l m o tiv e s a r e th e d o m in an t f a o t o r s i n oonaumer d e c is io n -m a k in g * ^ I n m ost o f th e w e ll known t h e o r i e s i t i s assum ed t h a t homo aco n o m lcu a— a man w ith a h y p e r - r a t i o n a l and m a th e m a tic a l m ind and m o tiv a te d by a p u re r a t i o n a l e o f p e r s o n a l s a t i s f a c t i o n and ac h iev e m en t o f th e h i g h e s t p e r s o n a l p l e a s u r e - - s h o u l d be th e b a s i s f o r S d w a rd C . B u rs k , T e x t and C ases i n M ark etin g * A S c i e n t i f i c A p p ro ach (In g le w o o d c i l f r s * tfew J e r s e y s p r e n t ic e - K a i l * m o .* 1 9 6 2 )* p . * > 0 * 17 a l l eoonom io a b s t r a c t i o n * an d t h a o r s t i e a l d i s o u s s i o n s . 2 Sona eoonom io t h a o r i a a o f to d a y w hloh a r a in ta n d a d to s u r p a s s and s u p s r o s d s th a a b s t r a o t o o n o a p ts o f m a r g in a l u t i l i t y and i n d i f f a r a n o a in d a z s t i l l b a s a t h a i r i d a a o n th a a s s u m p tio n o f th a homo o o o n o m l o u a . 3 I I . 80MB BASIC CONCEPTS H ara a r a soma b a s ie o o n o a p ta v h io h a ra r a l a van t to th a t h a o r a t l e a l a n a l y s i s o f t h a p r o j e o t . T ha o o n o a p t o f u t i l i t y . A c o n su m p tio n p a t t e r n i s th a r e s u l t o f t h a o o n su m e r'e many p a s t d o e l s lo n a ; p e r s o n a l* fa m ily * and s o c i a l i n f l u e n c e s ; and h i s p a s t e x p e r i e n c e s . I t c o u ld b e im a g in e d t h a t h a alw ay s t r i e s * so f a r as h a o o n s o io u s ly oan* t o m ax im ise th a p le a s u r e and s a t i s f a c t i o n w h ich h a h a s fro m s p e n d in g h i s inoom e; t h a t is * h a t r i e s t o m axim ise th a u t i l i t y o f h i s e x p e n d i t u r e s . S in c e th a e o n o a p t o f u t i l i t y h a s £ o n e th r o u g h a ▼ a rie ty o f ch a n g e s and c o n t r a d ic to r y * c o n t r o v e r s i a l i n t e r p r e t a t i o n s i n th a h i s t o r y o f ooomomlo th e o ry * i t i s im p o r t a n t t o d e f in e th a eoonom lo o o n o a p t o f u t i l i t y b e f o r e ^ G a rl I . Howland* I r v i n g L . J a n is * and H a ro ld H. K e lle y * C o m su n lo a tlo n and P r e s e r v a t i o n (Haw H avens T a la U n i v e r s i t y V raas* 1953)# p p . 5 7 - 5 0 . ^ L o u is B audln* T r a i t s d « lo o n o m ia P o l i t i q u e . V o l. I* (se o o n d e d i t i o n ; P a r i e s L i b r a i r l e D a llo s* 1 ^ 5 ) » p . 3U* 18 using the ts n s in various th o o rlo s. gconomlo u t i l i t y has a d iffe re n t meaning from tha ona given to u t i l i t y in ooauson p arlan o a. Ona oan sa fe ly say th a t soozunbI o u t i l i t y has tha fiv e follow ing b asic o h a ra o ta rls tio s t 1* Eoonom io u t i l i t y i s a s u b j e c t i v e and p sy o h o - l o g l e a l o o n o ap t* Tha u t i l i t y o f a com m odity i s r a l a t a d to th a consum er u s in g I t * Tha consum er sh o u ld ba con s id e r e d a s w ith a g iv e n incom e a t a g iv e n tim e w ith o t h e r g iv e n c irc u m s ta n c e s * C o n s e q u e n tly * th a u t i l i t y o f a oom m odlty t o a consum er o a n n o t be th a same a t d i f f e r e n t tim es* I n a g iv e n tim e th a u t i l i t y w i l l a l s o ch an g e d e p e n d in g u p o n th e am ount o f t h a t com m odity w h ich th e co n sum er p o s s e s s e s * 2* The econom ic c o n c e p t o f u t i l i t y e v i d e n t l y r e j e c t s th e e t h l o a l * m o ra l and u t i l i t a r i a n m ean in g s g iv e n to th e u t i l i t y o o n o ap t by J* B ent ham , E d g ew o rth and o th e r s * C o n se q u e n tly * t h i s c o n e e p t i s n o t c o n c e rn e d w ith th e m o ra l o r e t h i c a l u s e o f th e oom m odlty b u t w ith th e a b s o lu te w ant and n eed by a consum er f o r an eoonom io g o o d . 3* Eoonom io u t i l i t y i s a c o n c re te c o n c e p t w h ile u t i l i t y i n common p a r la n c e i s an a b s t r a c t c o n o e p t* I n oommon p a r la n c e * when one s a y s t h a t w a te r h a s u t i l i t y f o r human b e in g s* one d o es n o t add any p r e c i s i o n by m e n tio n in g w hat k in d o f human b e in g s o r th e o lro u m s ta n o e s o r th e d e g re e o f u t i l i t y * I n econom ic u t i l i t y * th e 19 u t i l i t y o f w a te r w ould bo c o n s id e r e d d o f l n l t o l y f o r a d o f l n l t o q u a n t i t y I n g iv e n o lr o u m s ta n o e s • On# t r i o s t o d e te rm in e th o u t i l i t y o f w a to r t o a g iv e n human b e in g a t a g iv e n t i n e who d o ee o r does n o t have a g iv e n lnoom e end a g iv e n am ount o f th e w a te r . On t h i s e t r i e t l y eoonom io c o n c e p t o f u t i l i t y th e id e a o f v a lu e c a n b e c o r r e l a t e d end th e th e o r y o f v a lu e e x p l a in e d .^ If. Eoonomio u t i l i t y o f eoonom io co m m o d ities c o n s i s t s o f th e im m ed iate end a v a i l a b l e e x - a n te a n a l y s i s o f s e n s a t i o n and s a t i s f a c t i o n . I t d o e s n o t c o n s i s t o f im a g in a ry and u n a v a ila b le s a t i s f a c t i o n s o r o f th e c o m p a ri so n o f s a t i s f a c t i o n s p a s s e d and oonsum ated (e x p o se d s e n s a t i o n and s a t i s f a c t i o n c o m p a ris o n ). 5 . Eoonom io u t i l i t y I s o o n e e rn e d w ith th e am ount o f co m m o d ities w h ich th e consum er p o s s e s s e s and w ith th e e x t e n t to w hich h i s n ee d s a r e s a t i s f i e d . The th e o r y o f m a rg in a l u t i l i t y d e v e lo p s fro m t h i s o o n c e p t. Some e c o n o m is ts h av e s u g g e s te d th e word " o p h e l l - m lte ” to e l im in a te any c o n f u s io n b etw e en th e common L i T h ere a r e e c o n o m is ts who b e lie v e i n t o t a l s u b - I J e o tlv la m o f v a lu e . and t h i s p o s i t i o n was ta k e n by C . ' V e rrijn S tu a rt. Die Orundlaaen der V olksw lrtaohaft (Ja n a . 1923)$ and i . von Bases, flrundprobisms der : Nationalokonomls ( Jena. 1933) I mentioned by Louis Baudln ana o th e r e d ito r s . T ra its d*Boonomls P o litiq u e . V ol. I (F a ria t L lb ra lrle JDailoi. 1 9 5 5 ) . pp. lz if - io T 20 p a r la n o e an d eoonom io c o n c e p t* o f u t i l i t y ,5 O th e r e c o n o m is ts h av e s u g g e s te d th a word " d e s i r a b i l i t y * " ^ I n th a German la n g u a g e th e r e l a a word f o r ea o h o f th e two u t i l i t y o o n o a p ta . W u t s llc h k e lt, m ean in g " o b je c ti v e and n o rm a l u t i l i t y ,* l a uaed f o r o r d in a r y u t i l i t y , and n u t s e n , m ean in g " s u b j e c t i v e and eoonom io u t i l i t y , " l a u aed f o r eeo n o ad o u t i l i t y * Leon W alrae h aa e x p la in e d t h a t th e w ord u t i l i t y o r u t l l l t e . a t r l c t l y d e fin e d b y th e f i v e o h a r a o t e r l a t l o a aa e x p la in e d a b o v e , l a a u f f i e i e n t f o r u ae i n eoonom io th e o ry w ith o u t any c o in a g e o f a new From th e b e g in n in g , t h e o r e t l o a l e c o n o m is t* , when a n a ly s in g th e o o n o a p t o f u t i l i t y , h av e made a b u n d a n t u ae o f m a th e m a tic a l m ethods and ay m b o lic i n t e r p r e t a t i o n * A lth o u g h th e s e m eth o d s w ere ao u aed t h a t th e y d id n o t alw a y s o o n tr ib u te t o th e eoonom io f i e l d i n a m e a n in g fu l ^ " O p h e llm lte " was p ro p o se d by V llf r e d o P a r e to I n h la M anuel d«Eoonom io P o l i t i q u e (se c o n d e d i t i o n ; P a r is * 1927 J# P* 1^71 m e n tio n e d oy L o u is Baud I n , o p * c i t * , p . 1221 K rlo h S o h n e ld e r , B ln fu h ru n g I n d ie W e rseo h af t a - t h e o r l e , I I t e l l ( f i f t n e o i s i o n ; T u o in g e n , GermanyT j* c* 6 . riohr p a u l S le b e o k , 1 956)* p p . 13- 1 5 . " " D e s i r a b i l i t y " was p ro p o se d by C h a rle s Olde I n h i s C oura d»goonom lo P o l i t i q u e . V o l. I ( s e v e n th e d i t i o n ; P a r i e s 1 ^ ) 1 p . m e n tio n e d by L o u la B a u d in , o p . o l t * , p . 123* --------- w ord 'L e o n W a lra s , B lam en ta o f P u re Boonom loa (Londons The R o y a l Boonomlo S o o ie c y , p p . <eo-l|.i* 21 m an n er, th e y have l a r g e l y e lim in a te d am biguous o o n o e p ts and h av e opanad up v a ry l n t a r a a t l n g th a o r l a a o f u tility * * * I t l a g a n a r a lly aaaum ad t h a t th o eonaum ar t r i e s t o th a . b o a t o f h i a a b i l i t y t o m a x im ise th a u t i l i t y v h io h oonaa fro m a p a n d ln g h i s inoom a b u t ae o n o m ia ta h av e h ad d i f f e r * ln g v iew s aa to th a n a tu r e o f t h i s u t i l i t y and th a m ethod o f m a x im isa tio n * C a r d in a l v s* o r d i n a l u t i l i t y o o n o a p t* How e a n ona m eaau re and oom pare th a d i f f e r e n t u t i l i t i e s o f th a same I n d iv id u a l o r o f d i f f e r e n t i n d i v i d u a l s ? Ona m ust f i r s t be a b le t o a t a te and a f f i r m t h a t th a u t i l i t y i t s e l f i s o a p a b la o f b e in g m e asu red and com pared* C o n s id e r two e o n m o d itle e v h io h a consum er w an ts t o buy and f o r v h io h h e h a s an o r d i n a l u t i l i t y f u n o t l o n U « (ql»q2) v h e re q l and q2 a r e t h e q u a n t i t i e s o f th e co m m o d ities q i and Q? v h io h he oonsum esf I t i s e v id e n t t h a t ( q l , q 2 ) i s c o n tin u o u s and h a s c o n tin u o u s f i r s t and se co n d o r d e r p a r t i a l d e r i v l t i v e s * The oonaum er*a u t i l i t y f u n c ti o n i n t h i s e a s e l a n o t u n iq u e , A v a r i e t y o f c o m b in a tio n s c o u ld I be Im ag in ed w hich w i l l ea o h b e d i f f e r e n t * A consum er who p r e f e r s ona h a t and tw o s h i r t s may be im a g in e d t o p r e f e r two h a t s and f i v e s h i r t s * I n t h i s e a se h e w i l l p r e f e r A B a u d in , op* o l t *» p* 12lf* 22 th * l a t t e r to th a fo rm e r c o m b in a tio n . C o n s e q u e n tly , w ith e p a r t i c u l a r s e t o f num bers a s s o c ia te d w ith v a r io u s com- b ln a tio n s o f and one can alw ays form a u t i l i t y I n - ' dex* Any m o n o to n lo tr a n s f o r m a tio n o f suoh c o m b in a tio n s w i l l c r e a t e a u t i l i t y In d ex * I n eoonom io th e o ry I t I s assum ed t h a t th e consum er m akes h i s c h o ic e s I n an a tte m p t to m axim ise an o r d in a l u t i l i t y f u n c ti o n I n o r d e r t o a c h ie v e th e h ig h e s t u t i l i t y f o r th e com m odity o r co m m o d ities w h ich he h a s t o c h o o s e *9 T h is a s su m p tio n I s b ased on th e f o llo w in g axiom s Any s e t o f econom ic goods and s e r v lo e s w h ich o r e a te co n su m p tio n d e c ls lo n -m a k ln g s i t u a t i o n s o f d e n o m in a tio n s A, B , C , D, B , I s , and c o u ld be a rra n g e d I n a u n iq u e and c o n s i s t e n t o r d e r o f an I n c r e a s in g p r e f e r e n c e by th e consum er* The consum er I n q u e s tio n p r e f e r s B t o A, C to B , and D t o C . Th* fo rm u la f o r t h i s axiom l a s Some w r i t e r s , n o ta b ly V llf r e d o P a r e to , had th e I d e a t h a t I t I s Im p o s s ib le to com pare two o r more u t i l i t i e s e x o e p t by an o r d i n a l p r e f e r e n c e and t h a t c a r d i n a l co m p ariso n o f u t i l i t i e s I s u n w a rra n te d and l o g i c a l l y u n a c c e p ta b le * A cc o rd in g to th em , one c a n h av e a c o m p le te o r d e r in g o f a v a r i e t y o f econom ic goods and J T * R* H lo k s , V alue and C a p ita l (O x fo rd s C la re n d o n P r e s s , 19W )# P P . 1 1 -T 7 :--------- =----- e------- a e rw lo e a I n v iew o f th o consum er*a d e c ie io n -m a k in g I n a way v h io h in c lu d e s th o f o u r f o llo w in g a s su m p tio n s* 1* Tho co m m o d ities o ro co m p arab le t o oooh o th o r i n p ro fo ro n o o * 2* T horo l a t r a n s i t i v i t y botw oon th o a o o o n a o d ltle a and p ro fo r o n o o • 3 , I n th o p ro o o a a o f d o o la io n -m a k ln g , th o c o n s u m e r's o h o io o i a i r r e v e r s i b l e * Onoo ho h a a e x p r e s s e d a p ro fo ro n o o f o r A to B, ho o a n n o t im m e d ia te ly change h ie m ind and ro w e ra o h i a d e o is lo n * It* Any c o m b in a tio n o f o o au n o d itlo a ara a t bo p o te n t i a l l y an o p tim a l o n e . M a th e m a tic a lly e x p l a in e d , th o c o m b in a tio n o f tw o o r m ore co m m o d itlea m uat bo auoh t h a t no p o i n t o f a a t l a t l o n o an bo im a g in e d f o r any o f them and any o f t h e i r u t l l i t i o a m uat bo l a r g e r th a n a e ro * Tho oom ploto o r d e r in g o f th o d i f f e r e n t oom m odltlea o an bo ahown by th o p r e f e r e n c e f u n c t i o n i n d i c a t i n g t h a t th o r o l a a n l r r e w o r e i b l e and p ro a o rw ln g i o r d e r and a la o t h a t th o d i f f e r e n t q u a n t l t l e e o r f u n o tlo n a hawo c o n tin u in g d o rlw ltlw o a o f th o f l r a t and aocond o r d e r i v h io h ln a u r o a th o d i f f e r e n t i a b i l i t y and c o n t i n u i t y o f th o fu n c tio n * I I I . UTILITY THEORY OP CONSUMER BEHAVIOR ACCORDING TO ALPRBD MARSHALL F a c to r* t f f t o t l n a o o n m i r b t h i T l o r a o o o rd in g t o A l f f d M i r i h t l l * A ll o f M a ra h a ll» a P r i n c i p l e * (B ook I I I ) l a da to ta d t o a Tory a n a l y t i c a l tr e a tm e n t and e x p l a n a t io n o f th a th e o r y o f oonaum er b e h a v io r . A th o ro u g h a n a ly a i a o f h i e work# and p a r t i c u l a r l y Book V# ahova th a c o n d itio n * v h io h h a aaaum aa aa th a b a a ia f o r th a d e o ie lo n -m a k in g o f i n d i v i d u a l o o n a u m in g -u n ita t o ba aa f o llo w * * 1 . E ach oonaum er h a a a l i m i t e d inoom e d le p o a a b le f o r a p e n d in g . 2 . T h ia l i m i t e d in o o m e# i n o u r m odern h ig h ly a p e o ia l ia e d econom ic ayatem # h aa a n u n lim ite d v a r i e t y o f u a e a and p o a a i b i l i t i e a i n p u r o h a a in g . 3 . The oonaum er i a c o n f r o n te d w ith a g iv e n c o n d i t i o n o r a i t u a t i o n o f th e m a rk e t. The a v a i l a b l e gooda and a e r v io e a o n th e m a rk e t a l l h a v e a d e te rm in e d a e t o f p r i c e * . If. The n e o e a a ity o f m aking a c h o ic e i a f o ro e d u p o n th e o o n a u m in g -u n it. He h aa t o d a o id e b etw e en th e v a r i e t y o f o om m oditiea by u a in g h i a l i m i t e d in o o m e. G iv en h i a l i m i t a d inoom e and t h e v a r i e t y o f oom m oditiea# th e oonaum er w i l l e o n e ta n tly w ato h t o awe w h e th e r h i a e x p e n d itu r e a o n one com m odity w ill# i f i n - o re aaed# ta k e away a g r e a t am ount o f u t i l i t y b eo au ae o f 25 n o t b e in g s p e n t on a n o th e r com m odity. And I n a m oney-eoonom y, good m anagam ant i a shown by ao a d j u a t i n g th a m a rg in s o f au ap an aa on a a e h l i n e o f e x p e n d itu r e t h a t th e m a rg in a l u t i l i t y o f a s h i l l i n g 's w o rth o f goods on a a e h l i n e a h a l l b a th a a ana • And t h i a r e s u l t a a o h ona w i l l a t t a i n by o o n - a t a n t l y w a to h ln g to aaa w h e th e r th e r e i a a n y th in g o n w h io h h a i a a p e n d in g ao much t h a t he w ould g a in by t a k in g a l i t t l e away fro m t h a t l i n e o f e x p e n d itu r e and p u t t i n g i t o n aome o t h e r l i n e **0 I n t h i a a l t u a t l o n th e oonaum er a o a e tlm e e o u r t a l l a h ia e x p e n d itu r e o n aome oom m odlty when he d is c o v e r s t h a t t h e r e l a more m a rg in a l u t i l i t y on o t h e r co m m o d ities th a n on t h a t f o r w hioh h e h a a d e o id e d t o a l l o e a t e money* He t r l e a to a d j u s t h i a e x p e n d itu r e on e a e h oom m odlty ao t h a t th e a g g r e g a te lo a a o f u t i l i t y w i l l be a minimum and th e t o t a l u t i l i t y o b ta in e d w i l l b e th e maximum a v a ila b le * 6 * She oonaum er t r l e a * when o a l o u l a t l n g th e m a rg in a l u t i l l t l e e o f d i f f e r e n t co m m o d ities* to oom pare th e d i a t a n t a o u re e o f p le a a u r e and a p r e a e n t ao u ro e o f p le a a u r e ( o r u t i l i t y ) by a llo w in g r e a s o n a b le d la o o u n t f o r f u t u r e u t i l i t i e s * A c c o rd in g to M a rsh a ll* two u t i l i t i e s d e r iv e d fro m two co m m o d ities a t d i f f e r e n t p e r io d s o f tim e by th e same oonaum er c a n n o t b e q u a n t i t a t i v e l y com pared and m easured* Aa h a a a lr e a d y b e e n u rg ed * we o a n n o t com pare th e q u a n t i t i e s o f two b e n e f i ts * w hich a r e e n jo y e d A lf r e d M a rsh a ll* P r i n c i p l e s o f Boonom loa ( e i g h t h e d i t i o n ; Mew Y ork* MacmilTfcn compahy* $ p* 118* a t d i f f e r e n t t i n e s e v e n b y th a san e p a r a o n . Whan a p a r a o n p o a tp o n a s a p l e a s u r e - g i v i n g e v e n t ha d o a a n o t p o a tp o n a th a p la a a u r a and ta k a a I n l t a p l a o o , o r i n a z p a o t a t l o n o f g a t t i n g a n o th a r a t a f u t u r o d a t a t and « a o a n n o t t a l l w h a th a r ha a z p a o ta th o f u t u r o p la a a u r a to b a g r a a t a r th a n th a ona v h io h h a l a g iv in g u p u n la a a v a know a l l th a o ir o u n - a ta n e a a o f th o o ase* And t h e r e f o r e , o v a n th o u g h wa know th a r a t a a t w h ich ha d la e o u n ta f u tu r a p la a a u r a b la a v a n t a , au o h aa a p a n d ln g o n a pound o n lw a a d la ta g r a t i f i c a t i o n s , va y a t do n o t know t h e r a t a a t v h le h h a d la o o u n ta f u t u r a p l e a s u r e s **1 7* I t la auppoaad th a t tha commodities av al lab la to tha oonaumer ara In vary sm all u n its and they ara eon* sldarad to ba on a b a sis of continuity* Consequently, I t la aaaumed th a t the consumer deriv es from h is purchases so much u t i l i t y th a t ha v l l l spend h is inoome so aa to bring fo r him self the maximum av ailab le amount of u t i l i t y Given tha Idea th a t tha amount of u t i l i t y of each oom modlty i s a fu n ctio n of th a q u a n titie s o f tha same oom modlty acquired, I t must ba th e o re tlo a lly assumed th a t maximum u t i l i t y w ill ba aohleved whan tha m arginal u n it o f expenditure In aaoh d ire c tio n brings in tha same in crement of u tility * F o r I f t h i a l a a o , a tr a n s f e r e n c e o f e x p e n d itu r e fro m ona d l r a o t i o n to a n o th a r w i l l In v o lv e a g r a a t a r l o s s o f u t i l i t y i n th a d l r a o t i o n v h e re e x p e n d itu r e I s re d u c e d th a n w i l l ba co m p en sated b y th a g a in in g u t i l i t y I n th a d l r a o t i o n w here e x p e n d itu r e I s I n c re a s e d * ( • * * fro m t h a p r l n o l p l e o f d im in is h in g m a rg in a l u t i l i t y * ) T o ta l u t i l i t y m u st, t h e r e f o r e ba d im in is h e d , w h a te v e r t r a n s f e r l a m ade.* 2 27 6 * From th e p r e v io u s a s s u m p tio n o f th o q u a l i t y o f m a rg in a l u t i l i t i o a o a l lo d p u ro h a s o s wo o an aasumo t h a t th o m a rg in a l u t i l i t i o a o f a l l co m m o d ities b o u g h t by a eo n su m sr m ust bo p r o p o r ti o n a l to t h o i r r e s p e c t i v e p r i o e s . M U o f A _ p A M U o f B p*B I f th o ro a ro n goods , th o eonaum or*a b o h a r lo r c o u ld bo o z p la in a d by an n - 1 a q u a tio n and a bud g o t a q u a tio n s (C onsum er B udget) I « T ■ p j.q i* P242+ P3*3« • • pnqn 9* D is c o u n tin g a f u t u r o p le a s u r e and u t i l i t y w ith a p r e s e n t u t i l i t y , i f su o h d is c o u n tin g eo n bo o o n - s ld o r o d f e a s i b l e , s h o u ld bo b a s e d on two c o n d itio n s s f i r s t , th o oonaum er m u st bo as r l o h i n th o f u t u r o a s ho i s p r e s e n t l y ; s e c o n d , h i s o a p a o ity f o r u t i l i s i n g and u s in g th o b e n e f i t fro m th o oom m odlty o r eo m m o d itio s m ust re m a in unchanged* 10* C om p ariso n o f th o m a rg in a l u t i l i t y o f a d u r a b le com m odity w ith a n o n d u ra b le oom m odlty i s a oom- p l l o a t o d p ro b le m . I n t h i s o a s e , M a rs h a ll assum es t h a t th o m a rg in a l u t i l i t y o f a d u r a b le oom m odlty oom pared w ith a p e r i s h a b l e com m odity I s " th e a g g re g a te o f th e u san o e. o r w o rth to him o f a l l th e s e p l e a s u r e s , allo w an o e b e in g made f o r t h e i r u n c e r t a i n t y and f o r t h e i r d is ta n c e ^ M a r s h a l l , o p . o i t . . p . 1 2 3 . 11* Th* u t i l i t y f u n c t i o n s h o u ld b* c o n d itio n e d to a s p e c l f l o p e r io d o f tim e s in c e t h e s a t i s f a c t i o n o r u t i l i t y e h lo h th e oonaum er d e r iv e s fro m a com m odity I s r e l a t e d t o th e p e r io d d u r in g w h ich h e u s e s o r oonsum es th e com m odity. T h ere i s no su c h b a s i c tim e s ta n d a r d . T h ere I s , h o w ev e r, a som ewhat v ague c o n c e p t o a i l e d ln c o m e - tla e . I n w hioh r e a s o n a b ly , th e oonaum er o a n s a t i s f y h im s e lf w ith th e com m odity. The M a r s h a llia n th e o r y I s s t a t i o b e o a u se th e p o s s i b i l i t y o f t r a n s f e r r i n g consum p t i o n e x p e n d itu r e fro m one p e r io d o f tim e t o a n o th e r i s n o t ta k e n I n t o a c c o u n t. 1 2 . The oonaum er** p r e f e r e n c e s a r e assum ed t o be c o n s i s t e n t and t r a n s i t i v e . I f h e p r e f e r s A to B and B t o C, he a u t o m a t ic a lly p r e f e r s A t o C. R o le o f m a rg in a l u t i l i t y o o n o o p t I n M a r s h a llia n a n a l y s i s . I n A lf r e d M a rs h a ll* * a n a l y s i s , w hich I s b a se d on th e m a rg in a l u t i l i t y a n a l y s i s , th e oonaum er I s c o n s id e r e d to be a homo o co n o m lcu a— a r a t i o n a l m ach in e w hioh c a l c u l a t e s p le a s u r e and d i s p l e a s u r e w ith e a s e and w eig h s th e m a rg in a l u t i l i t i e s o f an u n lim ite d am ount o f c o m o d i- t i e s a v a i l a b l e f o r h im . R e a so n a b le c o n s id e r a t i o n o f th e f a o t t h a t a t any g iv e n tim e many consum er o h o lc e s and d e o ls lo n s seem t o be o f a r o u t i n e and h a b i t u a l n a t u r e , and i n many o a s e s w ith o u t ev e n a c o n s c io u s d e c is io n m aking p r o c e s s I n v o lv e d , i s la o k ln g i n t h i s t h e o r y . A u to m a tic and h a b i t u a l b u y in g becom e# e v e n more p ro n o u n o ed i n th e o aa e o f o o n e u a e ra w ith la r g e ineom ea and when eo m m o d ltlee a r e v e ry e m a il o r low p r i o e d . IV . THE UTILITY THEORY OF J . R . HICKS AND USB OF INDIFFERENCE CURVES B a e lo i d e a . P r o f e s s o r H ic k s b a s e s h i e th e o r y on V llf r e d o P a r e t o 's I n d i f f e r e n c e o u rv e o o n o e p t and t r i e s to u s e i n d l f f e r e n e e c u rv e s t o h e l p e x p l a i n consum er b e h a v io r . One o a n im a g in e a consum er who h a s a g iv e n am ount o f money inoom e and who w an ts t o sp en d I t on co m m o d ities x and y o n ly . L e t u s su p p o se th e p r lo e o f x , y ; p x , p y I s g iv e n o n th e m a rk e t. One o a n r e a d and e x p l a i n th e am ounts th e oonsum er w i l l buy by u s in g h i s i n d i f f e r e n c e map w ith o u t any I n f o r m a tio n r e q u i r e d ab o u t th e am ounts o f m a rg in a l u t i l i t y w hioh h e d e r i v e s fro m th e g o o d s T h e i n d l f f e r e n o e map i s d e v e lo p e d as f o llo w s 3 I n th e e q u a t i o n U ■ F ( q l , q2) i f one assu m es t h i s u t i l i t y t o b e a p a r a m e te r , t h a t i s , f o r a g iv e n l e v e l o f u t i l i t y w hioh we i n d l o a t e UO = F ( q l , q2) th e n t h e r e i s a u t i l i t y f u n c t i o n c o n t i n u i t y i n q l and q2 , and an i n f i n i t e num ber o f c o m b in a tio n s o f and $2 a r e Hi H io k s , o p . o l t . . p p . l i i - 1 7 * 30 p o s s i b l e • I f on# p u ts s l l th # p o s s i b i l i t i e s o f th # d i f f e r e n t q a e n t l t l # # i n c o m b in a tio n s o f Q l end Q2 ( v h io h e l l h a v e th # sets# m o u n t o f u t i l i t y —UO) th # lo o u s o f e l l Q l end ^ c o m b in a tio n s fro m v h io h th # oonsum #r d e r iv e s th # s e a # sm ount o f u t i l i t y end s e t l s f e c t i o n o e n b# p u t i n th # f o r a o f en i n d i f f e r e n c e c u rv e r e p r e s e n t i n g th # o o l l e e t l o n o f e l l p o i n t s v h io h b r in g th # ssm# s a t i s f a c t i o n . I f on# p u ts e l l th e d i f f e r e n t s e t s o f i n d i f f e r e n c e c u rv e s on# e f t e r th e o t h e r t h e r # i s a n i n d i f f e r e n c e map* I t sh o u ld b# s t e t o d h e r e t h a t i n d i f f e r e n c e c u rv e s c a n n o t i n t e r s # o t •e o h o th e r* Th# r a t e o f com m odity s u b s t i t u t i o n . Th# t o t a l d i f f e r e n t i a l o f th e u t i l i t y o f th e f u n c t i o n i s dU ■ P I D ql f Pq Dq2 v h # r# F I end F2 a r e th # p a r t i a l d o r l v i t i v e s o f U v l t h r # s p # c t to q l end q 2 . Th# t o t a l ohang# I n u t i l i t y (com p a re d t o an i n i t i a l s i t u a t i o n ) c a u se d by v a r i a t i o n s i n q l and q£ i s a p p ro x im a te ly th e change i n q l m u l t i p l i e d by i th # chang# I n u t i l i t y r e s u l t i n g fro m a u n i t ohang# i n q2 . L e t u s a l l o v th # consum er t o move j u s t on# o f h i s i n - d lf f # r # n o # c u rv e s by g iv in g u p some Q l i n ex ch an g e f o r Q ^. I f h i s co n su m p tio n o f QX d e c re a s e s d q l ( th # r # f o r # d q l i s s a a l l # r th a n s e r o ) , th e r # s u l t i n l o s s o f u t i l i t y i s a p p ro x im a te ly f l d q l* The g a i n o f u t i l i t y c a u se d by a o q u lr in g some Q2 i s a p p ro x im a te ly f 2 dq2 f o r s i m i l a r 31 re a s o n s * T ak in g a r b i t r a r i l y s m a ll in c r e m e n ts , th a sum o f thaaa two ta rn s mu a t aqual saro I n tha U n i t , alnoa th a t o t a l ehanga I n u t i l i t y a llo w a d l n d l f f e r s n e a o u rv e s l a s a r o b y d e f i n i t i o n * Tha a lo p a o f a n I n d l f f a r e n c a c u r v e , dq2 , l a th a 3 q l r a t a a t w hioh a oonaum er w ould ba w i l l i n g to a u b a t l t u t a Q l f o r Q? o r Q? f o r Q l I n o r d a r t o m a in ta in a g iv e n l e v e l o f u t i l i t y * Tha n a g a tlv a o f th a a l o p a 9 - dq2 9 l a t h a 3 q l r a t a o f oom m odlty s u b s t i t u t i o n (RCS) o f Q l f o r ^ o r f o r Q l, and I t a q u a ls th a r a t i o o f th a p a r t i a l d e r l v i - t i r e a o f th a u t i l i t y f u n c t i o n . M a rg in a l u t i l i t y and I n d lf f a r a n o a o u rv a co m p ared . I n a o a r d l n a l a n a l y s i s w hioh M a rs h a ll u s e d , t h a p a r t i a l d e r i v i t l v e s f l and f 2 a r a d a f ln a d a s th a m a rg in a l u t l l l t i s s o f th a o o m m odltlaa Q l and Q2* Thus# P r o f a s s o r H lo k s t r l a s t o t r a n s l a t e th a m a rg in a l u t i l i t y th e o r y I n te rm s o f I n d l f f a r a n o a o u rv e s* Ha b e l ie v e s t h a t th a q u a n t i t a t i v e o o n o a p t o f u t i l i t y i s u n n e o e s s a ry i n e x p l a i n i n g oonaum er d e o ls lo n -m a k ln g and t h a t one d o es n o t n ee d to o o n p are th a m a rg in a l u t i l i t i e s o f o o m m odltlaa* Ha d e v e lo p s a f u l l th e o r y o f consum er b e h a v io r on t h e a s s u m p tio n o f a s o a le o f p r e f e r e n o e * I n d o in g so* ha 32 g o es a s te p beyond V iI fr e d o p a re to .L i* Tha b a s ie a s s u n p - tio n a o f o r d i n a l u t i l i t y i n th e H lo k s -A lle n d ls o u s s lo n a r e aa fo llo w s * 1* U t i l i t y i a n e a a u re d by u a in g in d if f e r e n o e o u r yea and n o t by u a in g th e m a rg in a l u t i l i t y o o n o ep t * M a rg in a l u t i l i t y i a r e p la c e d by m a rg in a l re p la c e m e n t a u b a t l t u t l o n (MRS)* A cco rd in g to H io k s , th e c o n o e p t o f m a rg in a l u t i l i t y and o f t o t a l u t i l i t y l a a r b i t r a r y and ah o u ld be a v o id e d , To a v o id any d a n g e r o f m la le a d ln g a a a o o la tlo n a o f w o rd s, he a u g g e a ta th e u ae o f th e te rm " m a rg in a l r a t e o f a u b a t l t u t l o n b etw een th e two commodi t i e s * " ffe may d e f in e th e m a rg in a l r a t e o f a u b a t l t u t l o n o f x f o r y aa th e q u a n t i t y o f y w hich would J u a t oom penaate th e oonaum er f o r th e lo a a o f th e m a rg in a l u n i t o f x* T h ia d e f i n i t i o n l a e n t i r e l y f r e e fro m , any d ependence u p o n q u a n t i t a t i v e m easu re o f u t i l i t y * L b i To o r e a te an e q u ilib r iu m i n th e m a rk e t, th e oonaumer* a d e c la lo n l a d l r e o t l y r e l a t e d to th e id e a t h a t h i a m a rg in a l r a t e o f a u b a t l t u t l o n b etw een any two com m odltlea m uat e q u a l th e r a t i o o f t h e i r p rlo e a * 2* The o o n o ep t o f d lm ln la h in g m a rg in a l u t i l i t y m uat lik e w la e be re p la o e d * I t doea n o t e x p la in oonaum er b e h a v io r i n aome o a s e s , e s p e c i a l l y when m a rk e t c o n d itio n s \ 0* D. A lle n , " P r o f e s s o r S lu ta h y * a T h eo ry o f C o n au m er's C h o ic e ," Review o f Sconom ic S t u d i e s * (1 9 3 6 )* ^ ^ H lo k s, op* c l t . * p . 2 0 . 33 ohang* and th a oonaum er m oves fro m ona p o i n t o f e q u i l i b riu m to a n o t h a r . I t l a assum ed t h a t b e h a v io r i n t h i a e a s e l a t o ba e x p la in e d by u a in g th a o o n o a p t o f th a d im in is h in g r a t a o f a u b a t l t u t l o n . 3 . Tha oonaum er o a n r a n k h i a a l t e r n a t l v e a b aaed on h i a p r a f a r a n o a a b ao a u aa h a l a r a t i o n a l and w a n ts to m ax im ise h ia s a t i s f a c t i o n s . Ha o an a a y , " I p r e f e r A to B» t h e r e f o r e B . I p r e f e r B to A , t h e r e f o r e B ^ A ." Or, " I am i n d i f f e r e n t b e tw e e n A and B .” H ia p r e f e r e n o * l a ra n k e d by h i a u t i l i t y f u n c t i o n , w hioh i s o r d i n a l and m a th e m a tlo a lly e x p re a a e d aa N otes The U f u n c t i o n s a t i s f i e s th e c o n d i tio n o f i n t e r - p o l a b i l i t y and au " l a c o n tln u o u a w ith c o n tin u o u s f i r s t and aeoond o r d e r p a r t i a l d e r i v l t l v e . The above fo rm u la l a a u b j e c t t o th e u a u a l inoom e e q u a tio n s yo s p i q l f p 2 q2 f p 3 q3 . . . pnqn 1*. T r a n s i t i v i t y i a assu m ed . T h u s, *> • T h e re l a c o n s is te n c y o f e h o lo e . Onoe th e oonaum er h a a made a o h o lo e h e o a n n o t im m e d ia te ly ohange h i a m ind and r e v e r a e th e o h o lo e . U = u ( q l , q 2 ) C r ltl o la m o f i n d i f f e r e n c e o u rv e a n a l y a l a . The e h i e f o r i t i o l a m o f t h i a ap p ro a o h l a p o in te d a t th e la o k o f r e a l la m o f l t a u n d e r ly in g a a a u m p tlo n a , aa expounded by 3k I t s o r i g i n a t o r * J . R . H lo k s . 17 H lek a u i u m i t h a t t h a r a a z i a t a a a to o k o f h o n o g an ao u s gooda w hioh o an b a a r r a y a d o o n v a n ls n tly a lo n g tw o a z a a o f th a n o d a l* and b a tw a an w h io h i n d i f f a r a n o a eurw aa o a n b a o o n a tr u o ta d . A o o o rd in g t o R uby Morris*** o o n a u n a rs i n f a o t p o a a a a s o r a o q u ira p r a e t i o a l l y no a to o k s o f h o n o g an ao u a go o d s w ith w hioh t o b u i l d I n d i f f a r a n o a o u r t o a . Tha n a x t p r o b la n i s how t o a u f f i o l a n t l y d i f f a r a n t i a t a th a g o o d s ao aa t o maks th a n o d a l w o rk a b ls . T h ir d ly * i n s t i t u t i o n a l p r l e a o o n tr o la a r a n o t e o n a ld a ra d * a lth o u g h n a n y gooda and a a rw le a a a r a p u b l i o l y r a g u l a t a d .* ? H ioka aa au n a a t h a t p o o p la a r a a b la t o ohooaa o o n - a i a t a n t l y b a tw a a n a r a t h o r o o m p rah an alv a s a r i a a o f o o n - b i n a t i o n s o f gooda* and a r a o a p a b la o f w ak in g o r d i n a l J u d g a n a n ta a s to t h a l r t o t a l u t i l i t y . ^ ® T h u rs to n s * a s x p a r ln s n ta ta n d t o ahow t h a t th a s u b j s o t ra a o h a d a r s s i a t a n o s p o i n t i n b o th d i r a o t l o n s w hara no a n o u n t o f a d d i t i o n o f th a o t h a r good w ould o o n p a n a a ta f o r p a r t i n g w ith th a in d la p a n a a b la n i n i n u n .2 * Z a u th a n h a a e o n n a n ta d * ? I b id e , PP* 6 - 7 . *®R. T . M o rris* Tha T h ao ry o f C o n au n ar D snand ( T a la s Y a la T Jn lw a rslty P rs a s * P* * ^ T h ia o o n a t r a i n t u s u a l l y a f f a e t a s u p p ly ( r a i l r o a d t l o k a t a * l l e a n a a s ) r a t h a r th a n d s n a n d . 20H io k a , op* o l t . . p . 1 3 . 21L . T h u rs to n s * "Tha I n d l f f a r a n o a F u n o tlo n * " J o u r n a l o f S o o ia l P a y o h o lo g v . V o l. I I (1 9 3 1 )* P - lltl* 35 t h a t o n ly s m a ll o r m a rg in a l ehangaa o n an l n d l f f e r e n o e c u rv e may ba a x p a o ta d to ba s u b j e c t t o o b s e r v a t i o n . ^2 H anry S h u l t s , a n a d h a ra n t o f th a I n d lf f a r a n o a * c u rv e a p p ro a o h , a d m its t h a t ona m uat e x p e rie n c e a g iv e n s a t o f p r l o a r a 1s t io n s i n i t s " p r o p e r " i n s t i t u t i o n a l a a t t l n g i n o r d e r t o maka up o n a 'a m ind aa t o th a q u a n t i - t l a a ona w i l l p u r c h a s e * ^ R . Q. D . A lla n a tta m p ta d t o m aat t h i s o r l t l o l a m by a llo w in g f o r in e r a m s n ta l eh an g aa fro m any p a r t l o u l a r c o m b in a tio n aa b a ln g a u a o a p tlb la t o o b s e r v a t i o n , and d a n y ln g any i m p l lo a t lo n t h a t ona o o u ld ju d g a h i a r e l a t i v e p r e f e r e n c e s f o r w id e ly s e p a r a te d com b in a tio n s * The e m p h a sis u p o n o r d i n a l r a t h e r th a n o a r d in a l e v a l u a t io n o f o e r t a l n c o m b in a tio n s o f gooda r a p r a s a n t s an u n d e r ly in g s h i f t o f p s y c h o lo g ic a l a s s u m p tio n i n th a d i r e c t i o n o f r e a lis m * a o c o rd ln g to N o r r i s . ^ 5 Tha I n d lf f a r a n o a c u r v e . I l k a th a d i m l n i s h l n g - m a r g i n a l - u t l l i t y s c h e d u le s , r e s t s upon i n t r o s p e c t i o n and im a g in a tio n , • b . Z e u th e n , "On th a D e te rm in a te n e s s o f th a U t i l i t y F u n c tio n * " R eview o f E conom ic S tu d ie s * V o l. IV ( 1 9 3 7 ). P . 2 3 8 . ----------------------------------------------- ^ H . S o h u lts * Tha M easurem ent o f Demand (C h lo ag o s C h lo ag o U n i v e r s i t y P r> T I7 1V3&T, '1U* A lla n , "The F o u n d a tio n s o f a M a th e m a tic a l T h eo ry o f K xohange*" Bconom loa* V o l. X II (1 9 3 2 )* d p . 2 0 6 - 2 0 7 . ---------------- ^ N o r r i s , o p . d t . . p . * > 2 . 36 e x c e p t a t th a p o in t o f r e a l i t y . I n n w i i r y , th o i n d i f - f e r e n o e c u rv e a p p ro a c h l a b a a a d on r a t i o n a l i s m . T har# l a no r a o o g n l t l o n o r d la o u a a lo n o f th a im p o rta n o e o f h a b i t , and no l i m i t a t i o n p la o a d on th a a x ta n t t o v h io h th a b u y er l a auppoaad t o ba w i l l i n g t o a a a k o u t th a p r a f a r r a d com b in a tio n # • Tha oonaum ar l a a z p a e ta d t o a p p ly h i a o r d i n a l u t i l i t y r a t l n g a w ith a r lg o r o u a m a th a m a tle a l p r a o la lo n w hioh may ba aonaw hat f o r a l g n t o man* a n a t u r e . C o n o lu a lo n and a v a l u a t l o n o f I n d l f f a r a n o a o u r to a n a l y s i s . B o th th a I n d l f f a r a n o a ourva an d m a rg in a l u t i l i t y a n a ly a a a a r r i v # a t a a a a n t l a l l y th a aama c o n c lu - a lo n a r e g a r d in g th a n a tu r a o f th a damand o u rv a and a l l o c a t i o n o f oonaum ar e x p e n d itu r e # . Tha damand o u rv a h a a a n e g a tiv e a l o p a , a l t h a r dua t o d lm ln la h ln g m a rg in a l u t i l i t y o r dua to th a o o n v e x lty o f th a i n d if f a r a n o a o u r v a a • A ohanga I n t a a t a a w i l l a h l f t t h a la v a l o f t h a damand ourva# a l t h a r dua t o a ohanga I n th a l a v a l o f t h a u t i l i t y a o h a d u la o r dua to a ohanga I n th a ahapa o f th a i n d i f f e r - an ea c u r v e s . A ohanga i n th a m a rg in a l u t i l i t y o f money (o h an g a I n t o t a l a a t i a f a e t l o n o r u t i l i t y r e s u l t i n g from | a n a d d i t i o n a l d o l l a r ) w i l l o a u s e th a a h l f t I n th a la v a l o f th a o o n s ta n t - o u t la y l i n e • T ha damand o u rv a f o r a g iv e n oom m odlty w i l l ba s h i f t e d aa a r e s u l t o f c h a n g e s I n th a 2 6 m a.. p. s k 37 p r i c e s o f o th o r p r o d u c ts . U nder m a r g i n a l - u t i l i t y a n a ly s i s * th o consum er w i l l m axi mi so h i s s a t i s f a o t i o n whan th o r a t i o s o f th o m a rg in a l u t i l i t i o a o q u a l th o r a t i o s o f p rlo e a * Tho ln d lf f o r o n o o c u rv e a n a ly s is s t r i v e s t o a v o id im p l i c a t i o n s o f th o m e a s u r a b i l i t y o f u t i l i t y * The o o n - sum or a e t s on th e b a s i s o f a know ledge o f h i s i n d i f f e r en ce s o h o d u le s and d o e s n o t n ee d to know h i s u t i l i t y ao h e d u le* B o th a n a ly s e s assum e t h a t th e consum er a c ts i n su o h a m anner as t o m ax im ise h i s s a t i s f a c t i o n s * V* THE REVEAIED PREFERENCE THEORY OF PAUL A* SAMUEL80N The e x i s te n c e i n eco n o m lo s o f extrem um l i m i t s and s o l u t i o n s g iv e s th e e c o n o m is t g r e a t o p p o r tu n ity to q u a n t i f y * m easu re and com pare many f a c t o r s u s u a l l y d i f f i c u l t t o q u s n tlf y * F o r exam ple* th e p ro b le m o f oonaum er b e h a v io r c a n be s o lv e d on th e b a s i s th a t* w ith g iv e n v a r ia b le s * th e consum er te n d s to m axim ise h i s p le a s u r e o r s a t i s f a c t i o n * C o n se q u e n tly * m a th e m a tle a lly th e s o lu t i o n o f consum er d e c is io n -m a k in g may be fo u n d by d e t e r m in in g th e maximum ( o r minimum) o f f u n c tio n s o f th e v a r i a b l e s i n te rm s o f h i g h e s t p le a s u r e o r s a t i s f a o t i o n a t t a i n a b l e * B a slo a s s u m p tio n * The b a s ic a s su m p tio n s o f th e 38 T h eo ry o f R o v o alo d P ro fo ro n o o a r o x ^ 1* Tho oonaum ar poooooooo a u t i l i t y f u n e tlo n * 2 . T horo o ro (n ) eom m odltloa* A p o r t l e u l a r a o t o f p r lo o f o o n a io tin g o f pO, p O l, p 0 2 , p03# and pOn l a d o - n o to d (PO) and th o e o rro a p o n d ln g q u a n t l t l o a b o u g h t b y th o oonaum ar I n d io a to d by (QQ)« Tho oonaum ar*a t o t a l o x - p o n d ltu r o a a ro I n d io a to d pO.qO v h io h a l g n i f l o a th o t o t a l am ount o f th o p r le o a tia o o th o q u a n t l t l o a * L o t u a c o n o id o r a n o th o r q u a n t i t y o f oom m odltloa ( q l ) v h io h o o u ld h av o boon p u rch o ao d by th o oonaum er b u t v h io h v o ro n o t* L o t u a lm ag in o t h a t th o t o t a l e o o t o f th o q u a n t i t y ( q l ) a t th o p r lo o o f (pO) m ust bo no g r o a t o r t h a n th o t o t a l e o a t o f (q O ), th o r o f o r o pO , q l ■ pOqO S ln o o (qO) l a a c o m b in a tio n o f eo m m o d ltlo a a t l o a a t aa o x p o n aiv o aa ( q l ) and a in e o th o oonaum ar r o fu a o d to eh o o aa c o m b in a tio n ( q l ) , (qO) i a ro v o a lo d t o bo p r o f o r r o d to ( q l ) « Prom t h i a a a a u m p tlo n , S am uolaon fo rm a tv o ax io m ai a* I f (qO) l a ro v o a lo d t o bo p r o f o r r o d to ( q l ) , 27 'P a u l A* S am u o lao n , F o u n d a tIo n a o f B o p n o ato A n a ly a la ( C am brldgos H a rv a rd U n iv e r s it y p r o a a , 1 9 ^ 7 ), C h a p te r "V* P P . 90-12l<.. 39 t h t l a t t e r a u t n i v a r b a r a v a a la d t o bo p r o f o r ro d t o (q 0 )« The o n ly way i n w h ich ( q l ) c a n bo r e v e a le d t o bo p r o f o r r o d t o (qO) l o t o have to o n i f th o conaum er h a t b o u g h t th o c o m b in a tio n o f ( q l ) i n th o tamo p r io o s t r u c t u r e i n w h ich ho c o u ld a l t o a f f o r d to buy ( q 0 ) 9 I n o th o r w o rd e , i t ah o u ld bo t h a t ( q l ) i t r e v e a le d to bo p r o f o r r o d i f and t h i o i t n o t p o a a lb le * b . I f (qO) i t r e v e a le d t o bo p r o f o r r o d t o ( q l) » w hich i t r e v e a le d t o bo p r o f o r r o d to (q 2 ) and to (q 3 ) and (q )t), w hioh i t r e v e a le d t o bo p r o f o r r o d to ( q n ) , th e n (q n ) m u tt n e v e r bo r e v e a le d to bo p r o f o r r o d to (q 0 )« I n t h i o axiom th o t r a n a i t i v i t y o f ro v o a lo d p r e f e r e n c e i t a ttu n e d * 3* Tho oontum er i t a ttu n e d t o buy o o m n o d ltie a p e r a f ix e d u n i t o f tim e i n a m a rk e t w hore ho e a n n o t a p p re c i a b l y in flu o n o o th o p r i c o t * ^ Baoh com m odity i t e o n - tld o r o d honogeneoua and d i v i t l b l o . Tho eonaum or w i l l m axim ise h i t a a t i a f a c t l o n by o h o o a ln g a g iv e n t o t o f eom m odltiea o n ly l i m i t i n g h im to lf to h i t d l t p o t a b l e i n come ( I ) , a t p e r incom e e q u a tio n s pl«qO s p • l q l • • • • tfnPn ■ 1 28 I b i d * , p . 9 6 * T h e re fo re * a c c o rd in g t o P a u l Sam uelson* th a " I d e a l i s e d oonsum er" w i l l eh o o aa aoma d a ta rm in a d am ount a o f aao h and •▼ try oom m odlty a v a i l a b l e (aom a gooda may b a s a r o am ount)* Tha am ount o f aa o h oom m odlty l a a f u n c t i o n o f a l l o t h a r p r l o a a and o f h ia lneom e* C o n seq u en tly * th a conaum ar b y r e v e a l i n g h i a p r e f e r e n e e s doaa n o t u a a th a m a rg in a l u t i l i t y o o n o a p t ad v an ced by A lf r e d M a rsh a ll* VI* THE VON NEUMANN-MORGENSTERN THEORY OF CONSUMES DECISION-MAKING B a a lo o o n o a p t* A c c o rd in g to t h l a th e o r y th a b a a le p ro b lam a o f d a o ia lo n -m a k in g o an ba e x p la in e d and a n a ly s e d by u a ln g u t i l i t y th e o r y and th ro u g h o o r r a o t o l a a a i f l o a - t l o n o f d a o ia lo n -m a k a ra and t h e o o n d ltio n a u n d e r w hich th a d e e la l o n l a made* I t mu a t ba d a ta rm in a d w h e th e r th a d e e la lo n -m a k a r l a ( 1) a s i n g l e human b e in g o r ( 2 ) a g ro u p o f human b e in g s o r an o r g a n i s a t i o n . The r e a s o n f o r t h i s d l a t l n e t l o n l a t h a t any c o l l e c t i o n o f i n d i v i d u a l s w hloh may h av e c o n f l i c t i n g I d e a s and I n t e r e s t s m u st r e s o l v e them e i t h e r I n o p e n c o n f l i c t o r w ith in th a o r g a n is a tio n * Tha o o n d ltio n a u n d e r w hloh a d e o l s lo n l a made may ba e i t h e r ( a ) o e r t a l n ty * ( b ) r is k * (o ) u n c e r t a i n t y , o r (d ) a c o m b in a tio n o f r i s k and u n c e r t a i n t y i n th a l i g h t o f e x p e r im e n ta l e v ld e n e e r e l a t e d t o th e re a lm o f s t a t l s t l o a l in f e r e n c e * The p ro o e s a o f oonaum er d e c is io n -m a k in g u n d e r th o o o n d ltio n a o f o e r t a l n t y l a c l o s e l y a p p ro x im a te t o i t a a n a ly a la by m oat e l a a a l o a l and n e o - e l a a s l e a l th e o ry * T h la th e o r y e x p la ln a t h a t , g iv e n a a e t o f p o a a lb le a o t s , th e consum er h a a to eh o o a e th o se w h ich max i n i *e o r m in im ise th e g iv e n in d e x o f u t i l i t y * The g r e a t o o n t r l b u - t l o n o f th e von N eum ann-M orgenstern th e o r y on t h l a to p lo l a t h a t th e y in tr o d u c e d t h e id e a o f a p p ly in g l i n e a r p ro g ra aaa ln g to th e th e o r y o f maximum u t i l i t y * T h la th e o r y o o n t r a d ic t a t r a d i t i o n a l th e o ry b y p r o - p o e ln g t h a t u n d e r c e r t a i n o ire u m s ta n e e a a conaum er may make o h o io e a u n d e r u n c e r t a i n t y and a la o w i t h a d e a l r e to gam ble* Von N eum ann-M orgenatern b e lie v e i t l a u n r e a l i a t l o to aaaume t h a t e v e r y th in g i n oonaum er c h o lo e and d e o i e i o n - m aking l a c e r t a i n and b a a e d on a v e r y d e a r p lan * L e t ua ta k e f o r an exam ple th e o a a e o f a oonaum er who, h a v in g a a l i g h t p r o b a b i l i t y o f g a in in g i n a g am b le, g iv e a aw ay th e c e r t a i n t y o f aoma s a t i s f a c t i o n . Hla d e c is io n -m a k in g i n t h l a o a a e d ep en d s on th e p r o b a b i l i t y o f w in n in g o r l o s i n g th e p a r t i c u l a r l o t t e r y o r tio k e t* ^ 9 Von Neumann-M orgena t e r n d e v e lo p e d a n a x io m a tlo a p p ro a c h t o th e th e o r y o f u t i l i t y b a a e d o n r i s k and u n - 29r. Duncan Luoe and Howard R a iffa , Games and Psolalona (New Yorks John Vlley & Sons, In 8 7 7 T 9 5 8 T # pp* 12-14* o e r ta ln ty * I f we a c c e p t t h e i r axiom s* we can* fro m th e p r e f e r e n e e o f oonsum ers* go t o u t i l i t y and p r e d i o t i n d i v id u a l o holoe* Von N eum ann-M orgenstern assum e f i r s t t h a t oonsum ers a re r a t i o n a l and second* t h a t th e y w an t to m axim ise th e u t i l i t y * The y o n N eum ann-M orgenstern axiom s a r e s 1* C om plete O rd e rin g Axiom* a* P o r tw o a l t e r n a t i v e s f a and b* th e in d i v i d u a l o an sa y s I p r e f e r a to b ( a > b ) . I p r e f e r b t o a ( b ^ a ) , I am i n d i f f e r e n t ( a ^ b)* b* O rd e rin g means t h a t in d iv i d u a ls o an p la e e a and b i n r e l a t i o n t o aa o h o th e r by ra n k in g them* o* P r e f e r e n e e i n o r d e r in g i s c o n s i s t e n t w ith m a th e m a tic a l a s s u m p tio n s , w hich means t h a t th e o r d e r in g s a r e t r a n s i t i v e and r e f le x iv e * Axiom o f T r a n s l t l v l t y t I f th e r e a r e th r e e o h o io e s — a* b* and c - - t h e in d iv id u a l* s o h o lo e i s t r a n s i t i v e * Thus* i f a ^ b and b ^ o * th e n a ^ c . T h is i s o r d e r in g o f th e s o - o a ll e d p r i m i t iv e ty p e* Axiom o f R e fle x iv e R e la tio n s I t l a t r u e t h a t f o r any "x** *x* b e a rs th e g iv e n r e l a t i o n t o I t s e l f * J u s t as th e r e l a t i o n o f e q u a l i t y i n a r i t h m e t i c i a r e f l e x i v e , a in o e x ■ x f o r a l l " x ^ * " B ut a r e l a t i o n i a c a l l e d a n t i - r e f l e x i v e when * x " doea n o t b e a r th e g iv e n r e l a t i o n t o i t s e l f f o r an y " x ." F o r e x a m p le* th e r e l a t i o n o f b e in g " g r e a t e r th a n " l a a n t i - r e f l e x i v e • A r e l a t i o n l a n o n r e f le x iv e when th e r e i a a t l e a s t one " x " w h ich d o es n o t b e a r th e g iv e n r e l a t i o n t o i t s e l f * The r e l a t i o n o f b e in g r e c i p r o c a l* f o r exam ple* i a n o n r e f le x iv e a o c o rd ln g t o w h e th e r "x " l a e q u a l t o u n i t y o r i a n o t e q u a l t o u n ity * 2* C o n tin u ity Axiom . A i a p r e f e r r e d t o B and B t o C* t h e r e f o r e t h e r e e x i s t a some p r o b a b i l i t y (P ) jjO ^ P and auoh t h a t th e consum er l a i n d i f f e r e n t b etw een outcom e (B ) w ith o e r t a l n t y I n a l o t t e r y t l o k e t o f f e r i n g th e outoom ea (A) and (C) w ith p r o b a b i l i t i e s ( p ) and (1 - p ) r e s p e c t i v e l y . C o n seq u en tly * by u s e o f a p r o b a b i l i t y o a le u lu s * th e i n d i v i d u a l may be I n d i f f e r e n t t o a gam ble in v o lv in g (A) and (C) w h ich i s ju d g e d i n d i f f e r e n t to ( B) • 3* In d ep en d e n ce Axiom. L e t u a assume t h a t th e consum er i s i n d i f f e r e n t b e tw e e n A and B and c r e p r e s e n t in g any outoom e w h a ts o e v e r. I f one l o t t e r y t l o k e t o f f e r s outoom ea A and C w ith p r o b a b i l i t i e s p and 1 - p r e s p e c t i v e l y * and o t h e r outcom es B and C w ith th e same p ro b a b i l i t i e s p and 1 - p* th e consum er i s i n d i f f e r e n t b etw een l o t t e r y tio k e te * If* U n e q u a l- P r o b a b ility A xiom . L o t u s u i u m t h a t th o consum er p r o f o r a A t o B* I f tw o l o t t o r y t i e k o t a L l and L2 b o th o f f o r th o aame outcom e* A and B th a oonaum er p r o f o r a th e l o t t e r y t l o k e t L2 I f and o n ly I f th e p ro b e * b l l l t y o f w in n in g A i a g r e a t e r f o r L2 th a n f o r L I* $9 Axiom o f C o m p lex ity * L e t u a aaaume t h a t a p e ra o n en g ag e* i n th e f o llo w in g game o f chanoe* He throw * a d ie and i f a one o r two oomea u p , h i a o p p o n e n t p ay * him #9*00* He pay* h i a o p p o n e n t # 3 * 0 0 I n e v e ry o t h e r o aae* The p r o b a b i l i t y o f a w in l a 1 /3 and th e p r o b a b i l i t y o f a l o s s l a 2/ 3 * The p la y e r o an e x p e o t to w in on th e a v e ra g e 1 /3 x 9 p lu s 2 /3 x - 3 w h ich l a e q u a l t o $ 1*00 p e r game* I f A and B a re th o money v a lu e * o f two outoom ea whoae p r o b a b i l i t i e s a r e p and 1 - p , th e m a th e m a tic a l e x p e c ta t i o n o f th e game o r th e e x p e c te d w in l a p x A + ( l - p ) x B Aaaume now t h a t th e oonaum er l a o f f e r e d a c h o ic e b e tw e en two l o t t e r y t i c k e t * * The f l r a t o n e , L l , o f f e r * th e o u t* cornea A and B w ith g iv e n p r o b a b i l i t i e s • Tho o t h e r , L 2, l a a oom plex ono i n th e a e n s e t h a t th e p r io e a them e e l v e s a r e l o t t e r y tlo k e ta * I f th o oonaum er ch o o aea L2 and w in e , h e g e t a l o t t e r y t l o k e t L3 ( o f f e r i n g A and B w ith so n * g iv e n p r o b a b l l l t l e a ) ; I f h e lo a e a h e i a g iv e n a n o th e r k$ l o t t e r y t l o k e t l 4 ( a l s o o f f a r i n g A and B w ith aoma g iv e n p r o b a b i l i t i e s ) . Assume f i n a l l y t h a t th a p r o b a b l l l t i a a o f w in n in g o n aa o h t i e k a t h a p p a n to ba au o h t h a t th a co n s u m e r's a x p a o ta t io n o f w in n in g i a th a aama w h a th a r h a o hooaaa L I o r L 2 . Tha axiom s a a a a r t t h a t th a oonaum ar i a i n d i f f a r a n t b atw a a n L I and L2.3® E v a lu a tio n o f t h a won Neumann-M orgena t a r n th a o r y . Von Neum ann-M orgens t e r n u t i l i t i a a a re c a r d i n a l i n th a aa n a a t h a t th e y may ba oom binad t o o a l e u l a t a e x p e c te d u t i l i t i a a and o a n ba u a a d to oom para u t i l i t i a a u n d a r r i a k and u n o e r t a l n t y . I f wa a c c e p t th a l o t t a r y s t a te m e n t, th a n th a th a o ry h a a p in n e d down th a o o n o a p t o f u t i l i t y m ore th a n th a t r a d i t i o n a l t h e o r i e a b ao a u aa th a u a u a l o r d i n a l u t i l i t y l a a u f f l c l e n t o n ly t o a llo w an I n d i v i d u a l to make up h i a m in d . Von Neumann-M orgena t e r n u t i l i t y g iv e a th a p o a a l b i l i t y o f th e oonaum ar*a b e h a v io r u n d e r o o n d i- t i o n a o f r i a k and u n o e r t a i n t y and a la o h a a th e a d v a n ta g e o f th e o t h e r u t i l i t i e s . H ow ever, th a axlom a a r e v a ry g e n e ra l* They r u l e o u t aoma ty p e s o f p l a u s i b l e b e h a v io r . T h ere l a , f o r ex am p le, th e p e ra o n who d a r lv e a a a t l a f a c t i o n 3 ^ I b l d . » p p . 1 4 -3 8 . Jo h n v o n Neumann and O skar M organs ta r n * T h eo ry o f Qamaa and Koonom lo B e h a v io r (aa o o n d e d i t i o n ; P rm o e V o n i r r i n o e t o n u n i v a r a i i y F ra a a , 1 9 ^ 7 ). from g am b lin g p e r a e . For h im th e r e may e x i s t o n ly a p r o b a b i l i t y o f s 1 o r ■ 0 , a o t h a t h a i a i n d i f f e r e n t ba* tw een th a o a r t a i n t y o f b o r th a u n o a r ta in ty o f a and a* T ha q u a a tio n i a w h a th a r we e r a g e t t i n g p u re p r e f e r en c e o r p r e f e r e n c e f o r oom nodity e n ta n g le d w ith r i a k and g a m b lin g . Tha o b je c ti o n i a t h a t th a l o t t e r y may i n j e o t e x tra n e o u s e le m e n ts i n t o th a p i o tu r e o f p u re p r e f e r e n c e , a d i f f i c u l t y w h ich t r a d i t i o n a l th e o r y e v i d e n tl y a v o id s , V I I . CONCLUSION The n a tu re o f oonaum ar d a o ia l on-m aking and a a t i a - f a o t l o n i a c o m p lic a te d . S u b je c tiv e id e a s , some o f w hloh may n o t conform t o th e b e s t o b je o tiv a know ledge a v a i l a b l e , a re a b a a io m o tiv a tio n i n hum an b e h a v io r . E v an i f com p l e t e and o b je c tiv e in f o r m a tio n l a e u p p lle d , t h e d e a lr e a o f one p e ra o n a re n o t n e o e a a a r ily th o s e o f a n o th e r and p e r s o n a l e v a lu a tio n s w i l l b r i n g a b o u t a g r e a t v a r i e t y o f d e o la lo n a • k s i g n i f i c a n t c l a s s i f i c a t i o n o f human a c t i v i t l e a and b e h a v io r h aa b e e n made by V llf r e d o P a re to on th e b a s i s o f l o g l o a l and i l l o g i c a l human a c t i o n s , v l l f r e d o P a r e to a p p lie d th e te rm " l o g l o a l a c t Io n a " t o " a c t io n s t h a t l o g i c a l l y oan j o i n am ana to e n d s , n o t o n ly fro m th e s ta n d p o in t o f th e a u b je o t p e rfo rm in g them b u t fro m th e s ta n d p o i n t o f o th e r p e rs o n a who h a v e a m ore i n t e n s i v e k n o w l- e d g e .* ^ This s ig n ific a n t c la s s if ic a tio n of human be havior oould be very u aefu l in an ev alu atio n of the d if fe re n t th e o rle e of oonaumar behavior. Much oonaumer behavior la in o o n traat to In d u e trla l decision-m aking whloh la u au ally baaed on lo g le a l reason- ln g . A theory of oonaumar preference baaed on the r a tio n a lis a tio n of oonaumer behavior oannot ex p lain the oomplexlty of th e problem. The oonaumar l a su b jeo t not only to h i a own d ealrea but to the many fo reea of h la environm ent, whloh lnolude educational I n s titu tio n a l movements of various kinds# p o li tic a l p attern s# and ao on. The degree to whloh he la guided by r a tio n a l or n o n ratio n al considera tio n s and the degree to whloh h la d ecisions a t d iffe re n t timea# and under d iffe re n t oiroumatanoea# are re la te d to d iffe re n t item s la to be measured in tedious# tlm e- oonauming research and oaae atudy ra th e r than by simple g e n e ra lis a tio n . While ignoranoe or m istaken id eas about produot q u a lity and performance may lead# a t times# to what may be deemed questionable evaluations# th e re la no aound reason fo r o a ilin g o e rta ln ev alu atio n s o o rreet and o th ers in o o rreo t when the b a sis fo r d iffe rin g ev alu atio n s la found in d lfferen o ea attached sub je c tiv e ly by d iffe re n t consumers to various produot ^^V ilfredo Pareto# The Mind and Soolety# ed. A rthur L ivingston (New Yorks Haro our t# Braoe and Co.# 1931)9 PP. 75-76. w q u a i l t i e a and p r o d u e t p e rfo rm a n c e a o f w h ich th e y h av e a d e q u a te k n o w led g e . • • • A c c o rd in g ly , e v e n i f o o n e u a e re o o u ld b e f u r n la h e d w ith f u l l and o o m p lete o b j e c ti v e I n f o r m a tio n and o o u ld b e d i a - ab u eed o f m la ta k e n b e l l e f a r e g a r d in g p e rfo rm a n c e , a t l l l th e e v a l u a t i o n p la c e d u p o n d i f f e r e n t p r o a u e ta by d i f f e r e n t p e o p le w ould n o t be th e aam e. • • • I n a f r e e a o o le ty one man* a p r e f e r e n o e a I n m a re h a n d la e e c o n o m ic a lly a r e n o t t o be deem ed a u p e r lo r t o th o a e o f a n o t h e r . E ach man ae e k a th o a e th in g a w hich g iv e h im happlneaa.32 32H e ll H . B o rd e n , The E conom ic g f f e c t a o f A d v er- t l a l n g (C h icag o x R io h a rd D. i r w l n . I n c . , 194-7)# p . < > 5 6 . CHAPTER I I I A . POSITIVE APPROACH TO CONSUMER PREFERENCE AS AFFECTED BY ADVERTISING I n t h i s o h a p te r , f o llo w in g a s w m a ry o f th a r o l a and l i m i t a t i o n * o f th a a b s t r a c t and d e d u c tiv e m at hod o f t a n u sa d by th a c l a s s i c a l e c o n o m is ts , t h a r a i s a b r l a f a n a ly s is o f th a naw u s a s o f s e l a n t l f i o m ethod i n econom i c s , Tha ohange o f em p h asis fro m u s in g a b s t r a o t and d e d u o tlv e r e a s o n in g to th a u s e o f th a s t a t i s t i o a l m eth o d , s u rv e y s and e a s e s t u d i e s w i l l ba shown* Tha o h a p te r i s o o n o lu d ed w ith an a n a l y s i s o f th a p ro b lem o f th a p r e s e n t w ork I n v o lv in g d e te r m in a tio n o f th a im p o r ta n t f a o t o r s a f f e c t i n g oonaum ar d e c is io n -m a k in g * I* LIMITATIONS OF DEDUCTIVE M ETHOD Use o f d a d u o tlv a m ethod by o l a s s l o a l e c o n o m is ts * C l a s s i c a l e c o n o m is ts i n g e n e r a l h av e b e a n t r y i n g to d i s c o v e r th a b a s i o , u n i v e r s a l e h a r a c t e r i s t l o s o f human a o t i v l t l e s and th a i n t e r - r e l a t i o n s h i p s o f th e s e a c t i v i t i e s on th e b a s i s o f a few a s s u m p tio n s suoh as th e law o f p e r s o n a l i n t e r e s t and t h e f r e e w o rk in g o f econom ic fo ro e s * t o T h e ir m ethod do*a n o t go t o th a o b s e r v a tio n o f o a a a a i n t r y i n g t o da to rm in a how a p a rs o n r a s e t s i n o h an g ln g o i r - o u m stan o ea . In s te a d * th a y ta k a f o r g r a n ta d t h a t p a o p la a o t r a t i o n a l l y and alw ays i n th a i n t a r a a t o f p e r s o n a l s a t i s f a c t i o n - - * a a t i a f a e t i o n w hloh i a o l a a r l T c o n c e iv e d by e v e ry p a rs o n w ith o u t a r r o r * Tha r a a d a r s may ba v a ry muoh a u r p r ls a d to f i n d o u t how f r a g i l e haya b a a n th a l o g i c a l c o n s tr u c tio n s and b a s i s o f soma fam ous aoonom ie t h a o r i a a u s in g th a d a d u o tlv a m athod and w i l l r e a l i s e how a o r l t i o a l and p o s ltlw a ap p ro ac h i s n e o e s s a ry .L Prom th a s a a s su m p tio n s f o llo w f r a g i l a l o g l e a l d a - d u o tio n s and a b s t r a c t o o n o lu s lo n s w hich t r y to i n t e r p r e t and p r a d l o t econom ic a c t i v i t i e s . I n t h i s h y p o th e tic a l r e a s o n in g th e r e i s l i t t l e o r no allo w an o e f o r th a human te n d e n c y o r t a s t e f o r t a k in g r i s k s and gam bling* f o r th a sim p le p le a s u r e o f a o tlo n and a c t i v i t y * f o r th a n eed o f pow er and g lo ry * o r f o r o th e r f a m ily and s o o l a l i n s t i n c t s and f o r o a s w hloh m o tiv a te many aoonom ie a o t l v l t l e a and d e c i s i o n s . ^ One oan r e a d i l y s e a t h a t homo oconom loua i s an a b s t r a c t e n t i t y w ith l i t t l e r e l a t i o n to r e a l i t y . B e s id e s th a c o m p le x ity o f i n d i v i d u a l m o tiv a tio n s ^Bertrand Nogaro* La ValourLogloue das theories Eoonomiquas (Parist Press* universitaire a* Franc** W /j# P* ViII. P. Parroux* "Bsqulss* d'Una Thaorla da L*Xoonomia Dominant*." Boonomle Ippllqua I.S.E .A .. Avrll- Saptambra* 1 9^8* p. 2I 4 . 3 "------------ 2L o u ia B audln* T r a it# D*Boonomla P o l i t i q u e , v o l . I ( F a r ia s L i b r a r l e D a llo s* l9 5 5 J# ‘ p . 53* 4 51 i n eoonom lo a c t i v i t i e s , th e r e a r e g ro u p s and com bined g ro u p s and v a r io u s o t h e r u n i t s and o r g a n i s a t i o n s h a r in g v e s te d I n t e r e s t s and I n t e r - g r o u p r e a c t i o n s w h lo h e r e a te n o re o o m p llo a te d e le m e n ts to s tu d y * P o w e rfu l eoonom lo u n i t s su o h a s g o v ern m e n ts and la b o r u n io n s r e a o t and I n t e r f e r e I n o u r e o o n o n lo l i f e * To a n a ly s e t h e l n a e d l a t e and u l t i m a t e e f f e c t s o f th e s e .f a c t o r s an d I n t e r v e n t i o n s by th e p u r e ly d e d u o tlv e m e th o d , w ith o u t th e h e l p o f s t a t i s t i c a l I n f e r e n c e and o b s e r v a t io n s , and w ith o u t some s o r t o f m a th e m a tic a l r e a s o n i n g . I s n e x t t o Im p o s s ib le * T h ere a r e th o s e who r e a s o n t h a t t o a n a ly s e w hat p e o p le w ant and what t h e f u t u r e o f b u s in e s s a c t i v i t i e s w i l l b e i s o u ts i d e th e re a lm o f th e s o le n c e o f econom ics* T h is I s o u t o f l in e w i th th e b a s lo fram e o f r e f e r e n c e o f o th e r s c ie n c e s where I n a l l f i e l d s th e r e a re p r a c t l e a l a p p l i c a t i o n s . One o f th e m ain r e a s o n s why a p p l i c a t i o n I n th e econom ic f i e l d h a s b ee n s o r e t a r d e d I s t h a t th e num ber o f f a o t o r s I s h ig h and th e c o m p le x ity o f t h e i r i n t e r c o n n e c tio n s i s g re a t* C o m p le x ity o f oconom lo phenom ena and u s e o f s u rv e y m eth o d * D ls re g e rd o f s u r v e y , o b s e r v a tio n and t h e s t a t l s t l - o a l a p p ro a c h e r e a te d a b ig g u l f b etw een th e d e d u c tiv e ap p ro ao h and th e a p p l i c a t i o n o f th e o ry t o econom ic d e c is io n - m a k in g , th e I n t e r p r e t a t i o n o f r e a l i t y , and eoonoailc f o r e c a s tin g * Some e c o n o m ists becam e s c e p t i c a l 52 of tho froquont uoo of tho deductive method* I t woo not th a t tho uooro o f tho deductive method had not aoon tho problem s. Tho eoonomlo problem* of today did n o t e x is t a t tho tim e of the e la a a lo a l econom ist*• in In creasin g com plexity of eoonomlo problems has oroatod now needs whloh must brin g about the use o f more eomplloeted methods* Borrowing so f a r as p o ssib le the lim its th a t • • • disagreem ent among economists oan be done w ith any prospect of sueoess only by appeals to experience9 i t fo llo w s, th e re fo re th a t the most u se fu l econom ists, from a p ra o tio a l p o in t o f view, ere those who cheek th e ir r e s u lts a g a in st what has happened* This is a lab o rio u s and expensive ta sk whloh I s quickly brought out by lim its of time and money *3 "There have alweys been economists who have sought to combine theory and p ra c tlo e . I th in k th a t th e ir number le Increasing* * II* INCREASED USE O P SCIENTIFIC M E T H O D SINCE 1930 S in c e 19309 a p p l i c a t i o n o f o a s e s t u d i e s , su rv e y s* e x p e rim e n t* , ln o r e a s e d u s e o f c o m p u ta tio n f a o l l l t l e s , new t h e o r i e s o f gomes and d o o la io n s , a p p l i c a t i o n o f l i n e a r ^ S l r R o b e rt H a l l , " R e f le c tio n s o n th e P r a o t l c s l A p p lic a tio n o f E co n o m ics* " The Eoonom lo J o u r n a l* #276* V o l. LXIX (D ecem b er, 1959) #’ p . 650.------------------- * * T b ld .* p. 6$2* 53 p ro g ram m in g , i n p u t- o u t p u t a n a l y s i s , o th a r m a th e m a tic a l and a t a t i a t i e a l c o n t r i b u t i o n s , and r i g o r o u s r e a s o n in g i n eooxuxaios sh o o g r e a t p o s s i b i l i t i e s and th a o p e n in g o f a new e r a i n econom ic s c i e n c e .5 Some w r i t e r s h av e te rm e d t h i s new a p p ro a c h and e m p h asis on i n d u c tiv e r e a s o n in g a p o s i t i v e a p p ro a c h o r p o s i t i v e m ethod i n e c o n o m ie s. The b a s ic f e a t u r e o f th a p o s i t i v e a p p ro a c h i s th a a tte m p t t o a n a ly s e econom ic phenom ena by d e f i n i n g and a n a ly s in g and se g m e n tin g them i n t o a s many v a r i a b l e s aa p o s s i b l e . I n t h e p r o c e s s o f a p p ro x im a tio n and a n a l y s i s o f aoonom ie r e a l i t i e s by t h e p o s i t i v e a p p ro a c h i t i a n e o e s s a ry t o show th e dynam ic r e l a t i o n s h i p s o f th e v a r i a b l e s and to r e f e r to and u se t h e f a e t u a l m eth o d s o f o a se s t u d i e s . By o o m b in in g th e a n a l y t i c a l p i c t u r e and dynam ic r e l a t i o n s h i p s o f t h e v a r i a b l e s , one o an e x p l a i n th a econom ic phenom ena. I n th e p o s i t i v e a p p ro a c h d e d u o tiv e m ethod s t i l l m akes a b a s ic c o n t r i b u t i o n and s h o u ld ba u s e d as r i g o r o u s ly and c a r e f u l l y aa p o s s i b l e . ^ H is to r y o f p o s i t i v e a p p ro a o h . H i s t o r i c a l l y , th e p o s i t i v e a p p ro a o h h a a b e e n u s e d by a s m a ll num ber o f ^A ndre M a rs h a l. M ethods S o i e n t i f i a u e e t S c ie n o e g co n o m lq u e. V o l. I ( P a r is * s c l n o n m a o io e s, P* ^ B au d in , o p . o l t . , p . 1 0 . e o o n o a le t a . L eon W a lra s , V i I f r a do P a ra t o and t h a l r a d - h a r a n t s who w are v e ry a n a l y t i c a l i n d e te r m in in g th a v a r l a b l e a o f econom ic phenom ena, t r i a d t o e x p l a i n a l l aoonom ie f a e t o r a and th a w hole ay a tam o f t h a l r r e l a t l o n - a h lp a o n th a b a s ia o f a a a t o f e q u i lib r iu m e q u & tlo n a w here th a e q u a l i t y o f th a num ber o f unknowna I n th a aq u a * tl o n a w as th a b a a ia o f th a a o l u t l o n o f th a. g a n o r a l e q u i l ib r i u m . H ow ever, th e y n e v e r v a r a i n t a r a a t a d I n t r y i n g t o f i n d th a a o l u t l o n n u m e r ic a lly , ba H a v in g t h a t auoh w ork waa hum anly iflq > o aaib le. P a r a d o x i c a l ly , th e y aaaum ad m a a n v h lla t h a t th a c o l l e c t i v i t y o f a l l l n d i v l d - u a la I n th a econom y a r e c o m p la te ly in fo rm e d and a b le t o make th a o o m p u ta tlo n a a u t o m a t io a lly . E v e n tu a lly aoma ao o n o m lata b eg a n to b e l i e v e t h a t t h e r e i a no r a a a o n why th a a o l u t l o n o f th a eoonom lo e q u i lib r iu m m u at depend o n th o a e a a ta o f a q u a tlo n a b u i l t up by L eon W alraa and v a r lo u a c o n te m p o r a r ie s . Haw and ad v an ced ld a a a e n te r e d th a eoonom lo a c en e I l k a th o a e o f Jo h n von Neumann. I n h la aconom io m o d a l, h a g av e t h a p o a a l b l l l t y o f a p r o o f t h a t an eoonom lo ay a tam o o u ld ba d e a e r lb e d by maana o f l n e q u a l l t i e a in a t a a d o f a q u a tlo n a and o o u ld ba e x p la in e d i n te rm a o f a n e x p a n d in g econom y r a t h e r th a n a a t a t l o n a r y and r i g i d e q u i l ib r i u m . I n m odern aoonom ie l i t e r a t u r e t h e r e l a a d e f i n i t e ohange o f am p h aaia and a d e a i r a to u aa th a p o a l t l v e 55 a p p ro a c h . O sk ar M o rg e n s te rn a t a t a a t h a t m odern aconom io t h a o r j l a g iv in g la p o r ta n o e t o n u m e rlo a l r a a a a r o h a a and q u a n t i t a t i v e r e s u l t a I n s u r v e y s •? L o u is B au d in b e l i e v e s t h a t th e t h e o r e t l o a l r e a s o n in g o f eoonom lo phenom ena and e x p l a n a tio n o f eoonom lo f a c t s I n l t a m o at p e r f a o t and c o m p le te fo rm n e e d s t o be n u m e rio a lly a p p l ie d . M athe m a tic a l a p p l i c a t i o n o f th e m ost c o m p le te e x p r e s s io n s o f eoonom lo p ro b lem s i s becom ing p o s s i b l e th ro u g h th e t r e mendous ad v an ce i n t h e te c h n o lo g y o f e l e c t r o n i c co m p u te rs and o t h e r co m p etin g d e v ic e s .® The dynam ic n a t u r e o f eoonom lo t h e o r y to d a y i s show ing I t s e l f i n t h e n e c e s s i t y o f f i n d i n g a g r e a t num ber o f " v a r i a b l e d e f i n i t i o n s 1 1 t o eoonom lo c o n c e p ts — so t h a t th ro u g h th e s e v a r i a b l e s th e th e o r y o o u ld be n e a r e r to r e a l i t y and a p p llo a b le t o i t . The em p h asis on v a r l a b l e a i s e x tre m e ly im p o r ta n t. V a r ia b le s a re v e ry o f t e n e x p e r i m e n ta lly d e te rm in e d and e s t a b l i s h e d by p a i n s t a k i n g ob s e r v a t i o n and s u r v e y . L eon W alras i s one o f th e p io n e e r s i n th e f i e l d o f e s t a b l i s h i n g v a r i a b l e s fro m e x p e rie n c e and o b s e r v a tio n s . I n I 67I4 . h e o o l l e e t e d th e v a r i a b l e s w hloh h e c o n s id e re d im p o r ta n t and s e t up a co m p re h en siv e s y ste m o f e q u a tio n s . ?O sk ar M o rg e n s te rn , Boonom lo A c t i v i t y A n a ly s is (Mew Y o rk s Jo h n W ile y and S o n s, i n c . , l95V )* P* 4 0 9 . ^ B a u d in , o p . o l t . . p . 1 7 . 56 I I I . APPLICATION OF POSITIVE M ETHOD TO THE PRESENT PROJECT The d a t a u aad l a a n a ly s in g and i n t e r p r e t i n g t h a p ro b la m o f oonaum ar d e o ls lo n -m a k in g aa a f f a o ta d by a d v e r t i s i n g and p u b l l o l t y was g a th a r a d fro m tw o su rv e y # h a v in g n a tio n -w id e o o v e ra g e . To a s t a b l l a h a a a t o f I m p o rta n t f a o t o r a o r d e te r m in a n ts w hloh o o u ld ba c o n s id e r e d aa " v a r i a b l e d e f i n i t i o n s * to th e p ro b le m , a c o m b in a tio n o f p r e s e n t day s o o l a l s c ie n c e f i n d i n g s and coaunon s e n s e was u s e d . The e i g h t d e te r m in a n ts w h ic h h av e b ee n l i s t e d seem t o be o f g r e a t im p o rta n c e f o r th e I n d i v i d u a l . A ll o f them have b ee n d i r e c t l y and I n d i r e c t l y In c lu d e d i n th e q u e s t i o n n a i r e s . The f i n d i n g s fro m th e s u rv e y show th e c o m p a ra tiv e and w e ig h te d Im p o rta n c e o f t h e s e d e te r m in a n ts o n d i f f e r e n t l e v e l s o f consum er d e c is io n - m a k in g . I n th e co m p ile d d a t a , th e d e te r m in a n ts a r e v a r i a b l e d e f i n i t i o n s . T hey a r e c o r r e l a t e d , co m p ared , and a n a ly s e d as to t h e i r c h a n g e s a s r e l a t e d to d i f f e r e n t s i t u a t i o n s o r p r o d u c ts • L i s t o f b a s i c d e te r m in a n ts u se d i n th e s u r v e y . The f a o t o r s m e n tio n e d below a r e , f o r th e p u rp o s e o f th e p r e s e n t s u r v e y , im p o r ta n t d e te r m in a n ts o f oonaum er d e c is io n - m a k in g . T h e ir r e l a t i v e im p o rta n c e v a r i e s a o e o rd ln g to th e m e r i t s o f d i f f e r e n t c a s e s and th e 57 s p e o i f l c n e e d s , s i t u a t i o n and s t a t u s o f aao h I n d iv id u a l* F o r th a p u rp o s a o f o l a r l f y l n g and u n d a r s ta n d in g th a e f f e c t i v e w e ig h t o f a a o h o f t h s s s f a c t o r s a s w a ll a s I t s o o r r a l a t l o n w ith th a o t h a r s t t h a t a b u l a t i o n and c a r a f u l a n a l y s i s o f th a r a s u l t s o f th a q u a s tlo n n a l r a s i s o f g r o a t im p o r ta n c e • H ara a r a f o r o u r li m l ta d p r o j e c t b a s io d e te r m in a n ts o f th a su rv e y * T hese f a c t o r s a r a w a ll known e le m e n ts i n aoonom ie s tu d y , w hloh c o u ld ba a s su a a d to a f f a o t oonsvuner d a o ls io n - m a k in g * 1* S o o ia l f o r c e s , w hloh c r e a t e a c c e p te d m odes of b e h a v io r and c u l t u r a l p a t te r n s * 2m The s o c i a l i m i t a t i v e n e s s and te n d e n c y o f p e o p le t o I m i t a t e and f o llo w th a co n su m p tio n p a t t e r n s o f th o s e i n t h a h ig h e r incom e g ro u p s o r o th e rw is e * 3* B a sio b l o l o g l e a l n e e d s o f in d iv id u a ls * It* S o o ia l n e e d s and s o o i a l acknow ledgem ent o f some b a s ic p a t t e r n s and t r a i t s c r e a t e d by p u b l l o i t y and s o c i a l r e c o g n itio n * ? 5* I n c r e a s e o f an h a b i t u a l way o f d o in g t h i n g s , w h ich e l i m i n a t e s th e d e c is io n -m a k in g and ch o ice * T h is i s a tre m e n d o u s ly I m p o rta n t f a c t o r * (Many tim e s th e f o r o e o f h a b i t i s p a r t i c u l a r l y n o t i c e a b l e when th e ^ F ra n o o ls P e r ro u x , Lea Comp te a de l a W atlon ( P a r ie s P r e s s e U n l v e r s l t a l r e de F ra n o e , 1Q I1 .9 J* p p . z o - z i* $8 o o n s w e r , th o u g h h l a incom e l e v e l h a a c h a n g e d, c o n tin u e a to buy aa h e d id b e f o r e w ith o u t c o n s id e r in g h l a r e a l n ee d s* ) 6 * The c o n s u m e r's incom e aa w e ll aa h l a e x p e c te d incom e i n th e f u tu r e * T h le f a c t o r h a a a s t r o n g in f lu e n c e on h l a d e c is io n -m a k in g * 7 . E x p e c ta tlo n o f f u t u r e p r i c e s and change i n th e econom io s i t u a t i o n . 8 * The a v a i l a b i l i t y o f goods and new m o d els and th e e x p e c ta tio n o f f u t u r e a v a i l a b i l i t y o f goods* L im i ta ti o n s o f th e p r o j e c t * The p o s i t i v e ap p ro ao h aa a p p lie d to o u r s p e c i f i c p ro b le m h a s i t s s h o rtc o m in g s . B e fo re p ro c e e d in g f u r t h e r , i t w ould be w e ll t o o u t l i n e them b r i e f l y * 1* The d e te r m in a n ts o r f a c t o r s i n d i c a t e d i n th e l i s t o f e i g h t a re n o t e x c lu s iv e and do n o t e x h a u s t a l l p o s s i b le f a c t o r s w h ich may come to l i g h t d u r in g a s tu d y o f th e a c t u a l phenomenon* 2* The o u ts id e i n f l u e n c e s l i k e l y to a f f e c t th e i n d i v i d u a l f a c t o r s a r e num ero u s, b u t i t was n o t p o s s i b le t o i n d i c a t e them o r to d is e n ta n g le t h e i r s h a re i n th e r e s u l t s o f th e s u rv e y s * E oonom lo, p o l i t i c a l , and w o rld s i t u a t i o n s and tr e n d s may b a s i c a l l y a f f e o t f o r some g iv e n tim e some consum er d e c is io n -m a k in g and th e r e s u l t s c o u ld a p p e a r i n o u r d a ta * I t was n o t p o s s i b l e t o ta k e i n t o 59 c o n s i d e r a t i o n a l l o f th o s e e v e n ts * 3* A ll c o n s ta n ts and o o - e f f l o l e n t s d is c o v e r e d fro m t h e r e s u l t s o f th e d a t a a r e s u b j e o t a t any t i n e t o ohange a c o o rd in g t o th e a c t u a l c h a n g e s i n s o o i a l l i f e * The n e c e s s a r y and f e a s i b l e c h a n g e s s h o u ld a g a in be b a s e d o n a v a l i d and r e l i a b l e su rv e y * T h e r e f o r e , th e s u rv e y s h av e v a l i d i t y I n s o f a r as th e y c a n be a s s ig n e d v a l i d i t y w i th i n a p e r io d o f tin e * It* Eoonom lo a n a l y s i s c a n , u s u a l l y , a p p ro a c h econom ic phenom ena fro m a m lo ro -o o o n o m le o r m aoro-eoonom lo p o i n t o f view * The p r e s e n t s tu d y b y p a s s e s t h e m lo ro - eoonom lo a p p ro a o h and g e n e r a l i s e s some i n d i v i d u a l o h a r - a o t e r l s t l o s * Due t o th e a p p ro a o h , some im p o r ta n t a d j u s t m en ts w i l l p ro b a b ly be m issed * *> • The l e g a l , p o l i t l e a l and s o c i a l s t r u o t u r e o f th e s o c i e t y a r e ta k e n as s t a t l o * C hanges i n th e s e s t r u c t u r e s o o u ld ch an g e th e w hole r e a c t i o n and com p ara t i v e w e ig h t o f th e d i f f e r e n t d e te r m in a n ts o f i n d i v i d u a l d e c is io n -m a k in g * The r e s u l t s a r e t h e r e f o r e v a l i d so f a r a s th e y a re a s s ig n e d v a l i d i t y o n th e a s s u m p tio n t h a t th e law s and r e g u l a t i o n s o f th e s o c i e t y a r e ta k e n a s s t a t i c * 6 * The v a r i a b l e d e f i n i t i o n s ta k e th e te c h n o lo g y o f th e eoonom lo sy ste m a s s t a t l o * C o n s e q u e n tly , th e s u rv e y r e s u l t s w ould be g r e a t l y m o d ifie d w ith th e p o s s i b i l i t y o f t e c h n o lo g i c a l I n n o v a tio n s and r e v o l u t i o n a r y 6o o h i n g i i . 7* I v t r j e f f o r t h a s boon l t d * t o make th o a u rv d y i r e l i a b l e , b u t th o r o a o y o t i l l bo a t a t l a t l o a l e r r o r a , i n - • i n o o r i t j ond la o k o f o o n u n l o a t l o n b etw e e n i n te r v i e w e r and I n te r v ie w e e a and many o th o r f a o t o r a w h ich o o u ld d o - o ro ao o th o v a l i d i t y o f th o d a t a c o m p ile d . I n a r o a o a r oh au o h aa th o p r o a o n t ono a o o r t a l n am ount o f o r r o r and ah o rto o m ln g i a ln o w ita b lo b o eau ao th o m oaaurom ont and a n a ly a la o f oonsum ora* d e e lo lo n -m a k ln g aa a f f o o to d by a d v e r t l a l n g in v o lv e s d la o n ta n g lln g a g r o a t num ber o f p a y o h o L o g ic a l, e m o tio n a l and l o g i o a l a a p o o ta o f t h o i r b e h a v io r . "C onaum era a ro i n d i v i d u a l human b e ln g a . ltaey a ro a l l d i f f e r e n t fro m ono a n o th o r ; and o v o n th o aamo p o o p lo w ary i n t h e i r f o o lin g a fro m tim e t o tim e ." * 0 E v i d e n t l y , p o o p lo " w ith a l l a o r t a o f d i f f o r o n t and c o n - f l i e t i n g m o tiv e * , do n o t alw aya know thom aolw oa w hat t h o i r m otiw oa a r o ; a n d , ovon i f th o y d o , th o y w i l l n o t alw aya ro w o a l t h o i r th o u g h ta u n d e r d i r e o t q u e s tio n in g ." * * How e v e r th e o b j e c t i v e o f th o p r e a o n t r e s e a r c h w i l l bo aohiow od i f acme d a t a and o o n e lu a io n a o f r o l o v a n t n a tu r e to th o p ro b lo m a ro fo u n d ao th o y c o u ld bo uaod i n f u t u r e r e a e a r o h . *°*dw ard c. B u ra k , T e x t and Caaoa I n M a rk e tin g —A S c i e n t i f i c A b r o a c h (E nglew ood C l i r r s , h . j . s P r e n t l c e - l l I b i d . , p p . $ 0 - £ l . CHAPTER IV AHALIBIS CP ASSUMPTIONS AND AXIOMS USED IH THE SURVEY The b a s io o b j e c t i v e o f th a s u rv e y m u st ba p r e - o l a a l y s t a t e d I n o r d a r t o a s t a b l i a h a o l a a r v a lu e and e f f e c t i v e w e ig h t f o r th a v a r io u s q u e s tio n s and d a t a w hich a r a in o lu d a d i n th a s u rv e y q u e s t i o n n a i r e s . L a c k in g a p r a e i s a s ta te m e n t o f th a o b je o tiv e and s i m i l a r l y o l a a r d e f i n i t i o n s o f a l l in q p o rta n t a s s u m p tio n s and axiom s w hich fo rm th a fra m e o f r a f e r a n o a o f th a p r o j e o t , th a com plex p ro b le m may ba e a s i l y m is u n d e rs to o d . Tha p ro b le m c o n s t i t u t i n g th a s u b je o t o f th a p r e s e n t r e s e a r c h i s r e l a t e d i n v a r io u s ways w ith o th e r s o o i a l and aoonom ie p ro b le m s . H ow everf to s im p lif y th a o o n p le x i n t e r r e l a t i o n s h i p s i t i s in d is p e n s a b le t o l i m i t and d e f in e th a p ro b lem and s tu d y th a f a o t s r e l a t e d t o i t w ith soma b a s i c a s s u m p tio n s and axiom s r e l e v a n t t o th a p r e s e n t p r o j e c t . I n t h i s c h a p te r th e s e b a s io o o n e e p ts , axiom s and a s su m p tio n s w h ich a r e u se d i n t h i s s u rv e y w i l l be o l a r i f i e d . I . DEFINITION OF THE FROBIEM The m ain o b j e o tlv e o f th e s u rv e y i s th e ex p 1 a n a - 61 62 t l o n , a n a l y s i s , and i n a lim ite d w ay , th a p r e d l o t l o n o f oonaum er d e o l s i o n -m aking aa a f f a o ta d by a d v e r t i s i n g and p u b l i o l t y . Tha f i n d i n g s nay p r o a a n t an o v e r ly g e n e r a l - la a d a x p l a n a t lo n o f r e a l i t y , b u t a good num ber o f l n d e - p a n d a n t v a r i a b l e s h a v e b a a n ln tr o d u o a d to g iv e th a a n a l y s i s o f th a p r o b la n a m ora a c c u r a te fram e o f r e f e r en ce t o a p a o l f i e s i t u a t i o n s . To f i n d p r a e l a a q u a n t i t a t i v e an sw ers t o th a v a r io u s added v a r i a b l e s o f th a q u e s t i o n n a i r e s , th a s u rv e y an d i n d u c tio n m ethod h aa b aa n w id e ly used* W herever th a u s e o f d a d u e tlv a r e a s o n in g was p o s s i b l e , h o w ev e r, and w here th a a s su m p tio n s o f th a p ro b lem w a rra n te d suoh r e a s o n in g , f u l l b e n e f i t was ta k e n fro m i t # I t o o u ld ba s a id t h a t a f e a s i b l e o o m b ln a tlo n o f d e d u o tlv e m ethod and s u rv e y te c h n iq u e h a s b e e n o f g r e a t h e lp I n r e e e n t eoonom lo s t u d i e s , I B eoause b y d e d u o tlv e lo g lo and u s e o f g e n e r a l i s a t i o n s , b a s io tr e n d s and te n d e n o le s o o u ld be d e te e te d and a n a ly s e d . B ut t o e s t a b l i s h s p e o i f l o v a r i a b l e d e f i n i t i o n s and p r e o ls e q u a n t i t a t i v e m o d a l i ti e s t o su o h g e n e r a l i s a t i o n s , th e u se o f a s u rv e y I s in d i s p e n s a b l e . An e f f o r t h a s b e e n made n o t o n ly to f i n d o u t th e * Jam es II, H e n d e rso n and R io h a rd B . (fcaandt, M io ro - K oononlo T h e o ry —A M aths m at l o a l A pproaoh (Hew Y o rk ! Ifo o ra w -H in book 6 0 . , I n o . , 1 $5 BV, p . I*. w o rk in g s o f th o d i f f e r e n t d e te r m in a n ts and t h e i r p r e o ls e q u a n t i t a t i v e c o r r e l a t i o n , b u t t o u se th e e e fo rm s from th e p o i n t o f view o f i n v e r t l b l l i t y — o n e o f th e m oat u s e f u l c h a r a c t e r i s t i c s o f r e s e a r c h m odels* I n v e r t l b l l i t y m eans o o m putlng any o f th e unknown e le m e n ts i f th e r e s t o f th e e le m e n ts a re e v i d e n t fro m e x p e r ie n c e , fro m s u r v e y , o r fro m o b s e rv a tio n * I I * CONCEPTS Prom t h e p r e v io u s d is o u s s l o n , i t i a d e a r t h a t th e q u e s tio n s and f a c t a in c lu d e d i n th e p r e s e n t s u rv e y q u e s t i o n n a i r e s a r e ch o se n and e s t a b l i s h e d w ith n e c e s s a r y e x p l o r a t o r y a n a l y s i s to n arro w down th e an sw e rs t o s p e c i f i o r e l e v a n t o h o io e s* C o n s e q u e n tly , th e h i g h ly s t r u c t u r e d , m a ile d q u e s t i o n n a i r e s , p o s in g th e p o s s i b le a l t e r n a t i v e s f o r th e r e s p o n d e n t t o eh o o se fro m , h a v e b e e n b u i l t on s s e t o f a s s u m p tio n s w h ich c o n s t i t u t e th e b a s i s o f th e p r o j e c t* E v e ry v a r i a b l e d e f i n i t i o n in c lu d e d I n th e q u e s tio n n a i r e I s to h e l p c l a r i f y th e o e n t r a l p ro b lem o f th e r e s e a r c h * E v i d e n t l y , i n f o r m u l a ti o n o f th e q u e s t i o n n a i r e s , $ some c o n c e p ts , a s s u m p tio n s and axiom s h av e b e e n ta k e n f o r g r s n te d * How c l a r i f i c a t i o n o f th e s e o o n o e p ts and assum p t i o n s w i l l be i n d i s p e n s i b l e f o r th e i n t e r p r e t a t i o n o f th e o o m p lled d a ta * On* s h o u ld n o t* t h a t a o o n o ap t o r an axiom i s n o t th a phenom enon o r f a c t I t a s i f • T hosa l o g i e a l t o o l s do n o t a x l s t o u ts l d a th a s t a t a d fram e o f r e f e r a n o e o f th a s u rv e y *2 I n r e a l i t y , th a s o o o n o a p ts and axiom s a ra th a fo u n d a tio n o f a l l human co n sm m leatio n a • Thay a x p l a ln and oom m unloata I n a v e ry s p a o i a l sa n sa p r a e l s a l y a l l eompo- n a n ts o f a p ro b lem *3 C l a r l f l o a t l o n o f c o n o a p ts w i l l g iv e mora d a p th and m aanlng to th a oom pllad d a t a . I n a l l s o e l a l and aconom lo su rv e y s th a r a a r a f o u r o a t a g o r la s o f e o n o a p ts w hloh sh o u ld ba o o n s ld a r a d . T haso o a t a g o r la s a r a : d e f i n i t i o n a l , t e e h n o l o g l o a l, b e h a v i o r a l , and I n s t i t u t i o n a l o r o r g a n i s a t i o n a l c o n o a p ts . P s f l n l t l o n a l o o n o a p ts . T hasa o ra th a a p r i o r i r u l a s and ld a a s t h a t ona w orks w ith . They m ust ba a x a o t I n n a tu r e and a e o u ra t* b y d e f i n i t i o n . Tha g iv e n d a t a s h o u ld p r o v id e th a a x a o t know ledge o f i n t e r - r e l a t i o n s h i p s betw een th a d i f f e r e n t v a r i a b l e s o f a p r o j e c t . The o n ly d a f a o t o f any p ro b lem w ith d e f i n i t i o n s I s t h a t th a y may n o t I n soma o a s e s ba p r e c i s e en o u g h . S r i l l l s m J . Goode and P a u l K. H a t t , M ethods i n fto o la l R e s e a rc h (Haw Y o rk : M oO raw -H lll B o o k g o . , m o . , 195217771^1 ^ M o rris R . Cohan and E r n e s t V a g a l, An I n t r o d u c t i o n to L o g ic and B o l e n t l f l o M ethod (New Y orks H a ro o u rt# s r a o e , 19314. ; , c n a p 7 e r "12. 65 T a o h n o lo g lo a l o o n o > p ti. T e c h n o lo g ic a l o o n o e p ts e x p l a in and d e s c r ib e th a i n t e r - a o t i o n a o f b a s i c a l l y p h y a lo a l and ta o h n o lo g io a l p ro o a a a a a i n an eoonom lc o r a o o l a l p h an o n an o n u n d a r s tu d y . Thay a r a n o t v a ry r a l a ▼ a n t to th a p r a a a n t s p a o l f i e s u rv e y p r o j e c t b u t a r a v a ry im p o r t a n t whan d e a lin g w ith p ro b la m s o f p r o d u c tio n . B e h a v io r a l o o n o a p ta . B e h a v io r a l o o n o ap ta a r a r u l a s and g iv e n d a t a d a a o r ib in g human b e h a v io r and m o ti v a t i o n and th a i n t a r - r a l a t i o n a h i p o f th a d i f f e r a n t f a e t o r a a f f a o t i n g human b e h a v io r* Thay a r a b aa ad o n human r a - aponaa t o g iv e n s t i m u l i . I t l a e v id e n t t h a t t o d a a o rlb a and a n a ly s e human b e h a v io r and to m easu re s t i m u l i and human r e a o t l o n a i s a v a ry d i f f i c u l t problem * Human b e h a v i o r o a n n o t ba p e r f e c t l y re d u o e d to m a th e m a tic a l axiom s and c o n c e p ts * F o r exam ple* th a u t i l i t y th e o r y and i n d i f f e r e n c e cu rv e* p r o j e c t i n g man as homo cc o n o m lc u a* do n o t g iv e a r e a l p i c t u r e o f human eoonom io d e c is io n - m a k in g . I n th a q u e s tio n n a i r e a th a a tte m p t h a s b e a n made to s tu d y th a r a a o t i o n o f consum ers t o soma g iv e n s t i m u l i by v a r io u s m eans* I n s t i t u t i o n a l c o n c e p ts * I n s t i t u t i o n a l c o n c e p ts d a a o rlb a th a b a s ic o p e r a t in g d e te r m in a n ts w hloh a r a im p o se d on o u r fram e o f r e f e r a n o e by o r g a n i s a t i o n s t r u o t u r e * o r fro m o u ts i d e o r g a n is a tio n s * i n s t i t u t i o n s and law s* I n 66 th e e a s e o f th e p r e s e n t su rv e y * th e e x i s t i n g e o o i a l end eoonom lo o r g a n i s a t i o n o f p r i v a t e p r o p e r ty and m ixed o a p i t a l i a t i e sy ste m h a s b e e n ta k e n a s a n i n s t i t u t i o n a l * o r g a n i s a t i o n a l o o n e e p t o f th e re a e a ro h * I I I . AXIOMS AND ASSUMPTIONS I n eoonom lo e x p la n a tio n s a n axiom l a a s e l f - e v id e n t and g e n e r a lly a c c e p te d p r i n c i p l e . I t i s assum ed to h e t r u e and c o n s id e r e d t o be a p r i o r i t r u t h o f a th e o re m . Axioms a r e th e b a s i s o f eoonom lo a b e t r a o t th in k i n g a s v e i l a s th e b a s i s o f m a th e m a tle s . F o r e x am ple* i n m a th e m a tic s we h av e B u o lld * s axiom s* o r common n o tio n s * su c h a s " T h in g s e q u a l t o th e same t h in g a re e q u a l to e a c h o th e r * " and* " I f e q u a ls a r e added to e q u a ls th e r e s u l t s a r e e q u a l* " e t o e t e r a . T h e re i s a f i n e d i s t i n c t i o n b etw e en axiom s and a s s u m p tio n s . A ssu m p tio n s a r e n o t g e n e r a lly c o n s id e r e d a p r i o r i tr u t h * A s e t o f a s su m p tio n s upon w hich th e s u b - J e e t I s b u i l t i s o a l le d th e fu n d a m e n ta l a s s u m p tio n s . I n eoonom lo a n a l y s i s and th e o r y many e m p ir i c a l a s su m p tio n s a re u s e d . T h ese a r e s ta te m e n ts th e r e l i a b i l i t y o f w hich i s b a s e d upon a lim ite d num ber o f o b s e r v a tio n s su c h a s su rv e y s* q u e s tio n n a ir e s * e x p e rim e n ts * o r th e f i n d i n g s o f o th e r s c i e n c e s . They a r e n o t n e c e s s a r i l y s u p p o rte d by b a s io axiom s o r t h e o r y . S m p lr ic a l a s su m p tio n s o o u ld aoa* tim e a be u ae d t o t e a t th a v a l i d i t y o f a g a n a r a l eoonoado t h e o r y . Mumeroua aaau m p tio n a hava b een u aa d i n th a au rv ey * Thay a r a a ta ta m a n ta f o r w hloh wa allo w p a r t i a l r e l l a - b i l i t y and h o ld t h a t th a y a r a , i n g iv e n o o n d itio n a and w ith n a e a a a a ry r e a t r a l n t a # p ro b a b ly t r u a . M arkov p ro o o aa a a a u m n tlo n . I t l a aaaumed t h a t th a oonaum ere* d a o la lo n i n f a v o r o f a b ran d o r a p ro d u o t doaa n o t ra m a ln e o n a ta n t b u t o hangaa fro m p a r lo d to p e rio d * Tha ohanga l a o a l l a d Markov p ro o aaa# a lth o u g h r a a l p r a f a r a n o a a and r a a l ra a a o n a f o r tw itc h in g may i n f a c t a x l a t . Tha b a h a v lo r o f la r g e num bera o f in d iv l d u a la i n a m a rk e t o o u ld ba m eaau red by p r o b a b i l i t y c a l e u l a t l o n a A B xpootod inoom a a q u a tio n . Tha lnoom a a q u a tio n o f i n d i v i d u a l a z p a n d ltu r a a i a in o u r a u rv a y m o d ifie d i n a aa n aa th a t# a c c o rd in g to t h a aaau m p tio n a# i n d iv l d u a la may go beyond t h e i r a o t u a l lnoom a i f th a y a n t i c i p a t e f u t u r e ln o r a a a a i n t h e i r inoome* T hla p o in t h a a b ee n added aa a f a o t o r i n th a q u e a tio n n a lr e * ^ F ra n k M * Baaa# R o b e rt D* B u a a a ll# and o th e r a ( e d a .) » M a th e m a tic a l M odela and Method a i n M a rk e tin g ( Homewooa# m i n o i e s k io n a rd b . Irw in # I n c .# 1 9 6 1 )7 pp* 103-lO q.; R* B . M a ffe l# • B rand P re fe re n o e a and S im p le Markov P r o o a a a ," O o e ra tlo n a R a a a a rc h . No* 8 ( I 9 6 0 ) , no* 210- 218 * --------------------------------------------- S a le s d eo av o o n a ta n t. I n th e ab sen o e o f a d v e r t l s - ln g and p u b l l o l t y i t i s assum ed t h a t a f t e r a p e r io d o f tin e * a a l e s o f a p r o d u e t b e g in to d e e r e a s e . B ut th e de g re e o f d e o re a a e i n a a l e s depende on th e s i t u a t i o n o f th e m a rk e t and i t a c o m p e titiv e n e s s and a la o on th e n a t u r e o f th e p r o d u e t.£ S a t u r a t i o n l i m i t . The a ssu sq p tlo n i s t h a t th e e f f e c t o f a d v e r t i s i n g and p u b l i e i t y on eonsum er d e o i s l o n - m aking i s n o t a c o n tin u o u s f u n o tio n b e e a u se t h e r e i s a s a t u r a t i o n l i m i t beyond w hich a d v e r t i s i n g does n o t i n f lu e n c e eonsum er d e c is io n - m a k in g . K xogeneous v a r i a b l e s v e r s u s en d o g en so u s v a r i a b l e s . V a rio u s f a e t o r a have b e e n o h o aen as r e l e v a n t t o th e s u r v e y . Many o t h e r f a e t o r a have b e e n ta k e n f o r g r a n te d f o r th e aa k e o f s i m p l i f i c a t i o n as h a v in g n o e f f e e t i n th e c o v a r i a t i o n s o f d a t a . T hese ex o g en eo u s o r dorm ant f a e t o r a may i n r e a l i t y h e o f some im p o rta n c e i n th e a n a l y s i s and i n some r a r e e a s e s a f f e o t th e e o n o lu s io n s . Such s h o r t com ings i n oom plex s t u d i e s a r e i n e v i t a b l e . W eight o f f a e t o r a . The fre q u e n o y o f o e e u rre n e e L . V id a le and H. B . W o lfe, "An O p e r a tio n s - R e s e a ro h S tu d y o f S a l e s R esponse to A d v e r t i s i n g .* O p e ra tio n s R e a e s re h , V o l. V# N o. 3 ( J u n e , 19571# p p . 3 7 0 -3 7 3 • 69 and d i s t r i b u t i o n o f th e f a o t o r a and th a n a tu r e o f t h e i r d l a t r l b u t l o n among th e o o m p lled d a t a l a th e s t a t i s t i c a l b a s i s f o r th e v a lu e g iv e n e a c h f s o t o r . B e s id e s assu m in g t h a t th e f a c t o r s and d e te r m in a n ts o f d e o ls lo n -m a k ln g a r e com plex* i t i s f u r t h e r assum ed t h a t th e o o m p a rs tiv e w e ig h t o f e a c h d e te r m in a n t i s n o t th e same on e v e ry o c c a s io n and t h a t i t v a r i e s w ith th e ty p e o f p r o d u c ts and a e r v i c e s in v o lv e d . C o n se q u e n tly * th e p r o d u c ts and s e r v io e a a r e a rra n g e d i n 12 b a s ic c a t e g o r i e s - - a s s e e n i n L i s t "JLa o f th e q u e s t i o n n a i r e s . T h is g ro u p in g i s im p o rta n t f o r th e c o r r e l a t i o n o f th e a u rv e y d a t a . I t i s ta k e n f o r g r a n te d a l s o t h a t co n su m ers a re b e h a v in g i n t h e i r p e r s o n a l i n t e r e s t b u t w ith a v a r i e t y o f m o tiv e s . C o n se q u e n tly * th e r e l a t i v e v a l i d i t y o f v a r io u s t h e o r i e s o f consum er b e h a v io r l a a c c e p te d . The game and p r o b a b i l i t y th e o ry * f o r exam ple* i s a c c e p te d a s w e ll as th e p u r e l y r a t i o n a l th e o r y o f i n d i v i d u a l d e c i s i o n . CH APTER V OPERATIONAL FRO BIERS OF THE SURVEY PROJECT An a n a l y t i c a l e v a l u a t i o n o f consum er p r e f e r e n o e and d e c is io n -m a k in g a s a f f e o ta d by a d v e r t i s i n g an d pub l i c i t y d ep en d s upon r e l i a b l e and v a l i d d a t a , w hich i n t u r n d e p e n d s upon th e m anner i n w h ich th e f o llo w in g b a s io o p e r a t i o n a l p ro b lem s a re h a n d le d : ( a ) th e p ro b lem o f s a m p lin g , (b ) th e medium f o r r e a c h in g th e p e o p le , and (c ) th e s t a t i s t i c a l v e r i f i c a t i o n o f th e d a t a o b ta in e d . I . ESTABLISHMENT OF THE SAMPLING M ODEL The sa m p lin g m odel i a d e s ig n e d t o r e p r e s e n t popu l a t i o n o f a l l 50 s t a t e s . The m a s te r p r o b a b i l i t y aam ple i s b a s e d o n th e i 960 c e n s u s d a t a and h a s b e e n e s t a b l i s h e d i n c o n s i d e r a t i o n o f th e f o llo w in g b a s ic p o i n t s and con s t r a i n t s : 1 . The U n ite d S t a t e s i s ro u g h ly d iv id e d i n t o 20 g e o g ra p h ic s o n e s . E ach zone i s o r e a te d t o have a ro u g h ly e q u a l p o p u la tio n o r a p p ro x im a te ly 1 /2 0 o f th e U n ite d S t a t e s p o p u la tio n o r o f n in e m i l l i o n . 2 . Baoh s t a t e i s o o n ta in s d e n t i r e l y w i t h i n a s i n g l e s o n s . 70 71 3 * E ach io n * h a s b e e n e s t a b l i s h e d w ith th e aim o f a o h le v ln g maximum p o l i t i c a l * s o c ia l* eoonom lo and o u l t u r a l h o m o g en eity * If* W ien ev er o o n s l a te n t w ith th e p r e c e d in g aim* th e a t a t e a w i t h i n e a o h aone b o r d e r eao h o th e r* P o l l t l o a l c l a s s i f i c a t i o n o f a t a t e a l a m a in ly a c - c o r d in g to th e d e g re e o f l i b e r a l i s m o r c o n s e r v a tis m In e a o h s t a t e . I t o o u ld be a a ld t h a t e x o e p t I n th e S o uth* th e p r e s e n t d ay l i b e r a l s a re m a in ly l> em o eratlc and th e p r e s e n t day o o n a e rT a tiv e s a re m a in ly Re pub 11 o a n . The i 960 p r e s i d e n t i a l e l e c t i o n r e s u l t s a re th e b a s i s f o r t h i s c l a s s i f i c a t i o n . I t was o h o sen b e o a u se th e e l e c t i o n was c lo s e and b eo a u se th e eam p alg n s em p h asised d o m e stlo eoonosiic I s s u e s p e rh a p s more th a n u s u a l* I n t h i s c l a s s i f i c a t i o n a d v ic e h a s b e e n o b ta in e d fro m th e P o l i t i c a l S o le n o e D ep artm en t o f th e U n iv e r s it y o f C a l i f o r n i a Los A n g eles* Zone 1— H a w a ii* H aw aii I s s u f f i c i e n t l y u n iq u e to be a o n e - s t a t e z o n e , th o u g h I t s p o p u la tio n I s l e s s th s n l / 1 0 t h o f th e d e s ir e d f i g u r e o f 9 m illio n * The t r o p l o a l I s l a n d s t a t e I s I s o l a t e d by th o u s a n d s o f m ile s fro m any o th e r s t a t e . I t s f o u r t h l a r g e s t b u s in e s s I s to u rism * Zone 2—A laska* Alaska Is s u ffic ie n tly unique to be a o n e-state tone d e sp ite I t s sm all population* Like 72 H aw aii* A la s k a i s i s o l a t s d fro m a l l th a o t h e r s t a t e s * I t h a s th e l a r g e s t area* lo w e s t p o p u la tio n and p o p u la tio n d e n s ity * and th e o o l d e s t c lim a te o f a l l th e U n ite d S ta te s * Zone 3—■W ashington, M ontana* Hew M ex ico , M in n e s o ta * T h is i s one o f th e t h r e e to n e s c o n ta in in g n o n -b o rd e rin g s t a t e s * th e o t h e r two b e in g Z ones 12 and 15* The s t a t e s i n t h i s so n s a r e u n i t e d by a p e r o a p l t a lnoom a r a n g in g fro m $100 above to IlfOO below th e i 960 n a t i o n a l a v e ra g e o f $ 2 *0 0 0 .1 Zona it— O regon* Idaho* U tah* A rizo n a* Wyoming* C o lo ra d o . The s i x s t a t e s I n t h i s so n e a re u n ite d by a p e r o a p l t a incom e r a n g in g fro m $100 above t o $ 1^ .00 b elo w th e n a t i o n a l a v e ra g e and by a p o p u la tio n p re d o m in a te ly R e p u b lle a n * Zone 5 — C a l i f o r n i a * C a l i f o r n i a i s s u f f i c i e n t l y u n iq u e t o be a o n e - s t a t e zone f o r th e am ple and w e l l - known r e a s o n s o f i t s c lim a te * grow th* c o n s ta n t p o p u la tio n In flo w * and h ig h a v e ra g e incom e and s a l a r y le v e l* Zone 6— H evada* N evada I s s u f f i c i e n t l y u n iq u e to be a o n e - s t a t e sone b eo a u se o f i t s g am b lin g in d u s t r y and s e v e r a l o th e r f a c t o r s ; Nevada i s th e s e v e n th l a r g e s t *See i 960 U* 3* C ensus o f P o p u la tio n * Vol* I 73 s t a t e tout h u e th e second lo w e s t p o p u la tio n and p o p u la tio n d e n s ity * T h is p o p u la tio n i s n e a r l y e n t i r e l y o o n o e n tra te d o n th e s t a t e ' s C a l i f o r n i a b o r d e r . Though N evada h a s few n a t u r a l r e s o u r o e s , th e p e r o a p l t a lneom e i s v e ry h i g h . Zone 7 — N o rth D akota* S o u th D akota* N e b ra s k a , K ansas* Io w a . The f iv e fa rm in g s t a t e s c o n s t i t u t i n g t h i s so n e a l l h a v e som ewhat b elo w a v e ra g e p e r o a p l t a inoom es and a r e a l l h ig h ly R e p u b lic a n * Zone 8 — O klahom a, A rk a n s a s . K entuoky* T en n essee* V ir g in ia * N o rth C s r o l l n a . The p e r o a p l ta lneom e i n th e s e s i x s t a t e s ra n g e s fro m $300 to $800 below th e n a t i o n a l a v e ra g e * The so n e w hloh th e y o o n s t l t u t e i s f a i r l y to h e a v i l y c o n s e r v a tiv e p o l i t i c a l l y , th e r e b e in g a c o n s id e r a b le S o u th e rn D e m o o ra tie i n f l u e n c e . Zone 9 — T e x a s * T ex as i s a o n e - s t a t e sone due to i t s 9 .6 m i l l i o n p o p u la tio n , i t s w e ll known p o l l t l o a l co n s e r v a tis m and g r e a t o i l , o a t t l e and t e o h n l o a l r e s o u rc e s * Zone 10— I l l i n o i s * M is s o u r i. T hese a d ja o e n t s t a t e s have a com bined p o p u la tio n o f llf. m i l l i o n and a r e p o l i t i c a l l y e v e n ly b a la n o e d * Zone 11— L o u is ia n a * M is s is s ip p i* Alabama* O e o r g la , S o u th C a r o l in a * The "d e e p s o u th " sone i s h ig h ly c o n s e r v a tiv e * I t i s p ro b a b ly th e m o st s o l i d l y I n t e g r a t e d b lo o k i n th e U n ite d S t a t e s fro m a a o o i a l p o in t o f v ia * . F o r o a p l t a lnoom a l a v e ry low th ro u g h o u t* Zona 12—W laoonaln* I n d i a n a * T hese tw o a t a t e a h av e a n a p p ro x im a te ly a v e ra g e p a r o a p l t a Incom e and a r a BM >derately to h e a v i l y R e p u b lic a n * Zone 13— M ic h ig a n . M ic h ig a n l a q u a l i f i e d t o b e a o n e - a t a t e sone* I t s p o p u l a t i o n l a 7*6 m illio n * T h ere a r e no b o r d e r in g a t a t e a h a v in g a s i m i l a r eoonom lo o r p o l i t l o a l make up* Zone 111— O h io * O hio q u a l i f i e s aa a o n e - s t a t e so n e b e o a u se o f I t s p o p u la tio n o f 9*7 m i l l i o n and th e f a o t t h a t no b o r d e r in g a t a t e a a re s i m i l a r t o I t * Zone IS — F lo r id a * M eat V i r g i n i a * T h ese s o u th e r n a t a t e a h av e below a v e ra g e p e r o a p l t a Incom es b u t a r e d i s t in g u i s h e d fro m t h e " d e e p s o u th ” I n t h a t th e y a r e f a r le a a o o n s e r v a tlv e • Zone 16— M aine* V erm ont* Hew H a m p sh ire. T h ese n o r th e r n New E n g lan d s t a t e s h a v e i n ooauaon p e r o a p l t a Incom es som ewhat below t h e n a t i o n a l a v e ra g e, a h eav y t o e x tre m e ly h eav y R e p u b lic a n p r e f e r e n c e , and v e ry o o ld o lim a te * The p o p u la tio n s h a v e many s o o l a l o h a r a o t e r - i a t l o s I n oonmon* 75 Zone 17— M a s s a c h u s e tts . C o n n e c tic u t. Rhode I s l a n d , T hese Hew E n g lan d s t a t e s h a y s w a ll above a v e ra g e p e r o a p l t a In o o m es. I n t h e i 9 6 0 e i e o t l o n th e y were h ig h ly D e m o c ra tic , th o u g h I t m u st be n o te d t h a t M a s s a c h u s e tts and C o n n e e tle u t h av e la r g e C a th o lic p o p u la tio n s * Zone 18— Hew Y o rk * P o p u la tio n a lo n e oan j u s t i f y Haw Y ork a s a o n e - s t a t e sone* The p e r o a p l t a lnoom a i s v e ry h ig h —4 7 0 0 above t h e n a t i o n a l lneom e a v e ra g e . I t te n d s to be D esu > o ratlo . Zone 19— P e n n s y lv a n ia * P e n n s y lv a n ia i s q u a l i f i e d to be a o n e - s t a t e s o n e , h a v in g a n 11 m i l l i o n p o p u la tio n . P o l l t l e a l l y , i t I s f a i r l y e v e n ly b a la n c e d * Zone 20— Mew J e rs e y * D elaw are* M ary lan d . T hese s t a t e s h av e an above a v e ra g e p e r o a p l t a inoome an d a r e , p o l l t l o a l l y , f a i r l y e v e n ly b a la n o e d * Zone 2 1 —W ashington* P . C. W a sh in g to n , D . C . I s s u f f i c i e n t l y u n iq u e t o b e a o n e - s t a t e so n e b eo au se I t h a s no v o te I n any n a t i o n a l e l e c t i o n , b e o a u se o f th e h ig h p e r o e n ta g e o f p o p u la tio n w o rk in g i n th e O overnm ent, and b e o a u se th e p e r o a p l t a inoom e i s e x tre m e ly h ig h ($ 8 0 0 above th e n a t i o n a l a v e r a g e ) . The p o p u la tio n i s o n ly .7 m i l l i o n . Random o h o lo o o f a d d r e s s e s . The t a r g e t p o p u la tio n 76 o f co n su m ers o r th e s t a t i s t i c a l u n iv e r s e h a s b s s n sam p led by t h e m ethod w hloh seem s t o b e m o st e f f e c t i v e and f e a s i b l e i n t h i s s u r r e y o f n a tio n - w id e so o p e . 2 I n a la r g e p r o j e c t su c h a s t h i s c a s e , t o t r y t o g u a r a n te e an i d e a l p r o b a b i l i t y sam p lin g * t h a t i s t o g u a r a n te e t h a t e v e ry member o f t h e p o p u la tio n h a s t h e ch a n ce o f b e in g s e l e c t e d , i s a d i f f i c u l t i f n o t im p o s s ib le t a s k . To s e l e c t random n am es, th e te le p h o n e d i r e c t o r i e s o f th e e n t i r e U n ite d S t a t e s h av e b e e n u s e d . A t g iv e n i n t e r v a l s o f p a g e s , m easu red a t 1 /1 0 ln o h e s , th e nam es o f p e o p le i n e a c h l a r g e o r s m a ll l o o a l l t y h av e b e e n o h o s e n . The a d d r e s s e s o h o se n and u se d t o t a l 3 1 0 0 . I t i s a p p a re n t t h a t a te le p h o n e d i r e o t o r y sa m p lin g l i s t e x c lu d e s a num ber o f p e o p le w ith o u t te le p h o n e s ( o f low In o o m e ), a s w e ll a s th e v e ry h i g h e s t w ith u n l i s t e d te le p h o n e s .3 To c o u n te r th e s e s h o rtc o m in g s , i n m o st o f th e b i g c i t i e s , su c h as Hew Y o rk , S a n F r a n c i s c o , C h ic a g o , Los A n g e le s , and P h o e n ix , s p e c i a l h e l p o f d i f f e r e n t I n d iv ld u a l a to c o n d u c t s u r v e y s and c a l l s on p e o p le o h o se n a t random h a s b e e n u s e d . 2S sm uel B . R ichm ond, P r i n c i p l e s o f S t a t i s t i c a l A n a ly s is (Hew Y orks The R o n ald p r e s s d o . , iV b /J* P« 130. ^ W illia m J . Goods and P a u l K . H a t t , M ethods i n S o c ia l R e s e a rc h (Hew Y o rk s M cG raw -H ill Book com pany, i n o . , 1 ^ 2 ) , p . 217* . 77 To se n d b u s in e s s q u e s tio n n a ir e s * a d d r e s s e s o f la r g o and m e d iu m -site d b u a ln a a a o r g a n ia a tlo n a woro oho a on by a a t r a t l f l o d p r o b a b i l i t y sa m p lin g o f th o a o b u a in o a a o a w hloh d o a l w ith * m a n u fa c tu re o r a o l l th e p ro d u c ta i n L i a t A c o n ta in in g th a 12 o a ta g o r ia a o f oonaum ar gooda and s e r v ic e s * From aao h o a ta g o ry o f gooda t h a r a i a a known f ir m r a p r a a a n ta d i n th a s a m p lin g . P a ra o n a l c a l l s * l o t t a r a and ta la p h o n a o a l l s w ara u aad to o b ta in p o s i t i v e r e s u l t * and anaw era fro m t h l a group* I I * ANALYSIS OF THE QUESTIONNAIRES Tha f i r a t a a t o f q u a a tio n n a ir a a w ere a a n t t o eon* aum ara i n th a 21 t e r r i t o r i a l zonea o f th a U n ite d S t a t e a aa i n d i c a t e d and t h a o th e r a a t o f q u a a tio n n a ira a * s p e c i a l f o r b u s in e s s e s * w ara a a n t t o m a jo r and m e d lu m -slse d b u a ln a a a o r g a n ia a tlo n a th ro u g h o u t th a U n lta d S t a t e * • T h ara w ara many r e a s o n s f o r u s in g tw o s e p a r a ta q u a a tio n n a ir a a * F i r s t * a c o r r e l a t i o n o f th a q u e s tio n n a i r e r e a o t i o n s fro m tw o d i s t i n c t g ro u p s — consum ers and b u s ln e s s —was d e s i r a b l e . Second* th e consum ers c o u ld h a r d ly ba a z p a c ta d t o d e a l w ith su c h su rv e y p ro b le m s as th e in f lu e n c e o f a d v e r t i s i n g o n m a rk e t s a t i a t i o n * b ra n d s h i f t s and a a le s d ao ay c o n s t a n t . On th a o th e r hand* b u s in e s s f ir m s a r a l i k e l y t o b a a b le to g iv e s p e c i f i c an sw ers to th e s e p ro b le m s w h ich a f f e o t consum er d e c is io n * 78 m aking* T h ir d , any d e v i a t i o n i n d a t a o b ta in e d fro m th e a e two q u e a tlo n n a lr e a waa w o rth c a r e f u l a n a l y s i s . The r e l i a b i l i t y o f su rv e y r e s u l t s I s eo h an o ed when t h e d a ta fro m d i f f e r e n t s o u r c e s a re c o n s i s t e n t and c o h e re n t* I I I * CONSUMER QUESTIONNAIRE Q u e s tio n 1 * B e s id e s th e f a c t o r s o f a d v e r t i s i n g and p u b l i c i t y * o th e r f a c t o r s c o n s id e r e d to be o o - d e t e r a i n - a n t s o f oonsum er d e c is io n m a k in g a re l i s t e d * T he f a o t o r a o f incom e o r e x p e c te d ch an g e i n inoom e* p r ic e * change i n q u a lity * and e x p e c ta tio n o f change i n th e g e n e r a l eoonom lo s i t u a t i o n a r e in c lu d e d . A ll th e o th e r q u e s tio n s a r e d l r e o t l y o r i n d i r e o t l y c o r r e l a t e d w ith th e b a s i c q u e s tio n # 1 * Q u e s tio n s 2 - 7 * T hese q u e s tio n s a r e d e v is e d t o ch e ck r e l i a b i l i t y and show t h e v a r i a t i o n s and d e v i a ti o n s o f th e d a t a o b ta in e d fro m Q u e s tio n 1* Q u e s tio n s 8 - 9 . T hese q u e s tio n s gauge t h e lo n g - r u n e f f e o t o f o e r t a i n a d v e r t i s i n g and p r o v id e d a ta f o r a n a ly s in g th e d e g re e t o w h ich th e a d v e r t i s i n g f o r ea o h p ro d u o t l a a n e c e s s i t y and th e b a s is f o r consum er d e o l- s lo n m a k ln g * Q u e s tio n 1 0 . D e a ls w ith th e m o tiv a tio n s gauged i n Q u e s tio n s 8 -9 i n d e p th and d e t a i l * A d v e r tis i n g h a s two 79 d l a t l n e t r o l e a s ( 1 ) to o r e a t e r e c o g n i t i o n and aw araneaa o f th a com m odity, and ( 2 ) to p r a o i p i t a t a p u ro h a a a o f th a e o n a o d ity . Q u a a tio n 10 a u p p lla a th a consum ara w ith m ajo r b ra n d namea to a a a how th a y o o r r a l a t a t h a l r a o t u a l p u r - o h a a aa w ith th a d l f f a r a n t n am es. I t i a e x p e c te d t h a t th a d a t a fro m t h l a q u a a tio n w i l l i n d l o a t a a tr a n d e o n a la t a n t w ith th a t r a n d draw n fro m Q u e a tio n a 1 , 2 , and 9 . Q u a a tio n 1 1 . I n t h l a q u a a tio n th a ln f lu a n o a o f a d v e r t i a l n g and p u b l i c i t y on conaum er d a e la lo n -m a k ln g l a d a a l t w ith i n d i r o o t l y . I t i a aaaum ed h a r a t h a t w h at oon- aum ara o o n a ld a r t o ba a o o l a l , p r o f a a a l o n a l , and p r e a t i g a r a q u lra m a n ta h aa b aa n l a r g e l y a a t a b l i a h a d by a o e i a l p u b l i c i t y and a d v e r t is in g * t t i a a t l o n 1 2 , T h la w e ig h te d , a p a o if le a c t i v i t y - e a n ta r a d q u a a tio n i a co n o a rn a d w ith a ra a a o f oonaum ar d a o la io n -m a k in g t h a t a r a l l k a l y to b a w a ll rem em bered* Tha d a t a o b ta in a d a ra eom parad and o o r r a l a t a d w ith d a t a fro m Q u a a tio n 1 . Q u a a tio n 1 3 , T h la q u a a tio n d a a la w ith th a p a o u l l a r a f f a e t o f a d v e r t i s i n g w hloh o o u ld ba o a l l a d th a c h a n n a lin g o f oonaum ar d a o la lo n -m a k in g * Prom a tu d la a w hloh h a v e b aan m a d a .it l a e v i d e n t t h a t eo n au m ara, whan th a b ra n d th a y h av e b a a n b u y in g l a n o t a v a i l a b l e and a la o whan th a a d v a r t i a l n g o f t h l a b ra n d h a a b a a n d la o o n tln u e d , a lm o a t 80 I n v a r i a b l y t u r n to th a m oat h e a v ily a d v e r t i s e d b ra n d o n th a m a r k e t. No m a tte r w h at t h e i r p r e v io u s l o y a l t y was* when o th e r p r e d i s p o s i t i o n s do n o t i n t e r f e r e , a d v e r t i s i n g i s p o w e rfu l and a f f e o t i v e en ough to o r e a t e I t s e l f a b a s i s f o r t h e i r im m ed iate d e o la lo n s * Q u e s tio n ill-# T h is q u e s t i o n d e a l s w ith th e p ro b le m o f A e t h e r th e oonsum er u s e s a d v e r t i s i n g a s a t o o l o f deeislon*»m aking (w hen he h a s a lre a d y d e c id e d w hat t o buy and i s s im p ly c h e e k in g p r l o e s and f i n d i n g o u t w here t o g e t th e co m m o d ity ), o r w h e th e r a d v e r t i s i n g i s th e p rim a ry f a c t o r i n th e c r e a t i o n o f th e consum er* a m o tiv a tio n and i n i t i a t i o n to buy* A t th e end o f th e q u e s t i o n n a i r e , f o r th e p u rp o s e o f c l a s s i f i c a t i o n , we a s k e d f o r th e i n d i c a t i o n o f m ale o r f e m a le , and i n d i c a t i o n o f th e in c o m e, w h e th e r I t waa h ig h , lo w , o r medium* IV . BUSINESS QUESTIONNAIRE Q u e s tio n I (a* b ) . The q u e s tio n i s in te n d e d t o f i n d o u t th e n a tu r e o f th e p o s i t i v e and n e g a tiv e r e l a - tlo n a h lp b etw e en a d v e r t i s i n g and s a le s * The r e l a t i o n o f a d v e r tis e m e n t and i t s d i s c o n t i n u a t i o n t o s a l e s i s im p o r t a n t t o a n a ly s e * Q u e s tio n s 2 - 3 * T h is q u e s tio n w i l l p ro v id e ad d ed 81 d a t a on th a e f f e c t i v e n e s s and tim in g o f a d v e r tis e m e n ts I n r e l a t i o n to a a le s * Q u e s tio n U . A o haok u p o n and a d i r e o t v e r i f i c a t i o n o f Q u a a tio n 1* Q u a a tio n 5 * I t a p u rp o a a l a to o b t a i n m ora i n f o r m a tio n on d a t a o b ta in e d fro m Q u a a tio n 1 (a). Tha aim i a to f i n d a " v a r i a b l e d e f i n i t i o n " o r a o o a f f l o i e n t f o r th a a f f a c t a o f a d v e r t i a i n g i n term # and m o d a lity o f tim e * Q u a a tio n 6 * A fa a d b a o k and a n o th e r a p p ro a o h t o th a aama i d e a o f r e l a t l o n a h l p o f a d v e r t i a i n g and p u b l i c i t y t o s a le a * Q u a a tlo n a 7* 9 * T hese q u e s tio n s a ra t o g a t h e r d a t a on how* i n an o lig o p o ly * a d v e r t i s i n g a f f e e t a oonaum ar d e o la io n -m a k ln g d i r e c t l y . I n an o l i g o p o l i s t i c i n d u s t r y w here co n su m ers a r e som ew hat bound t o buy fro m a few e s t a b l i s h e d firm s * how f a r d o es a d v e r t i s i n g in f l u e n c e th e o o n s u s » r* a l o y a l t y to a b r a n d t Q u e s tio n 8 * The r e s u l t s o f t h i s q u e s t i o n a r e t o be eom pared and c o r r e l a t e d w ith th o s e i n th e oonaum ar q u e s tio n n a ir e * Q u e s tio n 1 . V . VERIFICATION OF DATA RECEIVED I t l a im p o r ta n t t o t e a t and v e r i f y th e d i f f e r e n c e s 6 2 b e tw e en t h e r e s u l t s o f s u rv e y s a t d i f f e r e n t tim e a o r d i f f e r e n t aam plea o r ev e n d i f f e r e n t q u e a tlo n e on th e aerne te a t * T h e re a r e Y a rlo u a m ethoda o f d o in g t h l a w hloh a re a p p lie d i n th e p r e a e n t su rv e y * P a c t u a l v e r i f i c a t i o n . T h la o o n a la ta o f v e r i f y i n g a c t u a l l y by a n o th e r d e p th I n te r v ie w o f th e p e o p le who h av e f i l l e d I n t h e q u e a tlo n n a lr e t o aee I f th e y h av e known o o r r e o t l y w h at th e y h av e a t a t e d and h av e b e e n t e l l i n g th e t r u t h * F a c t u a l v e r i f i c a t i o n i a a v e ry I m p o rta n t m ethod b u t v e ry e x p e n s iv e to u a e I n econom ic r e s e a r c h e s and su rv e y s* T h la m ethod h a a b e e n u aed by a o t u a l l y c o n t a c t in g a t random i n th e Loa A n g eles a r e a some o f th e in te r v ie w e e a and o o m paring th e I n te r v ie w r e s u l t s w ith th e q u e s tio n n a i r e r e c e iv e d fro m th e same p e o p le * I n t e r n a l c o n s is te n c y o r fe e d b a c k m eth o d * A n o th er d e v io e i a t o t r y t o u n d e r s ta n d and f i n d o u t th e r e a l a t t i t u d e o f th e in te r v ie w e e o n s p e c i f i c q u e s tio n s by a s k in g some q u e s tio n s w hloh a r e d i f f e r e n t i n w ords b u t s i m i l a r I n m eaning* T h la c a n d e te rm in e th e p e r c e n t o f f a ls e h o o d i n th e p r e v io u s an sw ers* I t s h o u ld be n o te d t h a t th e d e g re e o f in a o c u ra o y i a n o t an I n d i c a t i o n o f d is h o n e s ty o n th e p a r t o f th e in te rv ie w e e * Many p e o p le te n d t o anaw er q u e s tio n s i n a c e r t a i n way w ith o u t th in k in g a b o u t i t * ( I n v a r io u s r e a d e r s h i p s t u d i e s made by f ir m s su c h a s D a n ie l S t a r oh o r A . C. N ie ls e n Com pany, o r th a M ark et R a sa a ro h C o r p o r a tio n o f A m erica* a e o u p la o f Im a g in a ry a r t i o l a tlt X a a a ra ad d ed to th a r a a d a r a h lp s tu d y t o sa a i f th a I n te rv ie w e e i n d l o a t a a t h a t h a o r aha h a a r a a d th a a r t i o l a . ) S t a t l a t l o a l v e r i f i c a t i o n s . A f te r t h a t a b u l a t i o n o f th a d a t a and t h a l r a n a l y s i s and c o r r e l a t i o n * t h a a l s p l a and n o ra o o n a o n ly u se d m e th o d s o f a t a t i a t l o a l ▼ a r lf io a tio n a ra u se d to t a a t th a o o n s ls ta n e y o f t h a r e s u l t s . These v e r i f i c a t i o n * w i l l ba show n I n e h a p ts r s r a l a t a d t o th a t a b u l a t i o n . C o n tr o lle d e x p e r im e n ta tio n . T h is m ethod o a n ba h e l p f u l a f t a r s u r v e y m a te r i a l s h a v e baan o o l l a o t a d and th a d a t a a r a p u t t o g e t h e r i n d i f f e r e n t f o rm a . T han one o an o o n o e n tra te o n p a r t i c u l a r k in d s o f in te r v i e w e e s o r p ro b le m s t o w hloh a p a r t i c u l a r k in d o f p r e f e r e n c e o f r e s p o n se was show n. By t h i s m ethod one w ould e x p e rim e n t i n a n a o t u a l o aaa t o s a a i f th a p a r t i c u l a r in te r v ie w e e s h a v in g th a p a r t l o u l a r re s p o n s e r e a l l y do s o t th a way th a c o l l e c t e d d a ta sh o w . T h is method* i f p r o p e r ly eo n d u o ted * i s e x tre m e ly im p o r ta n t an d h e l p f u l T i m e and la e k o f E d w a rd 0 . B rusk# T ex t and C ases i n M a rk e tin g —A S o l e n t l f l o A p proach (Bnglew ood C l i r r s , H. J . t "T r a n t i o a - h a l i * i n c .* i § t e ) * p . 3 8 0 . eit. m anpower h a a o b lig e d u s i n t h i s p r o j e c t t o l i m i t t h i s o h eek to a few o a s e s * I n o o n o ln s io n o f th a o h a p ta r a few w ords s h o u ld ba s a id a b o u t th a b a s l e d i f f i c u l t i e s e n c o u n ta re d i n a p p ly in g th a p o s i t i v e m ethod t o th e p ro b le m o f th a a f f a o t s o f a d v e r t i s i n g o n conauam r d e o ls io n -m a k ln g * The s u b je o t o f th e r a s e a r o h g e n e r a l l y c o n c e rn s hum an b e h a v io r — w hloh i s v e ry d i f f i c u l t to m easu re a c c u r a te ly * Human b e h a v io r l a s u b j e o t to c h a n g e s and t h e r e f o r e d o e s n o t s u p p ly sim p le d a t a f o r s t a t i s t i c a l p r o j e c t i o n s end g e n e r a li s a t i o n s * Tha d a t a o b ta in e d r e p r e s e n t o b j e c t i v e l y th e g e n e r a l te n d e n c i e s * v a r i a t i o n s end c o r r e l a t i o n s o f th e consum er b e h a v io r t h a t h a s b e e n sam pled* H ow ever* t o a f f i r m o a u s e and e f f e c t ju d g em en t o f th e o r o s s c l a s s i f i c a t i o n o f s u rv e y d a t a i s a d i f f e r e n t m a tte r* "Thus# th e s t a t i s t i c a l m ethod may s u g g e s t o au se end e f f e o t r e l a t i o n s h i p s , b u t i t o a n n o t be u s e d to p ro v e them i n th e way th e e x p e rim e n ta l m ethod o an b e u se d * "£ To overcom e th e s e l i m i t a t i o n s g r e a t c a r e h a s b e e n ta k e n to s e l e c t a p r o p e r r e p r e s e n t a t i v e sam p le o f th e s t a t i s t i c a l p o p u la tio n so t h a t th e l i m i te d f i n d i n g o f th e s u rv e y c o u ld be o f some d e s c r i p t i v e and i n f e r e n t i a l v a lu e * ^ H a rp e r W * Boyd and R a lp h W e s tf a ll* M a rk e tin g R e s e a rc h (Homewood* I l l * s R ic h a rd D* I r w in T T n o * * 1 9 5 6 )* p* 0 0 • C H A P T E R n COMPILATION AND TABULATION OP DATA The p p « s « n t r e s e a r c h p r o j e o t was s a t u p t o s u p p ly th a in f o r m a tio n , d a ta and th a n aa d ad raw m a t e r i a l s f o r a n a l y s i s . A f t a r a n a ly s e s e v i d e n t l y eo n s o o n e lu s io n s , reco m m en d atio n s and e x p l a n a t io n s o f th a p ro b le m s in v o lv e d i n th a p r o j a o t . P r i o r t o a n a l y s i s and i n t e r p r e t a t i o n i t i s in d is p e n s a b le to c a t e g o r i s e th e o o l l e e t e d d a t a m eaning f u l l y and t o p e rfo rm th e n e o e s s a r y c a l c u l a t i o n s an d p e r c e n ta g e s w h ich make th e i n t e r p r e t a t i o n and a n a l y s i s more e a s i l y u n d e r s to o d . I . ORDERING THE'DATA The o r d e r in g s t e p e o n o e rn s th e q u o tin g , e d i t i n g , c o m p ila tio n and t a b u l a t i o n o f th e d a t a . I n th e b e g in n in g th e i n d i v i d u a l q u e s t i o n n a i r e s c o n t a in i n g e r r o r , in c o n s i s t e n c y , in c o m p le te p a r t s , o r o t h e r a p p a re n t d e f e o ts m u st be e lim in a te d so t h a t th e raw d a t a f o r a n a l y s i s i s r e l i a b l e . O ut o f 3*100 q u e s t i o n n a i r e s m a ile d and some p e r s o n a lly d e l i v e r e d , t h e r e w ere r e t u r n s o f 8 5 6 q u e s tio n n a i r e s . A f t e r a n i n i t i a l s o r t i n g and e l i m i n a t i o n o f th e d e f e o tlv e q u e s ti o n n a i r e s t h e r e re m a in e d f o r t a b u l a t i o n 85 620* After i seoond soreenlng of questionnaires there were over I 4 . 6 0 questionnaires for fin al tabulation and analysis Tha p r il^ g M y dhsoks on tha questionnaires. Tha allmlnatlon of defective qusstlonnalrss la of prime im- portanoa In ordar to m aka a propar and rallabla analysis. Hoted hara ara tha baslo prooaduras for oontrol- llng and soraanlng tha duestionnnaires* 1. All questionnaires whloh bars not baan answered as Instructions raquastad haws baan disregarded* Tha quaation of sampling, particularly, alas of sample, is ons of tha moat misunderstood and controver s ia l subjeota In eeononlo rsssaroh. I t w ill bs Interest ing to olte som a spaolflo sample slsas here. For example, taking tha greater Los Angelas area, HieIson C om pany uses tha sample slsa of 250 homes* From this thay predict and ealeulate tha whole population of tha greater Los Angelas area and measure tha television audience of tha same area. These homes are chosen by pure probability sampling* The Gallup Foil sample Is designed to ba repre sentative of tha civ ilia n population of tha United States of Amarlea and tha D lstrlet of Columbia. The sample Is based on a probability sample on tha baslo of block level In urban areas and small, geographically definable seg ments In rural areas* For eaoh Gallup Poll survey, an Independent sample of 1 , 5 0 0 adults, over 1 5 0 aampling points are Interviewed. In general or regular Gallup Foil surveys, the results ere based on personal household Interviews* Occasionally, for special surveys such as p o litica l party, oomslttee-mans mall or telephone methods also are used* (The source of this Information Is a letter written from the Gallup Organisation, In c., 53 Bank 8 treet, Princeton, H ew Jersey and signed by Irving Oreatl, Vloe President, on September 7t I9 6 2 , addressed to this writer*) T h ere w ere many w r i t t e n , o u ts id e a n s w e rs , w hloh haws n o t b e a n a o o e p te d . S uch n o te s and e x p l a n a t io n s , a lth o u g h th e y h a r e b e e n k e p t , do n o t c o n s t i t u t e r e l i a b l e and e x a o t d a t a a s d e a l r e d , 2* A l l q u e s tio n n a i r e s b a s i c a l l y ln o o m p le te w ith o n ly so n e p a r t s anaw ered haws b e e n n o t t a b u l a t e d . A ll p a r t s m ust b e o o n p le te t o o b t a i n a b a la n o e d a n a l y s i s o f th e r e a o t i o n o f th e s t a t i s t i c a l p o p u l a t i o n . 3« A ll q u e s tio n n a i r e s n o t l e g i b l y an sw ered h av e b e e n p u t a s id e * A l l q u e s t i o n n a i r e s c o n ta in i n g u n n e c e s s a ry and e x t r a an sw era h av e b e e n p u t a s i d e ; and w here t h e re s p o n d e n t s h av e an aw ered w ith nany a n sw e rs I n s t e a d o f a l i m i t e d o h o lo e as r e q u i r e d , th e q u e s tio n n a ir e s h av e b e e n term ed l n o o r r e o t and h av e b e e n e l i m i n a t e d . L e g itim a te * e x t r a a n s w e rs * B x tr a an sw era a re l e g i t i m a t e w hen th e r e s p o n d e n t f e e l s h e i s to g iv e m ore I n f o r m a tio n a b o u t th e q u e s tio n and i s g iv in g h i s o r h e r own r e a c t i o n s t o th e q u e s t i o n . Some o f th e s e r e s p o n s e s a r e e x tre m e ly i n t e r e s t i n g and do have some a n a l y t l o a l v a lu e * I n su o h o a s e s , th e a s s u m p tio n i s t h a t t h e b a s lo an sw er o f th e re s p o n d e n t i s a c c e p ta b le and h i s e x p l a n a t io n « m ust b e o l a s s l f i e d on a s e p a r a te s h e e t t o show t y p l o a l o u ts i d e re m a rk s a b o u t th e s p e o i f l o p ro b le m . T heae re m a rk s o an b e u se d i n a f u r t h e r s tu d y and a n a ly s is * 6 8 T a b u la tio n o f d a t a * Tho t a b u l a t i o n c o n s i s t i n g o f c o u n tin g th a num ber o f ite m s f a l l i n g in t o o ao h o a t a g o r j o f th a q u e s t io n n a i r e haa b o o n o a r o f u l l y n a d a and eh ao k ad f o r any p o a a lb la e r r o r * A l l d a ta and th a q u o a tlo n n a l r a a haw s b a a n p u t I n th a form o f p e r c e n ta g e s , o r p o ln ta o f o o n p a ra tlT a v a lu e * To e lim in a te any p o a a lb la o o n fu a lo n o r n la u s a o f p e r c e n ta g e s , th a y a r a uaad o n th a b a a la o f th o p r l n e l p l a o f a v e ra g in g th a p a r e a n ta g a a . Tha p a r e a n ta g a a I n a a e h e a ta g o r y o r Ite m h av e b a a n a v e ra g e d and v a lg h ta d by th a a l s o o f t h a g ro u p f r o n w h lo h th a y a r a d e riv e d * Tho f o llo w in g a ra e x p l a n a t i o n s and e l a r l f l e a t i o n o f th a u a a o f w e ig h te d p a r e a n ta g a a and t h a l r a p p l l e a t l o n I n th a au rv e y * Q u e s tio n # l t Tha p o l n t a r e l a t e d t o d i f f e r e n t f a o to r a a f f e o t l n g consum er d e c is io n -m a k in g w are added h o r l s o n t a l l y f o r a a o h c o n su m p tio n l t a n * T o r e x a m p le , o n th a "o a n n ed and f r o s e n f o o d " lta n * a l l p o ln t a r a l a t a d t o th a h e a d ln g e " b i l l b o a r d , " " s t o r e d i s p l a y o r s a le s m a n ,” "n aw ap ap ara and m a g a z in e s ," " d i r e c t n a i l , ” " r a d i o , ” ” T*V *," " d e f i n i t e l y no a d w a r tla ln g i n f l u e n o e ," " d u e to change I n p e r s o n a l in o o n e o r a z p a c ta d 1 no o n e ," " b e t t e r m ent I n g e n e r a l b u a ln a a a a n d eoonom lo o u tlo o k ,” " p r i c e f a o t o r , " and "im p ro v ed q u a l i t y " w ara added to g e th e r * C o n s e q u e n tly t h a r a l a an a v e ra g e an d w e ig h te d p a r o a n t f o r a a o h f a o t o r b o g in n in g w ith • b i l l b o a r d * and o n d in g v i t h "im p ro v e d q u a l i t y , * I t l a im p o r ta n t t o n o t# t h a t th o t o t a l o f th o aw arag aa o f th a f l r a t a i x a la m anta w hieh a r a th o b a a ia o f a d v a r t i a i n g and p u b l i o l t y v a ra p u t a a p a r a to l y t o aho« th a t o t a l aw araga p a ro a n ta g o o f a d - ▼ e rtla ln g and p u b l i o l t y a f f a o t on th a oonaum ar d a e ia i o n - a a k ln g f o r a a o h item * Zn Q p e a tio n # 2 i t l a aakad w h e th e r o r n o t th a in te r v ie w e e a a a o o la ta a h i a p u ro h a a e o f a p ro d u e t w ith th a p ro g ra m i t a p o n a o ra o n T .V . o r r a d i o , A w a ig b ta d a v e ra g e ayatarn « aa u a a d b ao a u aa o f th a n a o a a a lty o f d l f f e r e n t l a t - ln g th a a f f a o t o f th a a d j e o ti v e * q u ita o f ta n * fro m " o c o a - a lo n a lly * o r from th a ta rm * a a ld o m .* " Q p lte o f ta n * o o n - a a q u a n tly waa w a ig h ta d If, * o e e a a io n a lly * v a a w e ig h te d 3 , •aald o m * v a a w a ig h ta d 2 , and " n e v e r" waa w a ig h ta d 1 « F o r % x aatlo n a # 3 , If, and $ , th a ita m a h a to b aan a iw p ly h o r l s o n t a l l y t o t a l a d and th a p a ro a n ta g a a w ara d a r iy a d . F o r Q p e a tlo n # 6 a w a ig h ta d a v e ra g e ayatam waa u a a d , b ao a u a a th a * q u lta o f t a n ,* * o e o a a io n a lly ,* and •aald o m * w arp a g a in u a a d . " Q p lte o fta n * w aa w a ig h ta d If, • o c o a e io n a lly * waa w a ig h ta d 3 , "aaldom * waa w e ig h te d 2 , and " n e v e r " waa w a ig h ta d 1 * A w e i g h t ' ay atam waa a la o u a a d f o r Q u e a tio n # 6 , e o n a la t ln g o f 3 w e ig h t, 2 w e ig h t and 1 w e ig h t. ^ n a t i o n # 1 0 a s k s th a in te r v ie w e e th a d a g ra a o f h i t f a m i l i a r i t y w ith s p e o l f l o b ra n d s dua t o a d v e r t l s l i g and th a a z t a n t o f h i a b ra n d p r a f a r a n o a an d p u ro h a a a o f th a same b ra n d dua to a d v e r t is in g * A w e ig h t ayatam waa uaad* I n th a " f a a t i.l la r l ty * co lu m n , " t o t a l l y * h a s a w a ig h t o f 3 , " p a r t i a l l y " h a s a w a ig h t o f 2 and "n o n o " h a s a w a ig h t o f 1* Tha aama te rm s i n th a * b ra n d p r a f a r a n o a and p u ro h a a a " o o lu a n a r e a l s o w a ig h ta d 3 , 2 , and 1 r e s p e c tiv e ly * F o r Q p e s tio n #11 a w a ig h t sy ste m w as u sed * " O fta n " waa w a ig h ta d If, " so m e tim e s" was w e ig h te d 3 , " r a r e l y " waa w e ig h te d 2 , and " n e v e r* waa w e ig h te d 1 * I n Q u e s tio n # 1 2 , " o f t a n ” waa w e ig h te d 3 , "so m etim es* waa w e ig h te d 2 and " n e v e r" w as w e ig h te d 1 * I n Q u e s tio n # llf th e in te r v ie w e e i s ask ed t o o o n - a i d e r c a r e f u l l y , i n d i c a t i n g 1 -5 i n o rd e r o f h i a p r a f a r a n o a w h at h a h a s b e a n lo o k in g a t and f o r i n t h a a d v e rtis e m e n ts o f a l l m a d ia , s t a r t i n g w ith " 1" f o r th e m oat im p o r ta n t e le m e n t* W eig h ted a v e ra g e s w ere u se d * P r i o r i t y # 1 w as w e ig h te d 5 , # 2 was w e ig h te d If, # 3 w as w e ig h te d 3 , #lf w as w e ig h te d 2 , and #5 w as w e ig h te d 1* A ll t h a w e ig h t p o i n t s w are p u t to g e t h e r and an a v e ra g e p e r c e n ta g e o f t o t a l p o in ts f o r a a o h ite m was e s t a b l i s h e d * 91 I I , TABULATION OF QUESTIONNAIRES OP THE BUSINESS FIRMS Aa s t a t e d I n C h a p te rs I I and I I I * th a o b j e c t i v e o f th e r e a e a r o h i s t o f i n d an e x p l a n a t io n o f th e p ro b le m o f th e p r o j e o t and to t r y t o e s t a b l i s h a f e a s i b l e e x p la n a t i o n by oom blnlng d a t a o f two d i f f e r e n t s u rv e y s * As n ay b e s e e n i n th e q u e s tio n n a i r e s e n t to b u s in e s s f i r m s , i t e s s I n te n d e d to f i n d o u t t h e i r v iew s o n th e same q u e s t i o n , 1 . e * , th e e f f e o t o f a d v e r t i s i n g and p u b l i o l t y o n oonsum er d e c is io n -m a k in g * The an sw ers h av e b e e n o a r e f u l l y a n a ly s e d * Many an sw e rs w ere n o t sim p ly " y e s ” o r "n o * " The I n te r v ie w e e s g a v e th e m s e lv e s th e fre ed o m o f e x p l a in i n g t h e i r v ie w s , so m etim es i n l e t t e r s o f a p ag e o r two* I t h a s b e e n s t r l o t l y th e p ro o e d u re t o o o m p lle and t a b u l a t e th e a n sw e rs r e l a t e d to e a c h q u e s tio n and to g iv e r e l a t e d w e ig h t t o th e p o i n t s i n d i c a t e d i n th o s e a n s w e rs . A t th e end o f t h i s c h a p te r th e an sw e rs o f th e b u s in e s s f ir m s and a l l t h e i r r e l e v a n t v iew s h a v e b e e n ta b u la t e d * DATA COMPILED FROM COKSOM SR QDE8TI0MHAIBB8 1* A ilo h f i o t o r o r f a c t o r s h m in flu e n c e d you t o buy any o f th o fo llo w in g p ro d u e ts and s e rv lo e s T ( I f t h a r s i s o n ly one f a e t o r i n a o a r t a i n p u rc h a s e , p u t a shook i n th o a p p ro p ria te e o lw n * I f th e r e a re two o r w ore f a c t o r s , p le a s e in d ie a te th e n a l l * ) I f you v e r s in flu e n c e d by a d v e r t is in g f a c t o r s , p le a s e I n d io a te th o n e d lu n .Z s • o K <P s & . 2 S i 3 5 S , ^ U n 3 h * 5 fln * » 3 o 5 & • S *«4 a •**« n o _ e h o P # « a s o o o s m 4 * * • < he ■ S S o a. a s: it * il "3? i-j u o » - * e tc p ► • c o p E o n H O p • « o o S>oo e fa o «*•< iX e vi • 4*4 da* 4> • o o % u s 2 > it s i : a m iJ: s I 0 1 e ► o 1* canned k fro z e n fo o d s 57 21 17 18 3 3 lit 7 0 0 22 ^ f r u i t s k v e g e ta b le s lf6 1 23 l | 2 1 5 12 1 1 27 15 d a ir y p ro d u c ts 1^6 2 l | 15 2 3 10 2 6 1 0 16 11 soup k sa u c e s 58 1 17 17 2 1 20 7 1 0 17 16 2 A ll th e s e d a ta a r e o a lo u la te d on a h o r iz o n ta l p e re e n ta g e b a s is * The " t o t a l a d v e r t is in g f a o to r a 1 1 l a th e aim o f s i x fo llo w in g o o lu a n a , l* e * , 8 U i i oeinl*T® $o re I**8? ! * ? °* S a lo m o n , Saw spapar o r M ag asln es, D ir e c t M a il, te 8 il (TO ► * M * 1 * ; : § 9 C r : i • 0 $ a * 8 f H O f t or * H m «t * 8 & I* & 5 *8 ft- «* E ; ; i s ■ s B 8 & * e \n t -* s € vO re vn re re re O B s S O B » -» » -» G * O B re H o M O »-• O M re H H * »-• H H U u M R W 2 1 S g O B vn >o o s K » ► » o R >o G G » -» O '* R SO vn O h re vn s vn o S s S ' •p- vn vn H re H U » b * H u> »-» re o M O £ H V a* G o O o H re •p- ■P- re re -P“ G G s 5 OB re o re V a » z & G o w o O o o o o o o C o <r * * o* * % o & b * T o ta l A d v e r t i s i n g F a o to r s B i llb o a r d * S to r e D is p la y o r S ale sm an W ewspapers o r M agazines D lro o t M a ll R adio T .V . Ho A d v e r tis in g I n f lu e n c e Chengo I n P e r s o n a l Incom e o r S z p e o to d In e o n e B e tte rm e n t I n G e n e ra l B u s in e s s A B o o n o ale O u tlo o k F r lo e F a c t o r Im proved Q u a li ty C 6 f r o a a n d ln n tr a • x p t u i n ViBI chaw ing g u a , oandy 3* T o o th p aa ta d eo d o ran t aoap & ah aq io o r a s o r b la d a a h a i r o i l fc to n ie t aea aak au p e la a n a a ra d a ta r g a n ta •P U a w M £ g ? a a a 3 8 2 A « K a * K o W s s S3 K h ft O 5 H 8 S S p * 2 S 8 51 2 20 11 A 0 15 11 6 i 5 23 11 6 l 1 5 16 59 2 9 17 6o 1 11 13 lf8 0 8 6 53 2 7 11 58 1 I t 18 W 1 9 12 58 1 It 13 8 * w i 2 H a *i •p a * S ?s S3 a « 8 1 1 * 3 d f l H WHO a 3 3 a o o 8 2 8 . w a w a a s «i«iO s i s I h o C a n a h o £ a s 8 4 » 3 a. o a ' o m % • a o — * rd S a O S • H » H s a t 2 3 w m 4 3 £ 2 3 13 12 2 l A 2 0 6 35 0 2 8 1 3 18 20 1 1 10 6 2 31 12 0 0 12 1 2 28 15 0 0 12 6 2 27 13 0 0 19 0 5 29 21 1 1 15 0 l 33 21 1 0 13 2 2 21 17 1 1 12 If If 28 15 0 0 15 8 if 28 9 0 1 18 a 3 ► O i l * vn -F" • • » 1 1 1 n ? n . , • 8 * S i jf h p e n * ^ g o 5 # £ 8 ~ » *i*o 3 8 < 8 o S V • M ► * H Mil ? - t ? s e vn o yv W vn O' * £ 5 u to S < 2 d o> T o ta l A d v e r tis in g F a o to r a ► * l-» M vn to O o O w o B illb o a r d to H I V > M IS H V a > vn to vn M O ► * H ■ F " S to ro D ie p la y o r S a le e a a n s & vn w to » - * » -• M P to O' V ew apapers o r M agaslnea ► * O K » N » -» O o K * ■p- D ir e o t M ail ► * * N N W M o to o R a d io H O O * 5 l-» ► * •-• vn - 4 -4 to T .V . K M o O c £ 3 u> O ' Vo A d v e r tis i n g I n f lu e n o e u u -F“ -4 vn to vn vn w Change i n F e r a o n a l In o o n e ex X zp eo ted In o o a e to u v * > U > to to •F - - 4 to w B e tte m e n t i n G e n e ra l B u s in e s s k B eo n o n ie O u tlo o k IS ro H o* vn r\» o * O' vn £ s P r i c e F a o to r K » - » o M O o -4 o» *4 M O <5 i j In p ro v e d Q u a lity 56 I S 1 5 1 n I H ! ■g2 » : s & a f a : | • ■ • e » s •* IF £ 3 e D . . I ! ■»* '■ » 3 I t I t t K * I f t a o 8 S 8 I vn ro O' © 3 w vn vn u> u w -J vn ro 5 vn O' T o ta l A d v e r tia in g F a o to r a M w r v > H H o to B i llb o a r d tU M O' C ► * u» W o 00 00 to o to o K 8 to r o D ia p la y o r B a lo a n a n -S o> p M O' G O M o R 5 s le v a p a p e r a o r M agaainea H w t-* M K » N to t-» D i r e c t M ail M p - M K » » - » ► * ro ro ro R a d io sO * G » IM M © P* * -• O' c ! • ¥ . R G O * IO M S to U) to ao vO 5 n O Mo A d v e r tis i n g I n f lu e n c e vn P “ O' V il p - to P" vn to Change i n F o ra o n a l In o o n e o r S z p e e te d IneooM M N t-» P “ N to » - » ro p - w B e tte rm e n t i n G e n e ra l B u a in e a a A K oononio O u tlo o k ts St M O' K ro H s £ to ► » P r io e F a c to r ► * ► * l-» O H 00 ' O e K » o * R O O •-• o In p ro v e d f e a l l t y 9 6 phonograph raoorda, tapaa food blondor oolorod tolophono ■winning pool bar aqulpaant barbaoua aqulpaant antlquaa & a r t objaota haavjy v a il to w all earpatlng photograph aqulpaant hcna ao rla aqulpaant 9 a H 4» 3 3 fa a ► ? fa a a. 3 s : 2,8 fa o •4 o « h M O .o a a AM a<p r4 S 3 a a o 3 H H A a to I s 1 ^ 7 0 20 16 53 0 23 18 65 3 12 30 37 5 10 12 32 0 13 15 70 l 30 29 39 l 2 1 * 9 l 21 17 6 1 2 22 23 57 2 17 22 s ff w i a i l as HM a n o i s 4 4 0 A fa a 4 * a - -a a n a r t i % a hi a fa o S S S a # 4 * 9 a • p o o a * 4 ^ 1 • > • * t ! s AH H H a t S * 5)0 o hi 3 a, a o 4 £ as 2 2 I 3 11 7 15 2 2 16 7 0 1 11 18 1 1 20 7 2 2 1 6 20 5 0 8 1 2 2 6 30 6 5 11 6 0 0 1 * 1 * 5 6 2 11 1 * 1 2 7 18 3 1 25 6 1 0 1 * 3 1 * 1 * 3 13 6 1 2 7 9 3 1 * 2 1 * 11 2 1 11 13 1 1 li* 8 1 * 2 10 15 2 1 15 10 !§ i m |f i | i | i H » »* * p P K i t H Z „ • o o *t l i t « m 0 3 i h • • a g a * i i - I | | _0 0 4l * DO 6 ^ H h • o * t tt t * i 1 p f f 4 d • O • “ * o • • «?Bf * g S «f © • m «f »r a • « * > «t «r i f ■ •j • 8 & * S S 5 I f f ff I il * • 8 8 ro O' >5 vn vn -o -4 ~4 v O S S V O > o vn VO T o ta l A d v e rtla ln g F a o to ra o K O' ro vn o ro V o ■ p - B illb o a rd ■ P " VO ► * i- »- ro o o O B S to ra D la p le y o r S a la a n a n -0 M «o VO ro i- O' s If ro vo M avapapara o r M agaslnaa H V A M O' K » V O V O V O 1- o vn D lr a e t M all O ro vn vn o K » o o vn R adio o vn to M H O' n O V o to O B T .V . o n O *- »- K O' ro i- C D vn 3 Ho A d v e rtis in g In flu a n e a *o VA vo ro VO -o vn vn O B Change I n F o ra o n a l Ineo n a o r B x p aetad Inooaa c ro »- H H ro VO ro VO B a tta rn a n t I n G e n e ra l B ualneaa A B eononle O utlook -4 £ if O' - 4 i- i- vn O' O' F rlo a F a c to r 5\ vn ro M 1 - lo VO VO Im proved Q u a lity 96 sO S I * ! § A A E f 1 ! f S f i s « » M I 4 H «* S » 1 g w V 3 ? • O I s g » I-* _ o n 3 * w e i H 8 ? . 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(]A « j o • 1 * u 2 • B i S'® S # 9 AN O O 2 5 & ° 0 9 h O • o ; & { « > ' : § f s g . s s g s | mi q « h am S £ m &S# £ 2 8 2 1 5 6 3 1 1812 2 l t l l l t l 2 2 2 19 13 21* 1 1 I* 9 3 1 1 7 X 3 8133131*8 6 1 2 1 7 7 1 6 53 16 1 1 3 I 7 0 1^ A 19 1 1 3 3 6 0 2 6 9 15 0 2 3 101 Do y o u a s s o c i a t e y o u r p u ro h o o o o f t p ro d u o t w ith t p r o g r a a i t o p o u ao ro o n T«T» o r r o d i o f QMlto O fto n 16 O ccasionally flo ld o a 27 Hover 10 I f y e a , o r o c c a s i o n a l l y , p la a a a n a n s th o ono o r ■ o re p ro d u o ta a o a t f i r m ly a a a o o la to d w ith p ro g ra n a y o u h av e ao o n o r h o ard * Product and brand names____________________________ Were you o ro r awayod by an advertisem ent of a produot to buy i t —only to fin d la to r th a t you d id n 't lik e l t t Yoa SU Ho 16 D o n 't Roaoabor 30 I f yoa* ploaao naao tho produet and brand you boughtt Thoro woro nnaoroua answers and roaarka but I t la a d v is a b le t o r o f r a l n h o ro f r o a m e n tio n in g a o o c lf lo n aao a o r b r a n d s ._________________________________________ Would you buy a p ro d u c t, e v e n I f y o u h ad an I n t e n s e d i e l i k e f o r l t a a d v e rtis e m e n t? 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My l a b o r a t o r y h a s b e e n w o rk in g o n a a p o d a l f o r a u l a f o r • • • " ) Yea 11 Ho 5 6 I n d i f f e r e n t 33 Do you te n d t o l i k e th e make o r d e s ig n o f c a rs * f u r n i t u r e o r c l o t h e s w hich y o u a e e I n o o n te a p o r a r y m ovies and T«V. ahow sf Q p lte o f t e n 30 O c c a s io n a lly 53 S e ld o a lit 103 7* D u n i d w t l i t r i aay th a t th e ir product la b a tte r than othara o f i t s kind* arc you***** OonTlnaad 1 In ta ra a ta d a l i t t l e 26 Suoploloua 1 * 0 In d iffe re n t 33 8* What Influence do you th in k th a t the a a lea power of aontlnuoualy repeated ado or a a eriea of ada of an Item* brand or serv ice haa had on your purohaaat S trong 21 Mild 61 In d iffe re n t 18 9* Suppose you hare noticed th a t a c e rta in brand, product$ or serv ice haa been h eav ily ad v ertised over a period of sev eral non tha* Would you aonalude th a t alnoe a b ig aun of money haa been apent on a d v e rtis in g , th e Item moat be goodf Tea 8 Probably 38 H o 5 1 * 10* How haa a d v e rtisin g of the follow ing brand name a made you fa m ilia r w ith theae brandaT la your brand purohaaa due to a d v e rtls ln g t PLEASE AH8WER B O T H * M y fa m ilia rity w ith M y brand preference brand haa been due and purohaaa la due to ad v ertisin g , to ady ertlaln g .» Weighted P oint T o tally P a r tia lly None Weighted P oint T o ta lly P a r tia lly Hone I r l a 312 171* 150 186 oampbell 633 1 * 5 1*32 111 De1-Monte 585 6 0 381 138 S p rin g field 285 153 156 171 Hunt* a 702 21 1*17 102 Kern*a 360 105 222 159 F llla b u ry 639 6 3 390 123 M y fa m ilia r ity with M y brand prafaranoa brand haa baan dua and purohaaa la dua to adwertialng* to adwartiaing* Waightad F o in t T o ta lly P a r tia lly Kona Waightad P o in t T o ta lly P a r tia lly Hone B atty Orookar 7 0S 33 300 8 1 * Duncan Hlnaa 61*2 5 1 * 357 120 Kellogg*a 661 51 1*38 90 Ganaral h i l l s 636 1 * 2 372 105 Foot 606 A 381* 105 ^aakar 51*3 72 336 129 Sw ift 586 1 * 5 321* 126 Hom al 561* 63 336 126 H illa Broa* 579 51 237 153 MJB I4.02 A 291 H*i Maxwell House 6I 46 1 * 2 21*9 H*7 TUban 609 39 273 H*7 Chaaa fc Sanborn 603 1 * 8 231* 150 Bbaoafe 315 1 * 5 276 1 1 * 7 Haina 177 1 * 8 363 105 Budwoiear 600 1 * 5 261 120 Ooora 1*1 67 195 111* B aatalda U56 93 213 165 Hanna 562 1 * 5 288 120 M illar 558 57 261* 126 Fabet 561 1 * 5 252 123 R « |ll S o h lits Cokt M p i l K tn t Vi earoy Marlboro Salon Canal C olntraaa Sm irnoff Swanaon*a T« dlnnar S to u ffara M atraoal W rlglay' a Dantyna Harahay Cutax R ation S trlp a M y fa m ilia rity with M y brand prafaranoa brand haa baan dua and purohaaa ia dua to adaartiaing* Waightad Point T o ta lly P a r tia lly Nona 1*32 8 1 6 0 0 36 59k 6 6 54k 1*8 6 1 5 36 6 0 0 30 62k 21* 558 33 579 33 2 0 1 132 1*92 1*2 7 6 8 30 1*20 57 6 0 3 27 5 1 * 9 6 0 531 51 1 * 7 1 * 72 519 57 621* 33 750 27 to adaartiaing* Waightad P oint T o ta l ly P a r t i a l l y Mona 2 0 1 11*1 1 6 2 111* 291 153 261* 150 123 177 93 1 7 1 * 123 177 111 1 7 1 * 1 1 1 1 6 8 1 * 5 1 5 6 196 135 315 1 2 0 108 H * l* 21*0 H *i 2 5 2 11* 7 3 0 0 123 255 150 219 1 3 0 32 1* 1 2 6 2 6 1 153 M y fa m ilia rity with M y brand prafaranoa brand haa baan dua and purohaaa la dua to advartlalng* to adaartlalng. Olaam Ip a n a p a p a o d a n t C o lg a ta C ra a t Ban H alan o C u r tla H a la n a R u b ln a ta ln H alo O l l l a t t a Oam B r y lo r a a a W lld ro o t L lfa b u o y D ia l Z a a t P a lm o llv a Lux Camay A ll D aah 6 9 0 W O lghtad P o in t Nona T o t a l l y P a r t i a l l y Nona 18 3 6 0 105 1*2 231* 16 2 2 7 2 5 2 1 5 3 3 6 2 2 8 1 3 5 2 1 1*56 108 1*2 2 5 5 1 2 9 1* 8 2 1 3 162 3 9 2 5 2 H * l 3 3 261* . U*7 3 6 3 2 1 1 7 1 7 5 1 6 5 168 3 9 2 7 3 1 7 1 3 6 2 6 1 1 1 * 1 * 3 6 2 3 7 1 5 0 1 5 3 7 2 108 2 1 3 3 3 1 2 6 1*2 21*6 1 5 3 3 9 2 7 9 H*l * 3 0 21*3 1 1 * 7 3 9 3 1 2 1 5 0 3 0 261* . 1 1 * 7 W aig h tad P o in t T o t a l l y P a r t i a l l y 8 0 I 4 . 6 3 3 0 * 5 61*8 7l *l * 6 1 2 6 0 9 6 5 1 6 6 1 * . 6I 4.6 516 5 6 7 651 6 2 1 *. 7 1 7 7 0 5 6 0 6 1*95 6 2 1 6 2 1 * . ■y f a a l l l a r l t y v l t h My b ra n d p r a f a r a n o a b ra n d h a a b a a n dua a n d p u ro h aa a l a dua to advartlaing< ► to ad v ertisin g .I Waightad P oint T o tally P a r tia lly Kona Waightad Point T o tally P a r tia lly Kona Ghaar 7lt7 15 282 141 Fab 714 16 243 153 S urf 6 0 9 48 192 165 Tlda 702 15 339 114 Ajax 6 7 8 21 375 114 Mr. Claan 717 9 1 8 9 141 Dutch 579 54 264 147 Coaat 711 15 4 U 10$ Standard O il 5 0 1 64 180 180 llobllgaa 531 66 186 171 ChaTron 510 81 207 I 8 9 Saba 201 129 63 156 K a x ln lllia n (fu ra ) 222 126 48 1 6 8 T iffany 405 75 1 2 9 159 Monat 243 111 111 150 Tlnax 6 6 3 27 264 1 2 9 Bulova 6 3 0 30 258 147 Ghana 1 576 48 201 177 Old Splea 597 33 303 123 S h a lla a r 327 102 105 1 6 8 Oanaral Motor* 6 0 9 24 300 117 M y f u i l i a r l t j v lth hr brand prafaranoa brand has baan dua and purohaaa la dua to advartiaing* to advsrtlslng* W aig h tad P o in t T o t a l l y P a r t i a l l y Hons W aig h tad P o in t T o t a l l y P a r t i a l l y Mono T h u n d a rb lrd 6 5 7 18 183 11*1 R a n b la r 6 6 3 2 1 * 162 11*1 F r i g i d a i r a 5**9 2 1 * 21*0 1 2 9 G s n s r a l S l a o t r i o 51*9 18 3 3 9 9 0 H o tp o ln t 5 7 9 1*2 2 0 1 1 1 7 R.C*A. W h irlp o o l 6 0 9 2 7 2 0 1 1 2 0 W a atin g h o u aa 6 7 2 12 231* 9 6 Kanaaora 5 6 1 5 1 291* 10 8 W aata K in g 5 0 1 1 * 5 231* 1 U* O af f a r a & S a t t l a r 1*65 5 1 162 1 2 6 A d a ir a l 6 1 5 2 1 * 1 6 5 12 9 H orga 61*2 2 7 180 123 P h llo o 6 2 7 2 7 2 0 7 123 Waeohi 5 7 9 1 * 5 1 7 7 11*1 S in g a r 5 8 2 3 0 3 0 6 102 R a n in g to n 5 7 3 3 3 2 7 6 9 6 H oovar 5 2 8 1*8 2 2 0 1 2 0 B la o tr o lu x 5 1 9 5 7 21*0 XU* M agnavox 591* 27 2 1 9 1 2 3 M o to ro la 59** 3 3 1 8 0 1 3 2 P a c k a rd B a ll 5 3 7 1* 8 1 6 2 111* M y fM dllarity with M y brand prafaranoa brand haa baan dua and purahaaa la dua to adrartlalng* to adrartlalng* Waightad Point Totally Partially M on a Waightad Point Totally Partially M on a Sylvanla 6 * 4 -5 2 1 156 1 2 6 Zanlth 6 5 1 * . 2 1 2 5 2 1 1 1 Maytag 651* 2 1 2 5 2 1 1 1 6 * Cadlllao 579 39 H *X 1 2 9 Ghryalar 561* 33 159 129 Waring Blandar 1 * 7 7 63 150 1 2 0 Lalea 1 3 2 1 0 2 93 117 Molla (natal furnltura) 177 117 1*2 111* Prlneaas *phona 651* 27 2 1 0 1 2 6 Honoral» Starao 393 63 171 1 2 0 7* Vlo Tannay 621* 27 96 1 1 * 7 Arthur Murray 7 0 8 1 8 159 1 3 2 Cook*a Tour 1*50 78 75 1 3 8 Dinar*a Club 5 8 2 33 171 129 Hilton Carta Blanoha 1*68 69 111* 135 8 . D a la Carnagla 5 1 6 63 11* 1* 138 Barllts 378 99 1 0 2 1 1 * 7 9 . Prudantlal 621* 27 169 138 law York Llfa Inauranoa 555 63 1 6 8 123 110 hy f n l l l t p l t j w ith hy brand prafaranoa brand haa baan dua and purohaaa la duo to ad rsrtlsln g* to ad vsrtlsln g* Waightad Point Totally Partially Rons Waightad Point Totally Partially ■ons 1 0 . Bayar Aspirin 678 33 375 U *l* Alka-Ssltssr 6 9 0 2 1 390 1 0 2 1 1 * Rad Cross 576 51 321 life Coununity Chsst 6 0 9 39 2 7 0 1 0 8 11* Do you OTor buy o r uao th a follow ing lta u s baoauaa of your profaooional rsq u lrsm sn t, o o eial s ta tu s , and p ra a tig o f T o ta l POOitiTO Oftan Sonatinas R arsly F acto rs IsT sr fu rs 21* 1 0 8 1 0 2 23t* 225 js v s lry 6 0 198 1 0 6 3 6 6 1 2 2 now oar 96 2 1 6 96 1*06 105 awlnaing pool 12 27 1 8 107 2 3I* an tiq u ss A a r t o b js e ts 6 0 1 * 5 27 132 2 7 0 llq u su rs 72 2 6 1 lot* 1*37 1 5 6 fanoy foods 8 1 * 279 HA 507 156 sxpsnslva vinos 21* 2 2 5 1 0 2 351 153 boat 1 2 36 1 2 6 0 2 7 0 g o lf aqulpaant 21* 90 98 1 6 2 21*6 a o e la l olub uaabsrshlp 36 1 5 6 3 0 2 2 2 21*6 I l l Ofton ftouatluoa .Barely Total Poaltlvo Paetora Hover volfaro organisation 36 lM* S k 231* 228 p o lltlo a l olub nauborahlp 21* 1*5 12 81 282 rollgloua organisation 81* 90 30 201* 21*6 thoator tlokota 36 207 78 321 210 1 2 * ttitt are the effeeta of id v irtliin g on tho following oopooto of your finonelol opproaohf Ofton Sonatinas 1 * 5 27 Do purohaooo duo to ad vertising offoet your pro-determined foully budget? D o you soaotlnoo uoko a u a jo r purohaaa on lupulao beoause of an a d v e rtla e - nontf Haa your in a ta llu o n t 3 6 buying ever lnoroaood duo to ad v e rtisin g ? Haro ada ever oonvinoed you to buy aouo food* toy or othor ltou whleh la nov and dlfforonty 231*. Did adrortlaouont over < lnduoo you to dlsoard laat yoar'a oar or major appllanoo and buy a nov onof 381* 258 198 222 72 Total Positive Paetora M over 1*29 285 231* 1 * 5 6 81 125 211 221 1 * 2 309 112 13* I f a n t d r w t l i t d b ra n d o f p r o d u e t o r s e r v i c e w hloh y o u u ao h a a e a a a a d t o b a a d v e r t i s e d , e h a t l a y o u r p r o b a b le r e a c t l o u t Continue to buy the brandT 3 5 % Porget to buy l t f 2 7 % Buy the brand a t tin e a and a t tin e s buy a e ln lla r brand whloh la a d v e rtise d t 2 3 % Swlteh to a h eav ily ad v ertised Item of another brand? 1 5 % ll^. Please oonaider o a re fu lly , in d ic a tin g i-$ In order of your p referen ce, what you have been looking a t and fo r In ad v ertlsen en ts of a l l nedla (using number 1 fo r the moat Im portant)* 2 5 % Read, liste n e d to , looked a t the advertisem ent beoauae I waa a ttra c te d to It* 1 6 % C u rlo u sity . 3 h % Read, liste n e d to , looked a t the ad to g e t In form ation and to compare p ric e s , 2 5 % Wanted to fin d out where to g e t the produot which I had already Intended to buy, O thers________ __________________________________ For C la s s ific a tio n Purposes! Male h A % Female 5 2 % Incomes Hlgbs 8% Lows $ % Mediums 8 7 % 113 DATA OBTAHED FROM BUSIHES3 QjDBSTIOHHAIREB l«t* P ltu * indloatt ths relationship of increase in your advertising to increase in sales of the ad* vertlsed product using product l i s t "A#* by items or group of items from 1-12 • Please lndloate at lea st by the general terns "directly related "somehow related .* "rarely related,* Direotly related - $0% for a ll items D l r e o t l y r e l a t e d - $ % c a te g o r y 3 ( o i l and g a s o lin e ) e s p e c i a l l y Direotly related - $% categories 1* 2, $, 6 Som ehow related - 3 9 J C on a ll categories Rarely related - 1 % 1-b. Please lndloate the relationship of deorease in your advertising to deorease in sales of the advertised product using product l i s t "A," by items or group of items from 1-12* Please lndloate at least by the general terms "direotly related." "somshoe related ." "rarely related#" — — — Direotly related - Z$% a ll eategorles Direotly related - $% oategory 3 ( e ll and gasoline) e s p e o i a l l y o a te g o r y 12 Som ehow related - 60j( Rarely related - 10J( 2* If you believe in oumulatlve effeets in advertising, have you had any method of measuring the time neoesaary to aohleve m axim um oiaaulatlve effeo t on the oonsumsrsf If yes, please lndloate the method for eaoh of the 12 categories* H o 39* Yes 6l% If yes, 30H time 6-12 months please explain 30* confidential information kS L d iffic u lt to measure 3 * Pitas* Indioats vhloh advertisement oampsigns btooM im ffto tiv * rapidly by referring to items on produot lia t Oatagorias 8 * 12 Pad Products—loosa items 1 , 2* 3* 7# 8 # 9 11— Luxuries I* .* V i a t h av a b a a n th a o f f s e t s o f d i s c o n tin u i n g a n ad* f o r a T ory lo n g u e s ta b lla h e d p r o d u o tf Do s a l a a d ro p o f f slo w ly * d ro p ia u a d ia ta l y * o r re m a in u n a ffa o ta d T P la a a a u a a p ro d u o t l i s t *A* f o r d e t a i l s * Drop slowly - aspsoially oatagorias If* $ • Drop immediately - $0% oatagorias 1* 2. 3 * 7 (movie tlokata only)* 8 (nswspapsr and magaalne}* 9 (banks)* 1 1 Unaffeoted - 1$% for soma time* 5* Have you uada any ossa study of the tins period of purohass activity related to tbs advertising oaap sign? >o S O * Yea S O * 6 * Hava you had any method* survey or faotual data on tha exaot application of Method Metappsf* W o 65* Tea IS* I f yac* plaaaa explain Confidential Information_______________ 7 * la there a lim it and m inim um for an advertising budget to keep the proposed ehare of tha market by the flrmt H o 18< Yea 82j eWet-Advertlsement-Produoe-Purohasesi A method by which you have really measured tha net sales due to advertising* Wetapps la Wet-Ad-Pur chases M ade by Peroelvers* Reader a* Listeners* and Ylewera of A d M as sage a* i,a* tha net residua of purchase made by consumers after deduotlng those purchases whloh oonsumers would hava made anyway without stimulation of the ads* xiS 8 * Are the • f f i e t i of advertising aora dopondsnt on*** a* Business Cyoles Tory rslatod k8 Soaaho* rolatod S 2 UnroXatad 0 b» Inoraasad Inoona of tha PublleT Vary ralatad Soaehov ralatad 6 6 Unrelated 0 9* In a H alted eoapetltlon (oligopoly) in vhieh a few flras doainata tha aarket, when one f i n uses an un usual lnerease In advertising, are tha other f i n s induoed to follow su ltf *o 16 Yes A ll. Does th is disturb tha proportion of aarket shares aaong than or notf H o 16 If yea, howf Taaporsry* but ooaas back to n on al as soon as tha ads so to noraal* by intro duo lna new itaas or batter quality* than aarket proooes favors tha flr a with tha new itaa*___________________ C H A P T B R V II KATHBMAXICAL AMAIXS1S GT DATA The i n a l y i i i and M t h a i a t i e a l p r e s e n t a t i o n o f t h e o o a p lle d d e t e o f th e p r e s e n t s u rv e y i s o f g r e e t Im p o rtan ce* I n t h i s e h e p te r th e f o llo w in g d a t e e r e a n a l j s e d t 1* T he r e l i a b i l i t y o f th e sa m p lin g d e t e i s t e s t e d i n o r d e r t o u n d e r s ta n d t h e e x a o t n a t u r e o f th e fre q u e n o y d i s t r i b u t i o n o f t h e d a te * A s ta n d a r d d e v i a t i o n o f th e t o t a l s a a p le an d a p a r a l l e l s ta n d a r d d e v i a t i o n o f a p i l o t s tu d y sam ple o f th e U n ite d S t a t e s p o p u la tio n h a s b ee n e a lo u la te d * The v a r i a t i o n o f th e tw o s ta n d a r d d e v i a t i o n s o f tw o In d e p e n d e n t p r o b a b i l i t y sa m p les o f t h e same s t a t i s t i c a l p o p u la tio n a r e com pared* The r e s u l t s I n d lo a te l i t t l e d e v i a t i o n and e r r o r w h ich p ro b a b ly i n t u r n i s d u e t o random s a m p lin g v a r i a t i o n s * 2* The c o r r e l a t i o n s and c o v a r i a t i o n o f an y r e l e v a n t n a tu r e I n th e c o m p ile d d a t a a r e a n a ly s e d and s tu d ie d * T h is i s im p o r ta n t f o r th e e x p l a n a t io n o f t h e v .a rlo u a ch a n g e s and f o r a tte m p tin g t o I d e n t i f y v a r i a t i o n s i n te rm s o f somehow o a u s a l r e l a t i o n s h i p s b e tw e e n tw o o r m ore v a r ia b l e s * T he o a u s a l o r c o v a r i a t i o n a n a l y s i s r e q u i r e s e r o s s t a b u l a t i o n and p r o c e d u r e s f o r p u t t i n g d i f f e r e n t 1 1 6 117 n r l t b l t i o f th o s s n p lo i n t o s u b -g ro u p s • F o r t h i s p u rp o s o th o d o t s o ro o i l s e p a r a te d * 3* S o n s r e l e v a n t and i n t e r e s t i n g o o n p o rIs o n s b e tw ee n d o to o b ta in * d o ro i n t e r p r e t e d * I . C O N F lR IB O ir O F T W O 3 T A W D A R D D E V IA T IO X B To e o lo u lo to s ta n d a r d d e v i a t i o n o f th o p o s i t i v e a d v e r t i s i n g ond p u b l l o i t j f a c t o r s os to b u lo to d I n th o q u o s tlo n o f th o eo n o u n o r q u o s tlo n n o ir o th o m n s o rio o l d o to w ere o o lo u lo to d f o r th o f o m u l o bo low s 3 = M w hore n s 90 I * 2 “ I a : 1 \A » 1 90 9 9 0 , x f ■ 9 0 x 2 1 9 .8 1 $ ■ 19*783#350 a : 1 90 1 a ; 1 2 z . = 18,0$1|.,001 s s . / ■ *9.7»3iJgo - M>.oft.ooi J 21S>896 V 90 (90-1) S ■ lU .675 I n th « M t n t l M t h e s ta n d a r d d e v i a t i o n o f th a d a t a o b ta ln a d fro m a p i l o t s tu d y o f 3 6 oonaum srs o h o aa n a t random p r o b a b i l i t y * l a t b s f l g u r a 15*217* Tha c l o s e - n a a a o f tb a a a tw o a ta n d a r d d e v i a t i o n s o f tw o In d e p e n d e n t sa m p le s l a a n I n t e r e s t i n g l n d l o a t l o n t h a t t h a sa m p le s a r a aomahow r e p r e s e n t a t i v e o f th a t o t a l p o p u la tio n * I n eo n * s i d e r l n g th a sam ple a l s a o f t h i s p r o j e e t , I t e o u ld a a f a l y b a a t a t a d t h a t th a a ta n d a r d d a w la tlo n o f o u r s u rv e y l a n a a r th a r a a a o n a b la d la ta n e a o f V (G ree k mu) o r th a a ta n d a r d d a w la tlo n o f th a t o t a l p o p u la tio n * H aw ing e a l o u l a t a d th a a ta n d a r d d a w la tlo n o f th a aam pla d a t a , one c a n u s e t h i s I n f o r m a tio n b y a t a t i a t l o a l I n f e r e n c e t o know m ore about* t h a t r u e aw araga and th a t r u e a ta n d a r d d e w la tlo n a o f t h a r e a l p o p u la tio n * Sym bol T* (mu) l a u a e d f o r th a mean and sym bol (sig m a ) f o r th a s ta n d a r d d a w la tlo n o f th a t r u e p o p u la tio n * F o r th a aam pla d a t a ( z ) r e p r e s e n t s th a m ean and ( a ) r e p r e s e n t s th a a ta n d a r d d a w la tlo n o f th a i s i p l a d a ta * I t l a I m p o rta n t t o know th a t r u e w a lu e s o f ( f* ) and ( ^ ) b e e s u s e th a n by a p r o b a b i l i t y e a l e u l u s one o a n ro u g h ly e s t i m a te how o lo a e any g lw an s a o t l o n o f th a r e a l p o p u la tio n l a t o t h a t r u e a ta n d a r d d a w la tlo n and t h a t r u e mean o f th a t o t a l p o p u l a ti o n . H s p e e la lly I n d e a l i n g w ith l a r g e num bers and b i g a e e tl o n a o f th a r e a l p o p u la tio n th a a p p ro x im a tio n s o o u ld be w ary h e l p f u l and r e l i a b l e * 119 I I . CORRELATION A liH S IS A c o r r e l a t i o n a n a l y s i s c o n s i s t s o f a body o f m eth o d s f o r s tu d y in g and M e asu rin g t h e r e l a t i o n s h i p b e - t v s s n two o r n o r# v a r i a b l e s . I t s p u rp o s e i n t h i s p r o j e o t I s , f i r s t , t o d e te rm in e th e n u n e r io a l r e l a t i o n s h i p o f th e t« o s e t s o f v a r i a b l e s and t o d e s e r ib e them i n th e eq u a t i o n o f a v e ra g e r e l a t i o n s h i p s . S e c o n d , th e c o r r e l a t i o n a n a l y s i s p ro d u o e s an e v a l u a t i o n o f th e c lo s e n e s s o f th e q u a n t i f i a b l e r e l a t i o n s h i p s b etw een th e tw o v a r i a b l e s . T h ir d , i t i s h e l p f u l i n d e te r m in in g how th e two v a r i a b l e s te n d t o be a s s o c i a te d and th e r e a s o n s f o r t h i s c l o s e n e s s . I t i s a le o h e l p f u l i n f o r e c a s t i n g and in f l u e n c i n g th e f a o t o r s w h ich o o u ld b r in g th e d e s i r e d r e l a t i o n s h i p b e tw een th e tw o v a r i a b l e s . C l e a r l y , t h e s e d a t a may be o f g r e a t v a lu e I n te rm s o f econom ic a n a l y s is and f o r e c a s t i n g . I n Q u e s tio n # 1 0 , u n d e r c o r r e l a t i o n a n a ly s ia o f th e oolum n " b ra n d p r e f e r e n o e and p u rc h a s e o f th e a d v e r t i s e d b ra n d ” and i t s r e l a t i o n s h i p t o th e colum n " in f o r m a tio n and b ran d r e c o g n i t i o n r e c e iv e d by a d v e r t i s i n g , " th e fo rm e r colum n i s c o n s id e r e d t o be th e ( X ) o r th e d e p e n d e n t v a r i a b l e and th e l a t t e r colum n i s c o n s id e r e d to be th e x o r th e in d e p e n d e n t v a r i a b l e . The tim e e le m e n t ( t ) i s th e b ack g ro u n d o f t h i s c o r r e l a t i o n a n a ly s ia and i s ta k e n a s f o r g r a n te d and 120 unchanged* 11m , o f o o u r a if l a a a p a o l a l k in d o f v a r ia b le * Aa I t a p p e a rs i n tim e a a r i a a a n a l y s i s , i t ta k a a v l a t b l a o a a e , a d l a o r a t a and u n ifo rm r a n g e , i . e . , th a e o r r a l a t l o n o f y and x I n th a p r o a o n t a n a ly a la l a t r u a I n ta r n a o f th a fram a o f r o f a r a n o a o f tlm a a l a a a n t t , an d many o t h a r in d a p a n d a n t f a o t o r a aa au a ad t o ba g iv e n aa u n ch a n g ed . Tha a p p a a ra n e a o f tlm a I n th a p a l r a d ob s e r v a t i o n s l a b a a a d o n th a Id a a t h a t t h a d a o la io n - malclng d a ta r e c e iv e d fro m th a oonaum ara c o u ld ba h a n d la d a l l a t o n ce— w hloh v a a th a o a a e — and a la o t h a t th a r e s u l t a o f t h i a c o r r e l a t i o n a n a ly a la w i l l ba t r u a f o r a 1 1 m ltad tlm a* Tha u a a o f th a t a r n “ d e p e n d a n t" and " in d e p e n d e n t" v a r i a b l e s to d e s o r lb e th a two v a r i a b l e s y and x I n t h a e o r r a l a t l o n a n a ly a l a l a b aaad o n th a m a th e m a tic a l fu n c t i o n a l r e l a t i o n s h i p , an d l a n o t n a e e s a a r l l y r a l a t a d t o th a c a u s a and a f f a e t r e l a t i o n s h i p o r d ep en d en ce i n th a a e n se o f d e te rm in a n t* Aa a m a tte r o f f a c t , th e r e l a n o th in g I n s im p le e o r r a l a t l o n a n a l y s i s , r e g r e s s i o n a n a l y s i a , o r an y o t h a r m a th e m a tic a l, f u n c t i o n a l r e l a t i o n s h ip t h a t c a n f i r m l y c la im to e x p l a in e x c lu s iv e oau aa and a f f a o t r e l a t i o n s h i p * Tha p u rp o s e o f t h i a e o r r a l a t l o n l a to f i n d o u t th e d e g re e o f a s s o c i a t i o n and c o v a r i a t i o n b etw e en th a tw o phenom ena* I n no e v e n t c a n i t be s a id t h a t t h a t o t a l oau ae c a n be d e d u o te d fro m su c h o b s e rv e - 121 t i o n b eo au ee eoonom lo phenom ena i n g e n e r a l h av a a g r a a t v a r i e t y o f o o - d a t a r a i n i n g f a c t o r s * To draw a d ia g ra m o f th a o o r r a l a t i o n o f y and x I n th a e a a a o f q u e s t i o n # 1 0 , i t haa b a a n fo u n d t h a t t h a o o r r a l a t i o n l a a s t r a i g h t l i n a r e l a t i o n s h i p * y ■ a ♦ bx e x a m in a tio n o f a a o a t t a r a d d ia g ra m o f d i f f e r e n t p o in t a o f p a i r e d o b s e r v a tio n s a a p l o t t e d i n A p p en d ix I ahowa t h a t th a r a l a t i o n a h i p a a p p ro x im a te d o o u ld ba shown by a a t r e i g h t li n e # C o m p u ta tio n h a a b e a n made by th a m ethod o f th a l a a a t s q p a re to p l o t th a d i r e o t a t r a i g h t lin e * Tha l i n e o f a v e ra g e r e l a t i o n a h l p aa e a ta b l ia h e d and o o n - a t r u o t a d i n A ppendix I o o u ld , e v i d e n t l y , a a rv a th a p u rp o a e o f f o r e o a a t i n g g r a p h i c a l l y th a y i e l d o f a g iv e n d e p e n d a n t v a r i a b l e fro m g iv e n v a lu e a o f t h a in d e p e n d e n t v a r ia b le * Tha p la o e o f o o r r a l a t i o n a n a l y a i a , and e a p e o i a l l y o f r a g r a a a i o n a n a l y a i a , i n f o r e o a a t i n g and d e te rm in in g th a a f f a o t a o f a d v e r t i a i n g , dep en d a u p o n th a r e l i a b i l i t y o f th a in d e p e n d e n t v a r i a b l e a c o l l e c t e d . I f th a In d e p e n d e n t v a r i a b l e a a ls o a h o u ld ba f o r a o a a t a d , th a r a g r a a a io n a n a ly a l a l a h e l p f u l i n s o f a r as t h a in d e p e n d e n t v a r i a b l e s may ba p r o ja o ta d and f o r a o a a ta d o o r r e o tly * I n th a o aa e o f th a o o r r a l a t i o n a n a ly a la o f th a p r e s e n t s u r v e y , t h a a p p l i c a t i o n o f t h i a fo rm u la o o u ld b a v e ry u t t f u l i f t h t r t t u l t t a r t a d ju s te d w ith th e d l f f e r - • n t o h an g es a n d f l u c t u a t i o n s - - a n c h aa th a la a d a and la g a o f t h a a c o n o n lo s i t u a t i o n * I h l a m eans t h a t th a f o r e o a s t b a a a d on t h i a g iv e n fo rm u la a h o u ld ba a d ju s te d by s tu d y - in g t h a b a a lo eh an g aa I n econom io f a c t o r s . Tha o p t i m a a f f a e t f o r a a p a e l f l e lo a d and l a g f a o t o r , and l t a r e l a - t l o n a h lp w ith th a fo rm u la * c a n ba p l o t t a d a g a ln a t t h a la n g th o f t h a g r a p h le p r a a a n t a t l o n o r o o u ld ba a la o uaad aa a n a x t r a a d j u s t i n g f l g u r t I n t h a e a l o u l a t i o n o f th a e o r r a l a t l o n f o m u l a fo u n d fro m o b s e r v a tio n s * F o r exam ple* th a a f f a o t o f b u s ln a s s d a p r a a a io n a o r ln o r a a a a I n n a t i o n a l in e o a s o o u ld b a g iv e n a a p a o lf lo w e ig h t I n f o r e o a a tin g * ( I t may b a n o te d t h a t th a b u s in e s s f ir m s a lm o s t u n a n im o u sly an sw ered t h a t a d v e r t i s i n g e f f e c t i v e n e s s I s somehow o r d i r e c t l y r a l a t a d t o b u s ln a s s o y e le s * ) L in e a r e o r r a l a t l o n o f q u e s tio n # 1 0 * I t I s now p o s s i b l e to d e te rm in e t h a n u m e rlo a l v a lu e o f a and b f o r th a f o rm u la ; y : i 4 b z w here a s I t was s t a t e d ! y r e p r e s e n t s th a d e p e n d a n t v a r i a b l e o r th a colum n " b ra n d p r o f e r a nee and p u re h a s e o f a d v e r t i s e d b ra n d " an d s x r e p r e s e n t s th a In d e p e n d e n t v a r i a b l e o r " in f o r m a ti o n and b ra n d r e c o g n i t i o n r a o a lv a d by a d v e r t i s i n g * " U sin g th a fo rm u la o f n o rm a l a q u a tio n s i n t h a f o llo w in g two s im u l ta n e o u s l i n e a r e q u a tio n s ! 123 ^ y . * n * ♦ » a : i a s l I 5 * s * I V b X * a : 1 s i a a 1 And a l s o t r y i n g tlw i m n d a ta th ro u g h th a f o r a u l a n b s a ( ‘F * * ’ -< I * a ’( 7 7 a > v s 1 a a 1 a ? 1 n _ n B ( X xa } " (X x* AS 1 A 5 1 ■I i - ' - l A s I a a 1 X. A Va a u b a t l t u t a th a t a b u l a t a d f l g u r a a aa fo llo w a s 1 * 13l» * 75 870 A S 1 A S X 1 & . 2 . * 7. s 1 6 .9 8 ^ .6 6 5 X x 2 ■ 3 5 .7 3 0 .7 3 6 a . * 1 a A S l A And s o lv in g th o unknown ono o b ta in * s a ■ 30,669 b » *13|} I I I , 01 THE CUMULATIVE AID FKRMAHKET EFFECT OF ADVERTIBI10 Tho c u m u la tiv e e f f e c t and b ra n d p r e f e r e n c e o ro a to d by a d v e r t i s i n g , aa o b ao rv o d I n th o p r o a a n t r e s e a r o h , l o a c h a n g in g phenom enon, I t doponda u p o n th o o o n tls m a tlo n o f a d v o r t l a l n g and eh an g o a a o e o rd ln g t o th a n o rm al and e x - p o o to d ohango I n oonaum or b u y in g h a b i t s , Tha M arkov p r o c e s s , i n a p p llo d eo o n o m lo s, d o to r m ina a t h a t th o I n d i v i d u a l o o n a u m o r'a p ra fo ro n o e f o r a b ra n d A , B* o r C dooa n o t ra m a ln c o n s ta n t b u t s h i f t s I n a p a t t o r n w h ic h . I n a g r o a t num ber o f e a a o a , c o u ld bo d o to rm in a d by th o p r o b a b i l i t y o a l e u lu o , ( E v i d e n tl y , I t lo ta k o n f o r g ra n to d h e r e t h a t th o b ra n d s A, B, and C do a d v e r tI s o and o o n p o to w ith o ao h o th e r t o koop t h o i r S h are o f th o m a r k e t,) T h ia s h i f t i s v e ry d e a o r i p t l v e o f th o d o o la lo n -m a k ln g o f a la r g o num ber o f o o n su m a rs, E v id e n t ly , I n auoh s h i f t s , h e a v y a d v e r t i s i n g d o cs g iv e f a v o r a b le r e s u l t s t o th o f i r m w hich p e rfo rm s th o m a jo r a d v e r t i s i n g o p e r a t i o n s ,^ ^ F ra n k M, B ass and O th e rs ( o d s ) , M a th e m a tic a l M odels and M ethods In M arks t i n s (Homewood*,' T l l U A l i t i i o t a r d D , Irw in, I n c , , 1 9 0 1 ), p p , 103-lO tj., 125 A o a r o f u l s tu d y o f d a t a o f ty w a tlo n s 2 , 3 , 6 , 9 , and 12 w ith d a t a o f ^ o e s tlo n s 1 # 2 , i n th o b u s ln a s s q u e s tio n n a i r e w i l l sh o o t h i s o f f s e t o f a d v e r tis in g * I n o o n o lu s io n o f th o o h a p to r i t s h o u ld bo s t a t e d t h a t a c o m p le te m a th e m a tic a l a n a l y s i s o f th o e n t i r e d a t a o f th o s u rv e y i s b ey o n d th o se o p o o f th o p r e s e n t p r o je c t* Many o f th e p o s s i b l e o o n p a r is o n s and d a t a o o n b ln a tlo n s a r e v a lu a b le f o r o t h e r eoonom lo and m a rk e tin g p ro b lem s* I t h a s b e e n th e aim o f t h i s r e s e a r o h t o l i m i t t h e u s e o f th e d a ta t o t h e b a s i e o b j e c t i v e o f th e p r o je e t« CHAPTER Y in CONCLUSIONS I n t h i s o h a p te r s e a t im p o r ta n t p o i n t s o f th o p r o o o n t p r o j e c t o ro b r i e f l y rev ie w e d * Some now p o i n t s o f i n t e r e s t r o l o t o d to th o r e s e a r c h p r o j o e t w hioh o o u ld ho o u h jo o t t o f u r t h e r s t u d i o s o ro M e n tio n e d . Tho s m e ll c o n t r i b u t i o n o f th o p r e s e n t l im i t e d p r o j e c t to t h e fram e o f r e f e r e n o e o f t h e eeonom los o f a d v e r t i s i n g end co n sum er eco n o m ics w i l l b e d is c u s s e d * I* ECONOMIC THEORY A M D ADVERTISING The o l s s s l o s l c o n c e p t o f c o m p e titio n among th e e s r l y e c o n o m is ts f o r s e l f - e v i d e n t r e a s o n s d id n o t le a v e a p la o e f o r a d v e r tis in g * The o l a s o l e a l e c o n o m is ts , b a s in g t h e i r r e a s o n in g o n th e e q u ilib r iu m m a rk e t p rlo e * d e te rm in e d b y s u p p ly en d dem and, d id n o t g iv e an y r o l e t o a d v e r t i s i n g and p u b llo lty * I n th e n e o - e l a o o lo a l ap p ro ach * one c a n m e n tio n th e c o n t r i b u t i o n s o f A lf r e d M a rs h a ll o f C am bridge U n i v e r s i t y * He made a d i s t i n c t i o n b etw e en two s o r t s o f a d v e rtis e m e n ts * A o o o rd ln g to M a rs h a ll i n h i s P r l n o l o l e a o f K oonom los and o th e r w r i tin g s * T h ere a r e two s o r t s o f 126 * a d v a r t l a e n a n t a ," a o o n i t r t t o t l T t v and "o o m b a tly a a d r a r t l a a - ■ a n ti* " M a ra h a ll danounoed e o a p a t i t l T a o r p a re u a e lw e a d - ▼ a rtla ln g , o o n a ld a r ln g I t a p u re a o e l a l v a a ta I n n an y o a a e a . 8 o aa n a o - e l a a a l e a l a o o n o m la ta o f th a p r a a a n t day h a ? a id a a a a l m l l a r t o A lf r e d M a r a h a ll. F o r I n a ta n e e , Raymond T . Rya l n d l o a t a a t h a t a d v e r t i a l n g h a a a m ixed r o l a i n th a economy.^* I n aone o aa aa a d v e r t 1 a in g d e f l - n l t a l y adda t o th a u t l l l t i a a w h leh th a e o n a u n a ra e n j o y , by h a lp ln g th a eonavuaara f i n d th a gooda th a y n aad and hy o a l l l n g p ro d u c t a to t h a l r a t t a n t i o n w hich th a y m ig h t n o t o th a rw ia a know a b o u t. I n aoma o th a r e a e e a , a d v e r t i a l n g by a d u o a tln g e o n a u n a ra I n th a u a a o f a v a i l a b l e gooda u n d o u b te d ly , a o o o rd ln g t o F ro f a a a o r B y a, y i a l d a I n t a l l i g a n t t a a t a . A . v a a t am ount o f a d v e r t i a l n g l a p u r a ly c o m p e ti t i v e , h o w ev e r, and i t a p u rp o a e , a o o o rd ln g t o F ro f a a a o r B ye, l a n o t • t o In fo rm o u a to n e re v h a ra gooda o an ba p u r - o h a a e d , n o r t p a d u e a ta th a n i n naw v ay a o f g r a t i f y i n g t h a l r d a a lr a a b u t n a r a l y to p a ra u a d a th a n t o n u ro h a a a th a n ro d u o ta o f one p ro d u o a r ln a ta a d o f th a a l n i l a r gooda o f th a r i v a l t T h ia c o m p e titiv e d l a o l a y . t h a r a f o r a . l a w a a ta f u l and n o t n r o d u o tlv e .* H taynond T . R ya, P r l n o l p l e a o f Ic o n o n lo a (Raw T o rk t F . S . C r o f ta A C o ., I n e . , 1^4-b), p p . 2 - 1 0 . 2Ib ld . 128 An o x p o riu o n t f o r t o o t i n g th o r o l o o f a d v o r tl a l n g I n d i f f o r o n t n a g a a ln o a was nodo o n o d T o rtlo o n o n to u h lo h opp o o ro d i n * l i f o , * "L o o k ,* and " S a tu rd a y S v o n ln g F o o t* d a r in g O o to b o r, 1958* F o r th o o o n b ln o d t o t a l a d - v o r tla o n o n t a , r o p r o a o n tin g 297 f u l l p ag o a o f a d v o r t l a l n g i n th o th r o o n a g a s in o a , th o o l a a a i f i e a t l o n o f a d v o r t l a l n g oopy ahowod t h a t a b o u t tw o - th ir d s o f th o a d v s r t i s o n a n ts v o ro o n o t i o n a l , p o r s u a s lv o and o o n a o q u o n tly w a s to - f u l . S tu a rt Ghaao bollovoa th a t 9 0 % of ad v o rtlaln g la uaoloaa and on th ia b aala oonoludoa th a t a o tlv itlo a in - ▼oatod in ad v o rtlaln g oould bo roloaaod in to a noro pro* duotlTo oooupatlon* A d v o r tla ln g o r o a to a no nov do l i a r a . I n f o o t , by r o a o v ln g v o rk o ra fro m p r o d u o tlv o o n p lo y n o n t, i t to n d a t o d o p ro aa o u t p u t , and th u a lo a a o n a th o n u n b o r o f r o a l d o l i a r a . W hat i t dooa do l a t h i a . I t t r a n a f o r a p u ro h a a ln g pow or f r o n A t o B* I t u a k o a p o o p lo a to p b u y in g a h a v ln g ao ap In n o g s and a t a r t a th a n b u y in g I t i n t i n f o i l a tie k a * I t eo n nako A r l o h and r u i n B«3 H i l l and T u g w o ll a la o o r l t l e l a o a d v o r t l a l n g , o x - p l a i n i n g t h a t i t i a a n o ro p r o f i t o o o k ln g t o o l v h lo h p ro * a o n ta tw o b a a le o v l l a I n o u r o o o n o n lo a y s to n . ( 1 ) Bnormoua v a s t# In v o lv o d I n th o o f f o r t t o t u r n tr a d o f r o n ono f l r n t o a n o th o r v h o n th o p ro d u o to a ro i d o n t l o a l In v a lu o ; and <2) f o o l i n g ^ S t u a r t C h aao , Tho T ra g o d y o f W aato (Vow Y o rk t M a o n llla n C o*, 1 9 2 8 ), p* l l 2 * 129 o o n n m r a r a t h e r th a n e n l ig h te n in g th a n by th a »*5 a d v e r t i s i n g p r o c e s s , Ona e a n r a a l l s a t h a t a d v e r t i s i n g h a a b a a n b o th b la n a d and p r a i a a d f o r l t a e o n p la x I n f lu a n e a u p o n ao o n o n lo o r g a n iz a tio n * and oonaum ar d e o is io n -n a k ln g * O n ly by o a r a f u l a tu d y o f th a a d v e r t i s i n g I n f lu a n e a u p o n I n d i v i d u a l and b u a in a a a a c t i v i t i e s i a a r a a l i a t i e e v a l u a t i o n p o s s i b l e . Head f o r ao o n o n io r a a a a r c h o n a d v e r t i a l n g * B oononle th e o r y and a d v e r t i s i n g a re becom ing e x t r e n e l y r e l a t e d * and th a ao o n o n io e f f e c t s o f a d v e r t i s i n g f r o n c o s t , o o n su n e r d e o is io n - n a k ln g , and th e n a r k a t s t r u c t u r e p o i n t o f view* o o u ld ba th a s u b je o t o f muoh i n t e r e s t i n g r e s e a r o h . H a ll B orden made a c l a s a l o a l r e s e a r o h to n e a s u r e th e e f f e o t s o f a d v e r t i s i n g on t h e e l a s t i c i t y o f demand i n v a r io u s in d u s trie s * ! ? However* ta k in g i n t o c o n s i d e r a t i o n th e i n o r e a s ln g im p o rta n c e o f th e a u b je o t and th e c o n s id e r a b le am ount o f money s p e n t on a d v e r tia ln g * i t n ay be s a i d t h a t th e num ber o f aoadem ie s t u d i e s made I n t h i s f i e l d * p a r t i c u l a r l y on a d v e r t i s i n g and consum er d e o is io n -n a k ln g * i s so a n t* ^Howard C . H i l l and R e x fo rd O* T ugw ell* O ur Econom ic S o o le ty and I t s P ro b lem s (Hew Y orks H a r tf o r d , B rao e and G o*, 1 9 ^ ) # P« 4-50. ^ H e ll H opper Borden* The Bconom ic K f f e o ta of Ad v e r t i s i n g ( C h ic a g o t R ic h a rd »* xrw m * i n c . , Chapter vl* R e s e a ro h i n t h e f i e l d o f t h o o r o t i o a l and eoonom le a n a l y s i s o f a d v e r t i s i n g ru n s i n t o b u i e d i f f i c u l t i e s * F i r s t , I n s u c h a r e s e a r o h , I n view o f th o o o n a id o ra b lo num ber o f v a r i a b l e s , i t l a d l f f i o u l t t o o o r r o l a t o a l l th o v a r ia b le s * I f th e y a ro ta k o n f o r g r a n to d aa n o t o h an g o d , th a n th o l i m i t a t i o n s o f th o f i n d i n g s a ro g r o a t* S e c o n d , do to rm in a t i o n o f th o o f f o o t a o f a d v e r t i s i n g fro m th o t h o o r o t i o a l p o i n t o f T io n l a d l f f l o u l t , p a r t i c u l a r l y i n lo n g - r u n a n a ly s is * T h o rs a ro a g r o a t many l a t o n t and d o la y o d o f f o o t s as wo11 as th o im p ao t o f o th o r o lo m o n ts o f n o n - a d v e r t i s in g n a t u r e w hloh sh o u ld bo c o n s id e re d * W ith t h e s e l i m i t a t i o n s , a n a l y s i s i n th o o o r r o e t p e r s p e c tiv e b o o o n es a problem * T h ir d , i n th o t h o o r o t i o a l a n a l y s is o f th o eoonom io e f f e c t s o f a d v e r t i s i n g t h e r e a re u n p r e d ic ta b le and o o m p llo a te d r e a c t i o n s fro m r i v a l f ir m s i n th o same I n d u s t r y and smong f ir m s i n d i f f e r e n t i n d u s t r i e s w h ich aro i n some s o r t o f c o m p e titio n w ith o ao h o th e r* Tho b e h a v io r o f th o b i g f ir m s i s so m etim es b a s e d on lo n g - te r m s t r a t e g y , o o n t r o l o f th o m a rk e t, s h a re o f th o m a rk e t, and o th o r c o n s id e r a ti o n s w hloh a ro d i f f i c u l t to a n a ly s e and q u a n tif y * ^ B e s id e s , t o o b t a i n d a t a w hloh ^D oan J o e l , M a n a g e ria l goonom ios (How Y orks P r e n tlo e H a l l , In e * , 1 9 0 I ) , p* 3 6 0 * C . B* B a r f o r d , "The T h eo ry o f A d v ert l a i n * , " B c o n o a e trio s (1 9 U 0 ), 0 0 . 279-280* ---------------------- 131 m ( i M r i l l j c o n f i d e n t i a l i n n a tu r e i t n o t p o s s ib le * I n th e a d v e r t i s i n g b u s in e s s t h e r e h a v e b e e n a g r e a t num ber o f s t u d i e s made by in d i v i d u a l oom panies* They so m etim es t r y o o n t r o l l e d e x p e rim e n ts * T h ere a r e m asy ex am p les o f th e s e s m a ll e x p e rim e n ts o n s p e o l f l e ite m s *1 I n t h e s e s t u d i e s a v e r y e p e e l f l e p o i n t o f v e s te d i n t e r e s t f o r a f i r m i s a n a ly s e d * C o n s e q u e n tly a th e o r e t i c a l a p p ro a c h to th e ec o n o m ie s o f a d v e r t i s i n g c a n n o t be made fro m them* I n v iew o f th e l n o r e a s l n g Im p o rta n ce o f a d v e r t i s i n g I n th e g r o s s n a t i o n a l in co m e* soy c o n t r i b u tio n i n th e f i e l d c o u ld be o f some v a lu e f o r th e f u t u r e d e v e lo p m e n t o f eoonom le th e o r y o f a d v e r tis in g * gome s u g g e s tio n s f o r r e s e a r c h * A c a r e f u l a n a ly s is o f th e e f f e o t s o f a d v e r t is in g * d e te r m in a tio n o f s a t u r a t i o n p o i n t s f o r v a r io u s p ro d u c ts * and a n a ly s is and c o n s i d e r a t i o n o f th e r e a l r e a c t i o n o f t h e p u b lic to a d v e r t i s i n g o o u ld be o f g r e a t h e l p i n o u t t i n g w a s te and b r in g in g a b o u t a m ore r a t i o n a l u s e o f a d v e r tis in g * A d v e r tis in g i s a g ro w in g i n s t i t u t i o n i n o u r eoonom io sy stem * I t h a s n o t b e e n o l a r l f l e d how f a r k ee n c o m p e titio n I n a d v e r t i s i n g may c r e a t e p ro d u e t and p ro d u c t i o n c o m p e titio n * o r how i t may e lim in a te s m a ll e o m p e tl- g ld n e y H o lla n d e r* "A R a tio n a le f o r A d v e r tis in g X x p e n d ltu r e s ." H a rv a rd B u s in e s s R eview (Ja n u a ry * 19li9)» p . 8 8 7 . “ "— — — — — t o r t and o p en th a way f o r o lig o p o ly and M onopoly, on th a o th a r h a n d , how f a r a d w a r tia in g h a a h a lp a d th a l a r g a t e a l a p r o d u c tio n and masa d i a t r i b u t i o n i n o u r eoonony i a w ary i n p o r t a n t t o stu d y * T h ere a r a i n th a r a l a t i o n a h i p o f a d w a r tia in g t o t h a g a n a r a l ao o n o n io th a o r y aona w o rth w h ila t o p io a t o stu d y * F o r e x a m p le , an a n a ly a ia o f o v u la tio n and th a in e r a a a a i n th a o o n a u n p tlo n f u n c t i o n o f a o o ia ty duo t o a d w a r tia in g i a an i n t a r a a t i n g to p ic * I n eo n a u n ar a o o n o n io a i t i a o l a a r t h a t im ita tiw a c o n su m p tio n i a b a - c o n in g c o m p e titiv e o o n a u n p tlo n and t h a t t h i a aonahow a f f a o t a th a p a t t a r n o f a a v ln g a and in w a a tn a n t i n th a w hola a o o n o n io sy stem * I n p a r t i o u l a r o a a a a i t w ould ba I n t a r a a t i n g t o d a ta r n ln a t h a w a r ia b la a and d i f f a r a n t i a t a d a f f a o t o f a d w a r tia in g and p u b l i c i t y o n aao h o f th a b a a io l t a n a o f o o n a u n p tlo n * I n th a f i n d i n g s o f th a p r a a a n t r a a a a r o h i t h a a b a a n obaarw ad t h a t th a o o n p a ra tiw a a f f a o t o f d i f f e r e n t a d w a r tia in g n a d la r a l a t a d t o d i f f e r e n t l t a n a o f consum p t i o n w as e x tre m e ly w a rla d and w o rth stu d y * Tha d a ta o f t h i a p r o j e c t show s a d e f i n i t e r e l a t i o n s h i p o f o o n a i a t a n t n a t u r e b etw een a d w a r tia in g and w a rlo u a l t a n a o f o o n a u a p - tio n * F o r th a p u rp o se o f th a p r e s e n t r a a a a r o h i t w ould hawa b a a n p r a o t l o a l l y im p o s s ib le t o o o r r a l a t a a l l th a o o n e e lw a b le w a r ia tio n a o f th a d a t a o b ta in e d * Suoh a n 133 a n a l y s ia w ould In v o lv e oo m p u tln g m a c h in e s , and w ould bo e x tre m e ly e x p e n s iv e , an d e v i d e n t l y , boyond th o ro a o h o f a a in g lo ro a o a ro h atu d y * I t w ould bo i n t e r e s t i n g t o a n a ly s o th o o f f o o t s o f a d v e r t i s i n g and p u b l i o i t y s t i l l f a r t h o r on f r o n th o o o n - s u a o r 's d e c is io n -m a k in g p o i n t o f view * F o r e x a m p le , i t w ould bo i n t o r o s t i n g t o know to w hat o z t o n t a d v e r t i s i n g and p u b l i o i t y h av a boon a s o u ro e o f in f o r m a tio n and g u id a n o e f o r oonaum ors i n m aking th o r i g h t d o e is io n * I t w ould a l s o bo i n t o r o s t i n g t o know , o n th o o th o r h a n d , t o w h at o z t o n t a d v o r tla ln g h a s c h a n n e le d th o oonaumor* a d o o is io n s t o s p o o l f i e ite m s i n s p o o if io f i e l d s b y moans o f h ig h ly d is g u is e d m o ti v a ti o n a l and p s y o h o lo g io a l a p p e a ls * Tho n eed f o r a now o o o n o n io th e o r y o f a d v e r t i s i n g * X eonom ies h a s made g r o a t p r o g r e s s f r o n a b s t r a o t th in k in g o n th o b a s i s o f l i m i t i n g th o t h e o r i e s t o g e n e r a l i s a t i o n s * Beonomlo la v s have boon d ls o u s a e d f o r 200 y o 'a rs and h av e b eo o n s a b a s lo p a r t o f o u r th in k in g * Many o f thorn ta k e v a r io u s f a o t o r s a s e o n s ta n t and th e n s im p lif y th o o o o n o n io s i t u a t i o n i n o r d e r t o e x p l a i n th o w o rk in g o f o o o n o n io f a o t o r s , th o law o f s u p p ly and dem and, th o law o f d im in is h in g r e t u r n s , and so on* H ow ever, i t i s d i f f i - o u l t t o make a dynam ic th e o r y o f a d v e r t i s i n g i n e o o n o n lo s p re s u p p o s in g t h a t many dynam ic f a o t o r s a ro t o bo ta k e n a s 1 3 k o o n a ta n t* T h is r e s t r a i n t w i l l a sk * th s e o o n o a lo th e o r y o f a d v e r t i s i n g w ith o u t any b o n a f l o i a l r a s u i t a . P o u r b a s lo o o n d ltlo n s a ro noodod i n o ro s t i n g a now e o o n o u io th e o ry o f a d v e r t i s i n g s X* I n a d v e r t i a l n g th e o ry w hloh o o u ld e x p l a i n w hat s h o u ld h ap p e n u n d e r o o n d ltlo n s w hloh o an be e s t a b l i s h e d o r g iv e n a s known* u s in g n o d e rn o p e r a t io n s r e s e a r o h ap p ro ach * The b a s lo o b je o tlv e i n th e o p e r a tio n s r e s e a r o h ap p ro ao h i s t o o r e a t e a n a t h e n a t l o a l n o d e l w hloh o a n be a p p lie d t o e a c h o f t h e v a r io u s f a o t o r s a f f o o t i n g th e t o t a l o o o n o n io e f f e o t a o f a d v e r tia ln g * The Du F o n t Company*a r a a a a r o h s t a f f a p p ly o p e r a t io n s r e s e a r o h i n s i x s p e c i f i c f i e l d s o f a d v e r t ia ln g r e s e a r o h ; a e d i a r e s e a r o h ; p u b llo r e s e a r o h ; ao o n o n io r e s e a r o h ; m o tiv a tio n r e s e a r o h ; and v l a u a l r e s e a r c h .® 2* O b je o tlv e a e s t a b l i s h e d f o r a d v e r t i s i n g w hloh w ould t e l l w hat may be so u g h t to be a c c o m p lish e d and w ould i n d i c a t e th e p o t e n t i a l i t i e s * 3* Some s ta n d a r d s f o r m e a su rin g r e s u l t s and v a r io u s r e a c t i o n s and a t t i t u d e s and m o tiv a tio n s in v o lv e d * It* A . g e n e r a l eoonosdo th e o r y o f o o n u u n lo a tio n and 8_ "How du P o n t M easu res Ad R e s u lts * " T id e S eptem ber* 1958)# P* 6 l* I n f o r m a tio n to a a t l a f y com plex f o a tu r o a o f th o r o l o o f a d v o r tl a l n g I n eco n o m ic o r g a n is a tio n * I I * SODS PIEDIHOS OP TBS RESBAROH PROJECT A d v o rtla ln g * aa a t o o l f o r l n f lu o n e l n g oonaum or d e o lslo n -m a k in g * h a a th ro o b a a lo o f f o o t s . F i r s t , and ■ o a t f r o q u o n tl y o b a o rv o d , l a th o n r o a o r v a tlo n o f f o o t s a d v o r t l a l n g koopa oonaum ora a lro a d y a o ld fro m c h a n g in g t h e i r eh o a o n b ra n d t o o th o r b ra n d a , tra d e m a rk s * o r p ro d u o ta * Tho ae e o n d o f f o o t* l o s s f r o q u o n tl y obaorvod* l a th o o o n v o ra lo n o f f o o t i oonaum ora a ro p o ra u ad o d and In d u o ed t o do ao m o th ln g t h a t th e y h av e n o t done b e fo re * E v id e n tly * I n th o o a a e o f o o r t a l n p r o d u c ts , p a r t i c u l a r l y now o n es w hich h av e a s m a ll and p ro b a b ly I n o l a a t l e d e mand* a d v o r tla ln g s h i f t s th o demand c u rv e and b u i l d s up p u b lic ao o o p tan co o f th o p ro d u c t* The t h i r d o f f o o t l a an a c t i v a t i n g e f f e c t t a d v e r t i s i n g m akes consum er a who a ro p ro d la p o a e d t o b u y a p ro d u c t* booomo aw are o f t h o l r p r e d i s p o s i t i o n and a c t a c c o rd in g ly * T hose th r o o b a a lo o f f o o t s o f a d v e r t i s i n g on oonaum or d e c is io n -m a k in g * and o th o r r e l e v a n t f i n d i n g s o f t h e p r e s e n t su rv ey * w i l l b e d ls o u a a e d I n th e f o llo w in g p ag es* P r e s e r v a t i o n e f f e c t * R e g a rd in g th e p r e s e r v a t i o n e f f e o t o f a d v o r tla ln g * th o d a t a fro m Q u e s tio n #2 o f th e 136 oonsum er q u e s tio n n a i r e a re r e le v a n t* Q u e s tio n # 2 t Do y o u u i o o U t * y o u r p u re h a s e o f a p r o d u c t w ith th o p ro g ram i t s p o n s o rs on T.V* o r r a d l o t A nsw ers l6 £ • Q u ite O fts n - O o o a s lo n a lly 21% - Seldom 10% - N ever t h e p o s i t i v e e f f e o t o f a d v e r t i s i n g on th e p r e s e r v a t io n o f eonsum er i n t e r e s t i n a eh o sen b ra n d r e a o h e s a t o t a l o f ( > 3 % * I f th e random p r o b a b i l i t y o f th e p o s i t i v e % e f f e o t o f "seld o m * colum n i s a d d e d , th e t o t a l p o s i t i v e e f f e c t i s r a i s e d to 90% » An i n d i r e o t p r e s e r v a t i o n e f f e o t o f a d v e r t i s in g and p u b l i o i t y o n oonsum er d e o ls lo n -m a k in g i s d e m o n s tra te d i n th e re s p o n s e to Q u e s tio n # 6 o f th e oonsum er q u e s tio n n a i r e . Q u e s tio n # 6 1 Do you te n d t o l i k e th e make o r d e s i g n o f e a rs * f u r n i t u r e o r c l o th e s v h lo h you s e e i n o o n te n p o ra ry m ovies and T*V* s h o v s f A nsw ers 30% - Q u ite o f te n $3% " O o o a s lo n a lly lil£ - Seldom 3 % * N ever 137 I t l a e v id e n t t h a t th e t o t a l p o s i t i v e i n d l r e o t p r e s e r v a t i o n e f f e o t o f a d v e r t i s i n g i s 97%* a t o t a l v e ry n e a r t h a t o f th e t o t a l p o s i t i v e re s p o n s e t o Q u e s tio n #2* v h le h v a s 90% « She r e s u l t s o f Q u e s tio n # 8 , I n d i o a t l n g a n o th e r a p p ro a o h to th e p r e s e r v a t i o n e f f e o t * a re c o n s i s t e n t w ith th e o t h e r f in d in g s * ^ i s s t l o n #8* N h a t in f lu e n c e do y o u t h in k t h a t th e s a l e s p o v e r o f o d n tin u o u s ly r e p e a te d ad s o r a s e r i e s o f a d s o f a n Item * b ra n d o r s e r v l e e h a s h ad o n y o u r p u r c h a s e s ? A nsw ers 2$% - S tr o n g 61% - M ild 18% - I n d i f f e r e n t The t o t a l p o s i t i v e p r e s e r v a t i o n e f f e c t on e o n - s u n e rs i s 82%. N ote t h a t th e ra n g e o f p r e s e r v a t i o n e f f e o t o f th e t h r e e p re o e d ln g d a t a i s 82% t o 97%* Q u e s tio n # 1 3 d e m o n s tra te s oonsum er r e a o t i o n t o t h e d i s c o n t i n u a t i o n o f a d v e r t i s i n g f o r p ro d u c ts * b ra n d s end s e r v lo e s w h ich th e y u se* Q u e s tio n # 1 3 s I f a n a d v e r t is e d b ra n d o f p r o d u c t o r s e r v io e w hloh you u s e h a s o e a se d to b e a d v e r tis e d * w h at i s y o u r p r o b a b le r e a o t i o n ? 138 I n i v w i $0% - f o r g t t t o buy th o p r o d u e t and to n d t o buy a l m l l a r p r o d u o ta . 1$% - oddod t h a t th o y o v lto h t o a h e a v i l y a d v e r tla e d ite m o f a n o th e r b r a n d . y£% - re m a in b ra n d o o n a e lo u a enough to a t l o k f o r aono t i n e t o th o n o n - a d v e r tla e d p ro d u o t cr b r a n d . T h ere a ro , o f o o u r a e , many e a a o a i n w hloh a b i g a d v e r t i a - i n g cam p aig n o r a a lo a and m a rk e tin g a t r a t o g y o a n d e f i n i t e l y ta k e away c u a to m e ra f a i t h f u l t o e o r t a i n p ro d u o ta * b ra n d a and a e r v l o e a . Tho d a t a f r o n Qua a t i o n #(4 . o f th o b u a ln o a a q u e a - t i o n n a i r o f u r t h e r i n d lo a to a th o o f f o o t o f th o d ia o o n - t i n u a t l o n o f a d v o r t la ln g f o r v e i l e a t a b l l a h e d p r o d u o ta . Qua Io n f its Whet h av e b o o n th o o f f o o t a o f d i e - c o n tin u in g a n a d v e r t ia e n e n t f o r a lo n g a d v e r tla e d and w e ll e a t a b l la h e d p r o d u c t? Do a a lo a d ro p o f f a lo w ly , im m e d ia te ly * o r re m a in u n a f f o o te d ? A n av ers o f anaw ere i n d i c a t e t h a t a a lo a d ro p a lo w ly . 30% o f anaw ora i n d i c a t e t h a t a a lo a d ro p Im m e d ia te ly . 139 X $% o f i n i w r i i n d i e a to t h a t a a lo a a ro u n a f f e c te d * C om paring tb o a o d a t a w ith t h a t o f Q u e s tio n # 1 3 o f th e o o n a u n e r'a q u o a tio n n a i r o , i t n ay bo a o o n t h a t l$% o f th o o o n a u n e ra aw i t oh t o h e a v i l y a d v e r tla e d ito m a o f a n o th e r b ran d * Thooo oho f o r g o t t o buy n ak o u p 27 jf. Thoao o h o buy o t h e r b ra n d e d i r o o t l y a ro 23 %• Tho t o t a l lo a a o f e o n a u n e re i a 6$%• Tho t o t a l p e re e n ta g o i n th o b u a in o o o q u o a tio n n a ir o p e r t a i n i n g to th o a a o u n t o f a a lo a d ro p p in g a l o v ly and d ro p p in g io n o d i a t o l y i a a b o u t 85 JC. H ow ever, th o n a r g i n o f 1$J( t o 20J C o x p la in a i t a o l f i n th o o a t e g o r i - a a t i o n i n d i c a t e d by b u a in e a e firx n a . T h ia c a n bo ao o n i n th o b u a in e a a q u o a tio n n a ir o r e a u l t a * I t w ould a la o bo i n t o r o o t i n g t o n o te th o r o a u l t a o f (fciea tio n # l - a o f th o b u a in e a a q u o a tio n n a iro * Q p e a tio n # l - a s P lo a a o i n d i c a t e th o r o l a t i o n a h i p b e tw e e n in c ro a a o i n y o u r a d v e r- t l a i n g and in o r e a a e i n a a lo a o f th o a d v e r t! a e d p r o d u c t, u a in g P ro d u c t L i a t "A* by i t o n a o r g ro u p a o f ito m a f r o n 1 t o 1 2 * P lo a a o i n d io a to a t l o a a t by th o g e n e r a l to r a a " D i r e c t l y r e l a t e d , " "Somehow r e l a t e d , " and " R a re ly r e l a t e d * " 1 1 * 0 A nsw ers $0% - D i r e c t l y r e l a t e d 39Jt - I n d i r e c t l y r e l a t e d A t o t a l o f 89J C in d i c a t e d t h a t a d v e r t i s i n g i a r e l a t e d t o s a le s * T h e re i s h e re a n i n t e r e s t i n g s i m i l a r i t y to t h e d a t a in d io a te d i n th e consum er q u e s tio n n a i r e w here th e r e l a t i o n s h i p o f b u y in g and a d v e r tis e m e n t was 80jf t o 9 0 £* C o n v e rs io n e f f e e t o f a d v e r t i s i n g * R e g a rd in g th e o o n v e r s io n e f f e c t o f a d v e r t is in g * i n w h ich oonsum ers a r e p e rs u a d e d and in d u o e d t o do w h at th e y h av e n o t done b e f o re * i t i s I n t e r e s t i n g to o b s e rv e th e f i n d i n g s fro m Q u e s tio n #10 o f th e c o n s u m e r's s u r v e y . Q u e s tio n #10* To w h at d e g re e h a s a d v e r t i s i n g o f th e f o llo w in g b ra n d nam es made you f a m i l i a r w ith th e m t I s y o u r b ra n d p r a f e r e n e e and p u rc h a s e due t o a d v e r t ! s i n g ? Answer* F o r e a c h o f th e tw o q u e s tio n s * th e re s p o n d e n t s r e p l i e d " T o ta lly * * 1 " p a r t i a l l y * " o r "Hone* i n v e r t i c a l eolum na f o r a l l th e b ra n d s l i s t e d i n a h o r l s o n t a l row* F a m i l i a r i t y . The d a t a shows t h a t f a m i l i a r i t y w ith th e b ra n d s i s due t o a d v e r t i s i n g i n many o a s e s . The "H one" oolum n o f an sw ers* i n d i c a t i n g t h a t f a m i l i a r i t y was n o t due t o a d v e r t is in g * i s p r a c t i c a l l y i n s i g n i f i c a n t com pared w ith th e t o t a l w e ig h t p o i n t H u g iv e n th e " T o ta lly * and " P a r t i a l l y " o o lu m n s. Tha h lg h a a t f l g u r a f o r f a m i l i a r i t y w ith a b ra n d nama d a f l n l t a l y n o t duo t o ad v e r t i s i n g r a c o g n i t i o n p o in ts a ro 201 and th a n o n - a d v e r tis in g r a o o g n ltl o n p o i n t s a r a 1 2 9 * P o r H a z lm lllla n f u r s , th a a d v e r t i s i n g p o i n t s a r a 222 p o s i t i v e and n o n - a d v e r tis in g 2 2 6 p o i n t s . A f t e r th a s a lu x u ry p r o d u e t e x c e p t io n s * many o t h a r p r o d u c ts (m o s tly h o u s e h o ld 1 tarns— I n c lu d in g soma lu x u ry Ite m s — fam ous b ra n d names i n g a s o lin e * a t e a t e r a ) show t h a t th a f a m i l i a r i t y p o i n t s th ro u g h a d v e r t i s i n g a r a 5 t o 6 o r som atim ea 10 tim e s m ors th a n th a f a m i l i a r i t y p o in t s th ro u g h n o n - a d v e r tis in g f a c t o r s . H are a ra 196 p ro d u o ts* c h o s e n fro s t w all-k n o w n b ra n d s i n th a A m erican economy* w here th a oonsum ers c o n s i s t e n t l y answ ered t h a t t h e i r r e c o g n i t i o n o f th a b ra n d was th ro u g h a d v e r t i s i n g . B rand p r e f e r e n c e and p u r c h a s e . I t was fo u n d t h a t th a m ore t h a t f a m i l i a r i t y w ith a b ra n d i s due t o a d v e r tis in g * th a m ore p r e f e r e n c e and p u ro h a s e o f t h a same b ran d i s a ls o due t o a d v e r t i s i n g . T h ere i s a d e f i n i t e c o r r e l a t i o n b etw een b ra n d r a o o g n ltl o n th ro u g h 142 a d v e r t i s i n g and p u ro h aaa o f a b ra n d due t o » t h a t r a o o g n ltlo n * An i n t e r a c t i n g a a p a e t o f th a c o n v e r s io n in f lu e n o e o f a d v e r t i s i n g i s shown I n th e d a ta f o r Q u e s tio n #1 o f th e c o n s u m e r's q u e s tio n n a ir e * Q u e s tio n #1* W hich f a c t o r o r f a c t o r s h av e c a u se d y o u to buy any o f th e f o llo w in g p r o d u c ts and s e r v l e e s f ( I f t h e r e i s o n ly one f a c t o r i n a c e r t a i n p u ro h a s e , p u t a oheck i n th e a p p r o p r ia te c o lu m n . I f t h e r e a r e two o r more f a c t o r s * p le a s e i n d i c a t e them a l l * I f you w e re in f lu e n c e d by a d v e r t i s i n g p le a s e i n d i o a t e th e medium o r m a d ia .) A nsw eri V a rio u s a d v e r t i s i n g m edia and f o u r o th e r k in d s o f f s o t o r s w ere in o o r p o r a te d i n th e q u e s t i o n n a i r e . F o r m oat o f th o p r o d u c ts and s e r v ic e s th e p e r c e n t o f th e t o t a l w e ig h t o f a d v e r t i s i n g and p u b l i o l t y o n consum er d eclslo n « -m ak in g ra n g e s fro m If0% to (*$%. T h ere w ere a few low a d v e r t i s i n g f a o t o r w e ig h ts a lf£ - d e n t i s t s f y J L - d o c to r s 8£ - h o s p i t a l 1 1 * 3 l l j f • N l l g l o u i o r g t n l i a t i o n i l 6jf - b e a u ty p a r l o r and b a r b e r ahop 19J< - a o o l a l s e r v i c e o lu b a 2 1 \% - p o l l t l e a l e lu b a 26jt - a o e l a l and f r a t e r n a l e lu b m em bership (a n d s i m i l a r s e r v i c e s ) F o r many o th a r 1 tarns t h a p a r o a n t o f th a t o t a l f a c t o r s a l l o o a t a d t o a d v e r t i s i n g r u n h ig h s 79J( - t h a a t a r and m ovie t i o k a t a 77% - t l e k a t s t o s p o r t s e v e n ts 63% - m a g az in es 6? ^ - books and o t h a r a d u o a tlo n a l m a t e r i a l 6t*£ - h o u a a h o ld d ru g s 6$% - d r a s s c l o th a a 60% - e a r s 6 *Jjf - o o lo r a d ta la p h o n a p u ro h a a a s $7% - p e rfu m e s 60jt - s o a p and shampoo 6 ljf - t o o t h p a s ta 6l% - ohew lng gum and candy 60% - fa n c y fo o d s Tha r a s t o f t h a p ro d u o ta and s e r v io e a ra n g e I n t o t a l a d v e r t i s i n g f a o t o r w e ig h ts b etw e en \\$% and 609(* I t l a I n t e r e s t i n g t o n o te t h a t th a o o n w aralo n o f i d v i r t l a l n g on oonaum ar d « o ia io n -M a k in g h a s c o n a l a t a n t l y r o a i l a i d aro u n d $0% * Tha d a t a fro m th r a a p a r t* o f Q u a a tio n #12 a la o r a l a t a t o th a o o n w aralo n a f f a o t o f a d w a rtia ln g * Q u a a tio n # 1 2 s What a r a th a a f f a o t a o f a d v a r t l a l n g on th a f o llo w in g a a p a o ta o f y o u r f i n a n c i a l a p p ro a c h t ( a ) Do p u re h a a a a dua t o a d w a rtla ln g a f f a o t y o u r p ra d a ta rm ln a d fa m ily b u d g a tf (b ) Do you aom atim aa maka a m a jo r p u ro h aaa o n im p u laa b ao au aa o f a n a d v a rtia a m a n tf (o ) Hava a d v a rtla a m a n ta aw ar oonw lnead you to buy aoma f o o d , to y o r o th a r ita m w hleh i a naw and d l f f a r a n t f Anawara* Tha ra a p o n d a n ta w are r a q u a a ta d to anaw ar " O f ta n ,* "S o m atlm aa," o r "H aw ar*" (a ) Tha t o t a l o f colum na " O fta n " and "S o a a tim a a " waa 1*29 p o in ta a g a in a t 125 p o in ta f o r "M arar* " T hua, th a o o n v a ra io n a f f a o t f o r th a a a oonaum ara l a a t l a a a t 3 tlm a a a tr o n g a r th a n th a n a g a tlw a a f f a o t* (b ) The p o i l t l T * o f th o a d v e r t i s in g f a c t o r l a tw io e aa s tr o n g a s th o n e g a tiv e o f f o o t . M ajo r p u rc h a s e s duo to a d v e r t i s i n g o o u n t 2 8 5 p o in ts * (o ) Tho p o s i t i v e o f f o o t o f th o a d v e r t l s - in g fm o to r i s 10 tim e s th o n e g a tiv e o f fo o t* Thoro a ro 1|.56 p o s i t i v e a d - ▼ o rtls ln g p o i n t s s g a i n s t 1 |2 p o in ts f o r "M over*• A c tiv a tin g o f f o o t o f a d v e r t i s i n g * Tho d a t a from Q u e s tio n # 1 4 i s p o r t i n o n t t o t h i s o f f s e t . Q u e s tio n #14 j F lo a s o o o n s id o r o a r a f u l l y , i n d i c a t i n g 1 -5 I n o rd o r o f y o u r p r e f a r a n o e , w hat you have boon lo o k in g a t and f o r i n a d v e r t i s i n g o f a l l n o d ia * (Uao n u ab o r 1 to in d lo a to y o u r m ain p ro fo ro n o o , 2 f o r sooond o h o io o , a t o . ) A nsw erst 255 - w a to h , ro a d o r l i s t o n to a d v e r t i s e m en ts booauso th o y w ant t o g o t i n f o r m a tio n and eom pare p rio o s * 255 “ w an t t o f i n d o u t whoro t o g o t th o p ro d u o t w hioh th o y had a lro a d y i n to ndod t o buy* Tho m o tiv a tin g o f f o o t o f a d v e r t i s i n g o o u ld bo s a id to bo botw oon 255 and 595* Tho 255 U f. 6 r e p r e s e n t s th o * # who r a a l l y in te n d t o buy and a r o a c tiv a te d t o buy* Tho o th e r 35jf • t i l ? , w en t t o buy b u t in te n d to o o n p ere p r io e * f i r s t * A d v e r tis in g end th e o r e e t i o n o f o l i g o p o l i e s * I t e o u ld be e e id t h a t a d v e r t i s i n g te n d * t o d e v e lo p mono* p o l i o • o r o l i g o p o l i e s a in o e n o s t o f i t i a u se d to p ro n o te b ra n d n a n e s and tra d e m a rk s by m ass cam p aig n s w h ieh a r e s u f f i c i e n t t o k ee p e o n a u n e ra a tta c h e d t o a g iv e n b ran d * The p o s s i b i l i t y o f e r e c t i n g a do f a o to m onopoly th ro u g h a d v e r t i s i n g d ep en d s upon th e a t t i t u d e and th in k i n g o f th e consum ers* A m onopoly th u s b u i l t up i s d e p e n d e n t u p o n t h e c o n t r o l o f human a t t i t u d e s r a t h e r t h a n upon th e c o n t r o l o f th e s u p p ly o f go o d s o r s e r v lo e s t h a t a r e s i m i l a r i n e v e r y th in g b u t name* The volum e o f ad v e r t i s i n g may b e a p o te n t f a o t o r i n in f lu e n c i n g human a t t i t u d e s o r b u ild i n g u p p u b lio p r e f e r e n c e f o r a p a r t i c u l a r b ra n d * fluch a m onopoly* how ever* w i l l p r o v id e o n ly a s l i g h t p o w er t o ln o r e a s e p r i o e a • Any a tte m p t t o r i l s e p r i c e s a n a p p r e c ia b le d e g re e w i l l e n c o u ra g e t h e s m a lle r oom panies t o oome i n th e m a rk e t w ith a lo w e r p r lo e d p ro d u o t* T h ere i s a l s o th e e v e r p r e s e n t e le m e n t o f oonsum er s h i f t s o f c h o ic e t o o th e r p r o d u o to *9 E v id e n tly * th e e f f e o t o f a d v e r t i s i n g d o es n o t go beyond a sim p le I n c r e a s e i n s a l e s r a t h e r th a n p r i c e s * I f th e c o s t o f a d v e r t i s i n g w ere to r i s e above th e n o rm a l p r i c e f o r w hloh a n ite m c a n be s o l d i n th e m ark et* th e n 9 c * H* S andage* A d v e r tis in g * T h e o ry and P r a c t i c e (C h icag o * R ic h a rd D* Irw in * in o * 7 l< & 0 )» P* 33 • li|7 a d v e rtisin g would be o f no use to th o firm* I f a d v e r t i s ing* in tho Meanwhile* has been a to o l of Monopoly* oonpetltora e a n also use I t w ith suooess i n brooking the ; Monopoly and e s t a b l i s h i n g o th e r b ra n d nans s . The d a t a o b ta in e d f r o n Q u e stio n #9 o f th e b u s in e s s q u e s tio n n a i r e i s v e ry i n t e r e s t i n g to n o te h e r e . I t i n d i c a t e s t h a t th e r o l e o f a d v e r t i s i n g a s a t o o l o f M onopoly o r o lig o p o ly h a s b e e n oonew hat o v e r r a te d . Q u e s tio n # 9 t I n a U n i t e d o o n p e tltlo n ( o lig o p o ly ) i n w h ich a few f l r n s d o n ln a te th e M arket* w hen one f l r n u s e s a n u n u s u a l in c r e a s e i n a d v e r tis in g * are th e o t h e r f i r n s ln d u o e d to fo llo w s u l t f Ho 16 Yes 8k e e s f a e e D oes t h i s d i s t u r b th e p r o p o r tio n o f M a rk e t s h a r e s among th e n o r n o tf Ho 16 Yes Sit I f yes* h ow f Tem porary* b u t o o n es b a o k to n o rm a l a s so o n a s th e ad s go to n o rm a l. E x c e p t 1 by in tr o d u c in g new l t e a s o r b e t t e r i q u a lity * t h e n m a rk e t p r o c e s s f a v o r s th e f i n s w ith th e new i t e m . A d v e r tis in g and s o o l a l s t a t u s . The r e a d e r n ay w ant t o n o te th e f o llo w in g d a ta fro m th e o o n s u n e r’ s V M fltle im a lrt» ^ w i t l o B # l l t Do you ew er buy o r « h th o f o llo w in g ito m a boeouoo o f y o u r p ro fo o o lo n n l r e q u ire m e n t, s o o io l a t a t u a , and p r o a t lg o t Anawar* A la rg o number o f th o l l a t o d lu x u ry ito m a , and p a r t i c u l a r l y now o a r a , fo rn o d a p o o ltlw e f a c t o r o f lfrOd* Tho h ig h o a t p o o ltiw o f a o to r a woro fa n c y fo o d a , e x p e n alv e w in e a , liq u o u r a and now e a r a , A d w o rtla ln g and oonaumora* a u r p lu a * A d v o rtle ln g h aa in e ro a a o d th o oonauaora* a u rp lu a i n o u r eoonom lo ay a ta n by p o in tin g o u t th o d i f f o r o n t uaoa o f produo t a , o m p h a a iiin g t h o i r q u e l l t i e a , and o r o a tin g i n th o e o n - aumera an a p p r o o ia tio n f o r th o a w a ila b lo g o o d a **0 T h ia h aa o ro a to d a a u rp lu a o f a a t i a f a o t i o n f o r th o wholo e o n - a u n in g p u b lio , Tho d a ta fro ai Q p o atio n #liv o f th o e o n - su m e r'a q u o a tio n n a iro i a r e l e v a n t , Q p e a tlo n #11*.* P lo a a o e o n a ld o r o a r o f u l l y , I n d io a t ln g 1 -5 i n o r d e r o f y o u r p r e f e r e n c e , w hat you have boon lo o k in g a t and f o r i n a d v e rtla e m e n ta o f a l l m e d ia, (Uae number 1 t o in d lo a to y o u r m ain p r e f e r e n c e , 2 f o r aeeond o h o le o , o t o .) l 0 * e i l H . B o rd en , Tho B co n aale B f f o c ta o f A dver- t l a l n g (C h io a g o t R i c h a r d T m F f l n , xho • , h*)$ S6x # 149 Ana w o rt 2$% - R oad, lla to n o d t o , lo o te d , a t th o a d - T o rtla o m o n t booauao a t t r a c t e d to i t * l 6£ - O u r lo a lty . 3k% ” R oad, lia ta n a d t o , lo o te d a t th o ad to g o t In fo rm a tio n and to eomparo p r lo o a . 2$ % - Wantod to f i n d o u t whoro to g o t th o p ro d u o t w hioh a lre a d y in to n d o d t o b u y . S a tu r a ti o n p o in t i n a d T o r tia in g . Tho p a tto r n a o f th in k in g and th o im p ro ao io n o o ra a to d by a d f o r t i a i n g a ro l i k e l y to onduro f o r aomo tim a • I f a d w e rtla o ra uao o o n a o o u tiro ap p o ala and d i f f o r o n t e f f e c t i v e m oana, t h l a may o ro a to a c u m u la tiv e and doop i n t o r o a t i n oonaum ara. Tho o u m u la tiv e o f f o e t e o n tin u o a t o in e ro a a o to a p o in t o f d im in ia h in g r o tu r n a w hioh i a roao h o d " e i t h e r th ro u g h a a t u r a t i o n o f th o m a r t e t , th ro u g h th o e o u n to ra o tin g i n - flu o n o o o f com peting m oaaagoa, o r th ro u g h th o a a t u r a t i o n o f r e c e p t i v i t y ." * * H I. S U M M A B Q T T oday, eonaum ar d o o ia io n -m ak in g i a in flu o n o o d p a r t i a l l y by w hat l a o a lla d im p e r f e c t, m o n o p o lia tio , o r C« H. Sandage and V ornon F ry b u rg o r ( o d a .) , Tho R olo o f A d v e rtla in g (Homewood, I l l l n o i a : R ic h a rd D . I r w m , i n c . , 1 9 0 0 )7 p« 1 6 1 . 150 n o n - p r ic e c o m p e titio n * A d v e r tis in g p r o v id e s a t o o l w hioh h e lp s th e b u s in e s s f ir m s n s l n t e i n t h i s p e o u l l e r l t y o f o oops t i t i o n w hioh i s th e d o m in a tin g f e a t u r e o f o u r eo o n o n io o r g a n is a tio n * A d v e r tis in g i s becom ing a n I n t e g r a l p a r t o f th e p r e s e n t d ay m l x e d - o a p l t a l l s t i c s y ste m o f p r o d u o tlo n and d i s t r i b u t i o n and t h e b a s i s o f m odern m ass o o m m u n io atlo n . B u s in e s s f ir m s c o n s t a n t l y s t r i v e t o f i n d new p ro d u o ts * p r o d u c t d i f f e r e n t i a t i o n s * new b ra n d s and tra d e m a rk s t o a t t r a o t m ore co n su m ers and t o c r e a t e new w ante o r d e s ir e s * To e s t a b l i s h an eoonom lo th e o r y o f a d v e r t is in g * i n th e fra m e o f r e f e r e n o e o f p r e s e n t- d a y m a rk e t s t r u o t u r e m ass oom m unioatlon th e o ry * i t i s n e o e s s a ry t o t u r n t o th e r i c h and com plex v a r i e t y o f o o n o re te o a s e s and t o ta o k le e a c h p ro b le m w ith due r e s p e c t and s p e o l f l e a t t e n t i o n * P o s s ib ly * r e l e v s n t and f a c t u a l I n f o r m a tio n c a n p r o v id e i n th e f u t u r e a k e y t o a s a t i s f a c t o r y econom ic th e o r y o f a d v e r tis in g * i BIBLIOGRAPHY BIBLIOGRAPHY Booka Agnaw, Hugh B ln a r , a n d D y g a rt, l a r r a n B . Adwar t i l i n g M ad ia, la v Y o rk s M o O r aw-Hi I I Book c o . , i n c . v m : A lto h la o n , J . and B row n, J . A . C. T ha L o g p o ra a l D i s t r i b u t i o n . G a a b rld g a s U n iw a ra lty P r a i a , X9^7. B or d a n , H a ll H oppar. A d w a rtilin g i n O nr Boonowy. C h ic a g o i R . D . I r w in , I n o ., _________ • Tha B o o n o aio B f f a o ta o f A d w a r tia in g . C h io ag o s h . D . ir w in , m o . , _________ . P ro b la n a i n A d w a rtia in g . 3 rd a d . l a v Y orks V cO raw -H iii b o o k UoY, IincVT 1937 • . A d w a rtia in g s T a x t and C a a a a . C h io ag o s R . D . i r w i n , m o . , 19b o . B o u ld in g , K . B . B o o n o n io A n a ly s is . Vav Y orks H a rp a r & Br o t h a r a , B rav a t a r , A rth u r J . I n t r o d u c t io n t o A d w a r tia in g . l a v Y o rk t M cG raw -H ill b o o k C o ., B row n, L yndon 0 . , La a a l a r , R io h a rd S . and V a ilb a e h a r , M i l l i o n M. A d w a rtia in g M ad ia, l a v Y orks R o n a ld P r a i a C o ., 19571----- ------------------ C o n au n ar B a h a w io r. T ha Dwnavl oa o f C o n au n ar R a a o tlo n . feTditad ay L in c o ln s t e n C la rk . Vav V orks la v Y ork U n iw a ra lty P r a i a , 195t|-« ! C o n tr ib u t io n s o f B urrow M athoda to Bco n o n lo a . K d lta d b y L av ra n o a r . k i s l n , v i i n pagan by o a o rg a E a to n s , L aw ranoa R . K l s l n , J . B . L a n a in g and o t h a r a . Surw ay R a sa a ro h O a n ta r , U n iw a ra lty o f M ic h ig a n , l a v Y o rk s C o lu n b la U n iw a ra lty P r a i a , 1 9 & . 152 153 O r i M f i J . ft* P n O w iM h ip o f M aior Conrn— r I t e r t U B . D o l m i l t y o r c a n o n age* i i i p i r iM & t o r A p p iie a Soonom loe M onographs. Vo* 7* Londons C am bridge U n iw a ra lty P re s s * 19&2. 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" J o u r n a l o f th a A n a rio a n S t a t l a t i o a l A a to o la tI o n , V oi* Wo. go3 i n a p t * . 1S5Q)* J a a t r a n , R* V* " A d v a r tla in g aa B aokad-up I n M onopoly P r o b la n ," R arlaw o f B oononloa and f t t a t l a t l e a * x m , 1949“ J o n a a , R* C* " T r a n a lto r y In o o n a and E x p a n d !tu ra a on C o n a u n p tlo n C a ta g o r ia a ," A a a rlo a n B oononlo R arlaw P a p a ra and P ro o a a d ln g a * Vol* 5o (M ay , i 9 6 0 ) • J U a ta r , P* T* " P r a d l o t l o n and C onaunar B uying I n ta n * t l o n a , " A n a rlo a n B oononlo R oT la* P a p a ra and P ro o a a d ln g a . V o l. 50 ( M i f i r r i r a n T ------------- K a to n a , O*, and P l a h a r , J* A* " P o a ta l M ara, C hangaa I n th a In o o n a o f I d a n t l o a l C onaunar U n i t a ," H* B* B* R . 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L . , JT • * 0 n th a T h ao ry o f D anand f o r O onauaar D or ab l a a ,* S o u th a r n B oononlo J o u r n a l . V o l. 27 (A p r il* 1 9 6 1) • Ml ah a n , X . j * "Tha T h a o rla a o f Conavuaar B a h a y io r 1 A C y n ic a l V iew #" Tha J o u r n a l B o o n o n lo . V o l. X X V III. Mo. 109 (P a h .* 1 9 6 1 )• ------------------ M o d ig lia n i, 7 . " F l u c t u a t i o n s i n th a S a y in g In o o n a R a l o t i A P r o b la n i n B o o n o n ie F o r a o s a t i n * ," M. B . B . R . S tu d ia a i n In o o n a and H e a lt h # XI ( 1 9 W ) . M o r ia r ty , W # D. "An A p p r a is a l o f th a P r a a a n t S t a t u s o f A d r s r t l s l n g , " A nar l e a n B o o n o n ie Ray l a y . XV ( 1 9 2 5 ). H o s t e l l e r , M ., and V o g a s, R . "An X x p e r in e n ta l M aaaura n a n t o f U t i l i t y , " J o u r n a l o f P o l i t i c a l B cononr (O c to b e r , 1 9 51)* V aunan, P . " C o n p la ta O rd e rin g and R a v a a la d P r e f e r e n c e ,” R aylaw o f B oononlo S t u d i a a . Vol# 27 ( F e b ., 1 9 6 0)# R a ^ i j w ith r e j o m a e r , u s s w s , H ., Vol# 28 (F e b # , __________• "A F a r t h e r Mote o n R e y e a le d P r e f e r e n c e ," lo o n o n ic a . V ol# 2 6 , Vo# 102 (M ay, 1959)# V ik a s , V# "Tha R o le o f Q u a n t i t a t i v e T h in k in g i n Modern B oononlo T h e o r y ." R eview o f S o c i a l Boonouar# Vol# X V II, V o. 2 ( S e p t# , 1 9 5 9 J# O h in s , T . "C o n au n ar and I n f o r a a t l o n # " Tha B o o n o n ie jo u r n a l# Tha Q u a r te r ly J o u r n a l o f i n s io y S T " I c o n o m o s o c ie ty # vo# z o i iM arcn# m o i l # P e a r o e , I . P . " i n B x a e t M ethod o f C onaunar D anand A n u ^ a i a ," Bconon a t r i o s . V ol# 2 9 , Vo# 4 ( O c t . , 1961)• Q u a n d t, R . B# " P r o b a b i l i s t i c T haory o f C onaunar Bahay i o r , " Q u a r te r ly J o u r n a l o f R o o n o n lo c . V ol# 70 ( Vov. , I 9b 0 j# 1 6 1 Q uirk# J» P«# and S ap o sn ik # R* " A d n i s a l b l l l t y and M e asu rab le U t i l i t y F u n o tlo n s # " Tha R eview o f B oononlo t t a i i t i i V ol* XXIX# Vo* 79 i r e o * , 1 962)* R obinaon# D* B* "Boononloa of F a s h io n D anand," g a r t e r I t J o u r n a l o f B o o n o n lo a. V ol* 75 (A u g ., R oaeborough# H* "S ons S o e io lo g l o a l D in a n a io n a o f C onaunar S p e n d in g # " C a n a d ia n J o u r n a l o f B oononloa and P o l i t l o a l S o la n o a * v o l* zo* io * 3 1a u g u a t. 1 9 6 6 )• R o th a c h ild , K . V* "A H ot# o n A d v e r tis in g # " B oononlo J o u rn a l* I p r l l # 191^2* R o tw a in , B* "The M ethodology o f P o s i t i v e B o o n o n lo a# 1 1 O u a r ta r lT J o u r n a l o f B oononloa* V ol* L X X III. Ho* £ (hot*# 1 9^ ) • Roy# R* "Da 1 'u t i l I t a . C o n tr ib u tio n a l a t h a o r l a d aa o h o ix # " A o tu a ir ta a f l o l a n t i f i q u a a a t I n d u a t r l a l l a a . Ho* 930 ( F a ria * b a r n aim , i91|2)* S sn u e lso n # P a u l A* "C o n a u n p tlo n T h a o ry I n Tarm a o f R a- v e a le d P ra fa ra n o a * " E co n o m ica, n -a * Vol* 15 (Hot** 19W ) . ------------------------- ---------------------- m * "Tha B n p l r lo a l I n p l l o a t l o n a o f U t i l i t y I n a l y s l s # " B o o n o n a trlo a * Ho* 6 (1 9 3 3 )* Sohunuokar# H* "Z u r a a th o d ia o h a n e n tw io k lu n g a m p rla o h an H a o h fra g a a n a ly a a I n d a n l a t s t a n a n a n s lg Y a h re n ." W s lw lr t a o h a f tll o h e s a r o h l v . V ol* 80# Ho* 1 (1 9 5 8 )* S ln o n # H* A* " T h a o rla a o f D e o islo n -M a k ln g i n B o o n o n lo a# 1 1 A n a rlo a n B o o n o n ie R ev iew . J u n a , 1 9 5 9 . S p iro # A* " H e a lth and th a C o n a u n p tlo n F u n o tlo n # " Tha J o u r n a l o f P o l i t l o a l Boonontr* Vol* LXX# N o.T i” (lu g * # 1 9 0 2 ) . i S p ra o a# J* "An B n g e l-ty p e C urve f o r C ash#" Tha Man- o h a a ta r S c h o o l o f B oononlo and S o e la l o t u a i e s . V ol* m (1957)#-------: ----------------------------------- S to o k ln g , C* A* "M odern A d v e r tis in g and B o o n o n ie T h eo ry # " A n a rlo a n B oononlo Review* XXI (1 9 3 1 )* 162 S to n e , R lo h a rd , and Rowe, D . A* "Tha M ark et Danand f o r D u ra b le G ooda," B o o n o n e tr lo a , V ol* 25 (1 9 5 7 )* S tr a s a n a n n , W * P* "Optimum C o n a u n p tlo n P a t t a r n a I n H ig h -In o o n e N a ti o n s ,” Tha C a n a d ia n J o u r n a l o f B oononloa and P o l i t l o a l s o ie n o e , v o l . z o , no* 3 (lug*, 19627.-------------------------- T l n tn e r , O* "The T h a o r a tlo a l D e r iv a t io n o f Dynamic Danand C u rv e s ," B o o n o n e tr lo a , No* 6 (1 9 3 8 )* IT* 8 * D a p a rtn a n t o f Labor* "C o n au n ar P u rc h a s e s t u d i e s , " B u l l a t l n a . 6I 42- 6I 4.9 (1 9 3 8 -19k 0) • W ald , A* "Tha A p p ro x im ate D a t a m l n a tl o n o f I n d i f f a r a n e a S u rv e y s b y Beans o f B n g e l C ur y e s ." B o o n o m atrlo a* V I I I (19M>)* Wo I f a , A* E . " t h r e e D im e n sio n a l D la g ra n a i n I l l u a t r a t l o n o f Conaum ara Dmaands o f I n t a r a a t R a ta a and B a y e r 'a S u r p lu s e s ," A n a rlo a n B oononlo R ay law * XV (1 9 2 5 )* W olf a , H* D *, Brow n, J . K *, and T honpaon, 0* C* "M e asu rin g A d y e r tls ln g R e s u l t s , " N a tio n a l I n d u s t r i a l C o n fere n c e B oard S tu d ie s I n b u a in e a a P o l i c y * No* 1QZ {new Y ork* N a tio n a l i n d u s t r i a l c o n f e r e n c e B o a rd , 1962)* Z e l i n e r . A* " S h o r t- r u n C o n a u n p tlo n P u n o tio n ," B e o n o n e tr lo a * Vol* 25 (O o to b e r, 1 9 5 7 )* * " T e s ta o f Bone B aalo P r o p o s i tio n s i n th a T n eo ry o f C o n a u n p tlo n ," A a e rlo a n B oononlo R aylaw P a p e rs and P ro o s e d ln g a * v o l* "50"rWey , W > 6 ).------- APPEHDIX TTT I c o ' mo- e « * j o o i a i c i o m mm ihcm o o im n u r t i tao ■ 100 d i a i c i o m s MMwico i m n « « ' OMcrrvMMMiHi K c H M i c v r bTw cu m o iota t » -1 --4

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Creator Baylor, Aly Asgar (author)

Core Title A Positive Approach To Advertising And Publicity As A Function Of Consumer Preference

Degree Doctor of Philosophy

Degree Program Economics

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Economics, theory,OAI-PMH Harvest

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Phillips, E. Bryant (committee chair), Anderson, William H. (committee member), Scholtz, Robert A. (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c18-295496

Unique identifier UC11359038

Identifier 6402563.pdf (filename),usctheses-c18-295496 (legacy record id)

Legacy Identifier 6402563.pdf

Dmrecord 295496

Document Type Dissertation

Rights Baylor, Aly Asgar

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA