There has been a lot of speculation (again) recently about General Motors (GM) filing for chapter 11. Reports suggest that the company would use this form of bankruptcy protection so that it could liquidate undesirable assets and renegotiate contracts. Of course, these are all things it has been trying to do over the past few months, a period during which it has received substantial funding from the US government ($17.4 billion was divided between them and Chrysler). It’s worth noting that, according to some reports, only around 10% of companies manage to reorganise successfully. Naturally, my interest is the potential reaction of consumers if GM did file for Chapter 11 rather than the politics of bailing out companies. That said, I will add that giving a huge amount of money to a group of people who have demonstrated that they can’t run a business well seems a little, how shall I put it, optimistic. […]
Too Much Choice: Part IV
Christian and Sonya raised an interesting conundrum with their question in reply to my last post. “In a category like breakfast cereal, are the manufacturers hurting themselves by having so many brands and varieties within those brands?” There are two aspects to this from a retail marketing and consumer behaviour perspective. The brands are doing themselves a favour (with an approach that was started by the cigarette manufacturers many decades ago): by proliferating the number of brand options you increase the likelihood that someone will choose one of your brands (and they basically don’t care which the customer takes so long as it’s one of theirs). This makes it much, much harder for a new entrant to take market share away. The retailers however are not helping their cause. It’s been found in one study of European supermarkets, that those who stock a smaller ranges sell more in total than those that stock […]
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