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One of the interesting dilemmas when you look at
research and advertising is that if you ask the
psychologist and my behavioral colleagues
does advertising work?
They study it in the lab.
And they say yes, it changes people's preferences.
People who see the advertising come on our side.
But if you see the effects of advertising in the field, they
are there but they're not as strong.
So what we started doing was ask the question why don't we
see the effect of advertising on prices and profits as much
as we would like to see or at least what the lab studies
would suggest?
There'd be a lot more.
If you bought into those studies, you'd say, well, they
should be allowing you to raise prices quite a bit, and
you should be making tons of money.
The fact is it doesn't happen that way.
So we dug a little bit deeper into this and again developed
a very sound economics OR type of model.
And the result of that model which was kind of interesting
was that we saw changes in preferences.
But the changes in preferences were such that, in many
instances, you saw more indifferent consumers.
So rather than polarizing preferences--
which would be very good--
you did affect preferences, but you brought
them into the middle.
And if you have more indifferent consumers, then
that's likely to lead to more price competition.
And that's likely to lead to also lesser profits.