Day 041 - 28 Oct 94 - Page 06

     
     1        through advertising to persuade the viewer, consumer,
     2        whatever, that the particular product that you are
     3        advertising is superior in some way and should be
     4        considered the best in the marketplace as far as that
     5        manufacturer or provider is concerned.
     6
     7        I think there are some general misconceptions as to how far
     8        advertising can go in doing that.  It can certainly achieve
     9        the trial of a product at least once, but at that point it
    10        is very much the product itself that will encourage the
    11        repeat purchase.  So, the advertising is really there to
    12        gain that trial and to create some kind of brand awareness.
    13
    14   Q.   Moving on from there, suppose you have a product which was
    15        once new but is no longer as, for example, a cheeseburger
    16        or a box of regular french fries, what do you hope to
    17        achieve in relation to those products by continuing to
    18        advertise them?
    19        A.  In that case, where you have a particularly mature
    20        market, then we are very much in competition with other
         people in that market.  The advertising would be designed
    22        to have people visit McDonald's more frequently than they
    23        would the competition.  So, it is very much fighting for
    24        market share.
    25
    26   Q.   That leads to another question, Mr. Hawkes:  You tell us of
    27        competition within the market.  It follows that you
    28        perceive you have competitors.  So far as McDonald's are
    29        concerned, who do they perceive as being their competitors?
    30        A.  Our direct competitors would be seen as any other
    31        restaurant chain that is selling hamburger products.  As it
    32        moves on from there, so it would be chicken products,
    33        pizza, anyone who is selling similar products that are
    34        delivered in a similar way, in a quick service restaurant
    35        type of way.
    36
    37   Q.   If we can name names (which we are not afraid of doing in
    38        this court), Mr. Hawkes, can you think of the names of the
    39        sorts of companies that McDonald's sees as its competitors
    40        in this country?
         A.  Yes.  Burger King, Wimpey, Kentucky Fried Chicken,
    42        Pizza Hut, Pizzaland -- we would consider those to be the
    43        key competitors.
    44
    45   Q.   I am going to show you some tables or charts prepared or
    46        brought into court by Mr. Fairgrieve in a moment, but
    47        I want to ask one or two more general questions about
    48        advertising.  I am still talking about advertising
    49        generally to the public at large.  From what you have said,
    50        I take it that the benefit for the advertiser is that if he 
    51        is lucky he increases his sales? 
    52        A.  Yes. 
    53
    54   Q.   If he is not so lucky, then his expenditure on advertising
    55        may at least keep his sales steady and prevent a decline;
    56        is that possible?
    57        A.  It may be possible, but it depends on what the reason
    58        for the decline is.  If his product itself is not as good,
    59        then the advertising may not be able to do that.
    60