has eroded in recent years, largely
as a result of focusing too much TRACKING CACHET: How much of the overall category was selling
on the superpremium end and at a premium over the price of value brands in 1997 versus 1988?
letting the main brands drift ten
ward the private label. Unilever, 100%
for example, failed to capitalize on
the cachet of its superpremium
Five Brothers brand by under- 80%
investing in Ragu, which for 70% Soup
some time had been a premium
60% 60% Yogurt
product. If you lose the focus on
building cachet for the entire cat- 50% Italian Sauce
egory, you can expect your earn- 40% 40% Coffee
ings to take a fall as weU.
25% Facial Tissues
Vijay Vishwanath and David
Harding are directors of
Bain & Company in Boston. 0% -
The Cutting Edge in Auctions
No, it's not eBay or FreeMarkets.
It's not even on the Net.
by Eric van Heck
Until recently, auctions were a relatively
exotic way to buy and sell goods. The Web
has changed that. Electronic auctions
have popped up like crocuses in early
spring - several hundred now operate on-
line. And yet the place to see state-of-the-
art auctions is not on the Web but rather
at one of a dozen or so auction halts in
Holland, where nearly 60% of the world's
cut flowers are sold each year.
Because flowers are highly perishable,
Sellers of time-sensitive goods on the Web should look
the Dutch flower auctions are built for at the Dutch flower auctions as a model.
speed. Every day, millions of flowers 60,000 transactions. Most of the flowers The key to the process is a method of
arrive at Amsterdam's Schiphol airport. will then be rushed back to the airport selling goods, known as a "Dutch aurtion,"
They are then quickly transported to for immediate export. Thus, over a 24- that dates back to the 1870s. Unlike the
nearby auction centers, the largest of hour period, a dozen roses can be shipped more common English auction, in which
which covers the equivalent of about 100 to an auction center by a grower, pur- bidders push the price up from below, the
soccer fields and can host up to 2,500 buy- chased by a wholesaler, delivered to a re- Dutch method starts with a high price set
ers. By day's end, more than 34 million tailer, and end up in the hands of a New by the auctioneer. The price then drops
flowers (and 3 million potted plants) will Yorker in desperate need of an anniver- until a buyer signals that he will take the
have been purchased in the course of sary gift. goods. No actual bidding is involved.
18 HARVARD BUSINESS REVIEW ?Vlarch-April 2000