Imponderables

by David Feldman

  Most states require service stations to prominently post the prices for at least some of their types of gasoline. Even in states without this legal requirement, low-ballers want to announce their prices, and “name-brand” service stations are viewed with suspicion if they fail to post prices.

  To entice customers into their stations, gasoline marketers have adopted one of the oldest merchandising techniques: the loss leader. In most stations, regular leaded gasoline is sold at a disproportionately low cost, so that the station may post a low price prominently on its signs. Most dealers work on what is called the pooled margin concept. Rather than have each type of gasoline carry its own weight in profit margin, the goal is to have the mix of the three grades and the self-service and full-service options yield together the desired profit margin. If no profit is made on the self-service leaded regular (the perfect type of gas to be the loss leader, since it is the cheapest and has a rapidly declining share of sales), the loss can be made up for by artificially increasing the price of, say, full-service unleaded premium.

  Some states actually have laws prohibiting the sale of any grade of gasoline at a loss, in order to prevent unfair price manipulation (and the forcing out of small dealers by larger oil companies). Despite all the fancy strategies, the name of the game in gasoline pricing is: What will the market bear?

  At the time this book is being written, this might be the price structure of a typical conventional service station:

  Self-service

  Full Service

  Regular

  $1.12

  $1.37

  Unleaded

  1.24

  1.49

  Premium Unleaded

  1.42

  1.69

  When self-service was first introduced, the pricing gap between self-service and full service was considerably less than it is today. At the time, most dealers didn't realize how many customers would switch to self-service and how many employees could therefore be laid off. But the original 3-5 cents that was charged as a premium did not pay for the use of even a minimum-wage employee in most circumstances, and competition from totally self-service stations forced most dealers to cut prices. Profit margins were wrecked.

  Not only did most station owners find that raising the prices significantly did not deter most full-service customers, they found that full-service customers in general were not price resistant. This insight led to all sorts of pricing inequities, including the Imponderable that originally inspired this question: Why must the premium unleaded customer, in our hypothetical gas station above, pay 5 cents more for the privilege of receiving full service than his unleaded or regular counterpart? Surely it doesn't cost more to pump premium than regular!

  These strange pricing gaps—and they are very common—exist because dealers can post them without customer resistance. The extra nickel per gallon that the dealer picks up on premium unleaded customers allows him to advertise the regular leaded for a few cents less, perhaps dragging in a few more hapless customers.

  Why does a thumbs-up gesture mean “okay”?

  Any Roman gladiator movie worth its salt includes the obligatory Colosseum combat scene wherein the sated, corpulent sovereign seals the fate of a beaten warrior by giving the thumbs-down signal. The crowd, with their thumbs, advises the king; in movies, at least, hanging juries were the rule, though they may have been prejudiced by the foreboding music on the soundtrack.

  Most people assume that the modern-day thumbs-up signal originated from this Roman affirmative meaning. Not so. In his book Gestures, Desmond Morris explains that Romans signified their approval of a beaten warrior not by signaling thumbs up but by covering their thumbs. When the crowd wanted the victorious gladiator to finish off the loser, they extended their thumbs, which Morris theorizes mimicked the act of stabbing the beaten man.

  If Rome was the birthplace of the thumbs-up signal, we would expect the gesture to be popular there today, and yet Italy (followed by Greece) was found to be the country in Europe where this meaning is least signified. In many parts of southern Italy and Greece, the thumbs-up gesture is a sexual insult rather than a sign of approval. It is likely that the thumbs-up gesture started somewhere else.

  If the early Roman derivation has been debunked, why do we use a thumbs-up signal to indicate “okay”? The historical evidence, as with most gestures, is murky and contradictory. Morris and other authorities believe the predominant reason is that Western culture tends to associate upward movements with positive, optimistic feelings and downward movements with negative, pessimistic emotions. Obviously, any finger pointed upward is heaven-bound. In the 1970s, the gesture of a forefinger extended upward became a symbol of fundamentalist Christians. The solitary forefinger not only indicated “one God” and “one way,” but where God resided and where the good Christian could someday reside.

  The thumb might have been selected as the raised digit because it is the most easily isolated finger. Try raising your finger and withdrawing your other fingers, and you'll realize why the thumb was a more natural choice.

  Why can't you buy Hellmann's mayonnaise in the West? Why can't you buy Best Foods mayonnaise in the East?

  If you live in or west of Montana, Wyoming, Colorado, or New Mexico, chances are you buy Best Foods mayonnaise. If you live in or east of North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, or Texas, you probably buy Hellmann's mayonnaise. Both brands are dominant market leaders where they are sold, but except for the El Paso area of Texas, their distribution does not overlap at all.

  Why don't the two brands compete against each other? It's a long story.

  First there was Hellmann's—actually, a Hellmann, a German immigrant who opened a delicatessen in New York City in 1905. His wife created a mayonnaise that Richard Hellmann used in his own store. In response to customers' requests, he began selling the mayonnaise “to go”—for 10 cents.

  Hellmann originally sold two slightly different formulas. His most popular formulation's jar was adorned with a blue ribbon, which still is displayed on Hellmann's jars today. Hellmann's cottage industry soon turned into big business. Once he started prepackaging jars, in 1912, distribution spread rapidly. He bought a truck to deliver jars, and soon he had a fleet. In 1913, the first Hellmann's plant was built on Long Island, and the mass-market mayonnaise business blossomed in America.

  Hellmann's success caught the eye of giant General Foods Corporation. In 1927, it purchased the Hellmann name and facilities. General Foods extended the distribution of Hellmann's beyond the East Coast, since competitors were sprouting throughout the country.

  The most successful of Hellmann's counterparts was a West Coast mayonnaise called Best Foods. Best Foods wanted to seek eastern markets, and an inevitable clash was averted when Best Foods took over the Hellmann's brand in 1932, thus gaining the lion's share of the real mayonnaise market in the United States. By the time of the merger, both brands were so firmly entrenched in their areas, and had such a dominant market share, that it was decided not to change either name. Best Foods later became a division of CPC International, Inc., and CPC decided not to rock the boat either. West of the Rockies, Best Foods is the number one mayonnaise; East of the Rockies, Hellmann's is king.

  CPC is a canny food marketer. For the most part, its brands are in extremely unsexy categories—syrups, oils, pasta, bread, peanut butter, and dyes. CPC makes no attempt to trumpet its own name in advertisements, as Beatrice and General Foods do, yet virtually all of its brands—Hellmann's/Best Foods, Karo, Mueller's, Niagara, Rit, Skippy, Thomas', and Knorr—are market leaders in the U.S. and abroad. CPC believes that brand identification is key—that consumers are loyal to Tropicana orange juice, not to Beatrice—so CPC is willing to suffer inconveniences in order not to interfere with allegiance to its popular brands.

  One obvious problem with manufacturing two mayonnaises is advertising. Although the advertising campaigns for Best Foods and Hellmann's are identical, they must not only make two separate commercial
s for each product, but then are incapable of running national television or radio spots or national magazine ads: CPC is forced to use “split runs,” losing some economy of scale. Extra label and packaging costs are incurred by retaining the separate identities of the two brands.

  The obvious questions remain: When Best Foods took over Hellmann's, which recipe was used? And are the two mayonnaises now identical? When Best Foods took over, the new Hellmann's labels assured the consumer that the old Hellmann's formula was being maintained. The mayonnaises were quite similar anyway, with Hellmann's having a slightly spicier flavor. Even today, the products are not identical. Although they are processed in the same way, their seasonings are a little different, and Best Foods mayonnaise is slightly more tangy. Both labels include the information that the mayonnaise is known by the other name on the other side of the Rockies, but representatives from CPC informed Imponderables that most consumers don't know about the Hellmann's/Best Foods connection and tend to complain to grocers when they can't find their favorite mayonnaise in a new location.

  CPC was faced with another marketing problem when deciding what to call its mayonnaise in foreign countries. CPC's mayonnaise is sold in about twenty countries overseas, with Hellmann's the most common name. But Best Foods is used too, and the same mayonnaise is sold as Fruco in much of South America and as Chirat in Switzerland.

  Considering the potential confusion, and the fact that no other food product is a market leader under two different names, it is a bit surprising that CPC has never considered aligning the two brands. CPC insists it is happy with the arrangement, and when you consider that, divided, it has conquered such supermarket heavyweights as Kraft, it's difficult to argue with CPC's logic.

  Not all companies are content to be anonymous to the consumer or to see conflicting brand names diminish the strength of their identity. In late 1984, Nissan Motor Corporation bit the bullet, and the world's fourth-largest automobile manufacturer announced that there would be no more Datsun. All of its products would now be manufactured under the parent company's name—Nissan.

  Nissan sells vehicles in more than 150 countries and manufactures or assembles cars and trucks in 21 countries, including the United States. Nissan felt it was important to ensure worldwide continuity of the Nissan name. The cost of the project: roughly $30 million, including installation of new signs, removal of old signs, and design changes. Nissan then undertook a massive advertising campaign to emphasize that Datsun had become Nissan.

  In a case where a brand has a poor image, name changes are often tried (e.g., Sambo's coffee shops), usually without much success. It is unusual for a successful name to be retired, but as the president of Nissan Motor Corporation in the U.S. stated, “Two names can be confusing, especially as Nissan's global operations grow.”

  Nissan figures that if you like the Sentra, you might be prone to buy a Nissan if you were in the market for a truck. CPC figures that even if you like Hellmann's or Best Foods mayonnaise, you won't automatically buy its Mazola instead of Wesson. Nissan's strategy is to build corporate loyalty; CPC's strategy is to build brand loyalty.

  Why are copyright dates on movies and television shows written in Roman numerals?

  This is not the kind of question movie studios want to answer on the record. About the only reason anyone could come up with to answer this Imponderable is the obvious one—they express the release date in Roman numerals in order to make it more difficult for viewers to determine exactly how old the show is. It is hard enough to spot the release date printed in Arabic numbers during a fast credit crawl.

  Although studio representatives were not unwilling to so speculate off the record, none of them knew this “deception theory” to be a fact. It may be just as likely that copyright dates are in Roman numerals simply because they've always been that way: Never discount inertia as an explanation for any phenomenon.

  There are many new avenues for international distribution of movies and television shows, notably cable television, home video, and videodisc. With each new “window” of distribution, some time elapses. A hit movie might show up on cable television six months after its theatrical release, and then on video-tape and videodisc a year later. But non-hit movies can have a more erratic distribution time frame—B-movies like horror movies or kung-fu flicks might not even hit theaters, let alone home video, until many years after they are shot. And the movie may not be released in foreign markets until even later. There are more reasons than ever for concealing the true release date of movies (writers have long made it a policy not to put dates on screenplays they send out for consideration—the older the date, the staler the script somehow seems to the reader).

  Ironically, though, more and more Arabic numbers are popping up on release dates, particularly in television. ABC- and NBC-produced shows now use Arabic numbers, and some movie studios use Arabic numbers, although the policy is inconsistent. W. Drew Kastner, a lawyer for NBC, indicated that the network has no reason to make it difficult for viewers to know exactly when a show was taped or filmed.

  Is there any practical reason for the copyright date in the first place? Although ideas cannot be copyrighted, the expression of such ideas is protected. By inserting the copyright date, movies are automatically protected by the Universal Copyright Convention, which means that if there is a copyright date listed, it will be protected internationally, without the need for costly legal paperwork in each locality the film is exhibited. Under the old copyright law in the United States, the term of the copyright was 28 years from the date of publication. But under the current law, effective January 1, 1978, the copyright extends to the life of the author plus 50 years, or 100 years after creation, or 75 years after publication, whichever is less. With the advent of home video, the copyright on a film is more valuable than ever. It isn't important, or even desirable, for you to be able to read the copyright date while watching the movie. But it is important that would-be plagiarists know where they stand.

  Why don't penguins in the Antarctic get frostbite on their feet?

  The yellow-necked emperor penguin, the largest species of penguin, spends its entire life resting on snow or swimming in water at a below-freezing temperature. A penguin's dense feathers obviously provide insulation and protection from the cold, but how can it withstand the cold on its feet, when humans won't put their limbs into the ocean when water is in the sixties?

  Penguins' feet are remarkable creations. They are set back much farther than on other birds, so that penguins walk up-right, but this conformation's main attribute is to help them swim. Next to the dolphin, the penguin is the fastest swimmer in the ocean. When swimming, a penguin's foot trails behind in the water, acting as a rudder and a brake.

  During their hatching season, mother and father alternate diving into the ocean for food. Encyclopedia Britannica estimates that the cooling power of the seawater to which they are exposed is the equivalent of a temperature of -4 degrees Fahrenheit with a wind of 70 miles per hour. Add the 10 or 20 M.P.H. speed at which the penguin typically swims, and you have rather uncomfortable conditions. The penguin's skin is protected by a layer of air trapped under its feathers—only the feet directly touch the water.

  When the penguin finds food, returns to the mate, sits on the chick, and watches the mate leave to find more food, it has gone from the frigid water to standing directly on snow that is, needless to say, below freezing temperature. How can the feet withstand such punishment?

  Penguins' feet do get very cold. They have been measured at exactly freezing, in fact. If their feet stayed at a warmer temperature, they would lose heat through convection or conduction.

  The low temperature is maintained by penguins' unique circulatory system. As arteries carry warm blood toward the toes, penguins have veins right next to them carrying cold blood back in the opposite direction. In effect, the two bloodstreams exchange heat so that the circulation level can remain low enough to conserve heat and just high enough to prevent tissue damage and frostbite. Pen
guins' feet have very few muscles. Instead, their feet possess a vast network of tendons, which do not become as painful as muscles when cold.

  Of course, there is another explanation for why penguins don't exhibit foot pains. They are not crybabies, and they are tougher than humans.

  Why haven't the fast-food chains been able to create a successful dessert?

  Fast food. Junk food. The two seem to fit together like hand and glove. But what do we see? Ads for Wendy's introducing a line of low-calorie foods. Burger King installs salad bars.

  For a long time fast-food chains have developed desserts, and for a long time they have failed. In 1984, desserts constituted only 4 percent of total fast-food revenue. Isn't the customer who wolfs down a cheeseburger and fries a prime candidate for dessert? Aren't kids, devotees of fast food, the largest consumers of dessert?

  It turns out that there are at least ten reasons that conspire together to rob the fast-food chains of the profit they feel they deserve from desserts—and in no particular order, here they are:

  1. Sixty percent of fast-food revenue is collected during breakfast and lunch. Most desserts are bought at dinner or as an after-supper treat.

  2. The big fast-food chains face specialized competition. Ice cream parlors and cookie stores are able to put all of their marketing muscle on their desserts and usually serve a superior product.