1. 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
20%
Vijay Vishwanath and David
Harding are directors of
Bain & Company in Boston. 0% -
1988 1997
Reprint F00202
best practice
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