Advisory opinion letter to Ms

Dear Ms. Cotter:

Shortly after your letter of March 11, 1976, arrived John Wilcox moved. We recently discovered that the answers to your questions were not sent to you, so that you could proceed with the advisory opinion of the Market Monitor service. The following are the details addressed in each question and numbered accordingly. (I have also enclosed a copy of your letter.) 1. Price information is to be collected weekly and is to be published weekly on the third day after the information is received by Mathews Research.

2. Prices are effective as of the date they are submitted to us by the store operator. There is no guarantee as to the length of time the prices will remain the same.

ADVISORY OPINIONS 1041 3. A sample page from the Market Monitor report is enclosed.* 4. All clients will receive the same infotmation; it will be available to anyone willing to use the service at the established rates. Food manufacturers may only wish to purchase information that pertains to their product group, or only require a partial report. 5. The retailers participating in this project will be from the divisional (or regional) levels. Our first test is to work with the chains that have stores located in the Youngstown/Warren SMSA. The divisions are located in Youngstown; Sharon, Pennsylvania; Cleveland, Ohio; and Pittsburgh, Pennsylvania. The prices and product lists will only be reported for the Youngstown/Warren SMGA. If the test is successful we would like to expand the service to other areas.

6. If the Youngstown/Warren SMSA test is successful, Mathews Research intends to expand the service into other areas located in Ohio, Pennsylvania, Western New York, Michagan, Indiana, and Illinois. Our resources are limited, and slow growth is anticipated. 7. Each grocery division has a computer print-out of all products, sizes and prices the company stocks. Each store manager prices his stock according to this list. The computer print-outs of all products, sizes and prices each division carries will be received by Mathews Research. We have not been able to obtain copies of the print-outs but have enclosed a copy of one that has wholesale prices. 8. As far as we understand, the Youngstown/Warren SMSA is a one price zone. Consequently, we will only be furnished one price for each product.

9. The information will enable retailers to be competitive in their markets. For example, if a price in one chain is lower than another the higher price chain would question the manufacturer as to why the lower priced chain was able to obtain the product for less. Moreover, the higher priced chain would question their pricing structure and if too high might lower their prices, thus enabling slightly more competition in a market area. If the report were not timely they would not be able to adjust their prices and if a manufacturer were offering discounts within a given time period they would not be able to take advantage of the lower discount rate. * Not reproduced herein.

Product manufacturers would be able to use the information to analyze why a product is doing well or poorly in a market. For . example, the retail price is higher in one market or not stocked in a market: this could explain why the product is not doing well in that area. It is not essential that the product manufacturers receive the Market Monitor as quickly as grocers, but to offer data more than two months old would weaken the value of our service; they could obtain this information in that length of time from their salesmen and other research services.

10. Representatives of food stores have indicated to us that the information available through the Market Monitor would be more reliable than traditional methods of collecting data, and at a lower cost to them.

11. A vice president of a food store chain indicated to us that we should propose the consolidation of pricing lists from several chains. He knows this is being done in California and those who participate | are finding it useful. It gives them a complete list of store items at a lower cost.

We asked the major chains operating in this area and they have indicated their interest, and would be willing to give us their price lists. Before they proceed they want an opinion from the F.T.C. to -insure they are not in violation of your regulations. Moreover, Mathews Research would not wish to provide a service that would be an embarrassment to our clients at a later date. I certainly appreciate your interest and help in this matter. If I can provide any additional information please let me know.

Sincerely,
/s/ Donald H. Mathews
Donald H. Mathews, Ph.D.