Market leader: can there be more than one?
In times of fierce market competition, it is becoming increasingly attractive to construct advertising campaigns that contain superlatives, in particular regarding market leadership.
Traditionally, this has meant only one company and it was the one that had a clear and for many years well-established prime position in the sales of products in a given market. However, it seems that there may be actually several leaders – according to a ruling of the Court of Appeals in Poznań, dated 12 December 2013, published in a dispute over rice advertising (case ref. I ACa 958/2013). So, what should one pay special attention to, when creating an advertising message concerning a company’s market position?
1. The narrower the product market, the easier it is demonstrate market leadership
If the market is defined precisely, then even a niche product manufacturer may attempt to communicate to consumers that it is number one in that market segment. Such advertising, though, must not mislead consumers, such as by including a tag or banner stating “number one” next to products for which it is not. In the event of any litigation, the statement’s use would be analysed in terms of manner and context, such as in adverts at points of sale or on the internet.
2. Educating consumers helps in defending against accusations of misleading them
The court found that the way advertising is perceived by consumers must take into account the specificity of the advertised product and the way it is presented on the market. It is assumed that producer-educated consumers of select goods (in this ruling – basmati rice) are less prone to being misled than consumers of common goods (such as white rice).
3. The advertising message relating to market position must be justified by data from sales of the product concerned
A good practice for avoiding doubt as to a statement’s veracity is to supplement the advertising message with a reference to a market research agency’s report containing data supporting the claim. The explanation must be accurate, accessible and easy to understand by the advertising’s recipient. What is more, it cannot change the content of the advertising; it may only complement it and forestall consumers’ wrong perceptions.
Dr Ewa Butkiewicz, Joanna Krakowiak, Life Science and Regulatory Law Practice, Wardyński & Partners