Wednesday, August 29, 2012

The "Gujummer" Wars

Marketplace's story, "The economics behind the ice cream man," describes how drivers dealt with their encroachment on their territories. A driver would cultivate a neighborhood, arriving at the same time each evening, stocking the preferred items and generally getting to know his customers. Once these relationship-specific investments were sunk, another driver would start arriving just before his time slot. It is bad enough when the other driver is from a different company, but often two different "Good Humor men" would vie for the same neighborhood.
There are people going in the same areas, and if a newcomer goes into an established area, established by someone else, then they’re going to get very mad, maybe hostile.

Usually the brand owner will provide exclusive territories to different venders so they would have incentives to sink these costs. But this is a cash and carry business and it is difficult to verify territorial encroachments. Headquarters has a difficult time policing violations and it is up to individual drivers to protect their investments, sometimes resulting in broken bones. This was once explained to me by an economist friend who once sold ice cream for Good Humor in New York, which is pronounced "Gujummer" in New York.

1 comment:

  1. The economics of ice cream trucks are remarkably close to the economics of Medical Device and Pharma sales! Reps from the same company vie against one another for sales commissions from the same physicians/hospitals/accounts all the time!