Robert Langton is currently aLecturer in Commercial Law inthe Commerce Department atthe University of Adelaide.

Tony Lewis is an AssociateProfessor in Marketing atMassey University, PalmerstonNorth, New Zealand.

An experimentalassessment ofthe legal value ofmarket researchresults

By Robert Langtonand Tony Lewis

Avariety of legal issues can arise when a television commer-

.

cial is alleged to constitute "misleading or deceptive con-

duct" in contravention of section 52 of the Trade Practices

Act or equivalent legislation. One of these issues is whether the

commercial conveys the implied claim that is alleged to be false.

Researchers in the field ofconsumer psychology have devised a

variety of tests of the implied claims conveyed by a television com­

mercial. However none of these researchers has shown that their

test provides evidence that a judge would find persuasive.

This paper describes a method ofassessing the weight that test

results might be accorded in legal proceedings. The method

involves an experiment in which 45 barristers are asked to predict

the outcome ofnine hypothetical court cases. Being hypothetical,

no inference is intended that any company's advertising might be

misleading or deceptive. The method is used to assess the impact of

tests in which a representative sample of the viewing public is

asked to respond to written questions after watching the commer­

cial in a movie theatre.

The study shows that this type of test could provide highly per­

suasive evidence in legal proceedings of the implied claims in a

television commercial.

Asia - Australia MarketingJournal Vol. 1, No.2· 9

IntroductionA number of legal questions canarise when a television advertise­ment is alleged to contravene thelegal rules prohibiting deceptiveadvertising. These include:* whether the advertisement con­

veys the impliedclaim alleged

* whether the claim is false* whether the claim is likely to

be believed* whether the claim is likely to

affect purchasebehaviour

* what remedy is appropriateSome of these questions have

been the subject of intensive studyby researchers in the fields ofadvertising and consumer psychol­ogy. It is therefore not surprisingthat the marketing literatureabounds with calls for greater useto be made of consumer researchin legal proceedings (Pollay 1969,Gellhorn 1969, Aaker 1974,Gardiner 1975). Severalresearchers have designed empiri­cal tests of advertisements specifi­cally to address the issues thatarise in deceptive advertising liti­gation. (Jacoby and Small 1975,Armstrong et al 1979, Rotfield andPreston 1981, Richards 1990).

On the rare occasions inAustralia and New Zealand inwhich empirical tests have beenoffered as evidence in legal pro­ceedings, the judges have declinedto give any credence to such tests.They have usually preferred tobase their decisions on more tradi­tional forms of legal evidence suchas testimony of individual con­s~mers or the opinions of commu­nications experts. Often theyappear to have relied simply ontheir own reaction to the advertise­ment. The judicial reluctance torely on evidence of consumer stud­ies can be explained by the factthat such studies resemble hearsayevidence which is generally inad­missible.

The hearsay objection has,until recently, remained an effec-

tive barrier to the introduction ofmost forms of market research evi­dence in Australia. However inArnotts v Trade PracticesCommission (1990) ATPR 41-061,the Full Federal Court of Australiadismissed the hearsay objectionand instead issued a warm invita­tion to market researchers. It stat­ed:

We have already indicated ouropinion that Australian law shouldfollow the American lead inacknowledging that market surveyevidence may playa useful role incases such as the present. In doingso, we do not mean to suggest thatsurvey evidence will always, oreven usually, be decisive. It willmerely be one element in the over­all picture, its .importance varyingfrom one case to another.

While emphasising that theimportance of market research evi­dence would vary from one case toanother, the Full Court recognisedthe possibility that in some casesmarket research evidence could bedecisive. It was this possibilitythat inspired the research describedbelow.

One type of court case wheremarket research evidence mighthave a large impact is one wherethe central issue in dispute iswhether the advertisement conveysthe implied claim alleged. Thistype of case seems to arise mostoften with respect to televisioncommercials. Preston (1987) hasnoted that most of the cases inwhich evidence of empirical stud­ies has been introduced in theUnited States have concerned tele­vision commercials. His explana­tion for this is as follows:

While nothing in the recorddiscusses that point, an easy expla­nation is that television must pro­duce most of the types of conveyedmessages that require extrinsic evi­dence. Explicit meanings andobvious implied meanings requirelittle or no such evidence, whilenon-obvious implied meanings,which do, seem to occur far more

often in television than in print orradio advertisements.

Given the American experi­ence, our research focused oncases where the central disputec.oncerns the implied claims in atelevision commercial.

Backgroundto the study

The first phase of the researchinvolved an analysis of the criteriajudges use in evaluating marketresearch evidence. This analysiswas then used· to identify a type ofconsumer test that appeared to bestmeet these criteria. This phaserelied heavily on the work ofPreston who has analysed FederalTrade Commission decisions(Preston 1987) and cases under theLanham Act (Preston 1989) inwhich consumer research has beenpresented. Following Preston, wetentatively concluded that the mostlegally persuasive type of empiri­cal test of the implied claims in atelevision commercial would beone that has the following features:* The subjects for the test are

approximately 1000 peoplewho are selected so to be rep­resentative of the general pop­ulation in the region where thecommercial is broadcast.

* Subjects are shown the adver­tisement in a theatre and askedto respond to written questionsimmediately afterwards.

* The questions asked are of theform "Is the advertisementclaiming that X?" where Xcorresponds to each claimalleged to be implied by theadvertisement.

* Subjects are asked to selectone of three possible options inresponse to each question:"Yes", "No" or "Don't know".In the rest of the paper the

term "audience reaction test" isused to refer to a study havingthese features. The results of anaudience reaction test comprise thepercentage of subjects who select-

10 • Asia - Australia MarketingJournal Vol. 1, No.2

Figure 1

Order of cases on video tapes

D Description ofaudience reaction tests

E Cases with ART scores4 Medium ART Reach5 Low ART Mitsubishi6 High ART Pine' 0 Cleen

White Magic

TapeC

ReachPine '0 CleenMitsubishi

Toyota

Panadol

British AirSimpsonHonda

Palmolive

British AirMitsubishiPine'o Cleen

White Magic

TapeB

Palmolive

Toyota

ReachSimpsonHonda

Panadol

Tape A

White Magic

British AirSimpsonHonda

F Before and after cases7 A Standard &

B High ART Panadol8 A Standard &

B Medium ART Palmolive9 A Standard &

B Low ART Toyota

A IntroductionB DemonstrationC Standard cases

1 Standard2 Standard3 Standard

ed each of the three possibleresponse options for a particularquestion. For the sake of brevity,the term "ART score" (AudienceReaction Test score) is used belowto refer to these percentages.

Our tentative conclusion thatART scores, the results of audi­ence reaction tests, would providethe most convincing legal evidenceof the implied claims in a televi­sion commercial seemed to be anidea worthy of further investiga­tion. Our investigations aimed toaddress the following two ques­tions:(i) How much weight would be

given to audience reaction testsin legal proceedings?

(ii) Would more weight be givento a different type of empiricaltest?Most of the paper describes

our attempt to answer the first ofthese questions. Less space isdevoted to a discussion of the sec­ond question.

The design ofthe studyOur first step in attempting to

assess the weight that would beaccorded to audience reaction testsin legal proceedings was to opera­tionalise the concept of "theweight given to a piece of evidencein a court case". In this study, theconcept was defined as follows:

The weight given to a certainpiece of evidence in a certain caseis defined as the change in proba­bility of the plaintiff succeedingdue to the evidence being intro­duced at the trial.

It follows from this definitionthat the weight accorded to a pieceof evidence can be calculated iftwo probabilities can be estimated;the probability of success with theevidence, and the probability ofsuccess without the evidence.

Various approaches to obtain­ing estimates of these probabilitieswere considered. The first was totry to obtain them from a sample

G Additional questions

of judges. This approach wasfound not to be available in prac­tice due to the convention thatjudges should not express opinionson hypothetical court cases. Theapproach adopted in this study wasto attempt to obtain the estimatesfrom a sample of barristers. Thebarristers selected were all thosewho had appeared in at least onecourt case decided under section 9of the Fair Trading Act 1986which is the New Zealand legisla­tion prohibiting deceptive adver­tisements. Given the short timethe legislation had been in opera­tion only forty five barristers quali­fied for inclusion in the study.

Two experimental designswere considered. The firstinvolved a before-and-after design.Each barrister would be given abrief description of a hypotheticalcourt case and asked to estimatethe probability of the plaintiff suc­ceeding at trial. They would then

be given the results of audiencereaction tests and asked for a sec­ond estimate of the probable out­come. A weakness of this designis that of confounding the effect ofthe evidence with the effect ofprior testing. Any change in a bar­rister's estimate could be attributedeither to the evidence, or to thefact that it was a second estimate,or to the interaction of these twofactors.

. The second experimentaldesign considered, involved ran­dom assignment of the barristers toone of two groups - an experimen­tal and a control group. Theexperimental group would receivethe evidence sought to be evaluat­ed while the control gr'oup wouldnot, all other factors remaining thesame. This design would allow aninference that the mean differencebetween the estimates of the twogroups was due to the effect of theadditional evidence. However a

Asia - Australia MarketingJournal Vol. 1, No.2· 11

Figure 2

Probability scale used in video tape

Certain, practically certain (99 in 100) 10Almost sure (9 in 10) 9Very probable (8 in 10) 8Probable (7 in 10) 7Good possibility (6 in 10) 6Fairly good possibility (5 in 10) 5Fair possibility (4 in 10) 4Some possibility (3 in 10) 3Slight possibility (2 in 10) 2Very slight possibility (1 in 10) 1No chance, almost no chance (1 in 100) 0

Table 1

Values of ART scores

claim to be false. Then the ad wasshown again. Finally, while theprobability scale appeared on thescreen, participants were asked toestimate the likelihood that theCourt would find the ad to contra­vene section 9 on the assumptionsprovided.

C Standard casesThree hypothetical cases were

then presented in the standard for­mat. The first case, was the sameon each tape (British Air).However the second and thirdcases depended on the tape viewedas is shown in Figure 1.

D Description ofaudiencereaction tests

30%30%30%

Don't knowNo

65%35%5%

After the first three cases, the

researchers described the format of

audience reaction tests. This

included the way the sample was

selected, the context in which the

advertisements were shown, the

type of questions asked, the

response options provided and the

way the ART scores were calculat­

ed.

Yes

5%35%65%

Low scoreMedium scoreHigh score

At the beginning of the tape,the researchers introduced them­selves and the general topic of thestudy. Participants were informedthat they were going to be asked topredict the outcome of a number ofcourt cases in which a televisionadvertisement was alleged to con­travene section 9 of the FairTrading Act. The wording of thissection was presented on thescreen. A probability scale wasthen shown and its use explained.This scale is shown in Figure 2.

A Introduction

potential problem with this designwas envisaged because thebetween-subject variation wasexpected to be large relative to thebetween-group variation.

The chosen design used a com­bination of both approaches. Theforty five barristers were randomlyassigned to one of three equalgroups. Members of each groupreceived an identical covering let­ter, printed questionnaire andvideo tape except in one importantrespect. The hypothetical casesappeared in a slightly differentsequence on each tape. Figure 1shows the sequence of cases oneach of the three tapes along withthe information given to partici­pants at various points on eachtape.

B Demonstration

Next, a demonstration example(White Magic) was provided toillustrate the way in which thehypothetical court cases would bepresented. The standard procedureinvolved the following steps. First,the ad was shown. Next, partici­pants were asked to make twoassumptions. The first assumptionspecified the claim that wasalleged to be implied by the ad.The second assumption stated thatthe defendant had admitted the

Table 2Mean and median predictions for

each of the nine cases

Case Mean Median

British Airways 1.20 1Simpson 2.05 1Honda 3.54 4Reach 4.71 6Mitsubishi 3.46 3Pine 0' Cleen 4.44 5Palmolive 5.16 6Panadol 4.23 4Toyota 3.71 4

12 • Asia - Australia MarketingJournal Vol. 1, No.2

E Cases with ARTscores

Immediately following thisdescription, three more cases werepresented. The first case was thesame on each tape (Reach).However the other two casesdepended on the tape viewed as isshown in Figure 1. These threecases followed the standard for­mat, with one important modifica­tion. In addition to the two stan­dard assumptions, a third assump­tion was included showing theresults of an audience reaction test.Apart from the addition of theART score evidence, this secondgroup of three examples was iden­tical to the first three examples. Inparticular, the ads were showntwice and participants were askedto estimate the likely outcome inthe same way as previously.

F Before and after casesFor the final group of three

cases (Panadol, Palmolive,Toyota), participants were asked toestimate the likely outcome twice,under two different scenarios. Inthe first scenario (A), only the twostandard assumptions were includ­ed. In the second scenario (B),the third assumption providingART score evidence was added.

G Additional questions

Figure 3

Distribution of predictions for all nine casesProbability Number of Responses

scale responses (%)

Certain 10 3 0.19 20 4.18 40 8.1

Probable 7 44 8.96 51 10.45 49 9.94 46 9.3

Possible 3 71 14.42 64 13.01 66 13.4

No chance 0 38 7.7

Total 492 100

Liklihood Ad Contravenes Section 9

Class 0/000/0 5% 10% 15% 20%

40% 60%Cumulative 0/0

After having predicted the out­come of the hypothetical courtcases, participants were asked toevaluate the effect of four varia­tions in the format of audiencereaction tests. These variationsrelated to the sample size, thenumber of times the commercialwas shown, the format of the ques­tions and the definition of the uni­verse. These questions aimed toaddress the second objective of thestudy which was to assess whethera different type of test would pro­vide more persuasive evidencethan audience reaction tests.

ART scoresincluded on tapesThe ART scores included in

the last six cases were hypotheticalscores contructed for the purposesof the study. The values chosenfor the study are shown in Table 1.

These three values were cho­sen for a number of reasons. First,the low and high values representextreme values. Second, the medi­um value represents the midpointbetween the high and low values.Third, the number of "don't know"responses remain constant. The

labels "low" "medium" and "high"were not revealed to participants.

Results of studyThe final response rate

achieved was just over 90% withinthe nine weeks allowed for thestudy. Of the forty five packagesposted, forty one were completedand returned. All questions wereanswered in each of the returnedquestionnaires. Each of the fortyone participants gave twelve pre­dictions. Thus a total of 492 pre­dictions was received. The predic-

Asia - Australia MarketingJournal Vol. 1, No.2· 13

NO ART(Liklihood Ad Contravenes Section 9)

High ARTscore

150/0

scores was provided in the firstscenario. The second scenarioincluded evidence of either a low,medium or high ART scoredepending on the tape viewed.The change between the first andsecond predictions was calculatedfor each participant. A single fac­tor ANOVA test revealed that astatistically significant proportionof the variation in the changes wasattributable to the value of theART score (p < 0.01). Thus, bar­risters' second predictions were

Class %

400/0 60%Cumulative %

100/05%

200/0

No ARTscore

Certain.. 10

Figure 4Predictions for four cases broken down by ART

scoreLow ARTscore

Probability Responses Responses Responsesscale No. (%) No. (%) No. (%)

10 0 0.0 0 0.0 0 0.09 2 2.4 0 0.0 1 2.48 2 2.4 0 0.0 8 19.57 5 6.1 1 2.4 9 22.06 9 11.0 1 2.4 6 14.65 10 12.2 3 7.3 6 14.64 9 11.0 0 0.0 5 12.23 9 11.0 3 7.3 2 4.92 12 14.6 9 22.0 0 0.01 17 20.7 15 36.6 2 4.90 7 8.5 9 22.0 2 4.9

Total 82 100 41 100 41 100

source of variation was not of cen­tral interest in the study. The mainobjective was to determine theextent to which evidence of audi­ence reaction tests influenced thepredictions. This was analysed inseveral steps.

The first step was to examinethe predictions for only the lastthree cases (Palmolive,Panadoland Toyota). In these three cases,participants were asked to predictthe outcome twice, under differentscenarios. No evidence of ART

tions were points on the probabili­ty scale. According to this scale,an estimate of zero represents aprediction that there is "no chance,or almost no chance" that theadvertisement would be found tobe deceptive. An estimate of tenrepresents a prediction that it is"certain, or practically certain"that the advertisement would befound to be deceptive. The overalldistribution of the predictions forall nine cases is shown in Figure 3.

As can be seen from Figure 3,there was a large variation in thepredic tion s. In only threeinstances were participants "cer­tain" the plaintiff would succeed.In thirty eight instances, partici­pants thought there was "nochance" that the plaintiff wouldsucceed on the assumptions pro­vided.

The main objective of thestudy was to assess the extent towhich the variation in predictionscould be explained by the evidenceprovided by audience reactiontests. However, prior to addressingthis objective, the effect of otherpotentially confounding factorswas investigated using a series ofone way analyses of variance(ANOVA) procedures. The poten­tially confounding factors investi­gated were:(i) the identity of the hypothetical

case(ii) the group of barristers who

watched the tape(iii) the order in which the cases

were presented on the tape(iv) the number of assumptions

provided in the caseIt was found that only the first

of these had a statistically signifi­cant impact on the predictions.The nlean prediction for eachhypothethical case is shown inTable 2.

The most likely explanationfor the observed differencesbetween the hypothetical cases isthat the implied claim alleged to beconveyed was more "obvious" insome cases than in others. This

14 • Asia - Australia MarketingJournal Vol. 1, No.2

0% 20°,lc, 40% 60% 80% 100%Cumulative %

LOW ART(Lilklihood Ad Contravenes Section 9)

Class %

0% 100/0 20% 30% 40%

cases (Simpson, Honda,Mitsubishi and Pine 0' Cleen). Inthese four cases, participants wereasked to predict the outcome onlyonce. The assumptions providedeither evidence of a low ARTscore, or evidence of a high ARTscore or no evidence of ARTscores depending on the tapeviewed. Figure 4 shows the pre­dictions for these four cases bro­ken down by the value of the ARTscore.

The observed differencebetween the means is statisticallysignificant (p<O.Ol), indicatingthat the effect of evidence of ARTscores is not limited to instanceswhere a prior estimate has beenmade. Further, a MANOVA testrevealed that the ART score evi­dence had a much greater effect onthe predictions than the identity ofthe hypothetical case (AppendixA).

Having established that thepredictions were affected by theevidence of audience reactiontests, the next question that arosewas as to the magnitude of thiseffect. The relationship betweenthe ART score and the chances ofthe ad being found deceptiveacross all nine cases is shown inFigure 5.

The figure shows the 95% per­cent confidence interval for themean prediction where one ofthree values of ART scores is pre­sented at the trial. On the assump­tion that the relationship is linear,the straight lines joining the topand bottom of these intervals showthe range within which it can beconcluded with 95% confidencethat the true mean falls for eachvalue of the ART score. Whereevidence of a low ART score waspresented, the mean prediction ofthe plaintiff's chances of successwould be expected to be within therange of 25% + 4% (ie 2.5 + 0.4on the scale). Where evidence of ahigh ART score was presented, themean prediction would be expect-

Asia - Australia MarketingJoutnal Vol. 1, No.2· .15

of the ART score evidence was tochange the mean estimate of theplaintiff's chances of succeeding attrial by 3.5 steps on the scale.

It is conceivable that this effectonly occurs where second predic­tions are made. That is, it is possi­ble that the observed differencesare th'e result of an interactionbetween the effect of prior testingand the effect of the ART score.This possibility was examined by asingle factor ANOVA test of thepredictions to four of the first six

00/0 200/0 40% 60% 80% 100%Cumulative %

HIGH ART(Liklihood Ad Contravenes Section 9)

Class %00/0 5% 10% 15% 20% 25%

Figure 4continued, J

affected by the value of the ARTscore.

Where a low ART score wasprovided in the second scenario,barristers reduced their estimate ofthe plaintiff's chances of succeed­ing at trial by an average of 1.7steps on the scale. Where a highART score was provided in thesecond scenario, barristersincreased their estimate of theplaintiff's chances of succeeding attrial by an average of 1.8 steps onthe scale. Thus the overall effect

majority of participants thoughtthat doubling the sample size (iefrom 1000 to 2000) would haveeither no effect or only slightlyincrease the weight given to theevidence as is shown in Figure 6.

The second variation consid-ered was the number of times theadvertisement is shown beforesubjects respond to the surveyquestions. The vast majority of

ed to be within the range of 61 % +5% (ie 6.1 + 0.5 on the scale).Thus, the difference in the meanestimates of the plaintiff's chancesof success between a low and ahigh ART score was about 35%.This finding - that predictions ofthe plaintiff's chances of successchanged by an average of about35% in response to evidence ofART scores - constitutes the mainfinding of the study.

In addition to predicting theoutcome of the nine hypotheticalcases, participants were askedwhether a number of possiblechanges to the format of the testswould affect the weight of the evi­dence. In describing the effect ofthese changes, participants used afive-point scale ranging from"greatly reduced weight" at oneend to "greatly increased weight"at the other. The horizontal axis inthe following bar charts corre­sponds to this scale. The verticalaxis show~ the number of partici­pants who selected each point onthe scale.

The first change investigatedrelated to the number of subjectsincluded in the tests. The vast

600/0

490/0

participants felt that showing theadvertisement twice rather thanonce would have either no effect oronly slightly increase the weightaccorded to the evidence. A fewbelieved this would slightly reducethe value of the evidence as isshown in Figure 7.

The third variation examinedwas the possibility of using open­ended questions rather than forced­choice questions. Based onPreston's analysis of United Stateslegal decisions, it was tentativelyconcluded that responses toforced-choice questions would begiven greater weight than those toopen-ended questions. This con­clusion was not supported by par­ticipants. One third of participantsthought that using open-endedquestions would greatly increasethe weight given to the evidence.Another third thought such evi­dence would be given slightlygreater weight. Only a few sup­ported the conclusion that suchevidence would be given muchless weight as is shown in Figure8.

The final possible variationinvestigated related to the groupfrom which subjects were selected.

Figure 6

I Double Sample Size & Weight

No effect

Slightly reduce

Greatly reduce 0%

Greatly increase

Slightly increase

Figure 5

20% 40% 60%ART Score (0/0 lIyesll responses)

IART Score & Ad Likely Deceptivel

5

4

6

9

8

Possible.. 3

Certain.. 10

Probable.. 7

16 • Asia - Australia MarketingJournal Vol. 1, No.2

sion advertisement conveys animplied claim. This conclusion­might be challenged on a numberof grounds.

First, it could be argued that noinference about judicial responsesto audience reaction tests can bedrawn from a study which mea­sures barristers' predictions aboutthe outcome of hypothetical courtcases. This argument ignores the

IShow Ad Twice &Weighij

600/0

fact that predicting the outcome ofhypothetical court cases is centralto the professional skill of barris­ters. This exercise involves ananalysis of the evidence that isreadily available, and of other evi­dence that could be obtained.Experienced barristers are there­fore experts in predicting the waythat judges will be influenced byevidence. In this study, the barris­ters' reponses were obtained in thecourse of their normal professionalwork. Therefore, the· study is moreaccurately classified as a fieldexperiment than as a laboratoryexperiment or simulation exercise.For these reasons, it is suggestedthat no other type of study wouldprovide such strong support forconclusions about the legal valueof a form of evidence.

A second ground on which theconclusion could be challenged isthat the evidence presented in thehypothetical cases was too unreal­istic, given the way in which thecases were selected. The caseswere selected on the basis that thealleged .claims were neither "obvi­ous" nor extremely "remote" infer­ences from the advertisement.Thus, only the medium ART scorerepresented a realistic test of the

Figure 8IOpen-ended Questions &Weight I

600/0

No effect

Slightly reduce

Greatly reduce

Slightly increase

Greatly increase

Figure 7

No effect

Slightly reduce

Greatly reduce 0/0

Slightly increase

ConclusionsThe main conclusion of the

study is that audience reactiontests provide highly persuasivelegal evidence of whether a televi-

Participants were asked fromwhich of four possible groupsshould subjects for audience reac­tion tests be selected, in order toprovide the most convincing evi­dence. These four groups weredefined as follows:* The. general adult population* The people who watched the

programme(s) in which theadvertisement was shown

* The people who regularly buyproducts of the type advertised

* The people who fall within the"target market" as defined bythe advertiserThere was very little consensus

among participants as to whosereactions the Court would findmost relevant as is shown in Figure9.

Given the lack of consensus onthis question, it may be doubtedthat alternative formulations of thepopulation would significantlyaffect the weight accorded to theevidence.

Asia - Australia MarketingJournal Vol. 1, No.2· 17

Figure 9

J Definition of Relevant Population I

Two other rules of potentialconcern to market researchers arethe one that prevents evidencebeing led on the ultimate issue inthe case and the one that preventsopinion evidence being given benon-expert witnesses. Both ofthese rules are illustrated in therecent Lego case. The makers ofLego building blocks alleged thatconsumers were being deceived bythe packaging and labelling ofsimilar blocks which were market­ed ,by the their rivals under thebrand name Tyco. In support ofthis allegation, evidence wasoffered of a market survey inwhich consumers were shown apackage of Tyco blocks and thenasked who they thought the manu­facturer was. At the trial, thejudge admitted the evidence butheld it to be entitled to littleweight. He stated:

I think the hypothetical situa­tion which was created was soartificial as to make it a quite dan­gerous guide to what the reactionsof actual shoppers purchasingLego or Tyco products from theshelf of a supermarket or a toyshop might have been.

On appeal, the Full FederalCourt felt that the market surveyevidence should have been exclud­ed from the trial. Mr JusticeGummow stated:

As I have indicated, in theabsence of a specialised market,evidence of consumers or retailersas to their likely reaction shouldnot be admitted on the issue ofwhether conduct has been, or islikely to be misleading or decep­tive.

The court gave two reasons forthis view. The first was that theevidence tended to usurp the func­tion of the court in that it aimed todetermine the ultimate issue in thecase. The court stated:

. . . the purpose of the evidencewas to show that potential con­sumers would have been deceived.Evidence to that effect is inadmis­sible, since that question is the

The possibility that these rulesmight operate to exclude evidenceof audience reaction tests was notempirically examined in the study.Barristers were asked to estimatethe likely outcome of the case inthe event that the judge allowedthe ART score evidence to beintroduced at the trial. Howevercareful attention was given to therules governing the admissibilityof evidence in the process ofdesigning audience reaction tests.It is not possible within the con­fines of this paper to undertake adetailed analysis of the potentialapplication of these rules to audi­ence reaction tests. However, afew brief points deserve to benoted.

In Australia, prior to 1990, therule of most concern to marketresearchers was the rule excludinghearsay evidence. This rule pro­vided an effective barrier to theintroduction of many forms ofmarket survey evidence. As notedabove, the Arnotts case effectivelyover-ruled the previous view thatmarket research evidence shouldbe rejected on this basis. Thisdecision brought Australia intoline with the position that hasexisted in New Zealand at leastsince 1976.

100/0

Adult Population

Target Market

Regular Buyers

Viewers

evidence. Extreme values wereused in order to estimate the extentto which judges would forego theirown interpretation of the advertise­ment in favour of conflicting evi­dence. Where ART scores corre­spond to the judge's own percep­tion of the implied claims in anadvertisement, the question of thepersuasive value of the evidencedoes not arise. The study aimed toestimate the extent to which audi­ence reaction tests have the powerto change a judge's mind about theways in which an advertisementwould be interpreted.

A third ground on which theconclusion could be challenged isto contend that evidence of audi­ence reaction tests would beexcluded from the trial due to therules governing the admissibilityof evidence in legal proceedings.The rules that have been invokedto exclude evidence based on mar­ket surveys include:(i) the rule excluding hearsay evi-

dence(ii) the rule excluding evidence on

the "ultimate issue"(iii) the rule excluding "opinion

evidence" being offered bynon-experts.

(iv) the rule preventing the askingof "leading questions"

18 • Asia - Australia MarketingJournal Vol. 1, No.2

Evidence to that effect is inadmis­sible, since that question is thevery issue which the Court has todetermine.

The second reason for exclud­ing the evidence was that the sur­vey did not ask subjects about theirpast behaviour. Rather, it invitedthem to speculate about theirfuture conduct. In the Court'sview, this involved asking subjectsto state their opinions. Such evi­dence was inadmissible becauseconsumers are not "experts in

. human nature". The Court said:Counsel submitted (and I

would accept) that consumer evi­dence is admissible if it establishesactual deception, but . .. not if it isused to show that prospective con­sumers say that they would bedeceived.

It might be suggested the rea­sons given for excluding the mar­ket research evidence in the Legocase apply with equal force toaudience reaction tests. In ourview this suggestion is misguidedfor three reasons.

First, in an audience reactiontest, subjects are not asked whetherthe advertisement is misleading ordeceptive \vhich is the question thecourt has ultimately to decide.They are mer~ly asked whetherthey interprete the advertisementto be making a particular claim.This is a necessary, but not a suffi­cient condition for the court to findthe advertisement deceptive.Providing viewers' answers tosuch questions does not usurp therole of the court to any greaterdegree than does a medicalexpert's explanation of the causeof death usurp the court's role in amurder trial.

Second, audience reaction testsdo not ask subjects to speculateabout their future conduct. Theyask for their interpretation of anadvertisement they have just seen.The questions aim to measureviewers' actual recent behaviour ininterpreting advertisements. Theydo not ask viewers to predict their

future buying behaviour.Third, in the long history of

deceptive advertising litigation inthe United States, it has never beensuccessfully argued that evidenceas to how consumers interprete anadvertisement is inadmissibleeither because it usurps the court'sfunction or because it requiresthem to speculate about theirfuture behaviour.

A further ground on which· theadmissibility of evidence of audi­ence reaction tests might be chal­lenged concerns the rule whichforbids the asking of leading ques­tions. This ground is consideredfurther below.

The secondary objective of thestudy was to briefly explore thepossibility that a different type oftest would be given greater weightthan audience reaction tests. Theinitial findings suggest thatchanges to the definition of thepopulation, the sample size and thenumber of times the audienceviews the advertisement wouldhave little effect on the legal valueof the evidence. However, futureresearch might investigate theeffect of using open-ended ratherthan forced-choice questions. Thequestions included in the audiencereaction tests required participantsto select one of three options(Yes/No/Don't Know) in responseto a question of the form "Is theadvertisement claiming that X?"where X corresponds to the claimalleged to be implied by the adver­tisement. Most barristers felt thatthe responses to open-ended ques­tions would be given greaterweight by the court. This is proba­bly due to a perception that judgesmight perceive forced-choice ques­tions to be leading questions. Arecent example is provided by thecase of Broderbund Software Inc& Anor v Computermate Products(Australia) Pty Ltd & Drs. Thecase concerned a dispute over theright to market an educationalcomputer game called "Where inthe World is Carmen Sandiego?"

between the authorised Australiandistributor and a parallel importerwho obtained copies of the gamefrom the authorised American dis­tributor. The parallel importerargued that the arrangement givingsole right to market the gamethroughout Australia to only onedistributor breached some of theanti-monopoly provisions of theTrade Practices Act 1974. In orderthe prove this allegation, the paral­lel importer had to show that thegame was "unique" in the sensethat there existed no close substi­tutes for the game. In an effort todo this it commissioned a surveyof software retailers. The crucialquestions in the survey related tothe expected behaviour of theretailer and their customers in theevent that the game was requestedwhen it was out of stock. Thejudge permitted the survey evi­dence to be introduced at the trialbut decided to place little weighton the survey, partly because, inhis view, the second question ofthe survey constituted a leadingquestion. He stated:

It is also significant, in assess­ing the weight to be given to thesurvey, to bear in mind the formwhich the questionnaire took. Thefirst question was whether thedealer sold educational or enter­tainment software games. But thesecond question asked was:

Are you aware of any softwaregames that tracks down criminalsacross differenct countries andcontinents throughout the world?

This is clearly a leading ques­tion. It fits exactly the descriptionof the program. It would havebeen better ifa more general ques­tion had been asked, for instance,if the dealer had been askedwhether he or she was aware ofany adventure games with an edu­cational use. In my view, the factthat a leading question of this kindwas asked at an early stage of theinterview must have serious conse­quences for the credibility of thesurvey as a whole, especially since

Asia - Australia MarketingJournal Vol. 1, No.2· 19

use open-ended questions such as"What, in your view, are theclaims made by the adverlise­ment?" However, we doubt thatthe responses to such queslionswould be given much weight inCOlIn. This is because open-endedquestions posed twO other prob­lems. both of which have beenhighlighted in the United Statesdecisions. The first problem isthaI categorising the responses isan inherently subjective and some-­what arbitrary process. The sec­ond is that such questions tend to

elicit only the main theme of theoommcreinl which is often nOl thefocus of the liligation. r'()r exam­ple in Ihe \Vonder 1Jretld case.viewers were asked "Whal is themost important thing that the com­mercial laId you about WonderBread?" Despite the facl Ihat only50 out of ?89 n:sponses suggestedIhal Wonder Bread inducesremarkable growlh. Ihe FederalTrade Commission held that thesurvey was nOl inconsistenl withIheir conclusion that this claimwas implied. The Commission

stated:Tlte queS/;ons wUe nOr

designed and ..'ould nor be Iiuly10 elic;1 consumers' perceprions ojIhe I(l/enl or implied meHagescontained in lite om'ali.inil suchas IIIOU cltallenged ;n lite Com­plaint. Rather, rhe que'lio". a.rked"'ere designed 10 and u.sually onlyelicil Ihe inlerviewee 'J recall oj Ih.explicil meHoge projecled by Ihead.e";.ement.

Where the meaning of !he cen­Iral claim in an ad\'enisement issubject 10 dispule. open-endedquestions provide n reasonablemethod of measurin8 the variousinterpretations of the clnim.However the categorising ofresponses to such queslionsremains a source of chnllenge tothe findings. In cases where Ihedispute relntcs to minor claims inthe ad\·enisement. some form offorced-choice qUCSlion will berequired. II remains to be seenwhelher ""me less direcl fonn ofquestion would produce more pcr­suasive evidellCe than Ihe tM typeof question adOpled in Ihis study_

In Our view, the main signifi­cance of the present study i. that itdemonstrates an empirical methodof tesling competing ideas aboutthe value of consumer re",arch inlegal proceedings. The specificfindings of Ihe study need to beinterpreted with care. In particu­lar, Ihe findings are Iimiled tocourt cases where the central issuein dispute concerns the exiSlenCeof implied claims in a televisioncommercial. TWo Olher issues tbntsometimes arise in deceptiveadvertising Iiligation are whClherIhe claim is laken seriously andwhether the claim has any effecton viewers' purchase decisions.Market research could provide evi·dellCC of relevance to these issues.

However. the re",arch design

would need 10 be quite different toaudience reaClion teSIS. Ourreview of previous legal decisionssuggests Ihat market researchershave frequently designed researehfor the purposes of liligation with_out being adequately informed ofthe precise legat issues in dispute.

Footnotes den",,". , Imer/ego IIG & IIna' v Edgar IJJ (1903) t Ch, Other uplanalion••re Crooer Trodin, Ply IJJ 223. .,124.(1990) ATPR 4-061 " po.. ible. For e..",ple. (1993) ATPR (Digest) • Brode'bond SO!I...arep51,8tQ same allesed claim, ...,. ,., • Anor ,, ~oo 1981 a. p 654. appeared mo", likely to , In"nego IIG & lI ..or v CompllrermaleThe lerm "utrin.;"evi_ affert people'. bu~in8 Croner TradIng Pr)' Ud /"odllcf< (AlISlmUo)dence" i. used to ",fer behaviour Ihan othe.. (1991) ATPR 41_124 at PI}' Lrd & Ors (1992)to all type. of evdenre or more likely to be 52.83~: 102 ALR 3?9 ATPR41-155.other th.n that pruvid«! belie,'ed than others, 11416, , m ConlineoMI Bakingby the .dvertiocment , CIIsromglau Boa" • 7 See the Passallc cited Co.. F.T.C. 865 (t973).itself. which i. refermt .<;,,111101<5. 8ros.. [19761 from the iudgement in " Ibid al p 911.to al "intrinsic evi_ t N.Z.LR. 36. 80",ne • S...un •

20 • Asia - AU$/ralio MarlceringJounwl Vol. /. No.2

Appendix A. Influence of ART scores (ARTSCORE) relativeto the identity of the case (AD)

Multiple analysis of variance table

Source of Sum of Mean SignifVariation Squares DF Squares F ofF

Main effect 705.062 9 78.340 16.488 .000ARTSCORE 447.384 2 223.692 47.078 .000AD 186.622 7 26.660 5.611 .000

2-wayinteractions 10.027 5 2.005 .422 .833ARTSCORE AD 10.027 5 2.005 .422 .833

Explained 715.089 14 51.078 10.750 .000Residual 1097.594 231 4.751Total 1812.683 245 7.399

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Armstrong G.M., M.N. Gurol and F.A.Russ (1979)

Detecting and Correcting DeceptiveAdvertising, Journal of ConsumerResearch, December, pp 237-246

Gardiner D.M. (1975)Deception in Advertising: AConceptual Approach, Journal ofMarketing,January, pp 40-46.

Gellhorn E. (1969)Proof of Consumer Deception beforethe Federal Trade Commission, 17Kansas Law Review, pp 559-572.

Jacoby J. and C. Small (1975) The FDAApproach to Defining MisleadingAdvertising, Journal of Marketing,October, pp 65-68

Pollay R.W. (1969)Deceptive Advertising and ConsumerBehaviour: A Case for Legislative andJudicial Reform, 17 Kansas LawReview, pp 625-638

Preston I.L. (1987)Extrinsic Evidence in Federal TradeCommission Deceptiveness Cases,Columbia Business Law Review, pp633-694

Preston I.L. (1989)False or Deceptive Advertising under

the Lanham Act: Analysis of FactualFindings and Types of Evidence, TradeMark Reporter, Vol 79, pp 1-67

Richards J.I. (1990)Deceptive Advertising: BehviouralStudy of a Legal Concept, LawrenceErlbaum Associates, Hillsdale, NJ.

Rotfield H.J. and I.L. Preston (1988)

The Potential Impact of Research onAdvertising Law, Journal ofAdvertising Research, April, pp 9-17

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