Measures by the Incumbent Firm to Enhance Demand

In order to counter entry by rivals, incumbent firms often seek to boost demand for their product and insure brand loyalty by advertising. Although the practice of advertising tends to follow the technology of the day, the concept is very old. There is evidence that the medieval Catholic Church recognized very early the necessity of advertising (and differentiating) its product. Early forms of advertising by the medieval church were both informative and persuasive. Preaching and instruction featured much advertising designed to inculcate brand loyalty. This seemed even more imperative in the wake of the Protestant Reformation. On June 17, 1546, the Council of Trent formalized its emphasis on advertising when it decreed that priests should "expound and interpret the Holy Scriptures, either personally if they are competent, otherwise by a competent substitute to be chosen by the[m]'' and that money from church coffers be set aside, if necessary, for "instructors in sacred theology, the bishops, archbishops, primates, and other ecclesiastical superiors of those localities . . . who hold such prebend, benefice or income.''16 At the same session the Council exhorted "all bishops, archbishops, primates and all other prelates of the churches ...to preach the holy Gospel of Jesus Christ.''17 The twenty-fourth session of the Council in 1563 likewise emphasized the preaching requirement of the clergy and compelled priests to advertise the efficacy of the sacraments.18 Yet another way the medieval Catholic Church sought to clean up the retail side of its operations was by approving, supporting, and advertising new and (supposedly) less venal religious orders, such as the Jesuits, an order that specialized in preaching and education. In The Founding of the Jesuits, Michael Foss said, "The results of the Council of Trent were very pleasing, and very important, to the Jesuits. The universality of the Church and the primacy of the pope had been stressed. The need for the Church to become active, preaching and teaching, was acknowledged. The Jesuits' place in the Catholic structure, as noteworthy preachers and the possessors of the finest educational system in Europe, was secured.''19

Reassertion of the celibacy rule was another means of shoring up demand for the Catholic product. The celibacy rule was instituted around the eleventh century as part of the move to concentrate and centralize powers of the papacy. By the sixteenth century, priestly celibacy had become lax if not blatantly ignored. A goodly number of priests that were outwardly celibate kept concubines on the side. The Council of Trent renewed prohibitions of marriage for priests and issued new condemnations of the practice of concubinage (see table 6.1). An economic justification for re-invoking the celibacy rule was to protect church wealth and property from alienation. Priests with children would, after all, have been especially apt to appropriate parish properties and revenues for their families, thus reducing Church wealth through inheritance. Given monitoring costs in the medieval context, a doctrine of celibacy minimized the risks of priests appropriating Church properties. However, we find it unlikely that this constituted the only justification. Before and after the Council of Trent, upper-level prelates routinely alienated church wealth by bequests to nonclerical relatives. Yet another justification for the reassertion of celibacy, especially at the retail level, was that sexual abstinence by priests added to the credence of the Church's product. If the official intermediaries between God and man were called to a greater sacrifice than the faithful, this somehow stamped a higher level of quality on the ultimate goal. Celibacy may therefore have been regarded as a type of warranty for demanders and potential demanders that the product was genuine.

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