Question

Topic: Other

Marketing Increasing Cost, Why?

Posted by Anonymous on 9/8/2005 at 3:51 PM ET 100 Points
How do you answer a critic who accuses marketing of consistently increasing cost without any genuine benefit to the consumer?
To continue reading this question and the solution, sign up ... it's free!
SUBSCRIBE
Or, SIGN IN

RESPONSES

  • Posted by wnelson on 9/8/2005 at 4:09 PM Member
    You combat the critic with data. Either you show that you have increased cost and features/benefits for the consumer or you didn't really increase cost. Either way, you should be able to show data. If you can't, maybe the critic's right. And even if he is, so what? If unit volume didn't go down as a result in increasing price, then you just made the company more money! If unit volume did go down, maybe the overall profit made by the company went up...in which case you optimized total profit by increasing price. And if none of this is true and you increased price with no tangible benefit and unit volume decreased, resulting in less total profit for the company, then maybe it was a small "price experiment" to see how elastic the price was. You have your results and the former price point was better, so restore the price.

    Put your data together and then address the critic the way the data leads you. And by the way, if you did moved price and had no reason and/or no data to support it, shame on you! Make sure you have data to show the critics next time.

    I hope this helps.

    Wayde
  • Posted by Markitek on 9/8/2005 at 4:15 PM Member
    I'm afraid you just have to shoot him
  • Posted by steven.alker on 9/8/2005 at 5:48 PM Accepted
    Imuller’s right of course, but even without the cost argument, there’s the economic law of supply and demand. If suppliers have to limit their demand to local customers and hearsay, then they will set their price high so that their ability to supply equals whatever little demand there is.

    Without marketing, buyers don’t know what’s available to them and what the price is, thus every supplier operates a virtual local monopoly and we all know what suppliers do to prices when they have a monopoly.

    If you want to know what happens when you dispense with markets and marketing, look up some pictures of the empty shelves of the state controlled shops in the old Soviet Union where supply was never allowed to match demand. Of course if you had some hard currency and were prepared to risk going to prison by using the black market, you could get anything you wanted – at a price.

    And if you wanted to disagree with the economics of the above, the state always had Markitek’s solution. Either that or do a spot of voluntary work down a salt mine.

    That was all without any marketing whatsoever!


    Steve Alker
    Unimax Solutions
  • Posted by michael on 9/8/2005 at 6:07 PM Member
    For some reason I see myself able to follow that person's line of reasoning. The issue, as stated above is that the cost of marketing is paid in the sale.

    Problem: Sales are needed.
    Answer: Sit and wait for the phone to ring
    Answer: Have customers who you do not have do the marketing for you so you don't have to pay for it
    Answer: Close the doors because you have no idea what it takes to run a business.
  • Posted by mgoodman on 9/8/2005 at 7:19 PM Member
    Paying rent for your office/factory increases cost without any benefit to the consumer. So does the salary of the CFO. At least marketing has the potential to increase sales and ultimately lower costs through increased volume. The CFO can't do that. Neither can your landlord, no matter how much rent you pay.
BACK TO TOP

Post a Comment

Related Discussions

Community Info

Top 25 Experts
(Other)