Marketing and Advertising

When I was in graduate school, two of the courses that we had to take were Marketing and Advertising, although advertising is part of a company's marketing mix.

Obviously, when a company advertises, it is trying to get the consumer to PURCHASE that which they do not really want or need.  

What I find humorous is when a company advertises a lot, that is an indication to me that sales are down and they are trying to improve their revenue and bottom line.

So, my question would be what is wrong with the company that they need to advertise?

On the other side of the coin, the more a company advertises, the more a company sells whether they need additional revenue or not.  The odds are always in the favor of the advertiser.

Marketing, on the other hand is the overall approach to selling a product.  This overall approach is called the Marketing Mix.  It includes advertising, discounts, coupons, rebates, two for one gimmick, etc.

One's marketing mix or plan figures the basic cost of goods sold which includes raw materials, use of machinery if applicable, overhead (factory utilities), and labor which is sub-divided into direct and indirect labor (administrative and sales).

Once the basic per item cost is calculated, the company must add shipping, warehousing or storage, and the cost of advertising and other promotional ideas, as well as consignment costs

After all these costs are determined, the company decides how much profit they want to make and that determines what the item will sell for to the consumer.

Most companies hire cost accountants to figure out all these costs and report to management what the cost of goods sold is and what the other costs are per item so that they can determine the sale price.

These prices are constantly being adjusted due to inflation, increased labor costs, or gasoline costs.  Most of the time, when labor costs go up, the company will raise the price rather than reduce profit.

Companies are also constantly looking at re-engineering the processes to save money by reducing steps and increasing throughput which lowers per item costs.

When I worked as a consultant to businesses and industry, my work was focused on process re-engineering and saving the company money by working with the employees who, for the most part, already knew what shortcuts could be made.  They were not allowed to make those changes unless the idea to change came from management.

Management claims to be so smart and yet, I often found just how stupid they really were...  it was rather embarrassing to discover that the workers had known this shortcut for years, saving the company millions of dollars.  Arrogant management is still our worst enemy.