Finance and Business

Product Marketing Modern Economy

This is second series of product marketing. The modern economy, with its emphasis upon specialization in production, places a handicap on anyone who attempts to produce in small quantities or, worse still, in single units; the costs are too high. The economic scale which the economists talk about, are only to be obtained after certain volume of production has been reached; that is to say it is cheaper per unit (depending on the product, of course) to produce 10,000 of a thing than to produce only one or even a few hundred, and cheaper still, in most case, to produce a million of them.

And yet, although these economies of scale can indeed be obtained, the trouble is that you have to be confident that if you produce a million bikinis, there are going to be enough women who will want to buy them in the particular materials, colours, designs, and sizes, in which you have decided to market them. Also of course, your judgment about the weather, and the time when your bikinis should be available must be justified by events.

These factors of time and place, of quantity and unit suitability, become increasingly important the greater the “economic unit of production” becomes, that is, the number of units of product below which is would be too expensive to produce for a given selling price (Ralph Glasser).

If a car manufacturer, for instance, were to produce only 500 cars of a particular model, each car would would cost more than if he were producing 50,000 since the expenditure on the various tooling-up processes would be essentially the same for either quantity.