Special Offer!!, page 1

reply to post by AccessDenied

My son wants a new action figure toy. Cost $14.99 For the love of god it's what 25cents worth of plastic to make the damn thing? Another 30 cents for the package. Maybe a buck in shipping and transporting it from factory to store? Of course the stores massive mark up to gain profit...

Yep. And...

A few million for market research. Usage and attitude studies to find out how, why, when and where kids in your son's demographic play with action figure toys. How they pester their mothers. How their mothers react. Devising strategies to exploit those dynamics. Manipulative? You decide.

Prototype development. A few more million there. Includes focus groups and playgroups to figure out what the kids like about the prototype, what they don't, how to improve it.

Meanwhile, most probably, a franchise agreement that costs absolute squillions to license the figure from whatever film or TV produceer, comic-book publisher etc etc owns the rights to the confounded thing.

Lots more moolah to ensure the toy is safe, yet more to put it through all the regulatory hoops and hurdles mandated (quite properly) by the law.

Money to create the designs, do the CAD, program the machines in the factory -- and who knows, maybe a few shekels to spare for the benighted coolies who assemble the vile objrct in some pit of a sweatshop in Shenzen. Cost of manufacture: not just 25¢ worth of plastic but building the moulds, setting up the production line, paying the workers, cost of manufacturing samples and rejects, domestic business taxes and tariffs and generally meeting the massive overheads any manufacturing business has to live with. Add to that -- this being the real world -- the very real cost of wining and dining third world politicians and bureaucrats.

Packaging design and manufacture. The figure itself may not be the most expensive part of the package, not the one that has the most money spent on its development.

Packing. Boxes, containers. Takes more labour, hence more money. Transport. Warehousing. Customs duties and tariffs.

Business overheads at the head office in Fullton, Ohion, where 4,000 very expensive employes, many of them unionized and therefore somewhat more costly, work.

Credit costs. Insurance premiums.

DISTRIBUTION. You have absolutely no idea how costly distributon is. Why do you people like DHL and Federal Express are among the world's biggest comanies? Distribution cost alone can put a 100% premium on what's gone before.

Then ADVERTISING, the subject of this thread. For high-margin (yes, they are) items like action figures, advertising can account for another 50% of sunk costs -- in other words, it costs as much as all the stuff we've been talking about so far put together. For luxury goods like designer clothes and perfumes, it's more like 90%.

Business taxes. I'm tempted to put that in capital letters too.

And after all of that, yes, your retailer makes a big markup. She often gets the biggest slice -- unless there are agents operating along the supply chain, which most companies do their best to avoid, though in many cases it is unavoidable. And at the level of primary products -- the oil that makes the plastic and runs the factories -- agents make billions.

* * *

Look at this way: if the maker of your son's toy could sell it to you any cheaper, he would. That's because there's always somebody else who will, if he won't. Manufacturers make money on economies of scale, not on the markup of indiviudal items. That's the retail business. That's why it's called retail.

There you have it. And why is it like this? Because people want it like this. All this happened because people wanted action figure dolls, just the way they are.

This bit is for Agent_T, too. If commercials put you off, it's probably because they are either (1) bad commercials or (more likely, 2) you're not in the target group. I sincerely hope that when I was a copywriter and account planner in the advertising business, I didn't make commercials like (1). I hope and believe I made plenty of (2). But you're right to abhor them. Agent_T, you watch TV with the sound off. I don't watch TV at all. Not because I'm afraid of being suckered into buying things I don't want, but because TV is garbage.

The ten minutes of commercials you have to endure when you're trying to watch a TV programme is the price you pay for being able to watch the programme in the first place. The advertising you watch pays for the programmes. You thought you were being allowed to watch TV for free? No-no.

No free lunches on Planet Earth. And besides, come on... if the lad's happy with his $14.99 toy, do you mean to tell me that it cost too much?