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Is MARKETING more important than the product itself?!? :-(
Old 20th July 2020
  #1
Is MARKETING more important than the product itself?!? :-(

They say a can of Red Bull only costs $0.09 to produce but it sells for $3.59. The wholesale price is only around $1.87 per can. Is this fair?

Start at 3:00 minutes to see:

Old 20th July 2020
  #2
Gear Maniac
 

Quote:
Originally Posted by Desire Inspires View Post
Is this fair?
Is what fair?
Old 20th July 2020
  #3
Quote:
Originally Posted by m_b_b View Post
Is what fair?
Is THI$ fair?
Old 20th July 2020
  #4
Gear Maniac
 

Quote:
Originally Posted by Desire Inspires View Post
Is THI$ fair?
Red Bull sells something at a profit; they're customers allow this to continue buy continuing to purchase the product. Also, Red Bull invest heavily in marketing. Nothing new - you could substitute Red Bull with Apple or any number of businesses.

Fair?!? It's not a charity. Maybe someday UNICEF will her involved...
Old 20th July 2020
  #5
Quote:
Originally Posted by m_b_b View Post
Red Bull sells something at a profit; they're customers allow this to continue buy continuing to purchase the product. Also, Red Bull invest heavily in marketing. Nothing new - you could substitute Red Bull with Apple or any number of businesses.

Fair?!? It's not a charity. Maybe someday UNICEF will her involved...
But they are making too much money. What can we do to stop them from exploiting people and taking all of that money from hard working people?
Old 20th July 2020
  #6
Gear Maniac
 

Quote:
Originally Posted by Desire Inspires View Post
But they are making too much money.



Quote:
Originally Posted by Desire Inspires View Post
What can we do to stop them from exploiting people and taking all of that money from hard working people?
Stop buying Red Bull?
Old 20th July 2020
  #7
Lives for gear
 

What counts as too much money? Keystone markup (retail price being double the wholesale price) is very common - or certainly used to be. So much so that it more or less came to be thought of as standard in many industries. Probably still is in lots of businesses. When it comes to bricks and mortar retail, the retailer has to cover the costs of premises, staff, equipment, shop fittings, etc. The money for that has to come from somewhere. Similarly, the manufacturer has to cover the costs of production (raw materials, plant, staff, etc.) and wholesalers/distributors have to cover their costs (warehousing, transportation, staff yet again, etc.) It all adds up.

There are exceptions of course. High volume retailers moving essentials on a large scale (e.g. foodstuffs) can afford to shave their margins and, for example, only make pennies on a particular product because they shift so much of it. But, even then, if a new product doesn’t pay its way more or less from the get-go it will be off the shelves and replaced by a better selling alternative like a shot. When it comes to making your cut out of a product you’re selling, those guys are some of the most money-focussed, cut-throat operators you’ll ever meet.

Internet-only retailers can also be an exception since their premises costs can be much lower than bricks and mortar stores on the high street or in shopping malls. But if they’re a legit business (and not just some chancer selling stuff out of their back bedroom without a proper business registration, etc.) they’re still going to have some premises and warehousing costs, plus staffing (if they have employees) and postage/packaging costs (if they offer free or subsidised shipping). Again, the money for all that has to come from somewhere.

And all of that’s before you can even think about the whole money-go-round generating actual net profits for business owners, investors or shareholders.

Of course, none of that justifies blatant profiteering, but there probably isn’t as much profiteering going on as people sometimes think.

(All in all, I suspect there may be more than a bit of tongue-in-cheek in the original post here, but I though I’d play anyway. Can’t sleep and I’m a bit bored...)
Old 21st July 2020
  #8
Quote:
Originally Posted by adrianww View Post
(All in all, I suspect there may be more than a bit of tongue-in-cheek in the original post here, but I though I’d play anyway. Can’t sleep and I’m a bit bored...)
You think?
Old 21st July 2020
  #9
Gear Maniac
 
HerbDelux's Avatar
 

The problem is, if people won't stop buying it, they won't lower the price.
Also keep in mind they spend money on distribution, advertisements, clerical, management, design, PR, etc etc. It might cost .09 cents to manufacture, but to get it into your hand costs extra dough.

Plus keep in mind, you wouldn't even know about red bull had they not spent millions in marketing. I doubt it would have taken off without its initial marketing campaign.

I agree that a ton of products in a ton of markets are over priced. And I also agree that greed has taken a strong foothold in modern business, at least in the US.

However, the average American consumer still really needs to smarten up.
Old 10th August 2020
  #10
Gear Addict
 

It's addictive. That's always a good argument for higher prices.

I once had one with vodka.

Got red rashes all over my face.

Old 16th August 2020
  #11
Gear Guru
 
Brent Hahn's Avatar
It's not at all unusual for marketing to be the biggest line item in the manufacturer's cost of a product. It's just not something they want to talk about. What's really a shame is when someone goes Big League like Reverb just did, and costs more because of it, and they hire some supposedly pro marketing outfit to make them a banner ad like the one I'm typing below right now.

"Used Gear. For Less."

You guys paid money for that? It's not even true. But then again, when it comes to claim substantiation, the audio industry as a whole gets away with a lot.
Old 16th August 2020
  #12
Gear Addict
 

Quote:
(..)when it comes to claim substantiation,(...)
My favourite claim is the perennial more than just a "______"


Then you ask: Oh great, what's more to it?!

Err.., ok, it's just a "_____". It's really good, though!


Old 16th August 2020
  #13
Lives for gear
You guys should see the mark-up on some types of pro-audio equipment!

1. The nine cents per can applies to the MARGINAL cost and not the entire cost. i.e. the cost of making the last can. The cost of making the first can is huge - millions! Build a factory, employ and train people to work there. Set up a marketing strategy. Advertise the product. Sponsor two F1 teams and hundreds of other sporting events.

2. The same applies to EVERY mass-produced product, inc. cars. The marginal cost of the Ford pick-up or Honda Accord is between one-fifth and one-eighth of the RRP. The factory can cost $1 billion or even more to build and equip. Then there is the five-to-ten years it takes for teams of (high cost) engineers to develop and test the cars - and so on - and on and on . . .

3. Make some very strong coffee, add lots of brown sugar and a little aniseed essence and you have Red Bull sirrup. Now add fizzy water and you have the complete soft drink. It will cost you less than the nine cents. Most of that nine cents is the cost of the can!
Old 17th August 2020
  #14
Lives for gear
 
TVPostSound's Avatar
What about the $2.79 cup of coffee at Strabux.

Same beans at home cost me .09 cents per cup??
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