LOWER SELLING COSTS

Southland Times, Issue 22489, 25 January 1935, Page 12

LOWER SELLING COSTS

ECONOMIC JUSTIFICATION. Very briefly expressed, the economic justification of advertising lies in the fact that it reduces selling expense by more than its own cost. For a firm to “save” £20,000 in a year by cutting out its advertising might—unquestionably would—mean that a sum considerably greater than this would have to be spent on personal forms of salesmanship in order to maintain sales at the same level as when advestising was being done. Furthermore, the cessation of. tne advestising would most certainly mean that demand would fall off to the point where the factory would be underproducing, with production costs and overhead charges rising sharply as the inevitable corollary. Advertising benefits the manufacturer by increasing, stabilizing and crystallizing demand, and so making substantial economies in working possible.—Charles C. Knight, in “An Outline of Sales Management.”