COST OF GOODS.

Timaru Herald, Volume CXXXV, Issue 18948, 6 August 1931, Page 4

COST OF GOODS.

REDUCED BY ADVERTISING. There are few economists who would to-day say that advertising is one cause for increasing the cost of goods. Advertising actually reduces the cost of goods. To dispense with advertising in order to reduce the cost of goods would be like going back to the door and flail in threshing in order to reduce the cost of grain. Advertising is the time and effort saving device in the sale of goods just as power and machinery are in the production of goods. All goods, including new and unknown goods, would sell themselves if given time enough—one satisfied customer might tell another. But time is an important factor in the "cost of goods, carrying charges in the way of interest and rent from the time of production to final sale. The speed with which goods are sold determines their price and in another larger way than reducing the carrying charges. The faster a stock of goods is sold the smaller, the lower the margin of profit the manufacturer or merchant is compelled to charge the consumer. The profit from doing business is not hi the large profit on each sale, but rather the number of profits from many sales. Many small profits from each sale made one large profit. This principle is technically known as “turn over” and is the number of times a merchant sells his complete stock in a year--turns the stock Into money. Say for instance a merchant makes 5 per cent profit on his “turn over" and by using advertising to speed the sales, “turns over” his stock, not once, but several times annually, the merchant will be in a position of not only considerably increasing his income, but at the same time will be able to reduce the actual price of his goods to his customers. Both the manufacturer and merchant use advertising to speed the sale of increase the “turnover. ’ If they are able to sell at less individual profit they are thus able to reduce the price—and to increase the market by making the goods within ; the price range of more persons. Advertising is the speed lever. It is not only an educational factor to more and better goods, but a lower price for the consumer by enabling the producer and merchant to live and prosper at a lower margin of individual profit.