During an offseason for any company, revenues can decrease dramatically. Yes, the recession is somewhat to blame for the bottom line being low but there’s a lot more that has to do with it too.
How many people in Wisconsin can say they plan on buying a pool for their backyard in January? How many people want a Christmas tree in the middle of summer? The answer: very few. Therefore these businesses must be well informed of the industry they are getting themselves into. A Halloween store must know that almost no one is going to buy a costume any other month besides October when they decide to get into the costume selling business.
What happens very often in the off season is what we call a temporary shutdown. In economics you learn that sometimes it is better for a certain amount of time to just incur the fixed costs, such as rent, and stop production all together (and stop all variable costs). Instead of remaining open and paying the heating, water, and electricity costs, some businesses will close for a fixed amount of time to avoid losing more money than if they were to stay open and not sell anything.
An example of this is a store that I came across in Bay View Wisconsin. Babes ice cream shop had a sign on the door saying “Frozen for the Season. Reopening February 23.” Some walking by may think that this meant Babes was going out of business, however the principals of economics tells us that this instead was just the smart thing to do. The ice cream shop owners know that the winter months are not a popular time for cold treats, and therefore closed their store until the demand for their product increases. Learning to make sound business choices and understanding decisions that other businesses make is a key part in marketing. Since supply and demand create the market, we must learn to take advantage of all they have to offer. And so, we learn that economics is the basis for everything in the advertising and marketing industries.
No comments:
Post a Comment