Sometimes we come across marketing opportunities for perfume that should be wildly profitable. The people are there, they want your perfume, they are eager to pay your price. What can go wrong? There are three simple ways you can mess up this opportunity and earn only dimes when you could have earned dollars.
Mess up # 1 - Addressing a mirage and missing the real market
What's the real size of your market? Not everybody who matches a particular demographic is your market. Your real market is concentrated - people who will respond to you and your perfume, people who are enthusiasts for you and for your perfume, people who have enough mad money on hand to buy it. (read more)
Mess up # 2 - Too much production
Marketing opportunities come in different sizes. You have an opportunity to sell 5,000 bottles but you produce 10,000. Look what happens:
Say your cost to produce a bottle of your perfume is $4.50. You wholesale it at $17.50 and it sells - successfully - at retail for $35. But "successful" relates only to the 5,000 people who want your perfume. That's all who want it. That's the size of your market. But you produced 10,000 bottles. You're left with 5,000 bottles you paid $4.50 each to produce but can't sell. Let's look at the math: (read more)
Mess up # 3 - You paid too much for your perfume, even when you knew what its highest possible retail price could be
This is the classic cause of marketing failure in almost any field - the opportunity is hot but you pay too much to obtain your product (in this case a perfume) even though you know what its highest possible retail price can be.
Say your perfume will retail for $35 and you will wholesale it for $17.50 and correctly expect to sell 5,000 bottles. Your gross receipts will be $87,500 but now you have to deduct the cost of those 5,000 bottles.
Say your cost per bottle was $4.50. That's a total cost of $22,500 giving you a gross profit of $65,000. (read more)
Discussion
The most profitable marketing opportunities come in fixed sizes. You maximize profit by understanding (judging correctly) the size of your opportunity. You produce just enough perfume to meet the anticipated demand. You don't fret over the handful of people who say they want to buy your perfume but waited until your supply was sold out. You don't produce another 5,000 bottles of perfume because a dozen people failed to buy it while it was available. (read more)
Footnote
-- As the article was a bit long, I've given you links to the original, which has all the numbers for comparison. Again, thanks for reading this message. And, on another topic, our four most popular books are now available at Amazon. They are listed in a link at the bottom of this full article.
-- Phil
