Wednesday, March 11, 2020

Misunderstandings about SCALE could be crushing your urge to launch your own perfume

     "Scale" simply refers to the SIZE or your promotion. Planning for unlimited perfume sales puts you at a disadvantage and dramatically increases your risk. Why? Because, to be fully profitable, you must sell out your full production -- no leftover inventory. Why? Because the production cost of every unsold bottle reduces the profit you would have made.

    Now it can be hard, almost impossible, to guess the number of bottles a promotion will sell. But you can guess with some accuracy at the number of bottles you will not sell. This is a guidepost for establishing the scale of your promotion.

    For example, you have good reason to believe -- perhaps due to your limited financing and distribution -- that you almost certainly will not sell 20,000 bottles. So the scale on which you plan your promotion will not anticipate the sale of 20,000 bottles. But what will the right number be?
   You need to consider the size of your hot market. How many people are really likely to buy your perfume?

    Then you need to consider the cost to reach these people. Suppose (this may seem a bit depressing!) that you have 12,000 really hot prospects for your perfume -- but, when you look at the best possible distribution you will be able to arrange, your fragrance will only be in stores that serve 3,000 out of that 12,000 -- and you need all the money you have to promote your fragrance to those 3,000 hot prospects.

    It is certainly human to imagine that somehow you'll be able to reach those other 9,000 hot prospects. It is certainly human feel you might go on to sell 20,000 bottles of your perfume. But your immediate project is to MAKE MONEY.

    You can make money by planning to produce and sell 3,000 bottles of your fragrance. If you are correct and you really have a hot market that will produce 3,000 sales, and you produce only 3,000 bottles, you end up with no waste, just profit.

    Now you can look farther ahead. Now you have some experience with the sale of your fragrance and you have some money -- the profit you made on those bottles you sold. Now you can start planning to target some or all of the 9,000 hot prospects that you couldn't target the first time around. Perhaps you'll split those 9,000 prospects into groups of 4,500. If all continues to go well for you, you'll sell to the first group of 4,500 successfully and then go on to the last group to complete your success.

    Then you can look for additional markets.

    But what about my cost per bottle? (To be continued...)

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