The First Step in Overcoming Rising Costs

Brought suddenly to a realization of the danger of an immediate and serious decline in sales as the result of increased competition, Saimoon is now doing a business of $850,000 annually, started a thorough going analysis of his local and tributary trade, with the result that changes were made in his business which increased his sales 45% and cut his cost of doing business from 9.7% to 8.1% within two years. The sales force was cut from 14 to 8 men. Bad debt formerly consumed 1% of the total sales, were reduced to less than 0.25%. For five years, Saimoon had been distributing merchandise within a radius of 75 miles of the home office. The gradual development of local wholesalers, however, had steadily cut down the size of the market. Sales from the outside territory diminished because many of the retailers patronized the houses in their home towns, where they could save in freight charges, get small orders filled quickly, and thus increase their turnover rate. As this man’s experience indicates, clean cut analysis of market conditions and the sales problem is a strong factor in eliminating rough and tumble methods of determining prices. Familiarity with the competition in Saimoon’s territory and first hand knowledge of the various retail outlets are, indeed, powerful weapons in pricing the merchandise so that it brings a profit.