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From: plouff@kali.enet.dec.com
Newsgroups: comp.sys.amiga
Subject: Re: Advertizing Misconceptions
Message-ID: <9154@shlump.nac.dec.com>
Date: 12 Mar 90 20:28:44 GMT
Sender: newsdaemon@shlump.nac.dec.com
Organization: Digital Equipment Corporation
Lines: 50


In article <132837@sun.Eng.Sun.COM>, cmcmanis@stpeter.Sun.COM (Chuck McManis) writes...
>In article <13635@baldrick.udel.EDU> (Marc Barrett) writes:

>[lots of stuff about advertising expense and various manufacturers' 
> pricing policies]

Without getting drawn into the debate, I'd like to make three comments:

Zenith was (until they sold the divison) quite successful in some parts 
of the personal computer market against IBM.  Did they spend 
proportionally as much of revenues on advertising as IBM?  Probably not. 
But, (and a big caveat) they really went after some niche markets such
as the U.S. government where advertising wasn't very important.  So 
advertising has to be considered as just one component of sales and 
marketing.

As a rule of thumb, electronic equipment sells for about five times the 
cost of its raw components.  One common misconception in this newsgroup 
is that the multiple should be a lot lower.  But time and again this 
little rule is right on the money.  Some exceptions... consumer 
electronics such as television sets sell for up to 10x parts cost.  
DRAMs are such a commodity that manufacturers have a hard time charging 
the standard markup.  Thus, populated RAM cards often have a lower 
multiple, or manufacturers sell cards without memory to preserve their 
margins.  Finished modules such as power supplies and disk drives are
also not marked up as much by manufacturers. 

The high cost of Mac computers puzzled me until I read an article in 
_Electronic Business_.  Macs are priced as much like software as they
are priced like other hardware.  This has been true ever since the
original model, according to a manufacturing engineering analysis I saw.
Think about the design philosophy of the Macintosh family -- tightly
coded firmware does many things other machines do in hardware, and this
makes sense. 

All the above is no great store of wisdom -- it's all stolen from 
business-oriented electronics magazines over the last couple of years.
IMO, the real basis for business decisions is more complicated than just
what Marc, Chuck or myself has mentioned.

We now return you to your regularly scheduled opinions... ;-)

Wes
-- 
Wes Plouff, Digital Equipment Corp, Maynard, Mass.
plouff%kali.enet.dec@decwrl.dec.com

"Who came out with that term, 'MULTIMEDIA', btw???
I prefer amiga's old slang: DEMO."	-Viet Ho in comp.sys.amiga