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On December 28 2013 14:30 Chocolate wrote:
Keep in mind that I have never formally studied economics.
People like sales. Simply put, that is why they stick around.
Sales makes people feel like they are winning - beating their friends, their neighbors, the other shoppers. People are complex and, in many cases, confusing; that is why we have people looking for sales on items that are used primarily to demonstrate wealth. Advertising and media have created an atmosphere of consumer-insecurity. You have to (silently) beat your friends and you definitely have to beat that bitch over there who is eyeing your boyfriend. You have to beat the person you walk past who has pricier clothes than you, even. The insecurity also probably comes from income and wealth problems - most of the people that I know who seem to care the most about pricey items are those from poorer backgrounds. Take a look at the perpetually impoverished black community and how that juxtaposes with name-brand shoe sales. Ever notice all those social media posts of presents, new phones, new cars, prom night, etc? They are often veiled as complaint, criticism, or discussion, but it's not about that at all. It's a ridiculous rat race.
Racism aside, this all ties back into sales because I'm trying to illustrate my point that consumer culture creates a competition, and sales allow a way to one-up your competitors.
There are practical benefits to sales too, but they are mostly consequences of the system that we run. Companies like to not have a ton of inventory in their shops at the end of their fiscal years. Also, right about now I would imagine that demand is rather low since many people are probably broke after spending a lot of money during Christmas to impress their family and convince their children that they are not poor. With extra supply and lower demand (my gut tells me that gift cards don't make up for everyone being broke, though I have no evidence) prices would logically lower right now, which I assume is the inspiration for your blog. And also remember, as others have pointed out, that sales are also a way to get customers in your store and that supply and demand are not static, and that consumers are dumb and like to think they are getting a steal even when they are not.
I think it's hard for many people to really understand the mindset behind this bizarre culture that nobody in real life (at least that I know) seems to talk about. I like topics like these because infantile basic "issues" like abortion and gay-equality seem to dominate these kinds of discussions and I think this is MUCH more important (as most people worth your time are already on the same side of popularized social issues as you) for society as a whole.
To be honest I think the best way to fix this is to create a whole bunch of radical changes to how we distribute goods and that this wouldn't be a problem under that system, but I don't want to derail the thread with socialism. I do find the idea of sort of fixing costs to be entertaining, but I think it would never get a lot of support among the general people without a lot of other ideas gaining ground, and in my country even touching this topic would instantly be decried as SOSHURLISM.
Very well spoken my friend. Curious if I may, have you received a degree, done any readings, or where did you gain your knowledge? I really admire people like yourself... Your views also identically mimic that of my father xD.
Anyway, I don't have much to say in response to you. I agree with you... I wish there was a place online where we could discuss ideas like these with other people, void of other trolls, and ideas could develop into more concrete philosophies etc. Right now there are lots of people that will be vocal if you don't choose your words in the exact correct way, and it often just makes typing these messages out very tedious. If you posted something like that about black people on facebook, I'm sure there would be people complaining about what you said... However in your context I can obviously tell you mean no offense, and so forth.
It's true that when the "basic" things can be agreed on like religion, abortion, gay rights and the like, a much higher-level conversation can develop. If every time you discuss something with somebody you have to mention everything you believe and assumptions you are making for this argument, it really slows down the pace of conversation. You made a compelling argument with very few words for what you said, and I think it's because you and I are on the same page. Anyway, hats off to you sir, respect.
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you obviously do not understand how a business runs. They don't sell shit for a bare minimum price; they need to first cover the production cost and then they need a marginable profit to cover employee costs and other costs to run a business. If everyone sold their shit for what it took to made it, no one would be in business for very long.
Now, sales is used as a strategy to lure consumers into the store so that they might pick up other items that are not on sale. Sales is nothign more than a marketing strategy. It is most commonly seen in retail stores such as JC Penny, Macys, Old Navy, etc.
It is ESSENTIAL TO UTILIZE SALES STRATEGIES TO STAY COMPETITIVE IN A CAPITALISTIC MARKET
On December 28 2013 13:25 FiWiFaKi wrote:
Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (:
In an ideal world, your proposal would make 100% sense to execute. However, in the real world, if a business, and a business is a business to primarily make money as its FIRST AND most important goal, then they would not be profitable for very long following your point.
It's a creative approach to fix the gap between the consumers and retailers, but in reality, it is just not a plausible option for corporations to utilize because it will ultimately lead them out of business.
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On December 28 2013 15:19 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 14:58 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:53 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:39 Hilltop_Razorback wrote:Show nested quote +On December 28 2013 13:15 FiWiFaKi wrote:+ Show Spoiler +On December 28 2013 13:02 Hilltop_Razorback wrote:
Your high-level economic theory hangs together on its own, but I'm not sure if it fits a current 'real-world' application. At times you reference manufacturers controlling prices, yet at others talk about government regulation or prohibition of sales. Aren't those two wildly different controlling mechanisms?
These days you'll find manufacturers don't really have much of a say in final pricing of consumer goods, most of the power lies with retailers - especially the mega-national or international corps whose goal is often to force a sales dependency upon the manufacturer in order to dictate more favorable terms. I'm aware of a half-dozen or so smaller regional manufacturers that have been forced out of business in the past decade due to this kind of leverage from a certain ruthless retail chain. Once a retailer constitutes more than 30% of your overall footprint they can fuck with your business hard.
These types of sales simply result from retailers' strategies in manipulating the buying habits of consumers, in order to hit quarterly public numbers or internal, departmental goals, or to achieve conditions from the manufacturers themselves. Oftentimes the short-term profit is only a secondary goal; it's more important to move inventory in order to hit a contract milestone and break into a new product pricing tier for the next quarter. The revenue is, of course, welcome; it's just that a contract price-break can be worth millions more.
All that being said, I don't see manufacturers regaining the power to control prices anytime soon. That leaves door number two, government. I think the question of putting a panel of bureaucrats in charge of complex economic matters should be fairly obvious to anyone who has kept up with fiscal policy of the past three or four decades.
Also, barring shipping, every fee listed in your second post come from government regulation of some form or another, be it sales/carbon taxes or cost-recovery fees. So the solution is more government control? Meh. Sorry there was just a lot of different material covered that I may have been mixing myself up. Distributors regulate prices, the government enforces that they do not have sales. This means that is they buy a good from a manufacturer for $100, they don't sell it for $105 for a month, gain a lot of publicity, and then sell it for $200 a month and people still buy it from there since it is a well-known store. Again, for your last paragraph, it's not so much government regulation. It's just a law that should be in place that says the advertised price has to be the price the customer will be billed for. Relieves many headaches. Yeah no worries; this is a blog, not a policy proposal =D So you're not talking about pricing controls, just variance controls? Which I guess theoretically should serve to provide more organic layering of 'cost-plus' structure each step of the way along the chain. So if the industry behaves, the final control point would be the Pricing Czar's office, which would ideally not interfere except in cases of malfeasance. This may be one way to minimize or redirect these current distasteful sales practices by retailers, but all this does is shift control of price manipulation back to its' source. What's to stop manufacturers from raising their MSRP contract rates in collusion with retailers? What about rebates or other incentives? What happens when a manufacturer buys up a raw material supply chain required industry-wide, driving that natural price up for everyone? I guess we'd need a Manufacturer Oversight Department and a Materials Control Board within the Pricing Czar's office in order to keep an eye on that too. Trying to control a part of the system requires control of the entire system. Edit: Also I want to say I enjoyed the discussion. Knowing prices are inflated in order to periodically stampede the herd into a mega-sale bothers the hell out of me, and I wouldn't have thought of your approach. See, I don't think that the manufacturers controlling the price would be that big of an issue personally. Let's assume the good was sold to retailers for $100 each, and now the next month it will be sold for $150 dollars each. Now the nice thing here is that even if the price now rose $50, at least the price everywhere will be more-or-less $50 more. So it doesn't really matter where you go buy it, the good will cost the same anywhere, However, I don't believe the fluctuations would be very sharp because: 1) Menu Cost would discourage manufacturers to do this. 2) Companies have stock in the warehouse that they can still expend. 3) Retailers would not respond to price change instantaneously. So I think if a cycle of one price a month is set (this number can be altered or there can be 3 different numbers for different types of companies)... A manufacturer changing the price would not see the price respond super drastically, and the consumers would see the overall trend in price, and anyway, I just don't feel like it'd be a very effective strategy. All the regulation and the Czar's Office (haha) would not be needed. And hey, thanks! I like discussing with people to arrive at new conclusions together. I know it can get a bit heated at times, but no harm meant (: Whoops, I think I took exception to an argument you weren't even making... I agree with your points about the inhibition of price fluctuation. The system you describe would control short-term consumer-level changes more effectively than they are today. I then assumed that you were also stating that this system would provide the lowest overall prices for consumers, which I disagree with. It was this notion my arguments were directed towards. With these controls in place, I feel that consumers would gain a sense of false confidence in the "real" price they are now paying for goods. With all oversight concentrated on the sales-side, it would be simple for this reality to be distorted over time. Also: sadly, I didn't generate that title spontaneously. Last I read, there were seventeen plus official czars in the Bush-Obama continuum, overseeing everything from car safety & student loans to tobacco & terrorism. If something like this was put into place, it wouldn't take long for the bureaucracy to take on a life of its' own. I'd bet it exceeds equilibrium before industry even finishes adjusting to the new model. =/ I am making both arguments actually. I believe (as does every economics textbook that discusses that I've read) that: The more stability there is in a market, the lower the rate of returns will be. If someone sees a safe industry, they will enter it and drive the profits down in the long-run. Constant prices create stable markets, and stable markets lower prices. That's why I believe that stable prices = long-term lower prices... This might not have been something I stated, just a fundamental assumption I guess. The reason is... When there are two firms and the prices constantly change to who has the better price, you'll just pick whichever one and go to it. However when the prices are constant and one therefore one firm has a lower price than the other the consumer will rather go to the cheaper one. This will put pressure on the higher price firm to lower price. This cycle will drive down prices and will occur until the price either goes low enough that one of the firms can't compete or it'd lose money, or two, they'd have very similar costs with slight deviations in product/service, and so customers would be split between where they went. This is what happens in most markets. For example Apple vs Android. Android has definitely driven the price of Apple down, and there is pressure on Apple to either make new innovations or lower prices, some people will still remaing with Apple, but Samsung is increasing its market share. Anyway, I think you get the idea. So to summarize: Illegalizing sales will create less fluctuations in pricing, which will be easier for consumers to handle, which thereby will lower retailing profit, and lower cost of goods for consumers. I suppose above is exactly what my argument is. There is a lot and a lot of back-up needed to back-up this claim, and not to mention the necessity to consider every counter-example people will come up with.
I always got the image of a toilet bowl or draining sink when I encountered this notion in economics texts. If all parties in the system continue to behave according to the rules of the system, then either everyone goes down the drain into improfitability together or one party behaves differently, not in accordance to the system's rules, in order to increase profits - but thereby invalidating the very assumptions of the system in question. It seemed a futile thought-exercise. I guess I'm just not willing to assume that all parties will continue to conform to behaviors predicted by theory. I do understand your point and it rules most markets within the consumer retail industry, especially those with less brand volatility.
However, all of that only addresses retail or in-house manufactured goods. You'd have visibility to markup from the point of origin, through supply chain, distributor & retailer, onto the shelves. I'm just pointing out that this system still has no visibility beyond the retailer's point of origin, i.e. manufacturer pricing. I don't like legislation that promises to control something that's impossible to control.
(Hypothetical: Korean giant ChipMake raises the price of their Whizzdinger500 chipset to all American-based mobile phone manufacturers, giving a comparative advantage to their domestic partners and forcing American manufacturers to raise their vendor pricing to retailers, who pass the increased cost on to the consumer. Samsung is now $50 cheaper per unit than the American competition and it's all based on source cost, so the new legislation doesn't apply.)
Currently, competing for the business of retailers is the primary restraining force on pricing for manufacturers. I believe that globalization and mega-corp retailers have changed the landscape. With Supercenters replacing smaller specialty stores, providing less chances for low-volume, higher-markup sales to said specialty shops, manufacturer prices are more normalized than ever across the board. This puts all the power in the hands of retailers, which leads to the consumer-manipulation at the root of this discussion. + Show Spoiler +(a nod to sam!zdat on the merchant capital vs industrial capital discussion, and I also believe this has a lot to do with our shift from a manufacturing economy to a service-based, or lately arguably, information-based economy).
So what happens when you clamp down on the retailers' ability to manipulate pricing with lumpy short-term sales gimmickry? After a painful adjustment period for every corporate retailer's revenue stream models, power shifts back to the suppliers - who now have far less pressure on them to conform to retailer demands, allowing them to adjust pricing back to comfort-zone levels. Knowing that your customer has to plan a purchase schedule more precisely over time due to the inability to manipulate sales through pricing provides powerful leverage. Or, rather, mitigates the leverage that retailers currently have.
This price-variance control mechanism constrains the marketing tactics of retailers, but cannot make a claim of guaranteeing lowest overall prices. Of course the same can be said of our current system, but then again, that's my point. I'm just not sure short-term retailer pricing volatility controls will constrain overall consumer cost over time any better than our current system does, especially with the added cost of oversight.
Caveat: If not painfully obvious, I've had little instruction in Economics; a few classes in college that I enjoyed, and some informal reading of the Austrian school. I'm coming at this from 12+ years in the belly of the Beast in Bentonville. Tell me where I'm going wrong =P
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On December 28 2013 16:55 Smurfett3 wrote:you obviously do not understand how a business runs. They don't sell shit for a bare minimum price; they need to first cover the production cost and then they need a marginable profit to cover employee costs and other costs to run a business. If everyone sold their shit for what it took to made it, no one would be in business for very long. Now, sales is used as a strategy to lure consumers into the store so that they might pick up other items that are not on sale. Sales is nothign more than a marketing strategy. It is most commonly seen in retail stores such as JC Penny, Macys, Old Navy, etc. It is ESSENTIAL TO UTILIZE SALES STRATEGIES TO STAY COMPETITIVE IN A CAPITALISTIC MARKET Show nested quote +On December 28 2013 13:25 FiWiFaKi wrote:
Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (: In an ideal world, your proposal would make 100% sense to execute. However, in the real world, if a business, and a business is a business to primarily make money as its FIRST AND most important goal, then they would not be profitable for very long following your point. It's a creative approach to fix the gap between the consumers and retailers, but in reality, it is just not a plausible option for corporations to utilize because it will ultimately lead them out of business.
I will reserve this post to respond to Hilltop tomorrow. It is getting late and I wont be able to formulate a good reply right now.
However I will ignore your post as pretty much the first thing you are taught in the first university microeconomics course is that in long-term costs equal to revenue in a perfectly competitive market. Hence the economic profit of a competitive firm is zero. Cost refers to AFC (Average fixed cost) which is the initial investment needed, as well as the maintenance costs of operation etc. It also includes AVC (Average variable cost) which is the extra money spent on each good produced, which includes to cost of materials and the cost of salaries to the workers, royalties, and all other capital that needs to be spent to produce a certain output. Hence it is possible for a company to earn nothing and stay afloat with zero economic profit. It also appears you have not read any previous replies in this thread.
I have decided to ban you from posting in my blogs because I do not appreciate your CAPITALIZATION trying to SCREAM things into my face, that's not how to have a friendly discussion. I obviously have knowledge in the field and I do not need to be told that I don't understand how a market works, when it shows you have minimal business or economic knowledge. If you would not like to contribute, that's fine, but don't aggressively post messages void of meaning here. Thanks.
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I don't mean to say this aggressively or anything, but isn't it a tiny bit condescending to assert that you know what's best for the consumers and that the average consumer can't handle sales because it makes them confused about how much something is really worth?
I know that's not what your intention is, but I have faith/hope that the average person is smart enough to:
A.) understand that he or she either has to research the good/product that he or she is going to buy
B.) just completely ignore it and buy the product no matter the cost because he or she needs it enough that its cost is basically arbitrary.
That said, I do like the idea of consumer protection and trying to advocate for the buyer and not entangle them in the bullshit that corporations try to use to swindle them out of money, but that's leaning towards socialism and isn't really what the free market is. I just think that making sales illegal wouldn't help the problem of uneducated consumers. I think that businesses should be more open about their products and provide more information and have more knowledgeable staff when it comes what they're selling, but that's again up to the owner of each business.
And I guess I should also note that I have no formal education with anything besides extremely basic economics (we talked about marginal profit, cost, revenue, and the demand function in my intro to calc class, does that count?  ).
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Good job figuring out that a thing is stupid in an inherently stupid system!
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Wait, without sales, how are stores supposed to empty their stock for next season or remove products?
Also, value is subjective. I don't think banning them will stop stores from lowering their prices for a fixed period of time and them raising them again. They just won't call it a sale.
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value isn't subjective, value is socially necessary abstract labor time 
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+ Show Spoiler +On December 28 2013 17:39 FiWiFaKi wrote:Show nested quote +On December 28 2013 16:55 Smurfett3 wrote:you obviously do not understand how a business runs. They don't sell shit for a bare minimum price; they need to first cover the production cost and then they need a marginable profit to cover employee costs and other costs to run a business. If everyone sold their shit for what it took to made it, no one would be in business for very long. Now, sales is used as a strategy to lure consumers into the store so that they might pick up other items that are not on sale. Sales is nothign more than a marketing strategy. It is most commonly seen in retail stores such as JC Penny, Macys, Old Navy, etc. It is ESSENTIAL TO UTILIZE SALES STRATEGIES TO STAY COMPETITIVE IN A CAPITALISTIC MARKET On December 28 2013 13:25 FiWiFaKi wrote:
Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (: In an ideal world, your proposal would make 100% sense to execute. However, in the real world, if a business, and a business is a business to primarily make money as its FIRST AND most important goal, then they would not be profitable for very long following your point. It's a creative approach to fix the gap between the consumers and retailers, but in reality, it is just not a plausible option for corporations to utilize because it will ultimately lead them out of business. I will reserve this post to respond to Hilltop tomorrow. It is getting late and I wont be able to formulate a good reply right now. However I will ignore your post as pretty much the first thing you are taught in the first university microeconomics course is that in long-term costs equal to revenue in a perfectly competitive market. Hence the economic profit of a competitive firm is zero. Cost refers to AFC (Average fixed cost) which is the initial investment needed, as well as the maintenance costs of operation etc. It also includes AVC (Average variable cost) which is the extra money spent on each good produced, which includes to cost of materials and the cost of salaries to the workers, royalties, and all other capital that needs to be spent to produce a certain output. Hence it is possible for a company to earn nothing and stay afloat with zero economic profit. It also appears you have not read any previous replies in this thread. I have decided to ban you from posting in my blogs because I do not appreciate your CAPITALIZATION trying to SCREAM things into my face, that's not how to have a friendly discussion. I obviously have knowledge in the field and I do not need to be told that I don't understand how a market works, when it shows you have minimal business or economic knowledge. If you would not like to contribute, that's fine, but don't aggressively post messages void of meaning here. Thanks.
I think we should stop pulling uni education out lol, but for the moment:
+ Show Spoiler +
Also, zero economic profit doesn't mean zero accounting profit. It's perfectly acceptable for ceo of Random Retail to earn 10 million/ year if that's what ceo's across the industry earn. So actually the term "zero econ profit" is pretty much theory and quite hard to pin down. You basically look at an industry that has been around a while and say, "yup, that's zero econ profit". Even then, when tech or innovation is introduced, zero econ will probably fall apart for a while.
Back to sales: I think quite a few people have pointed out sales are used to liquidate inventory, aka promoting efficiency. and sales can be used as promotion tool. If you're going to argue advertising is bad, that's a different subject, but what do you think of the above two uses for sales.
(also you mentioned menu costs before, but with the introduction of digital inventory management, it's not that costly to retail. The menu costs to consumer is the one I think you have problem with.)
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On December 29 2013 02:47 sam!zdat wrote:value isn't subjective, value is socially necessary abstract labor time
Except that people value a purse at 4K and its just a purse. But someone out there thinks it is worth that much money. I am not that person.
Value is subjective, always has been, always will be.
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United States10774 Posts
On December 28 2013 17:39 FiWiFaKi wrote:Show nested quote +On December 28 2013 16:55 Smurfett3 wrote:you obviously do not understand how a business runs. They don't sell shit for a bare minimum price; they need to first cover the production cost and then they need a marginable profit to cover employee costs and other costs to run a business. If everyone sold their shit for what it took to made it, no one would be in business for very long. Now, sales is used as a strategy to lure consumers into the store so that they might pick up other items that are not on sale. Sales is nothign more than a marketing strategy. It is most commonly seen in retail stores such as JC Penny, Macys, Old Navy, etc. It is ESSENTIAL TO UTILIZE SALES STRATEGIES TO STAY COMPETITIVE IN A CAPITALISTIC MARKET On December 28 2013 13:25 FiWiFaKi wrote:
Alright guys, well I'm heading out, too much negativity in this discussion for me.
It's rather interesting however, I just try to bring up a different point to say, "Hey, look, this is another way to think, analyse it and tell me what you think". I'm not saying with 100% certainty that it's a good or bad system what I'm suggesting, I'm offering a possible solution... Then I get criticized and shat for quite silly reasons. And people will disagree with me and get angry and then rate my blog 1 star.
Another interesting question is what system would allow a internet forum with serious discussion to operate at optimal efficiency to promote healthy discussion about society.
Anyway guys, I had a pleasure with some of the ones' that really struck me as smart like hypercube. Thanks mate (: In an ideal world, your proposal would make 100% sense to execute. However, in the real world, if a business, and a business is a business to primarily make money as its FIRST AND most important goal, then they would not be profitable for very long following your point. It's a creative approach to fix the gap between the consumers and retailers, but in reality, it is just not a plausible option for corporations to utilize because it will ultimately lead them out of business. I will reserve this post to respond to Hilltop tomorrow. It is getting late and I wont be able to formulate a good reply right now. However I will ignore your post as pretty much the first thing you are taught in the first university microeconomics course is that in long-term costs equal to revenue in a perfectly competitive market. Hence the economic profit of a competitive firm is zero. Cost refers to AFC (Average fixed cost) which is the initial investment needed, as well as the maintenance costs of operation etc. It also includes AVC (Average variable cost) which is the extra money spent on each good produced, which includes to cost of materials and the cost of salaries to the workers, royalties, and all other capital that needs to be spent to produce a certain output. Hence it is possible for a company to earn nothing and stay afloat with zero economic profit. It also appears you have not read any previous replies in this thread. I have decided to ban you from posting in my blogs because I do not appreciate your CAPITALIZATION trying to SCREAM things into my face, that's not how to have a friendly discussion. I obviously have knowledge in the field and I do not need to be told that I don't understand how a market works, when it shows you have minimal business or economic knowledge. If you would not like to contribute, that's fine, but don't aggressively post messages void of meaning here. Thanks.
he's saying the pricing of goods must be high enough to cover both AFC and AVC. you are both essentially making the identical point, just using the word "profit" in a different sense. as you are indeed taught in basic microeconomics and as common sense dictates, companies must be at least be able to cover those costs to stay afloat. so the price naturally accounts for those costs and is not just the the manufacturing cost. "profit" must cover those costs. he wasn't incorrect about that.
sales are good. i see it as a mechanism that benefits both the producer and the consumer. obviously it's not perfect, just as everything else in the market. companies evaluate the elasticity of the goods on their own and are able to determine whether the increased quantity will outweigh the decrease in price. as the poster above pointed out, it's liquidating your inventories. obviously there are marketing benefits as well - primary objective is to advertise the brand and lead consumers to buy other products that are not on sale. consumers also decide if the extra costs, such as having to go to that particular store during that particular time or having to wait a longer line, are worth buying the product at a lower price than the market price. of course, there's an information gap and some consumers may never have the opportunity to evaluate this because they never knew about it. this is not, however, a problem isolated to sales. or perhaps you can argue that that itself is the consumers' decision or investment because they have to make extra efforts to find out about sales i.e. look through magazines or coupons. i think the latter is the more correct perspective. why in the world the government should prohibit this boggles me. you talk about efficient markets. the government taking on that role would make the market less efficient because both parties are no longer free to make optimal, efficient decisions based on their preferences and circumstances.
one of the reasons reason why there's no true perfectly competitive market is because the asymmetry of information. this information gap also ties to institutional competence: whether a regulatory government body would even be suitable for setting prices. is it going to talk to all the major companies and choose a price in the middle? what about the delay in responding to changes in demand or input costs? this is the epitome of what an inefficient market would look like.
i don't see much benefit for consumers in banning sales. if you are willing to buy product A at market price, why does it matter that your neighbor bought it at a lower price? your neighbor made extra effort to find out about the sale, go to the store and take advantage of it. he did the work necessary to bridge the information gap between the seller and the buyer. if the good is not worth the market price for you, you will not buy it. or perhaps you will wait for another sale, but time is money and you are deciding to pay more in minutes instead of dollars (present value also plays a role here). or buy an inferior good at a lower price. that's how a free market works in the first place.
EDIT: if you are going to ban people for "screaming at your face," i would like to politely ask that you also stop the condescending tone as well. no need to harp on about your economics studies at university in dismissing people's points. theories are not always foolproof, especially in real-life application. what you learned in the classroom is not always a justified basis for simply ignoring and rejecting people's otherwise possibly valid points. i am not necessarily saying they're incorrect, but that people may have different interpretations of how to apply them in real situations.
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JC penney had the same mentality as you, they wanted to cut out the 'bullshit'
Big case study over there, look what happened to it
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United States10774 Posts
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Sales are really fun! It's like playing Diablo II all over again.
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Wow - a lot of interesting discussion here. Just to clarify, though, this discussion covers multiple discrete (albeit interrelated) concepts:
Marketing: the business capability that drives consumer brand perception (i.e. the culture of one-upsmanship, whether a brand is cool or worth spending money on, how consumers are engaged by a brand's culture)
Sales: the natural culmination of marketing, which is the transactional exchange of goods for currency.
Your original complaint is seemingly related to Sales Discounts but is actually tied to the concept of Consumer Fatigue, which occurs when price and value differentiation fail to create a compelling purchasing proposition. Just to build on the thoughts others have offered, your original argument both champions free market competition and governmental price regulation, which are at odds with each other.
Source: I work in consulting for large-scale sales and marketing organizations. Econ and jargon are fun, but the real world is even better!
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On December 28 2013 10:58 FiWiFaKi wrote:
Wasn't initially the goal of democracy to create like a free-market with no barriers to trading... Instead all of this bullshit to consumers?
I just wanted to comment on this small thing. I often see a free market economy/capitalism lumped together with Democracy like they are the same thing or interdependent when this is not the case.
Capitalism is an economic system based on a free market
Democracy is a form of government in which all citizens participate equally.
Often they are paired together. But they are not the same thing and they can exist independently from one another.
Otherwise good read 
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Err.. maybe I havent read everything right and should take more time to construct a valuable answer, but it seems to me that your mixing up things wrongly. I mean, how can you talk about free market and government intervention in one sentence? The goal of free market is to limit government interventions in order to stimulate competition amongst companies.
By restricting things you will create a less competitivr environment. Sales in general are actually good for companies to promote their products and good for consumers because they get value for their money. If everything was restricted by government *no sales* then companies could never make entry into existing and establised markets and there would be monopoly.
It seems to me that not finishing my economics major and straight up start a company paid off l.
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EPT![[image loading]](http://www.smbc-comics.com/comics/20130919.png)
