On 10 May 2006 05:01:54 -0700, "Fran"
If you define "sufficient" in an appropriately arbitrary manner, the cliche will always hold.
Which looks like what tropi is doing.From the whole thread thusfar, he seems to be rather wedded to arbitrarily defined cliches.
Cost reductions.If the company has no other products that directly compete with their own, they can maximise their profits by selling the product in unit sizes that minimize their packaging costs.
If the larger unit size was more profitable for them, there is little or no compebreastion in the product space, and their market research showed that enough consumers of the smaller pack would switch over to the larger size if given no choice, to a level that would provide higher overall profit levels - then the small pack would go.
Which it did.
That happens pretty regularly.In markets with little compebreastion you get volume creep like this, primarily to reduce packaging costs.
Its a similar phenomena (but opposite direction) that you get in highly compebreastive markets (like beer, biscuits, toothpaste) where you get volume shrink, where the price of the good stays the same but the volume or size of the good reduces.
There's often a large disconnect between those controlling the finances of a company and those responsible for maximising the market penetration of the product - especially in large organisations and for products that have relatively small sales volumes.Its often easier for the company to kill products that arent performing to profit expectations because of a lack of volume movement, rather than attempt to boost those levels to reach expectations, even if the latter could be achieved relatively easily.Large organisations too often lack the interpersonal communications infrastructure that would alleviate alot of these problems, and it also doesnt help that most of the good marketing people (and by marketing I mean real marketing, not advertising) tend to leave Oz at the earliest opportunity.No wonder - $120 000 a year here, or $500 000+ overseas, and its a real specialist talent to be good at it.
Most of the goods by volume that are sold in developed economies are the product of large bureaucracies anyway, often just as inefficient and limited as their public sector counterparts.
On a related note, I had a laugh the other day when I was reading Nick Minchin trying to justify the sale of Medibank Private to a sceptical public.He said (words to the effect) that selling Medibank Private would make the industry more efficient because the private sector is always more efficient than the public sector.I actually know something about this because last year I did a scoping analysis for a private equity firm (that I think was acting as a front for a foreign health insurance provider) that thought there was alot of value to be had by buying it (and a a bag of smaller health funds) and restructuring the company to get a large efficiency dividend.The only problem was that Medibank was actually an industry leader in efficiency and that in any compebreastive tender for the company, there would actually be a serious efficiency premium built into its eventual sale price.
Nick Minchin reminds me of alot of free market religionists, except for the fact that he actually knows when he's talking horsepoo.
