As a hypothetical then. Costco hands out “freebies”. Who pays for the freebies?
The members, Costco, the businesses manufacturing the items being sampled, or a combination of these?
Or would you claim Costco pays for this completely, and that the money that pays for this is completely unrelated to the members, the money just comes from somewhere?
…I encountered someone who made the latter claim. Perhaps the truth is some other third option I have not considered (which I would appreciate you pointing out, I need more practice thinking outside the box), but I highly doubt there is some money box that pays for customer “freebies” that isn’t somehow funded from customer revenue.
Yeah, possibly. Not sure how often they are involved with funding Costco samples haha.
(And there are definitely no VC involved in the discussion I had with the person, as we were discussing small family owned businesses that only have one location)
So lets make it simpler. Coke spends more on marketing than it does production. Does this make coke more expensive for the average joe? No it makes it cheaper. Why? Because they can sell more coke, and selling larger quantities of things can mean better pricing by either production scale or better deals on ingredients. Back to Costco, samples are a rounding error level of cost for massive gains in sales.
And where did the money come from in the first place? I get that advertising increases sales (literally why anyone would do samples), but it’s not like that money isn’t from previous sales.
Efficiency, its not a closed ecosystem. The world is not static like an econ 101 textbook question. There is so many factors like credits, seasonal pushes during peak supply, producers offers for floor space. A lot of factors go into pricing a product, the amount sampling is not really one of them, thats just to push sales and is done at a completely different level of management.
As a hypothetical then. Costco hands out “freebies”. Who pays for the freebies?
The members, Costco, the businesses manufacturing the items being sampled, or a combination of these?
Or would you claim Costco pays for this completely, and that the money that pays for this is completely unrelated to the members, the money just comes from somewhere?
…I encountered someone who made the latter claim. Perhaps the truth is some other third option I have not considered (which I would appreciate you pointing out, I need more practice thinking outside the box), but I highly doubt there is some money box that pays for customer “freebies” that isn’t somehow funded from customer revenue.
Marketing budgets funded by venture capitalists who made the wrong bet
Yeah, possibly. Not sure how often they are involved with funding Costco samples haha.
(And there are definitely no VC involved in the discussion I had with the person, as we were discussing small family owned businesses that only have one location)
So lets make it simpler. Coke spends more on marketing than it does production. Does this make coke more expensive for the average joe? No it makes it cheaper. Why? Because they can sell more coke, and selling larger quantities of things can mean better pricing by either production scale or better deals on ingredients. Back to Costco, samples are a rounding error level of cost for massive gains in sales.
And where did the money come from in the first place? I get that advertising increases sales (literally why anyone would do samples), but it’s not like that money isn’t from previous sales.
Efficiency, its not a closed ecosystem. The world is not static like an econ 101 textbook question. There is so many factors like credits, seasonal pushes during peak supply, producers offers for floor space. A lot of factors go into pricing a product, the amount sampling is not really one of them, thats just to push sales and is done at a completely different level of management.