Tuesday, January 05, 2010

When the c-c-chips are down …

As a former small business owner, I admit I know very little about business principles. I never attended Princeton, Harvard or the Wharton School at Carnegie-Mellon. I was a graduate of the seat-of-your-pants system taught at the Keep-The Doors-Open University.

I foolishly believed that you could make as much money by selling your product for a lower price, moving more units – newspapers, in my case – than you could at a higher price but selling fewer of them. I remained true to that principle, even as the ship was sinking; I played the captain’s role to the hilt and went down with the company. Heck, I didn’t know any goddamn better.

So you can understand how I was stunned one recent day when my wife brought home a bag of potato chips from a company whose headquartered are down the Legacy road here in Plano (who is nameless but initials are Frito-Lay). It was a well-known brand, including its r-r-ridges and rolled “Rs” to properly pronounce but my jaw dropped at the price on the 10-ounce bag … $3.99. I got downright …. R-r-Ruffled.

How r-r-revolting! Four bucks for some shit that was half-empty to start. It seemed like only yesterday that the same crappy item cost under $2.50 or even two dollars. At that cost, the chips seemed like a reasonable purchase but four dollars?!?!

Hey, hasn’t anyone at that company heard that there’s a recession happening taking place?

I’m sure the company spokesperson would counter by noting the quality of the product, the change in oil used to manufacture those chips and the increased cost of the air used to inflate that 10-ounce bag.

And economic experts would tell you that when you increase your price for service or items just 10 percent, you reap 33 percent more income, or when you lower your price just 10 percent, it takes twice as many sales to recoup the difference. I just know that the local major metro daily has lost beaucoup of sales because MANY people (moi included) have cancelled subscriptions because it is priced OUT of our budgets.

Four bucks for a bag of chips is fine and dandy, but times are tough, pennies are being pinched, nerves are being r-r-ruffled and households everywhere are discovering the true words penned by the Kinks two decades ago (1979), entitled “Low Budget.”

“Circumstance has forced my hand

To be a cut-price person in a low budget land.

Times are hard, but we’ll all survive;

I just got to learn to economize.

At least my hair is all mine, my teeth are my own,

But everything else is on permanent loan.”

There’s no doubt that Americans will flock to anything cheap. There is no other explanation for the sight of people standing in long lines in the dark of Thanksgiving night, often in near-freezing temperatures, simply to buy a second-rate flat screen TV because … it’s priced ridiculously cheap. Consumers have tossed aside quality American-made products in favor of low-priced junk made in foreign lands by the lowest salaried labor corporations can find. Damn, we’ve made Wal-Mart, king of cheap shit, the largest retail business around FOR THE VERY REASON – shit is cheap.

But … you Do get what you pay for. Cheap shit is … cheap-ass SHIT!

Such an attitude has all but eliminated the American manufacturing sector and turned our society into robotic shoppers, jumping like lemurs at the newest gadget or electronic toy, usually made with our dollars but not by our neighbors. We borrow up to our eyeballs to pay the credit cards used for these purchases and it’s all a vicious treadmill and we’ve become the trapped hamsters.

It reminds me of the 1983 movie, “Mr. Mom,” written by the late John Hughes and starring a much funnier Michael Keaton. Its “story” centered around the difficult recession of the early 1980s and an unemployed auto engineer who reverses household roles with his wife.

As the contrived finale came to a head, in the background plays the finished commercial that the wife had spent her time creating. It showed the president of a canned tuna maker explaining that his product, normally the most expensive on the market, would roll back its price until economic conditions improved.

It was because his all-American product – Schooner Tuna – was the “tuna with a heart.” He subscribed to the theory that if you sell more units at a cheaper price, you might just make as much money.

The chip company CEO needs to stand before the public and say the same thing. Lower the prices on those bags until our economy recovers enough to justify charging the higher prices.

I hope the folks on Legacy Drive are listening above the din of all that chip munching. Someone needs to find some goddamn “heart.”

1 comment:

Anonymous said...

how much do we really need potato chips ?(underline need and use the chips to represent a lot of stuff we buy these days) and if you still lived below I-20 the price is lower by a bit.