Why Everyone Should Take Marketing 101

Many years ago, I took a Marketing Fundamentals course.  I was more interesting in branding and advertising but this class covered basic business principles as well, and most importantly, the idea of retail mark-up was permanently etched in my mind.

Every product on the market is priced to make a profit for a retailer.  Below is a good explanation from a Houston chronicle article:

markup_percentage“The markup percentage measures the percent a company adds to its costs to set the retail price. Knowing the markup percentage for each of the items you sell helps you figure which of your items are the most profitable, which can help you decide which products to promote. For example, if your company can markup product A by 150 percent but can only markup product B by 30 percent, your company may elect to devote more advertising to product A because of the greater potential profits.”

As a class exercise we had to figure out a mark-up percentage for different products.  I quickly realized that high mark-ups are the norm.  According to a Wall Street Journal, “the typical markup on designer fashion is 55 to 62 percent.  Premium denim jeans often wholesale for around $150 and may sell at retail for up to $375.”

J.Crew jackie cardigan

What is the real value of this J.Crew jackie cardigan?

While I know that companies and retailers need to make a profit, I question paying such a high price for things that had nothing to do with the actual quality of the product itself — building rental, advertising, taxes, salaries, etc… In other words, when a factory churns out two similar quality products (say, a cotton sweater) and distributes Lot A to J. Crew and Lot B. to Old Navy, you will pay substantially more for the J. Crew one because of the label on the back.

There are certainly quality differences between products. For example, you can’t compare a run-of-the-mill cashmere sweater with one from Loro Piana, an Italian company whose name is synonymous with the finest cashmere.

At the same time, the vast majority of people associate price and quality — i.e. If it’s more expensive, it must be better — and that is simply not true.

Not all marketing classes are structured the same but I’ve listed a handful of online classes that should give you a sound foundation for understanding our free market system.

Even if you have zero interest in business, I highly recommend that you take at least one Intro course.  That’s because once you understand of basic marketing strategies, you have a better chance of becoming a smart consumer.

One course will not make you a marketing expert, but it could open your eyes.  I know… because that happened to me.

Review: What The Most Successful People Do Before Breakfast

What The Most Successful People Do Before Breakfast” is a best-selling e-book by author and productivity expert Laura Vanderkam.  I read her blog on a regular basis so I’m not sure why it took me so long to finally read this one.

Well, I guess I do know why… I knew that the definition of “success” would be fairly narrow in this book.  While there might be a few exceptions, success is defined mostly by career success.  The people profiled are all similar —  high-powered executives who are well-off and career-driven. However, even if you’re not in the corner office (or any office) and don’t aspire to that level of success, the book is worth reading and has advice/tips that are applicable to everybody.

bookcoverI felt that the book gives equal weight to three major areas: 1) personal/relationships/spiritual, 2) physical and 3) career/growth. In other words, successful people do not only spend their mornings reading business journals or doing work-related tasks. Many use that time to spend time with family, exercise, or meditate/pray.

After reading this quick e-book, I examined my morning routine.  I get up around 6 a.m., shower, get ready for work and spend time with my kids before leaving the house around 7:15-7:30 am. Getting kids ready for school can be hectic but I must say that overall I enjoy those early morning hours. Without knowing it, I was using that time as family time.

However, I realized that I could do more with my mornings.  As of this writing, I’m committing to three mornings of 30 minute exercise (walking and/or running at a nearby park).  If I plan ahead and take a quicker shower, I only have to get up 20 minutes earlier than usual.  Call me crazy but I’m excited about this plan. It’s making valuable use of my time and doesn’t make me take two showers a day, which is not cool in drought-ridden California.

Even if I don’t manage to make exercising a habit, I have to credit this book for inspiring me to try. Go read it for yourself and get inspired!

Yes, There Are People Who Work 40 Hours A Week And Want To Get Ahead

Financial Samurai once asked in one of his most popular posts, “Are There Really People Who Only Work 40 Hours A Week Or Less And Complain Why They Can’t Get Ahead?”  I would like to add my response in the form of this post.

First, the answer is “Yes”.

I think it’s okay to work “only” 40 hours a week and complain about not getting salary increases and/or not getting promotions.  At the same time, I focus my complaints on wage stagnation, rather than a better title, because I know that most companies reward the person who puts in the most hours.  I’m not saying that the promoted person is not smart or deserving; it’s just that many equally smart or deserving people often get overlooked for the wrong reason.

One of the commenters, DoveArrow, had an excellent response to that way of thinking:

“While I agree that people who take 90 minute coffee breaks have no room to complain that they aren’t getting promoted, I do think that there is a tendency to reward people who are busy rather than people who are efficient.

Now compare what I do to my co-workers. Many of them can barely open a spreadsheet, much less use one. When looking for duplicates on two separate spreadsheets, they will print out both and go through them laboriously line-by-line, rather than running a simple query in Access…As a result, they work 50-60 hours a week in order to get everything done.

Now here’s the rub. I have seen people like my co-workers, who make less efficient use of their time, get rewarded with overtime and promotions time and again. People like me, who are more efficient and innovative, get rewarded with laborious, boring shit jobs that need to get done, but nobody else has time to do. That’s because busyness in our culture is equated with ambition whereas efficiency is overlooked and often equated with laziness.”

Are we really making the best of our (human) resources when we promote base on looking busy, rather than creativity, innovation or effectiveness? This way of thinking actually excludes many smart people who want a work/life balance.

40 hours is long enough to do a job well — very well. With all the technological advances that have taken place in the past 20+ years, worker productivity has soared.  Think of the days before fax machines, smartphones, or computers.  In an office, every facet of a person’s job from filing to booking travel to creating presentations took twice as long to accomplish.  Yet we adhere to this “clock in – clock out” mentality that insists putting in the hours is the best way to measure productivity, when people should be measured by results.

I grant that there may be times that over-time is needed but if we expect someone to work 50-60 every week, there’s a problem that can and should be fixed by adding another employee or two. The real loser in this scenario is the person who puts in those long hours, and actually makes less per hour.  As venture capitalist Nick Hanauer revealed in a popular post about income inequality:

“…we capitalists will never actually ask you to work overtime. I don’t even track your hours. I just make it clear that I trust you to get your job done in the time allotted. And then I hand you twice as much work as you can reasonably do in a 40-hour week….And so you work even more hours, pushing unemployment up and wages down. And that, my friends, is one of the little tricks that keeps you poor and me rich.”

workerThere is also ample research showing that the optimal work hours for most people is about 40 – 50 hours max. Working longer hours does not make a person’s work more valuable.  He/she can make more mistakes and be resentful.  He/she may create work, like pretty reports and charts, just to have enough work to fill up those extra hours. I have personally seen that happen many times.

Even though this is a response to Financial Samurai’s original post, it’s not an attack on him or his beliefs.  However, I disagree with his core statement that “anybody who wants to be better than average can’t work 40 hours and expect to be more than they’re not.”  This implies that anyone who works “only” 40 hours per week cannot be exceptional.  I disagree. Consider that the extra hours can be consumed by office politics, back-stabbing, fixing mistakes, sitting in long meetings, and doing mindless work. Therefore it’s very possible and probable that a smart, efficient worker could average 40 hours a week and still be very valuable and worthy of promotion.

Finally, I think this 80-hour week mentality causes many qualified professionals to exit their careers due to burn-out or family needs, especially working mothers. In this day and age, where companies have zero loyalty to its employees, is it really worth it to put in all those additional hours just to get pushed out when you can easily become dispensable due to age or circumstance?