Thru an analysis of the possibilities of the demand for their products advertisers have not only devel oped their business but have taught the world to be dissatisfied with anything but the highest planes of living.
18. Estimating possible demand.—The manufac turer of necessities finds many government and state bureaus ready to help him in estimating the possible demand for his product. As early as 1800, the United States government began to compile records of the annual consumption of many articles of food and clothing. By dividing the total amount consumed in the United States by the population of the United States, one may obtain an estimate of the per capita consumption. By multiplying the amount con sumed by each person by the number of people in a particular sales district, the manufacturer may learn apprOximately the amount of his class of prod uct which is consumed annually in his trade terri tory.
The next problem is to find out how many other manufacturers are satisfying this demand and the probable proportion of the business which he, with his product, may be able to control. While it must be understood that the estimated share of the demand which a manufacturer may be able to center on his product is very indefinite, such an estimate, based on available records, is at least a step in advance of the reasoning of Mark Twain's Colonel Sellers who esti mated the fortune he would obtain from his new eye wash purely on the basis of population multiplied by two, as each person was supposed to have two eyes for the use of the product.
The statistical departments of some large manu facturing establishments thru estimates obtained over a period of years are actually able to furnish calcula tions within five per cent of the amount of their prod uct which, with a certain sales plan and advertising appropriation, can be sold in any new territory.
Mr. R. S. Patrick of Duluth, Minnesota, sells dia monds for use in drilling holes in mining explorations. He has worked out a plan of gathering statistics whereby he can tell from month to month, from esti mates of the number of drills in operation in different ore districts and the ,average wear of diamonds per foot drilled, the number of carats of new diamonds that will be needed and the proportion of these which his salesmen should be expected to sell. All his ad vertising is done direct by mail because of the limit of his field. He has records of the returns that his advertising brings, and is always in a position to esti mate the possible demand from any particular ore field. If this can be done in the field of mining en gineering, where new operations are usually under taken with extreme secrecy, there is no question of the possibilities of analysis in relation to a great many other ^ products. Tendencies indicate that before
many decades have passed the majority of successful manufacturers will be employing scientific methods in estimating the possible demand for their goods.
19. CoAsumption estimates.—Estimates of annual per capita consumption in the United States are hard to obtain. The following lisrhas been compiled from many different sources. While it is comparatively short, it is probably the longest that has ever been printed. Some of the figures represent consumption in pounds or bushels, others in units of the commodity, and still others represent expenditure in dollars.
In estimating per capita consumption, one must remember that the demand may vary considerably from year to year. Even in articles apparently as staple as tea and sugar there is a constant variation dependent on many conditions. During the last forty years the per capita consumption of sugar has increased 108 per cent, while the per capita consump tion of tea has decreased thirty-eight per cent.
20. Methods of estimating.—There are many in genious ways of estimating total possible consump tion. Most of them depend on taking a certain quantity which is known and from it estimating the unknown. For instance, you may be able to find out how many containers, such as cans and bags, are sold in a particular territory to manufacturers, and, from this, estimate the sale in pounds of the products for which these bags are used.
21. Testing a demand in advance.—There are cer tain lines of business which in the beginning may seem to be profitable and to warrant extensive adver tising campaigns, but which on further investigation prove to be absolutely without a stable demand. This is particularly noticeable in the publishing busi ness. One publisher estimates that during the last fifteen years as many as a dozen different publishing houses have spent an aggregate of over half a million dollars in attempting to sell sets of books on agriculture. In one case, an advertising campaign in excess of $50,000 was undertaken. Each of these twelve attempts is said to have been unprofitable.
It is said to be no uncommon thing among pub lishers of books of a technical nature to send out a few thousand letters soliciting orders for a book before a line of the book is written. If the demand is not sufficient, the book is not prepared. Whether the book is to be printed or not, the money is always im mediately returned with a note that the publication has been delayed (or indefinitely postponed, as the case may be) and that the subscriber will be notified when the book is off the presses. This is one way to test a demand in advance, and has often saved con siderable money.