8. Disadvantages of quantity prices.—Manufac turers who believe in one price to all irrespective of quantities purchased, usually advance the following arguments: CO In many lines the goods should not be sold in large quanlities because of tbe danger of spoiling; spoiled goods on the dealer's shelves are bad for the manufacturer; accordingly, be should encour age minimum unit purchases by refusing quantity prices. (2) The success of the manufacturer de pends on the success of his distributors; retail success is largely based on the principle of small stocks and quick turnovers; the manufacturer, therefore, should encourage the application of this principle by offering his best price for small purchases. (3) Finally, it is contended that a low quantity price to the dealer sel dom means a lowered price to the consumer, because the shadings of prices for increased quantities are usually small. One well-known brand of soap, for instance, selling to the retailer at $3.50 per case of one hundred cakes, is priced at $3.45 per case in five case lots, and $3.40 per case in ten case lots. This small lowering of the unit price per case does not mean that the ten case buyer can charge the consumer any less than the one case buyer charges him. In other words, the quantity price merely enables the big buyer to make a larger profit; it adds to the com petitive strength of the man with large capital and large trade, and to that extent works to the disad vantage of the small dealer.
Despite the slowly increasing number of manufac hirers who do not offer quantity prices, and despite the arguments that support them, the tradition of quantity prices is still strong in trade, and the gen eral opinion is that it will survive for a long time to come.
9. Deals and secret discounts.—Free deals are regular parts of some house policies; the buyer is given, say, a case of goods free, with each ten cases that he buys at the regular price. This is merely a method of temporary price reduction without chang ing the list price. Its advantage as a method of tem porary price reduction is that it enables the price to be brought back to the original figure without much criticism from the trade; and it permits price reduc tion in a restricted territory without necessitating a new published list. Its disadvantages are that buyers often wait for the deals, and buy warily at regular prices; it often encourages buyers to load up unduly and so to be saddled with unproductive and slowly moving stock. A large proportion of trade organiza tions have officially protested against the practice.
Secret discounts, or inside prices to favored buyers, have been much criticized of late. The manufacturer who offers them is likely to incur the distrust of buy ers at large, and it is possible that be will find himself in conflict with Federal trade laws. One price to all those who buy under the same conditions is coming to be the accepted idea in trade.
10. Fixed prices.—The manufacturer must decide whether be is to attempt to induce dealers to sell at fixed prices, or whether he is willing that each dealer shall fix his individual price. This matter is consid ered in a later chapter.
11. Guarantees.—The manufacturer must also reach a definite decision with regard to guarantees and returned goods. Is he to stand absolutely behind his goods, and protect the dealer in a similar stand? _Most manufacturers are adopting this policy because it is the honest, frank, above-board policy. In the working out of the policy there are many questions. For instance, shall the manufacturer issue a printed guarantee? If so, what shall be its terms? Shall it be absolute, or shall it be hedged around with qualifi cations and restrictions? Dealers and consumers are beginning to doubt the value of printed guarantees, because some of them have been so full of qualifica tions that, when goods, seemingly defective, are re turned in good faith, it is found that the guarantee does not cover them. Rather than run the risk of losing consumer good-will in this way, many manu facturers think it best to issue no printed guarantee at all, but to advertise that they guarantee their goods, and to adjust each case on its merits, always dipping the scales in favor of the customer.
12. Service.—Finally, the manufacturer must de cide the matter of service. Service is the big word in modern business. It means several things; for instance, a continuing interest in the customer after he has bought the goods; or a real helpfulness preced ing the sale, with the purpose of fitting the goods definitely to the customer's needs, or of helping him to decide whether the purchase is to his best interest or not. The automobile service stations are examples of this new idea in business; so also are the depart ments, conducted by periodicals, to help their advertis ers get more return from their advertising expendi tures. Another illustration is the service department of a furnace manufacturer, who will submit complete plans for furnace installation in any house without placing the inquirer under any obligation to purchase. Service of this kind is expensive, but it makes sales; no manufacturer can afford to omit service orf some kind from his selling plans.
13. Charting the cost of marketing.—The cam paign should be preceded by a carefully prepared budget of estimated receipts and expenditures. One complete budget of this sort included the following items: tabulation of complete expense balanced against returns from ninety per cent of proposed first year's output ; detail of manufacturing expense; detail of sales organization expense; detail of advertising ex pense; detail of expected volume of sales with basis of estimation; detail of possible lesser and greater volume of sales, with accompanying sales of gTaduated expense and returns; detail of. administrative financ ing of the proposition.