Night Hawks Tapes

Archive for August, 2009

Resources are not unlimited. Shortages—temporary or permanent—can result from several causes. Brisk demand may bring in orders that exceed manufacturing capacity or outpace the response time required to gear up a production line. A shortage may also reflect a lack of raw materials, cornponent parts, energy, or labor. Regardless of the cause, shortages require marketers to reorient their thinking. One reaction is demarketing, the process of reducing consumer demand for a product to a level that the firm can reasonably supply. Oil companies, for example, publicize tips on how to cut gasoline consumption, and utility companies encourage homeowners to install more insulation to reduce heating costs. Many cities discourage central business-district traffic by raising parking fees and violation penalties and promoting mass transit and car pooling.
A shortage presents marketers with a unique set of challenges. They may have to allocate limited supplies, a sharply different activity from marketing’s traditional objective of expanding sales volume. Shortages may require marketers to decide whether to spread limited supplies over all customers or limit purchases by some customers so that the firm can completely satisfy others.
By 2000, the building construction boom that accompanied the period of U.S. prosperity caught up with materials suppliers, and shortages of wallboard, lumber, and bricks slowed plans for expanding construction. The low unemployment rate produced a human resource shortage. To compete, employers had to increase wages and improve their benefits packages. Other companies turned to automated equipment to counter the employee shortage. Still others “imported” workers from regions with higher unemployment rates with promises of higher hourly wages, job security, and relocation allowances. Marketers today have also devised ways to deal with increased demand for fixed amounts of resources. Reynolds Metal Company addresses the dwindling supply of aluminum through its recycling programs, including cash-paying vending machines. Such “reverse” vending machines allow people to insert empty cans into the machines and receive money, stamps, and/or discount coupons for merchandise or services.