The Timeliness of Profit — Advertising Effects and Effectiveness , business accountability , Business marketing , lebanon , marketing , marketing budget , marketing strategy , profit timeliness , Random Views — Marketing in Lebanon
Monday, May 10, 2010

The Timeliness of Profit

"Profit is a function of time" as simple as this phrase may sound, it holds inbound wisdom. Profit, like everything else in a business, is calculated periodically. While the balance sheet gives you a snapshot of your state of affairs, this image might be misguiding you.

Expenses, per say, are incurred directly, even if their benefits are to be depreciated over a long time. This does not appear in your "snapshot" as the costs will be directly registered and the income statement might display a loss for the period at hand.
Had you been talking about inventory, the "just-in-time" policy success might be credited to this profit and time relationship. Yet it only simplifies the process of monitoring losses. In reality, had you been a retailer, buying a bulk of items at once can significantly reduce costs. Yet it makes your balance sheet look like a total disaster, as expenses will certainly outweigh sales for that period of time.

Marketing is no different. Had you understood the advantage of investing at once to procure long-term sales as opposed to instant gratification, you would realize the advantages of big integrated marketing campaigns. Keep in mind that marketing goes under "expenses" in the income statement and that the profits will only be accrued in the future.

Buying inventory progressively, might well be a safe bet, but it makes you lose your bargaining edge and increases your costs. You would indeed be making profits, but you would not be operating with your full potential as initial costs of goods would be high. Likewise, investing in marketing progressively gets you "some" sales, yet you lose the crescendo effect of an integrated campaign.

My point? The same marketing expenses invested at once would generate much more sales than the same amount invested progressively. Take the plunge, even if in your periodical business management reasoning, it looks bad. In the long run, it will appear to be sound judgment.

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