Legitimate Advertising Is the
Arch Enemy of Overhead
The most deadly of all the elements of manufacturing cost is that vaguely defined item known as “overhead.” Prior to the existence of the income tax law few American industries had progressed to an approximation of their producing costs and negligible, indeed, were those that had effected an intelligent apportionment of overhead expense per unit of product. The income tax was a mighty incentive to intelligent cost finding and today the average large producer in almost any line of industry has a speaking acquaintance with the term overhead, in fact, knows that it is the name of the disease that has brought a host of enterprises to an untimely listing in Bradstreet’s record of business mortality.
Some business men have learned, too, that well-directed advertising is the great alleviator of this disease. Take the case of an establishment producing any standard line of building materials, and assume that it has an investment in building and ground amounting to $100,000. Here, clearly enough, is a single item of overhead that constitutes a charge of $6,000 against every year’s production. No earthly power can banish that $6,000 item. But, when intelligent advertising steps in and creates the necessary demand, it is usually found that the plant’s output can be increased materially—perhaps can be doubled—without increasing the investment, while at the same time the cost of selling the product diminishes as the demand grows. Thus, two items of expense, apportioned against an increased output, shrink rapidly in their product-unit value and the price of the goods is proportionately lowered.
To the extent that advertising keeps two shifts busy in a plant, but one shift worked be fore, it is a boon to the consumer, as can be proven by a careful survey of the merchandising world. Consider the goods of high quality that sell at low prices and you will see that they are properly advertised goods; it matters not whether they are automobiles, breakfast foods or building materials!
The modern architect is the custodian of his client’s building funds. He chooses products that have been intelligently advertised, because he knows that as to such products his client will not be compelled to assume an unreasonable proportion of producing and selling overhead cost, such as must apply when a plant is not spurred to the limit of its productive capacity by the demand which nothing but advertising in proper channels can produce and maintain.
Advertising Talks—XV
by
THE AMERICAN ARCHITECT.
Arch Enemy of Overhead
The most deadly of all the elements of manufacturing cost is that vaguely defined item known as “overhead.” Prior to the existence of the income tax law few American industries had progressed to an approximation of their producing costs and negligible, indeed, were those that had effected an intelligent apportionment of overhead expense per unit of product. The income tax was a mighty incentive to intelligent cost finding and today the average large producer in almost any line of industry has a speaking acquaintance with the term overhead, in fact, knows that it is the name of the disease that has brought a host of enterprises to an untimely listing in Bradstreet’s record of business mortality.
Some business men have learned, too, that well-directed advertising is the great alleviator of this disease. Take the case of an establishment producing any standard line of building materials, and assume that it has an investment in building and ground amounting to $100,000. Here, clearly enough, is a single item of overhead that constitutes a charge of $6,000 against every year’s production. No earthly power can banish that $6,000 item. But, when intelligent advertising steps in and creates the necessary demand, it is usually found that the plant’s output can be increased materially—perhaps can be doubled—without increasing the investment, while at the same time the cost of selling the product diminishes as the demand grows. Thus, two items of expense, apportioned against an increased output, shrink rapidly in their product-unit value and the price of the goods is proportionately lowered.
To the extent that advertising keeps two shifts busy in a plant, but one shift worked be fore, it is a boon to the consumer, as can be proven by a careful survey of the merchandising world. Consider the goods of high quality that sell at low prices and you will see that they are properly advertised goods; it matters not whether they are automobiles, breakfast foods or building materials!
The modern architect is the custodian of his client’s building funds. He chooses products that have been intelligently advertised, because he knows that as to such products his client will not be compelled to assume an unreasonable proportion of producing and selling overhead cost, such as must apply when a plant is not spurred to the limit of its productive capacity by the demand which nothing but advertising in proper channels can produce and maintain.
Advertising Talks—XV
by
THE AMERICAN ARCHITECT.