Please read thefollowing, though it has nothing to do with bowling, or bowling balls, and was written in 2002. I wrote it for a friend who had a business in Ballina, and he and his two competitors were all madly discounting. He went broke about 5 years later, and so did one other.
Only one left now, and his prices reflect that.
In the mid 1980s, I was Ops Mgr . of the Service Station Association, and tried to persuade private ( mostly lessees) Svc Stn owners to not send themselves broke by discounting their already riduculous tiny margins. They didn't, there are now almost none left. Instead we now have Woollies and Coles with Shell and Caltex, and they can do whatever they like.
People chasing the best price, from anywhere they can get it, ALWAYS, eventually cause higher permanent prices later.
ELEMENTARY !!!
• Business creates employment, but that is not its purpose. Employment is, instead, a by-product
• To remain in business, and therefore maintain employment, a business must remain profitable.
• Every employee benefit paid for by the business must be met by the price received for the goods or services produced by the business.
• If the price of the end product of the business is insufficient, the business fails, the employment is lost and there are no employee benefits.
• The product or service of every business eventually results in a purchase by an end consumer.
• The end consumer, by large majority, is an employee, or a dependant of an employee.
• Employees, therefore, pay for the cost for any benefits they receive, for if they do not, both their employment and benefits cease to exist.
• Modern marketing revolves mainly around price, by way of "discounts", "sales", "free gifts", "specials", and prizes of cars, holidays, electrical goods, etc., creating a downward pressure on prices.
• There are no free cars, holidays or anything else. They must all be paid for by the end consumer, almost always an employee.
• Consumer Groups and Government Agencies, e.g. Competition and Consumer Commission, insist that all competition which pushes down prices is good.
• Virtually every collapse of every business, ranging from the thousands of small businesses, to the few spectacular large ones (Ansett, H.I.H., One-Tel, etc.,) have at the base of their failure too low a price for their goods or services.
• This base reason is distorted and disguised by Directors in some of the larger collapses, appearing to make unseemly grabs at large sums of money, just prior to the failure, but this is not available to the many small businesses which fail. They have all competed and discounted themselves out of business.
• It is therefore a denial of both logic and common sense to assert that all competition benefits consumers and that more competition benefits them more.
• Once a point of competitive balance is passed, where downward pressure on prices results in unprofitability and business failure , then the number of competitive businesses is reduced below that which the market would support, resulting in less competition overall.
• With a constant downward pressure on prices by the 'all competition is good' advocates, combined with an upward pressure on employee entitlements, including superannuation, paid leave of all sorts, including maternity leave, etc., etc., we're fooling ourselves. There is no magic source of money to pay for benefits, gifts or prizes. It is only available through the price of goods or services.
• If you buy enough bargains, always insist on a discount, shop around until you find the lowest price and insist that you get every benefit possible from your employer, because you like to, or because you think you are 'entitled', it will be good practice for when you need to do it after you've lost your job, or when you don't have as much money because your taxes have gone up to pay for the others who have lost theirs.
• One final thought - how can we have been converted into a Nation of bargain hunters and discount chasers and at the same time been persuaded to buy water in bottles, when we can get it out of a tap?
Jim Cross - Ballina - JUNE 2002