The mis-directed Billions

Have a cuppa at ABC coffee joint and it will set you back by about S$5.00.

Cost of coffee beans to make the coffee <>

Labour cost <>

Marketing/advertising cost > S$ 1.00? (20%)

Rental cost > S$ 1.50? (30%)

* note that the author did no research on the above and is purely based on the gut

More than 50% of a cuppa is spent on rental and advertising costs. For some products like toothpaste and shampoo, much more is spent on advertising. Why? The products, coffee or toothpaste, are essentially generic. Marketing and advertising are the way to get customers to buy a product. For coffee, the location of the stores play an important part.

You can expect how much a company spend in trying to improve the product given that it is the marketing and location of stores that matters more to final sales.

Look at automobile industry. A car is sold by its image, less so on technical superiority or even reliability. I guess as long as the number of times the car break down is less than the number of times someone woo and ahh at your car, you will find it worth-while?

Engineers are paid poorly compared to their colleauges in the marketing department. And to think that as an engineer you actually have to roll up your sleeves and getting dirty and smelly, as opposed to the marketing guy tee-ing off with customers at a golf course, who can blame the best brains flocking to business/marketing courses?

So, as the engineering faculty gets the brain-drain and eventually leading to stagnant product developments, the way to differentiate one company's car versus the others is through -- marketing and advertising.

As consumer, we are likely to continue paying more to marketing/advertising/rental space than to the actual end product. This madness is directing billions of dollars away from R&D for better products -- to the golf courses and real estate prices.

Will this madness come to an end? Maybe the internet will?