Posted 11 September 2016 - 06:39 AM

Johns sells apples for $3, making $1.50 profit per sale.



Mike sells apples for $2, making $0.50 profit per sale.



John's sales are more than double of Mike's sales for two years because consumers think his apples taste better, even though his price is higher.



Mike decides to provide prettier apples that cost him more money from his apple supplier and keeps his price the same at $2. He also buys a billboard advertisement, buys a newspaper advertisement, and rents his local community center to have a new product launch party giving away and showing off his new pretty apples.



Mike's sales have an immediate improvement because everyone wants to see if his apples are better. Mike is finally selling more apples than John. However, he is now loosing $1.00 per sale due to additional expenses such as more expensive apples from his Apple supplier and all of his advertising money he spent to hype up the community to purchase pretty apples.



His long term goal was to sell Apple peelers that only peel his pretty apples to make up for his $1.00 loss per sale... But there is a major problem...



Sadly, word around the flea market is that John is coming out with even tastier apples than what he has been selling, while Mike just spent all his money advertising his pretty apples. It turns out that in the long run people want apples that taste good, not necessarily asthetically pleasing apples. Mike's boost in sales is going to be temporary and not provide a return on his investment once John's new tastier apples are released.



Unfortunately, the community of consumers that feel pretty apples are more important than tasty apples are vastly outnumbered. With Mike's additional costs and expenses to launch his new pretty apples, his consumer base will not cover the loss he took to launch his product.



Mike needs to go back to the apple supplier quickly and provide apples that most people want... Before people start thinking he is incapable of providing a delicious apple...

