Page images
PDF
EPUB
[blocks in formation]

On these divisions we sought information as to source (manufacturer or wholesaler), in bulk or in package, and in which direction the tendency.

SPLITTING THE BUSINESS INTO DEPARTMENTS.

This division of merchandise naturally raises the question of departmentalization of business. In general, it is admirable to departmentalize. Sales should be analyzed just as expense is. But in practice in the ordinary drug store, with annual sales of from $15,000 to $20,000, it is conceivable that there might be excessive departmentalization.

It does seem, however, as if the prescription business should in all cases be accounted for separately. It is partly manufacturing as well as selling, and requires specialized and more expensive service than the other parts of the business.

The system of prescription charging is being standardized in the retail drug trade, I believe, along scientific lines-container plus material at 50 per cent profit, plus dispensing fee according to time, with, properly, the first

ounce more expensive. Still, Mr. Mason reports that estimates from 272 druggists on identically the same prescription varied from 50 cents to $1.50. The scientific method given above would have set the charge at 90 cents.

A SEPARATE ACCOUNTING OF SODA BUSINESS.

To prescriptions, as one department, should essentially different part of the business, then be added, as another department, soda, as an package goods, and miscellaneous. How much these last two departments should be further departmentalized depends on the size and

nature of the business. However, it is more rational from a business point of view to have tobacco, confectionery, and proprietary remedies taken together as package goods, than to have proprietary remedies combined with the prescription department.

To sell a package of a proprietary cold remedy is not different in nature or expense from selling a package of confectionery. But it is decidedly different to dispense a physician's prescription for a cold.

The main divisions of our "Schedule for Retail Druggists" are:

General.
Buying.
Stock-handling.

Selling.
Accounting.

Under these main divisions we gleaned from our preliminary work the following:

Under Buying the evidence is that more accounts are carried with manufacturers than with wholesalers, and the tendency is to favor purchasing from the manufacturer; yet, the total bought from the wholesaler was greater because of the diverse lines represented by one wholesale account. Tobacco and proprietary remedies were almost entirely bought from the wholesaler.

MANUFACTURER'S BRANDS.

There seems also to be a tendency toward purchase in greater proportion of package goods. Manufacturers' brands were favored in a few cases, but generally not. The underlying idea is apparently that the manufacturer's brands, nationally advertised, permit leaders and price cutting, and tend to make the retailer more of a mechanical distributor and less of a merchant. Private brands were re

garded as generally desirable, as, if good, stim- used in some cases, but had not the popularity ulating regular patronage.

Discount terms are usually 2 off in 10 days, 30 days net, though on specialties cash discounts of 5 per cent are received. Quantity discounts are on the whole opposed as putting the small dealer at a disadvantage, although when given by the wholesaler on a large order of different lines they do not seem to be objected to.

Under Stock Handling it was gathered that no stock records were kept, and that the number of different articles carried, amounting to 7000 or 8000, some 5000 of which are brands, would make the ordinary stockkeeping seem impracticable. It may be that a system being tested by the Bureau for the retail grocery business can be applied to the retail drug busi

ness.

Those in business in 1907 were of the opinion that they were carrying more stock now, in proportion to their sales, than then.

Under Selling, only four out of the thirty paid their salesforce other than a regular weekly wage. These four paid in varying forms, a wage plus a commission. Six of the thirty kept individual records of their salesforce.

ADVERTISING AND ACCOUNTING.

Advertising had taken the form of special sales, and window displays. Newspapers were

of the other forms. Every store had private brands. Accepting manufacturers' brands as a fact, the maintenance of resale prices was favored in practically all instances. It was felt that legitimate profits could be secured in this way, and that substitution could not so constantly be resorted to.

Under Accounting, 7 of the 30 had never taken an inventory; another said "never again;" 8 reckoned their profit on the cost instead of the selling price; 7 allowed depreciation, but none had a depreciation account; 12 charged salaries for proprietors varying from $1000 to $1400 a year. In two out of three cases where the stores were owned no rent was

charged.

In general, the accounting methods were crude and inadequate, although in one or two cases complete, if not the most useful, records were found.

It is interesting to note here that in the grocery research of the Bureau it was especially significant that the stores whose figures were most efficient were the very stores who had the most exact and detailed information about their businesses. This happened too often to be accidental. Apparently they had been able to reduce their expense because of possible economies shown to them by accurate accounting methods.

MAKING USE OF THE
PRINTED ADVERTISEMENT*

Last month we spoke of the five customerproducing channels, and discussed in some detail the first of these five channels, namely, the Store Window. In this issue we shall deal with the second customer-producing channel, which is the Printed Advertisement. The other channels will be taken up in future issues of the BULLETIN.

By the Printed Advertisement we mean booklets, circulars, bill-boards, show-cards,

*Second article in a series of five special papers.

By HAROLD WHITEHEAD, President American School of Business, Inc., Boston

and newspaper advertisements—particularly the last.

Many drug merchandisers apparently fail to realize that the printed word may be made a wide channel through which profitable patronage can be made to flow into the store.

The printed advertisement has a double effect: it introduces the merchandise to new prospects, and it keeps old customers in the straight and narrow path.

I earnestly urge druggists to advertise, and not just announce.

To say that the Hyphen Drug Company sells candy at 60 cents a pound is an announcement, not an advertisement. It merely states a fact, and it lacks that appeal, that punch, so necessary to impel the people to buy.

The bare announcement that a certain drug store sold candy never caused any one to put on his hat and go out to buy some.

But talk of the unusual flavor of the candy, the freshness of it, the exclusiveness of it, the fact that the discriminating buyer prefers it because she is always sure of getting the very last word in candy-that is advertising!

THE DOUBLE APPEAL.

The good advertisement generally appeals both to desires and to reason; in other words, it has both "suggestion" and "reason-why" copy. Pure logic-reason-why copy-generally lacks that persuasiveness necessary to bring the prospect to the store.

For example, if I were advertising candy, I would suggest its deliciousness and the pleasure to be derived from eating it or giving it as a gift; and at the same time I would give "reason-why" by pointing out the quality of my candy, its purity, etc.

Again, one may appeal to the imagination by painting vivid word-pictures of what his goods will do for the customer when she gets them. This does not mean exaggeration. That is to be avoided.

Notice the difference between the statement "We have a new stock of high-grade stationery," and "Our stationery conveys an atmosphere of 'distinction' to the receiver of your

letter."

In the first case you make a "bromide" statement about the goods; in the second, you convey a picture to the mind of the reader. She sees her new acquaintance opening her letter, and pictures its delicate, dainty appearance. You have told her what the goods will do for her.

Of course, plain "reason-why" may sometimes be used-in advertising a special price, for instance. Here you would play upon the saving in price as a reason for buying.

DON'T BE IN A HURRY.

Don't look for great results from your newspaper advertising all at once. Newspaper advertising may be compared with the building of a dock. The first few thousand tons of

masonry used in its construction are hidden beneath the water. To the outsider it seems that vast quantities of material are buried in the sea without result. In time, however, a solid foundation becomes visible above the water, and soon a permanent structure is seen.

In your newspaper advertising the results may not be visible at first, but the continuous, wise use of space will develop a permanent structure of good-will which cannot fail to prove beneficial.

It is wise to have an advertising appropriation and to decide in advance what will be spent during the season in advertising. Let that amount cover all the advertising done during that period.

Much better results will be obtained from the continuous use of small advertisements than by one big splurge. The latter is soon forgotten, while the continuous use of small advertisements constantly pounds home the message to customers and prospects.

Do not try to advertise twenty articles in a two-inch double-column advertisement. If the amount of space you can afford is limited, advertise one line or one thing at a time. Unless this is done, the attention of the reader is scattered and fails to develop into a desire to possess any of the articles advertised or into interest, even. When the space is small, advertise one line of goods at a time, or, better still, one article at a time.

MONEY THROWN AWAY.

Give up the thought which so many druggists have that you can prepare your advertisements in odd moments. It is actually money thrown away to use ads that are poorly worded and displayed. Make the preparation of your advertisements a definite duty, and give ample time to its performance. Or perhaps it might be well to arrange for a local advertising agency to look after it. Better results will surely follow.

Avoid running the same copy twice. Advertise the same articles as often as you wish, but prepare new copy. There is always something fresh to be said about it; and do, oh please do! see that what you advertise is seasonable.

Look through the advertisements which some druggists display. Some of them are as out-of-date as the Canadian druggist who advertised fly-swatters in January. By advertising goods which are in demand now you are

more sure of pulling immediate business. The advertising that you want must not only build up good-will for you, but must introduce some dollar bills to their brethren in your cash register.

Advertising is not an expense. It is an investment which should pay good interest. If advertising is properly attended to it will surely pay well.

Those little post-card-size printed advertisements or booklets are mighty useful to slip into customers' parcels; but again, one must see that they are seasonable, and that the goods so advertised are in stock.

CHEAP BOOKLETS.

Many manufacturers-in fact I can safely say the majority of manufacturers-waste more money on this kind of advertising than they spend judiciously. Many of them kindly but unwisely flood you with little booklets and other matter having advertisements of articles which you do not sell, and your name and address is sometimes very poorly and cheaply imprinted. It looks a regular hodgepodge.

If I were an active drug merchandiser today,

I would throw away nine-tenths of the advertising material sent me by the manufacturers. I would be ashamed to have such shabby-looking material going out as representing the quality of the store which I ran. Remember that every piece of advertising that goes out with your name on it in any way is looked upon by the recipient as representing the standard, the quality, of your store. So whatever you do use, see that it is really representative of what you want to make your store.

The druggist who thinks he can stand behind his counter and wait for business to come in these days is mistaken. He is almost comparable to our friend with the hookworm, who, when you complain of his lack of energy, will tell you in languid tones that he was not consulted as to whether he should be born or not, and under the circumstances he "reckons" that the world owes him a living.

He is quite right. The world owes us all a living. But it is up to us to collect it for ourselves! What we get we go after.

And one of the ways that the modern druggist goes after what he wants is through the medium of the printed advertisement.

Next month Mr. Whitehead will discuss "The Written Letter."

HOW I CUT

DOWN EXPENSES

Now that it's all over it makes me laugh. I cut down expenses when I didn't need to.

The war did it, mostly-the big war in Europe; and the way I cut down expenses was to sell my automobile.

Running a drug store is not the gold mine people think it is but, at that, I have no cause to complain. I have always made a good living, I own my stock and fixtures, my store building, and my home, and up until last May I owned an automobile.

When the war broke out I looked for hard times. It seemed to me that money would tighten, and that everybody would think twice before they let go of a dollar. The banks clapped on the lid a little, prices commenced to

By EDGAR E. DALLEY

sky-rocket, and the general outlook didn't seem very promising.

That was the first scare I got. The next one came when the Lusitania was blown up. I looked for war; didn't see how we could possibly avoid it.

So I began to figure how I might hedge a little.

Do you know that it is a hard thing to reduce a drug store's operating expenses? I own my building: shall I move out? For it surely would not do to put down in the expense account a smaller amount than the building would rent for to some other man. I can get $60 a month for it any time; so I charge myself up with $60.

And clerks. I keep two, and work myself. I don't see how I could possibly get along with one. In fact, I know that I couldn't, for I should lose business. People won't stand around nowadays. They want to be waited on

at once.

We have a furnace in the basement-hot water. We surely have to have heat in the winter, and we couldn't think of using stoves, the way we used to. Nor could we get along without electric lights, and plenty of them.

We have to have insurance, have to pay taxes of several different breeds and varieties, have to have two 'phones, have to contribute to the church and to a number of other causes, and we have to advertise.

Where can we begin to economize? I gave the matter very serious consideration and concluded that the store, as a store, couldn't; that if there was any economizing to be done I, as the store's proprietor, would have to do it.

Last year I drew $2276 out of my business. -spent that much. I had my stakes set at $2000; that is, $2000 was the salary I allowed myself. But I overdrew; I spent more.

Now I never had an automobile until a year ago last April. I bought what they call a "demonstration car"-one that the company had used as a sample and to demonstrate to prospective buyers. The regular price was $1350; I got it for an even thousand. It had been run 1500 miles.

Before I bought a car I had it in my head that I would like to tinker it up, if anything got a little out of whack. I liked to read the Scientific American, and thought I was a mechanic. But I soon found out two things-one being that I didn't have the inclination to doctor my car, and another being that I couldn't doctor it if I wanted to. An automobile is a complicated piece of machinery, particularly the part that has gone wrong with me the most -the carburetor.

Then, too, a great many of the parts are hard to get at. Lying flat on your back on the floor and twisting bolts directly above your head, getting an occasional gob of grease in your mouth, and once in a while a nut in your eye, isn't exactly what I call fun. And for heat, next to a certain place spoken of in the Bible, there are very few institutions that can beat a garage on a hot summer's day.

I thought, too, that it wouldn't cost much to

run an automobile and keep it in repair. Where I live gasoline was only 10 or 11 cents a gallon.

A license cost me $3, and a new tire $28. That's what I started out with, plus $5 for the first month's garage rent, a dollar's worth of gasoline, and sixty cents' worth of lubricating oil.

My wife bought a robe and also four linen dusters, one for dad, one for mamma, and one for each of the two kids-$10. Then we had to have a hamper-a metal box to fasten on behind, and a full kit of eating tools-another $28. I bought two new inner tubes and a box of patches-$11.50.

I kept a detailed account, and my first six months' expenditures, including garage rent, were $92.09.

During the balance of the open season (I did not run my machine during November, December, January, February, and March) my average monthly expense was $17.69, this representing actual outlay for gas, oil, the charging of batteries, and repairs. During the cold months my expenses were merely garage rent, five dollars per.

How much I spent by reason of having the machine that I would not have spent if I hadn't had it there is no way of telling. I learned that a woman likes to do up things in grand style, when she gets out in an automobile. It gives her a feeling of royalty, and she wants to live up to it. So we had many a fling in a small way. This did not cost much in real money, I realize; it would not foot up big. But it was a contributing cause to the overdrawing of my salary account.

When I went to start my car in the spring, it wouldn't go. It had stood in a cold room all winter, and was out of tune. I sent for a professional tuner and he got busy-got busy eighteen dollars' worth.

About this time I had a talk with a friend of mine on the subject of depreciation. He estimated the depreciation on his car at $450 a year. This scared me a little, and the possibility of the United States getting pulled into the trouble in Europe scared me still more. I got a chance to sell my automobile for $900, cash, and I let it go.

That is the way I cut down expenses.

In conclusion it is only fair to say, though, that I shall have another car.

« PreviousContinue »