Is Greed Good?

Is Greed Good?

Bernard Flynn from Mullingar Crystal was featured in a recent radio programme on Irish National Radio (RTE). He spoke on air to the resident Business expert, Mr. Neil Hughes, a partner in a very prestigious accountants and business advisory firm.

The pretext for the interview was the difficulty of establishing a new business with limited funds. Mr. Flynn from Mullingar Crystal explained that as it was a new company, running TV advertisements and big campaigns was out and was basically seeking ideas from the listeners as to how to proceed.

The main piece of advice that was dispensed on air from Mr Hughes was that Mullingar Crystal should increase their prices dramatically. How much is dramatically?
An example was given in the radio studio of a crystal plaque which was on sale for €67 (approx $100) including taxes. The recommendation from Mr. Hughes was that this piece should be increased to €199 ($300). The reason given was the “perceived value”.
The question therefore is - Do we only appreciate something if it is expensive?

What does a business like Mullingar Crystal do?

Mullingar Crystal has set itself up as a company with a great product range and offering excellent value for money, however, if the perception is that because prices are low then the quality is not good, then there is only one option.
The mantra, “Greed is Good” as expressed by Gordon Gecko in the 1987 film
“Wall Street” is now a living reality for everybody and not just stockbrokers.
A pair of shoes that cost $300 is perceived to be better than a pair that cost $100. This may be true but not necessarily. It could be just a smart retailer and that same retailer discounts the pair of shoes at sale time to $150 and a “bargain” is had!

Similar madness to this happened in the property business in the UK prior to the crash in the early 90’s. People were experiencing increases in the value of their properties of up to £30,000 in a week. Houses were bought off plans and resold before the house was built for huge increases. A conversation anywhere could not take place without property prices being mentioned.
Are we therefore heading for a retail crash?

All the signs are there. We need a sense of reality to return. We need to value by quality and not by branding and price alone.

One piece of advice given following the radio programme read as follows;

“Turnover is vanity, Profit is sanity.”

Mullingar Crystal now needs to sort out its future in relation to its price structure and secure its future while still offering value for money.