10 main reasons for low profits
Many companies have low profits, are on the verge of bankruptcy and are waiting for a miracle. For some, this has even become the norm. This happens for years, sometimes even decades, but a miracle does not occur. Before the crisis, there was still extra money in the economy, which somehow saved the situation. But the crisis has come, the extra money is becoming less and less, which means that the situation is becoming more and more difficult, and in order to get out of it, you first need to find the reasons for low profit.
The situation itself will not be resolved, so the time has come to take action. To begin to act, first you need to find out the reason, or rather the reasons for low profits. There are a lot of them, but there are the main ones that make the maximum contribution to lower profits and, among other things, cause a number of other negative aspects. It is from their elimination that it is advisable to begin all.
… the first reason for low profit is subjective advertising, which is done without reliance on the market and needs …
So, we begin to determine the causes of low profits. The first of these is subjective advertising, which is done without relying on the market and needs, but based on the considerations of the specialist who is involved in it. He decides what the advertisement should be. Market and needs analysis, application of technologies – are not expected. In fact, the specialist makes an advertisement for himself, namely himself, having in mind as the recipient of the advertising message.
Main source of problems
reason for low profits
He considers his psychological portrait and his needs as a base and focuses on them. Many do not react to such advertising or even react negatively. As a result, there are no sales, and the reputation is spoiled, which further exacerbates the situation. Advertising in itself is the activation of implemented ideas. But not those that are rooted in the specialist, but those that are rooted in the consumer. To get objective advertising, you need to study and know them.
All that does not lead to the activation of an idea is pseudo-advertising
The second reason is pseudo-advertising. As mentioned above, real advertising is the activation of ideas introduced into customers. If ideas are not active, a person does not need anything, he is in a state of complete satisfaction and happiness. In order for a person to want something, it is necessary to activate the implemented ideas in him and this is done just the same through advertising. Only when an idea is active in a person does he want to realize it, and for this he needs a product or service, which are ways of implementing the idea.
Only real activation of the idea is advertising. All that does not lead to the activation of an idea is pseudo-advertising. It is bad in that it does not create needs, does not create a desire to buy a product or service, and thus does not sell. Pseudo-advertising is a type of slot machine from a casino that slowly but surely eats up your money. So we can safely say that many reasons for low profits are closely related to poor advertising.
The third reason is inappropriate advertising, which creates customers not for you, but for other companies, including competitors. With this approach, you spend your money on activating other people’s ideas, getting not into your target ideas, but into others’ ones, which creates a demand for goods and services of other companies. These companies receive free customers and thereby increase their profits at your expense, while you either get low profits or not at all.
This is a very common situation and is connected with the fact that there are no preliminary studies to establish which ideas need to be activated to create demand for your goods and services. The situation is paradoxical, because it seems like the activation of ideas is happening, but there are no sales, and in appearance, if you don’t know your target ideas, everything looks like a real advertisement, which complicates the search for the reasons for low profits.
Fourth Reason – Unprofitable Advertising
The fourth reason is unprincipled advertising. As mentioned above, advertising is the activation of an idea. One idea can be activated only by another idea. But very often attempts are made to activate the idea with thoughts. Everything is done correctly, using technology, but instead of an idea, thought is transmitted. It takes money and time to get it and make it into communication. Moreover, it is planned to return the money by creating needs and, accordingly, sales.
But this does not happen, because thought cannot activate an idea and cannot create a consumer; it can only create a like-minded person. As a result, the company bears costs that are not refundable. This accordingly reduces profit as a whole due to expenses, and also eats up potential profit from sales. It turns out that the company suffers double damage.
Moreover, the money invested in your market will always be yours, because you can sell it …
The fifth reason is the lack of a market. When there is a market, there are people who have been pumped by a controlled idea.