Sales and Marketing Area

Technological development and scale are not the only features of the activities of a company that unusual situations can bring up opportunities for sustained high profit margins. There are some situations in which this can also take place in the areas of sales or marketing. One example is a company that has set up in its customers the custom of almost immediately and automatically specifying its products to assign a new order in a method that makes it somewhat expensive for a competitor to try to move them. There are a couple sets of conditions that need to occur in order for this to take place. First of all the company needs to build up a reputation for superiority and dependability in a product, first of all in that the customer is able to see that this is very important for the adequate behaviour of his activities, and second of all where there is not any competitor that is serving more than a minor part of the market in order for the leading company is almost the same in the mind of people in general with the source of supply, nonetheless that the cost of the product is only a very little part of the customers total cost of operations. As a result small reductions of price only result in very small savings in comparison to the risk of taking a chance on a supplier that is not known of.  Nonetheless, even this type of situation is not sufficient to make sure a company will be lucky enough to place itself in this position and that it will be able to have the benefit of above average profit margins every year. Another thing is that the company will need to have a product that is sold to a great number of customers instead of only to a few large ones. These customers will need to be specialized enough in their temperament that it would not be probable for a possible competitor to feel they could get reached through media that advertises such as in the case of television and magazines. They make up a market that as long as the head company keeps the high standard of its product and the satisfactoriness of its service, it would only be able to be displaced by sales people that are making individual calls. However, the size of all the orders of each customer is able to make this kind of selling attempt very expensive. A company that is processing all these advantages is able to through marketing, keep an above average profit margin just about for an indefinite period that is unless there is a big change in technology that would then take over it. These types of companies can usually be found in the reasonably high technology supply area. One of the things they do in order to keep their image of leadership is to often times hold technical seminars on how to use their product, and this is a marketing tool that has proven to be very effective after a company reaches this kind of position.

One thing that should be pointed out and seen is that the above average profit margin return on investment does not need to be, as a matter a fact should not be, a lot of times that made by industry in general to place a great amount of investment attraction to the shares of a company. As a matter a fact if the profit or return on investment is too much, it can be a cause of hazard because the enticement then turns into something that is almost impossible to oppose for all types of companies to try to get in on competition in order to get a share of that unusual deal. On the contrary, a profit margin that is constantly only two or three percent of sales higher than that of the next best competitor is enough to make sure of a very good and outstanding investment. 

To go over the main points of the third aspect of a truly conservative investment remember that it is not only necessary to have the amount of personnel but to have had that personnel or their precursors move the company into areas of activity where there are intrinsic reasons inside of the economies of the specific business in order for the above average profit is not only a matter that only lasts for a little while. To say it in a simple way, the thing to ask as far as the third aspect is to find out what the specific company is able to do that others are not able to accomplish as well. If there isn’t hardly anything, so that, when the business starts to become more successful, others are able to run in to share in the company’s success on the same conditions, the evidence pretty much shows the truth that even though the stocks of the company are not cheap, the investment does not succeed in qualifying in this third aspect.