Radio age research, manufacturing, communications, broadcasting, television (1941)

Lower Distribution Costs Sought KAP/n EXPANSION OF NEW MARKETS. MORE EFFICIENT METHODS OF DISTRIBUTION OF INDUSTRIAL PRODUCTS ARE AIMS OF SCIENTIFIC COMMERCIAL STUDIES MADE BV RCA RESEARCH GROUP By E. W. Butler, Manager, Commercial Research Dept., RCA Victor Division E\'KRY time someone asks us what we do in the Commercial Research Department I get a little concerned about whether they fully understand the meaning of that word "research". Research is usu- ally associated with test tubes, Bun- sen burners, electrical laboratories, and lots of complex apparatus. But "research" isn't limited to the tech- nical field. In fact you can "re" search or take a second look to pretty good advantage in a great many parts of your business. Commercial research people are just ordinary commercial people who go about the job of taking a second look at our commercial prob- lems. We define commercial re- search as the procedure of obtain- ing facts on which to base decisions. We do not employ any crystal balls, fortune tellers, or clairvoy- ants. We do not attempt to |)redict when the war will end. or whether Dick Tracy will escajie from his lat- est predicament. Similarly, there are many business problems which management cannot answer now. Some people believe that the imme- diate post-war era will witness the greatest boom known to mankind. Others think unemployment and high taxes will create a chaotic de- pression. The study of other fac- tors, like inflation and free trade or high tariffs, can give you almost any answer you wish to prove. In spite of these many per])lexing questions, there are some sound conclusions which the business ex- ecutive can get through research. That is, he can reach some sound conclusions if he will stop long enough to obtain facts and conduct tests through scientific procedures. Until now, the selling end of most businesses has lacked the same rules and systematic procedures that have been accepted in accounting, manufacturing, and engineering. It was to eliminate the use of per- sonal opinion and substitute proved facts in policy-making that the management of our company set vp a Commercial Research Department a little less than three years ago. We have great confidence in the post-war period, and the things we are doing are designed to help our company take full advantage of what may be the most interesting time in our country's history. For example, we believe that retail prices must be lowered and that this lower price must be obtained large- ly through reduced costs of dis- tribution. We know that we shall have many new products and that new markets can be opened for both old and new products. We believe that comiietition will be stronger and more aggressive and that our own sales methods must be revampsd to cope with these new conditions. But it is one thing to talk about lower prices and new markets and it is another thing to do something about them. Doing takes "know- how" and that is where Commercial Research fits in. We are trying to find out the "how" of our post-war job. Perhaps you may wonder why RCA's Commercial Research De- partment is headquartered in Chi- cago when our home offices are located in New York and Camden, N. J. The explanation is simple. We market our consumer products through approximately eighty wholesalers and 15,000 retailers. Most of these distributors and all of the dealers represent independ- ent capital. In Chicago, however, we have our own distributing house, with branches at Kansas City and Detroit. These are our only company-owned distributing points in the country. It was recognized that Commer- cial Research needed a laboratory^—■ not the kind of laboratory men- tioned before with test tubes and Bunsen burners, but a practical sales laboratory where we could ac- tually test our theories on lower dis- tribution costs. To practice these theories on an independent distrib- utor might not be too healthy, but there could be little wrong with try- ing out new ideas in a company- owned wholesale house w'here we have our own money invested. That is how we came to locate our com- mercial research activities in Chi- cago—in order that we might have a company-owned distribution unit at our disposal where we could put theories to actual test. The success of stores following a simplified and economical pattern as exemplified by the voluntary or corporate chain is ample evidence of what can be done by streamlining distribution. Any manufacturer, like ourselves, who markets his goods through wholesalers and re- tailers finds a difficult problem when he sets about to see what can be done to reduce the cost of distribut- ing his products. You cannot just say to these wholesalers and retail- ers that you have decided to cut the cost of distribution and therefore proceed to cut their discounts. In- stead, you should know what con- stitutes an economical operation and what profit margin is required for such an operation. Therefore, we are trying to de- termine through careful and pains- taking study how to make our dis- tribution more effective and less costly. We are conducting experi- ments to find out how to conduct a wholesale distributing business at the lowest possible cost commensu- rate with good service. This work includes time and motion studies exactly like those performed on the manufacturing production line. We have mechanized many operations in our warehouses; we have orig- 10 RADIO AGE