I'm sorry, but I disagree on this point. It is Mattel's responsibility to maximize shareholder value by maximizing the net present value of all future cash flows. Sometimes, that translates into price increases.
For example:
If the figs cost $10 to make, and they wholesale for $15, Mattel makes $5 profit per fig. If they sell 10,000 of them, that's $50K profit.
Raise the wholesale price to $18, and that's $8 profit per fig. Now, they need to sell only 6250 figs to make the same $50K profit. I'd argue that sales wouldn't drop off by 3750 from 10,000.
So, if they sell 8000 figs at $18, the profit is then $64K. Mattel has done the right thing by raising the price, even at the lower sales volume...assuming they order fewer of them and don't have to eat 2000 unsold figs.
Now, I have no idea what Mattel's real numbers are. This is just one hypothetical scenario. However, you can plug different numbers into the calculations and still reach the same conclusion - that raising prices can be the right move, if sales don't decline past a break-even point. Mattel wants to make the most profit that it can, and not necessarily sell the most product that it can.
Most of the arguments against raising prices seem to be that A) TRU already has villain peg-warmers, and B) sales will drop significantly, jeopardizing the line. If I were Mattel, I'd produce a higher percentage of heroes to villains from now on, and I'd be prepared to see a certain amount of decline in sales. And if sales dropped catastrophically, I'd be prepared to drop the price back down. I've got to think that Mattel would be prepared for that.
Just to be clear, I'm not debating the morality of the increase. As a customer, I'm not any happier to see the price going up than anyone else on the board. I'm just saying that the numbers might make sense. Come to think of it, maybe the best response is to buy stock in Mattel, and be on the receiving end of the increase.
For example:
If the figs cost $10 to make, and they wholesale for $15, Mattel makes $5 profit per fig. If they sell 10,000 of them, that's $50K profit.
Raise the wholesale price to $18, and that's $8 profit per fig. Now, they need to sell only 6250 figs to make the same $50K profit. I'd argue that sales wouldn't drop off by 3750 from 10,000.
So, if they sell 8000 figs at $18, the profit is then $64K. Mattel has done the right thing by raising the price, even at the lower sales volume...assuming they order fewer of them and don't have to eat 2000 unsold figs.
Now, I have no idea what Mattel's real numbers are. This is just one hypothetical scenario. However, you can plug different numbers into the calculations and still reach the same conclusion - that raising prices can be the right move, if sales don't decline past a break-even point. Mattel wants to make the most profit that it can, and not necessarily sell the most product that it can.
Most of the arguments against raising prices seem to be that A) TRU already has villain peg-warmers, and B) sales will drop significantly, jeopardizing the line. If I were Mattel, I'd produce a higher percentage of heroes to villains from now on, and I'd be prepared to see a certain amount of decline in sales. And if sales dropped catastrophically, I'd be prepared to drop the price back down. I've got to think that Mattel would be prepared for that.
Just to be clear, I'm not debating the morality of the increase. As a customer, I'm not any happier to see the price going up than anyone else on the board. I'm just saying that the numbers might make sense. Come to think of it, maybe the best response is to buy stock in Mattel, and be on the receiving end of the increase.

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