Final Paper Outline on Pencils

Pencil: From Manufacturer to Customer

Francisco Saravia-Jimenez

0519796

Thomas Edison State College

Introduction to Business: BUS-101-OL009

Timothy Kenny

March 25, 2013

Pencil: From the manufacturer to the consumer

I. Introduction

A. In the case of an ordinary pencil, every aspect of the production and marketing process is designed to maximize profits and to minimize costs.

B. Most pencils are relatively low-cost, low-investment items—a consumer does not give much thought to a pencil, other than functionality and price. “These days, typical yellow writing pencils and children’s coloring pencils are generally considered to be a commodity. That is, one product from one producer is more or less considered by the customer to be as good as another, just like corn from one farm is more or less the same as corn from another farm” (Economics of pencil-making, 2012, Studio 602).

C. Most consumers do not have a ‘favorite’ brand of pencil.

II. Profitability

A. Economies of scale: For a pencil, the profit occurs through manufacturing at an economy of scale, rather than making a larger profit off of each pencil. Ultimately, the manufacturer must consider how “the quantity of product to produce drives the level of investment required in the factory and inventories as well as can effect [sic] the cost per unit produced due to economies of scale” (Economics of pencil-making, 2012, Studio 602).

B. Reducing input costs

1. Outsourcing

2. Moving the location of production to reduce “transportation costs for incoming materials as well as to the customer” (Economics of pencil-making, 2012, Studio 602).

3. Finding ways to reduce “regulatory and energy cost as well as duties and taxes” (Economics of pencil-making, 2012, Studio 602).

III. Marketing

A. Quality-based: Some level of quality is required for the pencil to be functional. If a particular brand of pencil is completely substandard, consumers will not purchase it next time.

B. Retailer...