The problem with Best Buy selling cables for absurd mark-up levels is that they're trading away brand equity for a few dollars today. How does someone feel if, after buying a cable at Best Buy, he later sees the same cable for sale elsewhere for 1/4 the price? Will he be so willing to go to Best Buy in the future? Will he trust the salesperson's recommendations if he does indeed enter the store again? Traditional accounting methods don't assess the change in value of a company's brand quarter-over-quarter, but they sure do represent the seemingly high profit margins of cables. So, what's a poor executive to do?
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The problem with Best Buy selling cables for absurd mark-up levels is that they're trading away brand equity for a few dollars today. How does someone feel if, after buying a cable at Best Buy, he later sees the same cable for sale elsewhere for 1/4 the price? Will he be so willing to go to Best Buy in the future? Will he trust the salesperson's recommendations if he does indeed enter the store again? Traditional accounting methods don't assess the change in value of a company's brand quarter-over-quarter, but they sure do represent the seemingly high profit margins of cables. So, what's a poor executive to do?