Chapter 1110 Marketing Budge
When it came time to fabricate the second prototype for testing, Ves begged off the opportunity to do it himself.
"I trust in your company's capabilities."
"Oh? That's quite different from last time, Ves. Why the change of heart?"
"I am used to doing everything myself." Ves replied over the comm. "However, after seeing how competent your subordinates are, I think they can do an excellent job in my stead. The difference in quality won't be very noticeable."
"That is true. I hardly ever bother with fabricating a mech by myself. My employees have gotten very good at fabricating even my most complicated designs due to focused efforts on enhancing their capabilities. This is something that every mech company can accomplish over time as long as you keep nurturing your mech technicians."
The professor raised a good point. At this time, Ves would never trust his mech technicians as much as the professor did his own. The LMC's mech technicians were still rather basic in their qualifications. Learning how to fabricate an entirely new mech design took way too long. They would need to fabricate at least dozens of Aurora Titans in order for them to pass through the steepest part of the learning curve.
Aside from not wanting to bother with redundant work, Ves also had two other reasons to leave the matter in someone else's hands.
First, he already observed the effect of the Aurora Titan's underdeveloped X-Factor. Its strength was so strong that the test pilot already noticed its presence from the start.
Ves did not wish to attract more attention to this aspect of his design than he liked. The testing facility would doubtlessly be scratching their heads trying to disassemble and reassemble the Aurora Titan over and over again if they encountered the same phenomenon yet again.
By letting others be responsible for fabricating the prototype, the X-Factor of the mech would still be present, but in a substantially weaker form. It shouldn't be strong enough to attract any alarm.
Ves figured the incident with the prototype mostly had to do with the fact that Ves fabricated the prototype personally by hand. As his Spirituality increased in strength, its effects gained in strength as well. Any mech designed and handcrafted by Ves gained a lot more value than before!
In general, this was good news, because his gold label mechs and any custom mechs he developed became even more fantastic compared to their bronze and silver label counterparts. Even the latter two editions also rode along as the more potent X-Factor of the design meant that even if others mass produced his mechs, they would still retain a good amount of spiritual strength.
It was like diluting a cup of wine. In order to retain its alcohol content even after dumping some water in the cup, it was best to start with a stronger wine.
Aside from his concerns on the prototype's X-Factor, Ves also had a second reason to remain in Cloudy Curtain.
He simply didn't want to travel to Bentheim again. After seeing how close the planet was about to blow during his last visit, Ves couldn't wait to get out as fast as possible! Why would he possibly return and expose himself to the same risks as last time?
Even though Bentheim remained oddly quiet during the past few weeks since his departure from the planet, Ves still didn't want to take the risk of getting caught up in a terrorist attack!
They moved on to discuss the marketing of the Aurora Titan. The closer they came to publishing the design, the more they began to shift their attention towards prepping it for the market.
So far, the initial tests showed that the Aurora Titan held a lot of promise. The challenge was in trying to convince the market to appreciate the value it could bring to a spaceborn mech force.
Marketing the mech was crucial to the mech design's commercial success. While neither Ves or Professor Ventag would bleed if the Aurora Titan flopped in the market, it wasn't in their nature to give up before a fight.
This was why both of them pooled together a substantial amount of money into the Aurora Titan's marketing budget. The LMC together with Bollinger Mech Trade would focus on marketing the Aurora Titan in Bentheim. NORA Consolidated would try to market the mech model in the rest of the Bright Republic and the star sector.
These two marketing campaigns required a lot of funding to take hold. If the Aurora Titan didn't sell more than a thousand mechs per year, then both companies would lose more money than they earned from its sales due to all of the money wasted on ad campaigns and other marketing activities.
"Where do you think NORA Consolidated spends most of its money?" The professor suddenly asked.
"Research?"
Ves knew that a Senior Mech Designer often engaged in expensive research in an attempt to advance their design philosophies. They needed to perform many different experiments, many of which involved the use of very high-end materials.
Advancing to Master was the ultimate dream of every Senior Mech Designer. Without devoting a sufficient amount of time and money into their research, they would never be able to come close to join the ranks of vaunted Masters in their profession!
Yet surprisingly, the professor shook his head. "It's actually marketing."
While Ves had an inkling that the professor might say that due to the current topic of discussion, the answer still surprised him a lot!
"How much do mech companies actually spend on marketing?"
"It depends on many factors, but generally the larger the mech company, the more they are able to leverage their scale to achieve very substantial gains from marketing. There are mech companies in the Bright Republic that spend twenty, thirty or even forty percent of their budgets on marketing!"
Forty percent! A mech company that spent almost half of their budget on advertising and other marketing activities alone must almost certainly run on hype alone!
"Does it work?"
"That's a difficult question to answer, but generally yes. Marketing does work. Why do so many mech companies allocate such a high proportion of their budgets to marketing activities if it's just a waste of money. It's an investment, Ves. In order for a company to make money, they have to spend money. Even if my company releases a new mech model, it can't rely on my reputation alone to turn it into a great success. Even though my company's brand is very strong, there are other companies that are also just as well-regarded."
"So mech companies are constantly competing against each other on marketing?" Ves furrowed his brows. "Won't that turn into an arms race at some point? Company A spends ten percent of its budget on marketing to capture marketing share from Company B. Subsequently, Company B spends twenty percent of its budget on marketing to recapture that same marketing share. In response, Company A ups their spending on marketing by thirty percent, and so on. Won't that eventually eat away at every company's profitability?"
The only companies who won in this arms race were the news portals and other media outlets who played the advertisements on behalf of the mech companies! They must be rolling in credits with all the money the mech companies threw at them to run their ads!
Even now, the LMC prepared to invest up to 8 billion credits on marketing the Aurora Titan! This was far more than the company invested in marketing the Blackbeak and the Crystal Lord during their launch!
For the same money the company prepared to spend on its upcoming marketing campaign, it could have easily used the money to buy another Hanover production line and still have 2 billion credits left to spare!
"These spending levels are fully reasonable, Ves." Professor Ventag stated. "Sure, we are gambling heavily on our Aurora Titan design to achieve at least moderate success, but in order to maximize these odds, we need to invest a great amount of money."
"Still, ten billion credits is a lot of money for the LMC. If not for.. extenuating circumstances, my company would have never been able to gather this much money for the Aurora Titan's marketing budget."
The problem the LMC faced was that 10 billion credits was actually on the small side! The advertising landscape was so saturated with ads for different mech models that it was hard to get a consumer to pay attention to the Aurora Titan unless ads about it continued to pop up. Not only would ads have to be present in Bentheim's virtual sphere, but a physical presence was also essential.
The professor underscored the necessity of spending this much money. "Think about how many Aurora Titans need to be sold to earn back all of this money. Leaving aside our profit split, we only have to sell 100 copies to recuperate your share of the marketing budget. Does it seem so difficult for us to manage to sell at least this much mechs?"
This rosy picture conveniently ignored the other costs related to producing the mechs. Even so, selling a couple of hundred Aurora Titans would still allow the LMC to pay back its investment in its marketing campaign.
Ves nodded reluctantly. "If you put it that way, then maybe spending so much on marketing doesn't seem so bad. With how extensive our marketing campaigns can be, achieving a couple of hundreds of sales doesn't seem impossible."
This was the perspective of a true major mech manufacturer! The LMC still had a long way to go before it began to equal the likes of the old KNG or NORA Consolidated.
The Senior elaborated on the issue of marketing. "Right now, you're still an Apprentice, so you have always treated the competition as numerous but formless. Yet will that last? When you advance to Journeyman, you no longer compete with kids anymore. The moment you lift yourself up is the moment you and your company enters the big leagues. Not only will you be competing in a much less crowded arena, your competitors are as capable if not better than you. Even if you believe that marketing is a waste of money, what about your competitors?"
Ves knew that the nature of an arms race was that both sides had to one-up each other in order to remain viable in the race. The moment a participant stopped competing, they would quickly fall out of consideration.
While Ves became increasingly more dour, he knew that Professor Ventag had given him a very necessary dose of reality.
No mech company could do without marketing! Not if they wished to continue to grow!
A marketing campaign was like a mech regiment meant to be employed in the war for market share. In this analogy, the side which fielded the best and most numerous mechs gained the upper hand against a less-well funded mech regiment.
If Ves continued to remain as miserly with regards to marketing as before, his company's marketing activities would only be as strong as the Flagrant Vandals.
In an equal battle, the Flagrant Vandals would definitely lose out against the Hostland Warriors or the Spiral Shockers!
The Mech Corps invested a lot of money into maintaining the strength of their mech regiments. Mech companies were similar in that they spent huge amounts of money into their marketing activities.
Whether it was the military or a private mech company, both of them were required to fight their own battles.
A mech company like the LMC would always need to fight against someone in the market in order to secure some market share.
Ves ended the call shortly afterwards in order to digest the lessons he received.
The professor was also a teacher, after all, so he always imparted the information that Ves needed to know the most.
"I'll be glad if the Aurora Titan sells a hundred copies at the start. Yet with all of this money being spent on marketing, the Aurora Titan needs to sell a lot more copies in order for our companies to break even!"
This was quite an expensive gamble!