Monday, December 15, 2014

Free Enterprise Encourages The Proliferation Of The Extraordinary

"One machine can do the work of fifty ordinary men.  No machine can do the work of one extraordinary man."

Elbert Hubbard (1856-1915)

While describing himself politically as an "anarchist and socialist," Hubbard apparently understood that free enterprise is the way to go in business!

Going into business with John D. Larkin, he helped to found The Larkin Soap Company in 1875.  The company was innovative in many way, including being one of the pioneers in the mail-order business.  This method of sales soon became known as "the Larkin method."

The Larkin method involved two things - door-to-door sales and mail-order sales, both of which had "premiums" attached.

A premium consisted of soap which came in its own box.  They produced three soaps - a so-called "Sweet Home" yellow laundry soap and a bathroom soap, called Oatmeal Creme.  A color picture of the company's logo came in every box, and a certificate for a free gift.

The premiums soon became an important part of the business.  Hubbard proposed making the mail orders smaller, offering only three cakes of soap.  The premium that came with the next  order of bath soap was a handkerchief, towels with the laundry soap or one-cent coins.  The soap packages were sold for 10 cents, so this amounted to a 10% premium.  The idea took off.

Soon the Larkin Company became one of the first large-scale manufacturers to eliminate their wholesalers, retailers, salesmen, and brokers.  This was quite innovative!

Hubbard then introduced a "combination pack" and a $10 box of soaps.  It contained enough laundry and bath soap to last a family about a year.  The $10 was roughly the equivalent of one week's pay.  So the  premium included with the purchase amounted to $10, and could be redeemed for any of the then hundreds of products in the Larkin catalog.  The Larkin idea crystallized into a company motto:   "From Factory-to-Family: Save All Cost Which Adds No Value."  Selling the products directly to the consumer like this the savings could be passed on to the consumer, so purchasers felt like the products were "free."

Further, the Larkin Company introduced cooperative buying clubs, and consumers felt a part of the family.  Called "The Larkin Club," soon it allowed consumers to purchase products on an installment plan, with interest attached, and you can see the development of what is so common in today's business environment.  Small Larkin Clubs developed in towns and neighborhoods where 10 families could each contribute a dollar to join their own little club and enjoy club savings and their own special club product savings and premiums.

Catalog offerings expanded to include "pure" foods, glassware, leather goods, pottery and furniture.  This became a huge part of the marketing plan and helped the company survive the economic downturn of 1893.

The company peaked in sales in 1920, to an eventual low in 1939, and done in by the depression it ceased operations in the 1940s.  Among the corporate changes it introduced to its employees, and American business, included paid vacations, a thrift plan, life insurance, medical benefits for illnesses, tuition for attending night school, free coffee, lunch, and an annual summer picnic.  It even created its own chapter of the YWCA in 1905.  Quite innovative!

No anarchy or socialism here!  The success of mail order as a marketing idea was soon picked up by many other companies.  Its other ideas are rife in our modern marketing and sales companies.  Elbert Hubbards' ideas and innovations extraordinarily changed the business climate nationwide.  His statement above rings true today, for people and machinery.

Free enterprise encourages the proliferation
 of the extraordinary.

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