The following appeared in a memorandum from the owner of Armchair Video, a chain of video rental stores.

“Because of declining profits, we must reduce operating expenses at Armchair Video’s ten video rental stores. Raising prices is not a good option, since we are famous for our special bargains. Instead, we should reduce our operating hours. Last month our store in downtown Marston reduced its hours by closing at 6:00 P.M. rather than 9:00 P.M. and reduced its overall inventory by no longer stocking any film released more than two years ago. Since we have received very few customer complaints about these new policies, we should now adopt them at all other Armchair Video stores as our best strategies for improving profits.”

The owner of the Armchair Video presents a memorandum that comprises suggestions to increase their declining profits. Taking a clue from one of their stores in Marston, which reduced its operating hours and the overall inventory by stocking only recent films, he says that this should be adopted at other stores as well. Since they are known for their discounts and special offers, they cannot consider increasing the prices to gain profits. This change has also seen very few customer complaints because of which it can be adopted at other stores to reduce operating expenses. However, this could be a useless change, if not profitable, since the memorandum ignores a number of other possibilities that can prove the opposite to be true.

As is mentioned in the memorandum, the store in Marston reduced its operating hours in the last one month. Reducing the operating hours can reduce the expenses only if it can be introduced successfully. However, there are a number of things attached to this decision that are ignored in the memorandum. While reducing the operating hours reduces the expenses, it also cuts down on the number of customers that come to the store. There are many people for whom the evening time of 6 to 9 suits best to visit the market. They cannot come to the store before that. Moreover, the evening time is most profitable in many places. Similarly, there are customers for whom other times of the day are suitable. Hence, if the operating hours are cut down, these customers are lost. Therefore, the owner of the video rental stores should consider this before reducing the working hours of all the stores.

The owner also considers reducing the overall inventory of films by stocking only those films released in the past two years and giving away the films older than those. With this he probably expects to reduce the costs of maintenance of these films.

However, it is possible that there are a number of customers whose first choice is older films. The owner has to thus make a careful decision of the choice between retaining the business by keeping these customers and earn profits or by reducing the costs related to keeping these films to increase profits.

There could have been very few customer complaints of these policies in Marston, but it cannot be accepted for all places. The choice of films by customers depends upon the composition of customers of the place. While at one place people could prefer the recent films, at other places there could be a liking for the older films. Hence if there are no complaints from customers of Marston store, there could be reports of customer complaints at other places. Moreover, it should not be forgotten that such a policy has been adopted in Marston only for a period of one month. This period is a very small period to observe the reaction of customers as well as predict future profits. People take time to notice such changes. There could be many customers who are not aware of these policies and thus they did not complain about them. If there have been very few customer complaints in the past one month there could be an increase in the number of complaints in the coming times as the customers get to know about the changes.

These points discussed above disagree with the owner’s suggestions of following the policies of Marston to gain profits. Instead of such policies, there should be other ways of increasing profits. A change in the marketing strategies should be considered to attract more customers. Since Armchair Video is known for its special bargains, the owner should introduce more of such offers along with some subscription or membership for customers and ensure profits. Thus, it can be said that the suggestions given in the argument should not be followed in all the stores because of their impracticality. The owner should instead consider other options that can be more profitable for its video rental stores.