Growth in Profit, But Concerns Over Sales

Though margin profits have improved this past third quarter, according the Wall Street Journal, many companies are worried about the future prices. Commodity prices are on the rise, forcing many businesses to make difficult financial decisions. Whirlpool Corp. has decided to lower prices of products for consumers even though input prices rose. In the consumer products market, Procter and Gamble gross margin fell from 52.6% a year before to 51.8%. P&G are seeing their costs increase due to higher commodity costs, especially from paper pulp and plastic resin; the company is off-setting these costs by seeking out other areas within the company to cut expenses and to avoid raising prices. Though many businesses have seen an increase in profit margins, economists are skeptical as to how this will aid in lowering the unemployment rate or if the economy will see such increases next year.

Many of these companies claim to be cutting back within their businesses and lowering prices for their consumers, but they are increasing their marketing expenses (WSJ). Will the possible benefit of reaching out to more customers through advertisements override the expenses of the actual marketing?

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