What’s Opportunity Cost?
Opportunity cost is an economics term that refers to the value of everything you need to give up so as to choose something different. In summary, it is a value of this road not taken.
Weigh All Your Options
By way of instance, by opting to lease retail space in midtown Manhattan at the bargain price of $10,000/month, you’re eliminating the chance to lease in SOHO, or the Upper East Side, or even Jersey City, New Jersey. Assuming your other choices were less costly, the value of what it might have cost to rent elsewhere is the opportunity cost.
Sometimes the opportunity cost is high, like if you gave up the opportunity to find in a terrific corner shop that was renting for only $2,000/month. And sometimes it’s low, or negative relative to what you may now spend, like if your next-best alternative was retail area on another block which has been renting for $15,000/month.
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Choosing How to Spend Your Resources
The idea behind opportunity cost is that, as a company owner, your resources are always limited. In other words, you have a limited period of time, money, and experience, so you can not take advantage of every opportunity that comes along. If you decide on one, you always have to give up on others. They’re mutually exclusive. The value of these others is the opportunity cost.
Big picture, opportunity cost is more about the choices you make than about resources or money. It is about keeping in mind that one action or alternative could preclude you from taking advantage of other choices.
Factors to Take into Account
Therefore, as another example, the opportunity cost of deciding to partner with Amazon to market your new product is the capacity to associate with other retailers. You must decide if, given your other options, the opportunity cost is well worth it.
In this case, you could weigh:
- The amount of visitors Amazon gets daily
- The average value of a sale
- The retail price of your product on Amazon
- Your profit margin
- Anticipated sales amounts
- Length of exclusive partnership
- Conditions under which you can depart the partnership
Opportunity cost can be helpful in evaluating several alternatives, to make certain that your best plan of action has the lowest drawback.
What’s Outdoor Advertising?
Outdoor advertising, also called out-of-home advertising, is advertising that reaches customers when they are outside their homes. The Outdoor Advertising Association of America says that is where customers spend 70 percent of the time.
Types of Outdoor Advertising
The most commonly known form of outdoor advertising is that the billboard. Frequent forms of outdoor advertising today fall into three classes:
1. Billboard Advertising
Most individuals are knowledgeable about billboard advertising, irrespective of where they reside or travel. Billboards are placed alongside high-traffic highways in addition to along less-traveled streets in non-urban places. Drivers see them nearly anywhere because they’re an efficient and cost-effective way of communicating information that’s geographically significant — the place of the nearest chain fast food restaurant on the road, the closest motel, or campgrounds at the next exit.
2. Street Furniture
A bit of a misnomer,”street furniture” applies not simply to park or bus benches but also to bus shelters, newsracks, and phone kiosks, amongst others.
Ads on the sides of busses would be the most common type of transit outside advertising, but outside advertising is common in subway stations and inside subway cars, in taxis, along airport paths, and wrapped around vehicles — one of the more recent trends.
Other Forms of Outdoor Advertising
Advertising appears to follow customers wherever they go — in grocery shopping carts, in sports arenas, and in gyms. They may be high-tech — believe digital — or very low tech — believe personal-computer generated mini-posters offering dog-walking services trapped into a coffee shop bulletin board.
Digital Outdoor Advertising
Also called digital signage, electronic outdoor advertising is a particular type that uses digital technology to change what is displayed on a display. Digital billboards feature messages from a couple of advertisers that rotate every six to eight minutes. Other digital signs may be free-standing on an urban pavement or courtside at a school basketball game.
For Small Businesses
The most significant outdoor ad for any little brick and mortar business is its built-in outside advertisements: exterior signage. Business owners need crisp, clear signage which communicates well from a distance. When it should convey the provider’s brand image, it should also help the company get discovered and discovered.
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