Let's assume that the cost of fabrication of a pair of shoes is 25 USD. If the brand multiplies this price for 2x, and retailers sell the shoes for an additional 2x, in the end, you'll pay 100 USD for 25 USD shoes.
Among other things, a portion of that 50% margin goes into marketing/sales.
When Uniqlo signs a 300 million USD deal with Federer over ten years, they expect to get their money back in less than a decade. You, as a customer, are paying a few pennies that go directly into Federer's pocket whenever you buy a Supima t-shirt at Uniqlo. But you also donate a few cents to Google on each purchase, because Uniqlo spends money on AdSense as well. Costs start to pill up, and if the company had an initial 50% gross margin, at the end a ~20% profit margin will remain before taxes.
Uniqlo spends ~35% of its revenue on SG&A (Selling, General and Administrative) expenses. If marketing was forbidden, products could be ~35% cheaper, and the company would still make a ~20% profit margin before taxes. Imagine buying clothes at Uniqlo with a permanent 35% discount. It's beautiful. I always think how much money could we save if we weren't bombarded with infinite ads every day.
Animals are immune to ads, humans aren't. If ads were forbidden, not only costs of products would be lower, but perhaps humans will stop desiring things and, like animals, we would take only what we needed.
Hi, I'm Erik, an engineer from Barcelona. If you like the post or have any comments, say hi.