MARP Price Fixing Update - Consumers Win!

[Dive Right In Scuba]

I would look at WHY and HOW Your losing your local customers to the internet. You say dive shop X charges $3k a person and you would charge them $2k....well when they are in your store, you can sell for whatever you want....so sell it for $2k.

Like Phil said, the big guys will bury everyone else. It happens every so often when they all drop a price to pennies over cost....this winter it happened to UK products as they had a weak MAP policy that these guys laughed at, and UK was not willing to fix until after Xmas. ALOT of people were guilty of this same thing. One guy lowers their price, the others see this and immediately drop their price to not be high....then the price war begins...with their volume discounts (which DO exist off the books), they can afford to do what most shops could never do.

The main thing is in your store you can do what you want....if there is no store to complain, why not run that weekend AD, or collaborate with other stores to offer an AD and chip in on. This will only help all of the stores.....Do you place weekly ads in the paper with coupons? You compared it to big stores...do you have that type of budget to spend on that?

It seems like business must be bad for you or you have bad sales people if your losing your customers to "Price" from internet dealers.....Match their price and call it a day. Stop losing customers on price and give them something to stay with you and not worry about online.

I have people that come in with price quotes on packages, they know we price match and they can go home with it, try it on, and support a local business, and also get our service and knowledge....they know its not worth going else where....instill that into your customers with your offerings and you wont have to worry about losing to X online.....and Johnny Consumer will come to you and not X online or other high price local shop

 

[offthewall1]

On your website - e-learning is $109.95 + $199 (course fees) + $150 (open water) = $458.95 plus gear (you said $85) = $543.95. And this is before the rest of the gear that you either buy or rent to enjoy your new hobby. I'm sorry but it doesn't compare to something like baseball and it is been my experience on multiple times that under quoting the cost of the sport to prospective customers leaves a lot more of a bad taste in their mouths then expensive gear. Especially when there are less expensive gear options already. The LDS that I teach for used to fudge the numbers on a regular basis but it was me as the instructor that had to deal the ire of the customers - it got to the point that I told the store owner that I would stop teaching if he continued that business practice.

I commend you for wanting to increase the popularity of the sport as that would be an excellent thing for everybody in the industry - greater mass will mean more equipment options and more innovations. However, the hidden cost method is just as bad, and I will argue worse, then expensive gear options since at least with expensive gear options that is an option and there are less expensive lines on the market.

As you point out moose... I have no hidden costs... they're listed right on our website.

I wasn't exact in my numbers in my previosu post... I was using a general comparison... and I still contend that the two are in the same neighborhood. I did not put the $150 for checkouts in my previous post - but I also did not include all of the expenses a family incurs over a 12 - 16 game season of baseball for the kids... I can tell you people end up spending much more than $150 over the baseball season in travel to games, food and eating out, team events, new equipment etc... etc...

The cost comparison is very similar... only people don't know that. The perception is that scuba is outside the realm for them.

As an example, I recently had a mother come into the store. It seems her 12 year old daughter would bug her everytime they drove by the store to sign her up for scuba lessons. So one day, without the daughter - mom comes in to check us out. Dad waited in the car... figuring this would be an in-out to expensive for us trip.

Well after a while of talking to the mom - dad decides he better come inside and see what was taking so long. You see his wife and subsequently he were astounded when they found out just how inexpensive it was (at least here.) They had looked into diving themselves at another local shop a few years earlier and couldn't afford it.

While it was still a little pricey for them, they ended up signing their 12 year old daughter up as a special gift for good grades. Now mom and dad are considering signing up too... since the three of them can do this for virtually the same price only one of them could have done it for at the other local shop.

You see - three new divers is better for the industry than one or even none... and I'll leave it at that.

 

[Jupiter31]

And it does not take as much time in the confessional either. So, its a win-win if he can find one sucker rather than 4 knowledgeable shoppers.

And it works .... until he runs out of suckers.

Perhaps true.....

But so far apparantly he has not.

He has, which I think is also overlooked, given enough folks reasons to want to do business with his shop - is this not what the debate has always boiled down to? Price is one component of a relationship - not the only one, though I will agree its important.

And 'cmon awap - when you go to the Chevy dealer, is it really realistic to believe that they are going to mention the sale going on over at Toyota, or suggest you sign up for Consumer Reports buying service?

You don't need a Rolex to tell time, nor a Mercedes to get from point A to point B - there is a perception of value, prestige, whatever to those who buy those products or, maybe they just don't care.

Another aspect to this is there are some who are not overly concerned with the absolutely lowest price; in the case of ScubaPro gear, assuming the LDS' in the area adhere to the company line and discount a max of 10%, and for whatever reason that customer chooses not to shop on line, a 10% discount is acceptable.

Too, there are those who want to shop at their LDS - they may know they can get the product(s) on line for less, but perceive value in the relationship w/ a local LDS.

I don't like MAP, and like less the idea of dictating to a seller what his retail price has to be, and hate that this is very common in a fragmented industry populated by retailers who are often undercapitalized and unlikely to mount an expensive legal claim.

Its also phoney, because these manufacturers know whats going on with their products via e commerce.

But the fact is there are folks who either don't care about price, or for whatever reason choose to pay retail or close to it. The internet is so pervasive that I believe anyone so inclined can do the basic research and see what prices are on the web - and if they don't, well......

I can't put down a business person who is operating under his current retailers agreement, not in violation of the law, who chooses to sell his product at a price that maximizes his profit - we are not a socialist country - yet.

All this said, I commend what Offthewall is doing.

 

[bill_bain]

Offthewall wrote Because of their contractual relationship with the retailer (freely entered into BY the retailer), the manufacturers do retain some "ownership control" over the goods -- that is, they retain control over the minimum advertised pricing.

There is nothing nefarious about this -- retaining control over "sold goods" happens in many different aspects in business -- from the "license" we all sign when we buy software (which limits our rights to do X, Y or Z) to renting a car. All we have done is buy the right to the product that the seller has offered to sell -- nothing more, nothing less.

Umm, let's not confuse "goods" with "non-goods". Software is not a "good", and is LICENSED, not sold. The licensor retains title to the software and can, by contract, limit the rights granted to the licensee. Ditto, the rental car. Neither is a "sale" of goods and in neither case does title pass to the licensee, unlike the title to goods which does pass to the buyer at either origin of shipment or upon delivery under the UCC, which all states have adopted. The title is supposed to be free of all encumbrances, except possibly a security interest until the seller's been paid. If the seller wants to, by contract, not offer any warranties if the sales doesn't meet certain criteria, that's a different issue.

It is far less common for the seller to retain an incident of ownership in the sale of goods once title has passed.

 

[Leadking]

When I was in the business, we had a minimum advertised price (MAP). This was used to discourage price only shopping. We would allow our retailers to sell at any price they wished BUT they could not advertise a price lower than MAP via any medium (web,print,etc.). We wanted to have our stores compete on service but use pricing if they had to. You can never build a stable business on price only. Your customer base is only as loyal as your price is low. I say this after watching 30 years of discounters come and go!

 

[PhilEllis]

The title is supposed to be free of all encumbrances, except possibly a security interest until the seller's been paid. If the seller wants to, by contract, not offer any warranties if the sales doesn't meet certain criteria, that's a different issue.

It is far less common for the seller to retain an incident of ownership in the sale of goods once title has passed.

When a retailer purchases a scuba regulator from a major manufacturer, the title and rights to that regulator are absolutely and permanently transferred to the retailer, to do with as he or she likes....including to advertise and resell at any price the retailer chooses. The rub is what happens to the NEXT regulator if the retailer uses business practices outside of those chosen by his supplier.

I know of NO scuba company that has laid down requirements for what a retailer may do with CURRENT inventory. However, many promise not to deliver FUTURE inventory to dealers that do not abide by the unilateral resale rules of the manufacturer. THIS is what creates the rub in our business.

Phil Ellis
www.divesports.com

 

[mike_s]

Phil....

doesn't (or didn't) Aqualung try to force the selling of "current inventory" at set prices?

 

[PhilEllis]

Phil....

doesn't (or didn't) Aqualung try to force the selling of "current inventory" at set prices?

To be honest, it is almost a distinction without a difference, but I know of NO scuba manufacturer that tells you what you can do with your CURRENT inventory. However, when you are a dealer dependent upon continuing shipments of merchandise to run your business, you are certainly INFLUENCED as to what to do with your current inventory in an effort to minimize a chance that they will deny future shipments.

Phil Ellis
www.divesports.com