Hi bt: Retailing 102: No one opens a business to lose money. Period. Your points are well taken. $5 is indeed a pitiful margin, even for merchandise on sale - no wonder more shops don't carry Okuma products. But here's a question: If high-end manufacturers like Ross, Sage, Winston, etc., force shops to price their lines at MSRP, why doesn't Okuma do so as well? Sidebar: Of course, I'm assuming that such high-end manufacturers are not *actually* engaging in price fixing - that's obviously illegal ;-) They simply reserve the right to yank their lines from shops that might foolishly sell them below MSRP, since to do so would erode the value of their brand perception across Sage's target market. Here's an example of a brand strategy in action: how many Sage owners would admit they'd just spent $600 on a shitty rod? Sage's tactic is to do what it takes to reinforce the perception that since some of their rods cost $600, they *must* be *good* rods, otherwise why would one have spent $600 on it? If one could buy the same rod at another shop for say, $400, that would erode the perception that the rod was worth $600 in the first place. Which is why Sage products are price-protected and you won't find them available anywhere at anything other than MSRP. Any shop who doesn't play by those rules is obviously not qualified to be a licensed Sage dealer and may even be in violation of a licensed dealer agreement with Sage. (I'm picking on Sage purely as an example - pick another high end manufacturer if, like me, you own and like Sage rods.) Back on subject: if Okuma is *not* a price-protected line like Sage, one has to wonder who sets the margin on an Okuma reel at $5? And why? If, as most Okuma owners insist, the product is worth more, why aren't shops selling it higher than a paltry $35 or so? If it's the Okuma corporation that's determined that MSRP is $35 and they're that hell-bent on pricing their product so far below market value and forcing their dealers to observe their MSRP and generate a paltry $5 margin, then theirs is a business that's designed to lose money. And it end's up being a de facto price-protected product after all. Not a good thing, for obvious reasons. And no, I'm not a retailer. I own a marketing communications and design business and am pleased to count numerous successful retailers like Seattle Lighting, Dunn Lumber, and others over the years as clients. Kent Lufkin >Actually Kent, on a Okuma reel a fly shop would only make about $5. Okuma is >not a price protected product and it's margins are pitiful, this is why you >won't find it in a flyshop, 99% of all products in flyshops are price >protected(ever notice why Ross reels are the same price at all the shops), >generally margins are 40% mark-up, this means if a shop buys it for $60 it >sell for $99.95. > >bt > > >----- Original Message ----- >From: <[EMAIL PROTECTED]> >To: <[EMAIL PROTECTED]> >Sent: Friday, September 14, 2001 5:06 PM >Subject: Re: Retailing 101 (was: RE: Okuma reel ?) > > > > Good points, Kent. I always appreciate your input. > > > > A fly shop definetly has to make enough profit to stay in business so I >can't > > fault them on that one and the mark up scenario makes sense. I also >agree > > that fly shops provide service to a market niche that is somewhat >different > > then the mass retailers that tend to carry the brand names with lower >profit > > margins. > > > > Thanks for the retailing 101 lesson. I often don't consider things from >that > > angle. > > > > Mike W > > > >
