Originally Posted by milehighmike
Originally posted by Master Theseus:
In your first two statements, you practically admit that you are out to gouge the consumer to the extent possible. If you can afford to reduce the price, then why don't you? And if you truly want to see what effect a price reduction has on sales, put the item ON SALE.
As for as your comment about collecting demographic information, I believe it's totally BS. You know where your sales come from - units sold to each retailer. And you know the relative economic status of purchasers by, for example, comparing BLS statistics with store locations. What is really at issue here is collecting ancillary information such as names, phone numbers, email addresses, income levels, etc - personal information. And do you sell this info to others?
Rebates are old marketing. People are sick of them. I just received some rebates last week that were mailed the day after Thanksgiving. I have resolved to never again purchase anything with a rebate. That's why retailers such as Best Buy have dropped rebates from their retailing business plan. I guess manufacturers that use rebates in their marketing schemes don't do business with Best Buy?
See, that is where you are wrong. There are two ways for a business to make money, good margin, or good volume. At $79 we have good margin, at $69 we would need more volume. If I can't sell any more at $69 than I can at $79, then I am going to sell it for $79 to maintain profitability.
If I, as a business, can not make money then I don't want to be in business. Customers always complain about pricing, and I understand your goal is to save as much money as you can when buying something. If you didn't you would be a fool. However, as a business, I am supposed to get as much for my products as I can. If I didn't, I would be a fool.
So the answer is to find a balance. We make a product and try to sell it for a price that we believe the market will bear. If the market doesn't respond then I can say, "Well, they don't think this price is fair" and make adjustments.
And in response to putting it on sale, I already told you that putting it on sale costs me more money!! If I want to reduce the price $10 retail then I need to reduce the wholesale price to accommodate that and preserve the dealers margin. The retailer doesn't want me to reduce his margin so he charges me when I do. The quickest and easiest way to make sure that I get that $10 in the hands of consumers is by offering a rebate.
But I do want to make it clear, Sangean has only run 2 rebates in the last 32 years of doing business. We don't make a point of using rebates, but will use them if we feel it neccessary.