Thursday, September 17, 2009

Price fixing v the Consumer is King! (or Queen....)

For a short time I was helping out as the CS rep for Adorama's underwater division, LeisurePro. While there are nowhere near as many message boards and blogs associated with scuba as there are with photography, a recurring question posed by a number of posters has been about LeisurePro's status as an independent supplier of scuba gear.
For one reason or another, whenever this arises, the on-board interaction can be, to say the least, vociferous - and lengthy.
While those consumers who buy from LP are quite content to 'live and let live', those in opposition appear to be anything but!

I am now bowing out from my time on the LP boards, and resuming my full concentration on our Adorama Camera customers, however, while Adorama carries a very small selection of direct import goods, the issue does comes up from time-to-time.

Are 'grey' goods justified? Is a retailer who does not buy from an authorized dealer bad or a crook, or simply providing an alternative in the best interests of consumers? The word 'grey' does have negative connotations, but so does price fixing.....

When the free market does not control price, consumers are confronted with deflated product lines in narrow price ranges. Suppressed competitive pricing policies eliminate variety from product offerings. Bid suppression, bid rotation and market division are all tactics used to control availability and diversity of product lines. Regulating price limits innovation because companies are no longer motivated to continue to improve upon or develop new products. Price regulations discourage new, creative companies from entering into the marketplace.

[I had posted this piece on one of the boards, but it was removed; too close to the truth, I wonder?]

WalMart is hated by many people, but it is an example of a store that took on the manufacturers in the best interests of the consumer and reduced the grip of manufacturers who have had to revise their policies in order to be more consumer-friendly.

Along came the Internet, and now we have Amazon - which changed the buying power of the consumer and made the world of retail much more competitive.

We will always need dive shops, so the smart LDS owner actually goes out of his way to support a customer of LP - who will then be more likely to choose the personal service that only the LDS can offer the next time he makes a purchase. The dive shop owner who is angry, may refuse to help - and the customer becomes more loyal to LP.

Manufacturers' warranties are effectively 'insurance premiums' - if the smart consumer weighs the cost of that 'premium' payable on all the equipment that he buys and calculates that with the money he saves he can pay for servicing and repairs if he chooses, the need to return the items to the place of purchase becomes irrelevant.

"Grey market" refers to products imported directly into the US, rather than through the manufacturer's authorized agents / distributors. It is perfectly legal to directly import & sell these products in the US; the term "grey market" was coined by manufacturer's authorized distributors who wanted to discourage consumers from buying these (less costly) goods.

With no factory authorized middle-man involved in the import of these products, costs are lower, so the price is lower to customers. Also, many items which are in short supply or not imported at all by the manufacturer's authorized distributors are available in direct import.

There is no difference in the actual products as they are produced under identical conditions, by the same workers and the same machines in the same factories, as units distributed by authorized distributors, and the warranty from LP in every case is either identical - or better.

So, I am left to ponder why my post was removed from the scuba site........I'd welcome any comments!!

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