Daily Blog - John E. Johnson, Jr. - June 30, 2008: WHAT PRICE MARKETING DEPARTMENT?
I had an interesting experience this past weekend that I want to tell you about.
A product that I use for outdoor exercising wore out. This happens about every five years, and I simply replace the product with a new one.
So, I went into the store to get it, and they took me over to a display that showed a new model. It was priced about $150 more than the model l usually purchase. He said there was a $150 rebate on the new model, and the old model was not in stock anyway. It did not appear to have the heft of the old model, but I decided what the heck, and bought one. They gave me a rebate slip that I was supposed to send in and would get my $150 rebate check within a couple of weeks.
OK, so I get home and install the new model. Well, it did not perform nearly as smoothly as the old model. Part of the problem was the lower weight of the new one.
I thought about this and realized what was going on. The company that makes this product didn’t have any competition at first. Now, they have some, and the competition makes good units.
What they are trying to do is build a new version that is much cheaper to manufacture, stock it fully in dealer showrooms, not stock the old one very much, price it higher so you think it is a better model than the old one, offer it with a rebate so you will be tempted to buy the new one (with the rebate, you then get it at the same price as the old model), and slowly work their customer base into using the new, cheaper made model. They raise the price and build it cheaper. What could be better?
Well, how about a customer base that is stupid enough to fall for this? It does not exist. Customers are just too shopping-wise these days. There is too much info out there and we have been screwed too many times before.
So, I took the new model back and said I want the old model. He gave me a $132 refund, with the rest of the money going to pay for the old model when it comes in next week.
The thing I really want to say here is that I have not seen this kind of shady marketing in the Audio Video world, and the reason is that there is just too much competition. There are only three competitors to the exercise product that I bought. There must be 100 speaker manufacturers out there. Anyone who tried to fool us would be out of business within a year. Can you imagine what would be said about them on all the audio video forums?
July 1st, 2008 at 4:20 am
I don’t like the rebate thing, I only get about half of them back and have to fight with the store for the others. If there is a rebate and the store does not give it to me up front, I give them the rebate slip let them turn it in, they don’t want to do that I don’t buy the prodict.
July 1st, 2008 at 7:30 am
I hear you on the rebate thing. Several times I have sent in rebate forms and did not get the rebate check. There are class action lawsuits going on against companies who have tried to sideslip their rebates. They count on you forgetting to send in the rebate receipt. In this case, I think the rebate check would have come. It is a very prominent company. But, I still believe the whole thing is a scam to get their customer base to buy into the cheaper quality product, then they will bring the list price down to what it was before, and they would then be making more profit. The problem is that they want to raise their prices but can’t because of the competition. So, this is their way of maintaining their profit margin but keeping the price the same. To me, reducing the quality of the product to maintain profit is a death warrant for the company. Consumers are not stupid.
July 1st, 2008 at 2:34 pm
Haven’t heard of any A/V companies charging more for inferior products to convince casual consumers that their product is better? Have you never heard of Bose?