MAP Pricing

[halden.doerge]

@FortyTwoBlades, you better stop making so much sense or the villagers are gonna be reaching for their torches and pitchforks soon.

Seriously, good posts. This is always the way these MAP threads go.

 

[Someone1]

A company does not have to lower their prices in selling to Amazon or Walmart. That is their choice because they know that they can increase their sales by selling to them. In fact, they do not have to even sell to them.

However, they should not be able to require Amazon or Walmart to have a price floor- MAP.

All of this discourse is moot. The courts have held that MAP pricing is not illegal. So, it is not going to change. However, it is not free market. The market is not determining the pricing structure.

I will still refrain from buying at MAP pricing. I buy on the secondary market, MARKET, where the prices are determined by actual value to the buyer. Or, I wait until knives go to clearance prices.

That's great. If you think that manufacturers should not have a say in how their things are sold, then i guess you don't really like any large business in the US. You think a book publisher has absolutely no say in how a book is shown in a Barnes and Noble? Well, technically, i guess not. And Barnes and Noble isn't doing so well.

What if Ford had no say in how a Ford dealer showed or priced their cars? What if corporate McDonald's had no say in how their franchisees marketed and priced the food?

Man, seriously. This isn't some crazy conspiracy. It's just how it is.

 

[pyreaux]

If yall aren't careful this thread might become educational! Looks like the issue isn't cut and dry. Manufacturers want to protect their ability to sell product and limit the power of large resellers in an effort to maintain a diverse dealer network so that if any one large or small threaten to or actually end the relationship they can attempt to redistribute merchandise to the remaining network.

Shoppers want to get the most value for their money, but can't easily internet bargain hunt with MAP in effect. Those without local dealers may be screwed for a bargain in this regard, where someone with a local dealer may have the opportunity to negotiate or develop a relationship that leads to discounts.

Local dealers want to be able to service local clients but have no way to maintain a brick and mortar location that can compete with massive online retailers on overhead cost.

The operating cost argument would eventually lead to only buying Chinese clones if you apply it to the entire supply chain.

 

[gadgetgeek]

A company does not have to lower their prices in selling to Amazon or Walmart. That is their choice because they know that they can increase their sales by selling to them. In fact, they do not have to even sell to them.

However, they should not be able to require Amazon or Walmart to have a price floor- MAP.

All of this discourse is moot. The courts have held that MAP pricing is not illegal. So, it is not going to change. However, it is not free market. The market is not determining the pricing structure.

I will still refrain from buying at MAP pricing. I buy on the secondary market, MARKET, where the prices are determined by actual value to the buyer. Or, I wait until knives go to clearance prices.

A company doesn't have to lower their prices, unless their retail channel demands it by forcibly lowering the available price, which is also legal. MAP just moves the price setting towards the manufacture instead of towards the retailer. The market will still decide if the the product is worth what its priced at. Consider the common practice of manufacturers selling directly at MSRP and sometimes setting it artificially high so as to not compete with their retail partners. Sure it has some benefits in so far as some of the value calculations, but its also an agreement with the retail chain. Is that also a problem?
Any time a retailer can take enough control of a manufacturers output to the point where they can control the market value, and can do so without competition to correct them, they pose a danger to that manufacturer.
I also don't see this discussion as a moot point, even though its legal, the market could decide that manufactures who enforced MAP would be punished by it. At the moment while it seems that there is a small and very vocal minority who oppose it, it would seem that most manufacturers feel they are benefiting from it, as are most of their retail partners.

 

[gadgetgeek]

If yall aren't careful this thread might become educational! Looks like the issue isn't cut and dry. Manufacturers want to protect their ability to sell product and limit the power of large resellers in an effort to maintain a diverse dealer network so that if any one large or small threaten to or actually end the relationship they can attempt to redistribute merchandise to the remaining network.

Shoppers want to get the most value for their money, but can't easily internet bargain hunt with MAP in effect. Those without local dealers may be screwed for a bargain in this regard, where someone with a local dealer may have the opportunity to negotiate or develop a relationship that leads to discounts.

Local dealers want to be able to service local clients but have no way to maintain a brick and mortar location that can compete with massive online retailers on overhead cost.

The operating cost argument would eventually lead to only buying Chinese clones if you apply it to the entire supply chain.

I think the operating cost argument is somewhat more complex as most small brick and mortar shops don't just do knives. Its worth having product viable in every army surplus store, hunting and tackle shop, police and fire supplier, etc. So the local dealers do have an advantage in that there are still many people who are going to be coming in the door, even though its likely for something else. At least the MAP makes the local vs. internet gap smaller.

 

[Someone1]

I think the operating cost argument is somewhat more complex as most small brick and mortar shops don't just do knives. Its worth having product viable in every army surplus store, hunting and tackle shop, police and fire supplier, etc. So the local dealers do have an advantage in that there are still many people who are going to be coming in the door, even though its likely for something else. At least the MAP makes the local vs. internet gap smaller.

Just like Amazon has an advantage by bringing in people who want and look for the absolute lowest prices for a knife that leads to a 1% loss on the knife but they then buy a toothbrush made in China, bought for $.01 and selling for $3, selling a backpack made in Malaysia and bought for $.05 and sells for $10, and an electric fan that cost them $3 but sells for $30.

That's loss leading. People, even MBAs with many years of experience, don't seem to want to admit the existence of. It's kind of sad that degrees don't grant common sense.

 

[halden.doerge]

That’s loss leading. People, even MBAs with many years of experience, don't seem to want to admit the existence of. It's kind of sad that degrees don't grant common sense.

Oh man, we have a new contender for thread winner!

 

[Daniel]

Again, nothing forced a company to sell to Amazon. It is a choice. There are many manufacturers who will not sell to Amazon or Walmart because they don’t like their way of doing business.

Loss leaders are not what we are talking about. This is MAP pricing.

The market should decide the pricing.

 

[Someone1]

Again, nothing forced a company to sell to Amazon. It is a choice. There are many manufacturers who will not sell to Amazon or Walmart because they don’t like their way of doing business.

Loss leaders are not what we are talking about. This is MAP pricing.

The market should decide the pricing.

I don't understand where a person with your supposed credentials and experience would see this as anything but the market deciding. It honestly makes me question your own statements about yourself. Were you educated back in 1972 at Moscow University? Then worked at some Apple or Google Store for the last 10 years? I don't get it man, your background is totally opposing any bit of business sense. Seriously, were you educated at Columbia?

 

[Daniel]

Insults and derogatory remarks?

Good job!

 

[gadgetgeek]

Again, nothing forced a company to sell to Amazon. It is a choice. There are many manufacturers who will not sell to Amazon or Walmart because they don’t like their way of doing business.

Loss leaders are not what we are talking about. This is MAP pricing.

The market should decide the pricing.

A company could decide to not sell to the largest retailer, I don't think anyone is denying that. But all that does is move the potential monopolizer one tier down. By definition the monopolizer is taking away the markets power to set pricing as well. In the MAP model, the chance of there being a monopolizer is reduced, therefor both the retailers operate on a more even field (each retailer will be selling from multiple manufactures, and potentially multiple product categories) and then the brand of the manufacturer has to compete on that level playing field with other manufactures in their category.

I'm seeing it like 3D chess, the retailers compete, and the manufactures compete, and each does use the other to aid it when possible. That gives the end consumer the best chance of having the best marketplace overall. Yes, it will mean that overall prices will be slightly higher, but that means that a single retailer cannot suck a brand dry and kill them off for their own gain.

If you presume all are operating in good faith, then MAP is not required, but if a retailer decides to monopolize a brand for its own profit, they damage that brand, even if not fatally. If the bar for entry is high enough, then that weeds out those who are not planning on being viable long term, but as 42Blades stated, the low bar for entry right now means that little sellers can pop up like weeds and damage the legacy retailers, and in doing so damage the reputation of the brands. Even if one seller doesn't form that monopoly on their own, the market might, and market forces have killed brands before. More sales doesn't always mean long term success, especially in a reputation based marketplace. Also the low bar marketplace also makes clones easier to sell and more profitable, therefor damaging the brands and harming the manufacturers.

As an aside, Daniel I think you have made your points well, just that your perspective doesn't seem to take into account the effect of online sales. It could also be that there are certain definitions that are not shared, or that your market experience doesn't translate 1:1 with knife retailing, I don't know. I'm certainly not an expert, just trying to frame a debate as best I can hope to understand it better myself, as well as add to the general knowledge of the community. Someone1 was out of line, which is unfortunate because he seemed to be making good strides away from the start he made. Oh well.
Lastly, I realize that there might be an ideological component to the debate as it stands. I hope I don't have an ideological bias, I'm trying to come at this from as realist a perspective as I can with the knowledge I have, but that might also be part of why these threads go this way. Not to say there in anything inherently wrong with an ideological discussion, but both parties need to be doing that, otherwise we are speaking different languages.

 

[halflife78]

All MAP has done is basically forced me into buying local and helping local shops vs. buying online. I have 1 main store I get mostly everything from and he gives me a 30% discount on regular Benchmade, roughly 40% on non limited gold class, and 20% on limited editions.

Another local shop does standard 20% off on BM with a biannual additional 20% all their knives which includes ZT, Keeshaw, Case, Buck, etc.

Interesting enough, there is another store where my wife grew up that has a rough avg 30% off standard sticker price in most of their Benchmades. Black Friday they do 25% off the standard 30% which is insane. I will be there Friday cash in hand ready to go.

Based on what I have been told the margins are what dictate the discounts also. Benchmade is roughly sold to dealers at 50% off MSRP where ZT and Microtech have tighter margins, so my discount levels on those are much less. Same for WE. Another large margin knife is Chris Reeves.....local shop left their delivery paperwork in the box with their knives awhile back so I saw their dealer pricing which was almost 50% margin, at least based on the sheet in the box.

Only good deals I ever find online is when the auction site I don’t know if we can mention here does the random 15% off days and you can find dealers with that price request option, got a couple BMs that was for almost 45% off a couple times.

Long story short, local shops seem to be goldmines for getting below MAP is you do some shopping around and get to know dealers.....and you also live somewhere with multiple good shops nearby.

 

[Someone1]

A company could decide to not sell to the largest retailer, I don't think anyone is denying that. But all that does is move the potential monopolizer one tier down. By definition the monopolizer is taking away the markets power to set pricing as well. In the MAP model, the chance of there being a monopolizer is reduced, therefor both the retailers operate on a more even field (each retailer will be selling from multiple manufactures, and potentially multiple product categories) and then the brand of the manufacturer has to compete on that level playing field with other manufactures in their category.

I'm seeing it like 3D chess, the retailers compete, and the manufactures compete, and each does use the other to aid it when possible. That gives the end consumer the best chance of having the best marketplace overall. Yes, it will mean that overall prices will be slightly higher, but that means that a single retailer cannot suck a brand dry and kill them off for their own gain.

If you presume all are operating in good faith, then MAP is not required, but if a retailer decides to monopolize a brand for its own profit, they damage that brand, even if not fatally. If the bar for entry is high enough, then that weeds out those who are not planning on being viable long term, but as 42Blades stated, the low bar for entry right now means that little sellers can pop up like weeds and damage the legacy retailers, and in doing so damage the reputation of the brands. Even if one seller doesn't form that monopoly on their own, the market might, and market forces have killed brands before. More sales doesn't always mean long term success, especially in a reputation based marketplace. Also the low bar marketplace also makes clones easier to sell and more profitable, therefor damaging the brands and harming the manufacturers.

As an aside, Daniel I think you have made your points well, just that your perspective doesn't seem to take into account the effect of online sales. It could also be that there are certain definitions that are not shared, or that your market experience doesn't translate 1:1 with knife retailing, I don't know. I'm certainly not an expert, just trying to frame a debate as best I can hope to understand it better myself, as well as add to the general knowledge of the community. Someone1 was out of line, which is unfortunate because he seemed to be making good strides away from the start he made. Oh well.
Lastly, I realize that there might be an ideological component to the debate as it stands. I hope I don't have an ideological bias, I'm trying to come at this from as realist a perspective as I can with the knowledge I have, but that might also be part of why these threads go this way. Not to say there in anything inherently wrong with an ideological discussion, but both parties need to be doing that, otherwise we are speaking different languages.

Sorry i disappointed you. I don't believe Daniel had anything to do with buying or selling brands at retail.

Sorry Daniel. I believe your liberal mentality has affected your common sense. I know you probably don't like to hear someone saying you're wrong, but you're wrong. I don't know how else to put it. You seem like a nice guy but your opinions are wrong. Whatever that's due to, i couldn't say. I'm sure whoever granted your degree had America's best interest in mind, like most colleges teaching about SJW politics and global hegemony and crushing mom and pop stores. At least colleges teach now overtly teach that feelings are more important than logic.

 

[gadgetgeek]

Sorry i disappointed you. I don't believe Daniel had anything to do with buying or selling brands at retail.

Sorry Daniel. I believe your liberal mentality has affected your common sense. I know you probably don't like to hear someone saying you're wrong, but you're wrong. I don't know how else to put it. You seem like a nice guy but your opinions are wrong. Whatever that's due to, i couldn't say. I'm sure whoever granted your degree had America's best interest in mind, like most colleges teaching about SJW politics and global hegemony and crushing mom and pop stores. At least colleges teach now overtly teach that feelings are more important than logic.

And then you had to go political. You had a few posts that were fairly well formed up until then. Declarative generalized statements don't fly far here, no matter which side you are on. Someone1, I think you have also let your ideology start to dictate how you see the world. You are categorizing people and assigning beliefs without evidence. If you can come up with something more than some youtube talking points, then maybe there is room for discussion, but the word salad you just typed leads me to believe that you don't actually understand what any of it means.

 

[Insipid Moniker]

Sorry i disappointed you. I don't believe Daniel had anything to do with buying or selling brands at retail.

Sorry Daniel. I believe your liberal mentality has affected your common sense. I know you probably don't like to hear someone saying you're wrong, but you're wrong. I don't know how else to put it. You seem like a nice guy but your opinions are wrong. Whatever that's due to, i couldn't say. I'm sure whoever granted your degree had America's best interest in mind, like most colleges teaching about SJW politics and global hegemony and crushing mom and pop stores. At least colleges teach now overtly teach that feelings are more important than logic.

Politics belong in the Political Arena. I kindly suggest you pony up for a gold membership and continue that line of discussion there.

 

[Daniel]

That is a first! I have never been accused of having a liberal mentality!! Too funny.

Belief in a free market with pricing control is liberal think?

Again, with the insults. You must have nothing of substance to add. You know nothing of my background. The only reason that I mentioned my education was that a member chose to lecture me and refer me to research marketing.

I will always oppose price controls whether in goods or wages. This is a conservative philosophy and not liberal thinking.

 

[gadgetgeek]

Do you at least see why I don't see MAP as being incompatible with a free market? I'm fine with disagreeing, I just want to make sure I at least make sense.

 

[Someone1]

That is a first! I have never been accused of having a liberal mentality!! Too funny.

Belief in a free market with pricing control is liberal think?

Again, with the insults. You must have nothing of substance to add. You know nothing of my background. The only reason that I mentioned my education was that a member chose to lecture me and refer me to research marketing.

I will always oppose price controls whether in goods or wages. This is a conservative philosophy and not liberal thinking.

Liberal mentality is using the government to quash freedom just because someone doesn't like what they're seeking to outlaw that doesn't actually violate any rights.

No, i don't want governments to step in and and dictate to me how and when i sell my products, especially when I'm fighting against companies monopolizing the market. You seem to believe that this should be illegal which would mean government intrusion into how products can be sold. I don't agree with that. Manufacturers are free to add whatever stipulations they want on a product and customers are free to accept those stipulations or not. That's a wonderful thing. Government getting involved is government overreach. Sorry if that's too political for some. MAP discussions are inherently political, as are discussions about clones and the prices of knives from China vs the US.

I'll just leave it as I'm all for government staying out of private transactions that involve consenting adults. A retailer buying knives from a manufacturer with certain stipulations attached is a consensual transaction between informed adults. There's zero reason to seek oversight from the nanny state in this. Busting monopolies is different and stops predatory companies, which is in essence protecting a citizen's property. Government should bust monopolies like Amazon and Walmart when it can be proven that they have predatory policies that harm the overall market. But how to do that on a large scale without violating their rights and stifling economic growth? Well, sometimes governments should just stay out of it and allow the market to correct itself. MAP is that correction. And if the MAP policies are too harsh, again, the market will correct itself because customers will stop buying the products. Voluntary actions by informed adults fix the issue from any angle you look at it until a company becomes so large and has monopolized the market so much that it corrupts the government.

 

[DavidZ]

The manufacturer can sell to whoever they want for whatever price they want and can get, from the distributor, retailer or even the final consumer. If they only want to sell to only Mom and Pop brick and mortar stores then they should. However, when they sell it, it is no longer their product.
The distributor, retailer, or consumer should be able to do the same to their customers without overreach from the manufacturer.
Free Markets.

 

[DavidZ]

That depends on the particular company. Most of the MAP products I stock are obtained through distributors rather than direct from the manufacturer, so I would have to review the particular manufacturer's MAP policy before I'd feel comfortable with selling below MAP, such as not to put my supply chain at risk. Usually offering a value-added service for free or at discount is the best way to get around MAP issues, like offering free shipping or a discount on a non-MAP item purchased at the same time.

So there are manufacturers or distributors that forbid you from selling for less than MAP? That is price fixing.