Looks like one retailer's finally had enough of being undercut by Costco...

Discussion in 'Fly Fishing Forum' started by Alosa, Aug 6, 2013.

  1. Rob Hardman

    Rob Hardman Active Member

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    If I understand correctly, MAP pricing dictates that a product cannot be advertised or marked at a lower price than agreed upon. Doesn't mean it can't be sold for a lower price.
    Companies like Bose have been doing this for years quite successfully.
    Manufacturers believe that once one retailer starts advertising their product at a lower price, they're considered a discounter. Discounters generally (historically) carry lower end products, and now the perceived value of the product in the consumer's eye has dropped. As well as now all the other retailers have to drop their shorts in order to compete, an make much slimmer margins.
    So, case scenario, let's say I own a fly shop. I've now had to discount my Sage rods to $300 in order to compete. I'm making $25 a stick on them. -OR- I can sell an Echo rod for $250 and make $125 a stick. Which do you think I'm gonna push? I'm going to down-sell Sage and try to up-sell Echo. Again, Sage's image drops.
     
    Michael Morris likes this.
  2. _WW_

    _WW_ Fishes with Wolves

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    Bingo! And this is why you see some retailers "throwing" in a free line or something with MAP priced rods. Or as 'Frank' would say - "bundling!"
     
  3. Kent Lufkin

    Kent Lufkin Remember when you could remember everything?

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    Not really. MAP (Minimum Advertised Price) is simply a manufacturer's right to set what they think is a fair price for their goods and to refuse to continue selling products to resellers who don't agree to abide by the MAP pricing. It's a free country, and any manufacturer can decide what to charge for their product and whom they sell it to.

    Price fixing though (also known as collusion) is when two or more manufacturers agree (conspire) to set prices together to either maximize profits, volume or to penalize a competitor. Price fixing is very much illegal.

    As an example, Sage is perfectly free to set a MAP price of, say, $300 for a particular rod. Likewise, customers like Leland are also free to sell Sage products for whatever price they feel like (known as 'breaking MAP'). Sage also is free to refuse to sell Leland any more rods.

    By establishing and enforcing MAP, Sage sets the tone for the value of their products in the marketplace. By punishing MAP breakers, they send a message that they won't tolerate resale customers whose discounting errodes the perception of the value of the Sage brand.

    To extend the example, if Orvis, Thomas & Thomas and Winston all agreed (collude) to price a similar rod at say $200 to steal customers and market share from Sage, that indeed is price fixing and would end up incurring some very hefty legal bills and fines.

    MAP pricing can be fluid as manufacturers adjust it to stimulate sales or to discontinue a product. Some manufacturers allow resale customers to individually adjust prices within a percentage of MAP, say 5% or 10%. In our little manufacturing company, our flagship product has a MAP price of $45, but we permit downward deviation from MAP to allow some customer to sell that product for a couple dollars less if they feel it will increase sales. But that knife cuts both ways. One of our best customers prices the same product for $49.95 and still enjoys robust sales volume and velocity.

    K
     
  4. rory

    rory Go Outside

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    Costco or Sage? They are both Washington companies.
     
  5. Porter

    Porter Active Member

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    Nicely put Kent. And true.
     
  6. troutpounder

    troutpounder Active Member

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    They best dump Redington and Rio products as well, they are all owned by the same company
     
  7. Davy

    Davy Active Member

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    f%$6t it . Good post Kent. Writin here aint gonna change nuthin
     
  8. Daryle Holmstrom

    Daryle Holmstrom retiredfishak

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    I'll keep my $30 Flypole and out fish all youse guys
     
  9. Daryle Holmstrom

    Daryle Holmstrom retiredfishak

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    Still looking for that 1942 And a half, have a brand new LLbean stripping basket, never used
     
  10. Daryle Holmstrom

    Daryle Holmstrom retiredfishak

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  11. jessejames

    jessejames Flyslinger

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    NOT TRUE.
    Been there.
    jesse
     

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