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In Reply to: RE: High Price posted by Bromo33333 on February 23, 2015 at 14:27:51
"Since even at entry level, there isn't a large pool of buyers, the mass market audio companies aren't really serious about jumping in (they are going for low volume/high profits - not what they do best).""Entry level" and "mass market" are used so loosely it's not clear what consumers and company/products are affected.
"And the rest is filled by small companies that operate on the low volume/high profit model."
Same as above for "small companies".
"The distribution network is either antiquated (lots of middlemen making the original company take in 25-30% of the final price as income) - or it's confusing (buying a $2k component over the internet is not for the feint of heart)."
I guess antiquated means, 'not good'. I would buy a new car over the internet if I thought it to be advantageous, rather than a model to lead customers into dealerships.
Edits: 02/24/15Follow Ups:
> > "Since even at entry level, there isn't a large pool of buyers, the mass market audio companies aren't really serious about jumping in (they > > are going for low volume/high profits - not what they do best)."
> >
> "Entry level" and "mass market" are used so loosely it's not clear what
> consumers and company/products are affected.
> > "And the rest is filled by small companies that operate on the low > volume/high profit model."
>
> Same as above for "small companies".
Let me clarify.
It is not clear there are as many consumers today that want to spend money on a stereo system as there have been in times past. Those that seem to be keen on it these days, typically would budget a few hundred dollars, not thousands. And of course a rare few (in shrinking numbers) are willing to spend thousands of dollars or more on a stereo system.
There has also been a jump in real price in much of this market space for a quality stereo.
And since there is lower volume, this is expected. I believe this is a function of lower sales volumes that has a number of impacts: 1) The companies best able to offer lower prices (such as Masushita, Sony, etc.) are playing a low volume/high profit game. 2) There are a number of small firms that MUST play the low volume/high profit game since their overhead absorbtion isn't anything like the larger companies in #1 (Even the larger of these firms such as the Harman Kardon Group, or Wilson Audio are a fraction of the size of the big boys).
> > "The distribution network is either antiquated (lots of middlemen making the original company take in 25-30% of the final price as income) - > > or it's confusing (buying a $2k component over the internet is not for the feint of heart)."
> I guess antiquated means, 'not good'. I would buy a new car over the internet if I thought it to be advantageous, rather than a model to lead > customers into dealerships.
Slightly negative, but it is also a function of a proliferation of small companies that cannot distribute their own product effectively the way a Masushita or Sony can. It is also the high margins in inerent in the system - which means the customer is going to pay more than with something with fewer middlemen or higher margins, and the producing company is going to get less. But it is the way things were done and have been done in the past and can only be supported with higher prices.
It is interesting that you mention dealerships of cars as another antiquated model. For a good example, compare the way Tesla wants to sell cars vs. the way it has been done for the last 100 years. Tesla's selling model is very low overhead and is driven from how they design, produce and service their cars. I will not pronounce one way or another as good or bad, but the benefits of the current way of selling cars accrue to the middlemen (dealerships and salesfolks) in a way they wont' with the Tesla Model - if it becomes normal, it will mean there is a whole host of new car salespeople that will have to find other work, which will make me a little worried, since the benefits of efficiency tend to be thinly spread.
============================
As audiophiles, we take what's obsolete, make it beautiful, and keep it forever.
Hey! I have a blog now: http://mancave-stereo.blogspot.com or "like" us at https://www.facebook.com/mancave.stereo
I had hoped for more of a distinction between audio and consumers goods in general.
"There has also been a jump in real price in much of this market space for a quality stereo."
It might be common marketing lingo but I can't identify with this.
"It is interesting that you mention dealerships of cars as another antiquated model."
That was not my intention neither do I agree. I mentioned the willingness to buying a car online in response to: "(buying a $2k component over the internet is not for the feint of heart)".
The Telsa model is something else altogether, (particularly Model S P85D), however they don't sell on the internet as far as I know.
"The Telsa model is something else altogether, (particularly Model S P85D), however they don't sell on the internet as far as I know."The sales process involves quite a lot of internet. But you can (and should) schedule a test drive at the nearest showroom. The car, once you buy it, it usually delivered right to your door.
It's a pretty progressive sales model, and gets enough of the "high touch" part you can get whenever you are buying something that is very expensive, but much of the additional inefficiencies/costs/markups are avoided.
I am pretty sure that this could be modified to be a distribution model for nearly any expensive product that currently uses a lot of middlemen with large markups.
But the advantage of the current system is that when it is working, the salesperson tends to be knowledgeable, has made an entrepreneurial investment in his or her inventory, and also can offer multiple options for a consumer right in their showspace.
====
But as far as the rest of the communication you put towards me - I will say the following: Stereo systems were once normal consumer goods that was widely bought - a little like how television and computers are today.
Now? Most stereos are better characterized as a luxury good, not a regular piece of consumer electronics. As such the volumes are low, and the margins & markups are high. For a large company - say the size of Panasonic - this means they can be highly profitable. For a small company - say a company operated by a couple of people only - they can survive. It also can tolerate a distribution system with one or more middlemen each with large markups. If a stereo system was a mass market style of consumer good, rather than a luxury good - the volumes would be higher, the profit per unit sold would be lower, and the cut for middlemen would be lower. The price for the component would be closer to the parts cost than it is today for a "high end" stereo component.
============================
As audiophiles, we take what's obsolete, make it beautiful, and keep it forever.
Hey! I have a blog now: http://mancave-stereo.blogspot.com or "like" us at https://www.facebook.com/mancave.stereo
Edits: 02/25/15 02/25/15
"The sales process [for Telsa] involves quite a lot of internet."
Says nothing, IMO.
"But you can (and should) schedule a test drive at the nearest showroom."
LOL Streams of consciousness wear me down. I concede.
You can't concede, I already gave up! ;-)
Seems we have failed at basic communication.
============================
As audiophiles, we take what's obsolete, make it beautiful, and keep it forever.
Hey! I have a blog now: http://mancave-stereo.blogspot.com or "like" us at https://www.facebook.com/mancave.stereo
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