Big changes at Audio Research (again)

Guys

FYI, for a little clarity and consistency....

AR stands for Acoustic Research

ARC stands for Audio Research Corporation (Audio Research)
 
It would seem that a lot of the pricing strategy is given to the manufacturers by their dealers and reps. ( Middle men). Problem is this, dealer A/rep is in a country that has a very different economic mix than dealer B/rep, resulting in Dealer A/rep stating: 'Hey, your prices are too low and as a consequence, we are having a problem selling your gear to the consumer who buys solely based on price....the higher the better'. Wherein Dealer B/rep says, 'Hey, your prices are so high, we can make no sales'. What is the manufacturer to do, they cannot have one price for Dealer A/rep in his country and a much lower number for Dealer B/rep. So, they go with the higher number, which severely impacts in a negative way Dealer B/rep.

Personally, I think the solution might be for the manufacture to insist that Dealer A/Rep educate their consumer base that price asked is actually NOT necessarily directly tied to ability/quality. That way both A and B can enjoy a larger business exposure. ( as well as the manufacturer). Unfortunately, this 'education' also has to be encompassing..and the folks in the high end media are typically going to demur. NOT a good thing for the overall long term health of the industry, in my opinion!
 
Pearce Harrison said:
It would seem that a lot of the pricing strategy is given to the manufacturers by their dealers and reps. ( Middle men). Problem is this, dealer A/rep is in a country that has a very different economic mix than dealer B/rep, resulting in Dealer A/rep stating: 'Hey, your prices are too low and as a consequence, we are having a problem selling your gear to the consumer who buys solely based on price....the higher the better'. Wherein Dealer B/rep says, 'Hey, your prices are so high, we can make no sales'. What is the manufacturer to do, they cannot have one price for Dealer A/rep in his country and a much lower number for Dealer B/rep. So, they go with the higher number, which severely impacts in a negative way Dealer B/rep.

Personally, I think the solution might be for the manufacture to insist that Dealer A/Rep educate their consumer base that price asked is actually NOT necessarily directly tied to ability/quality. That way both A and B can enjoy a larger business exposure. ( as well as the manufacturer). Unfortunately, this 'education' also has to be encompassing..and the folks in the high end media are typically going to demur. NOT a good thing for the overall long term health of the industry, in my opinion!
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You've got lots of great points. And I agree with them.

Unfortunately a clear majority of the people on these forums whining about supporting local dealers (not you) are the same ones calling around willing to undercut the local dealer who spent 3 hours with them on an demo to get a $100 better deal.
 
Pearce Harrison said:
It would seem that a lot of the pricing strategy is given to the manufacturers by their dealers and reps. ( Middle men). Problem is this, dealer A/rep is in a country that has a very different economic mix than dealer B/rep, resulting in Dealer A/rep stating: 'Hey, your prices are too low and as a consequence, we are having a problem selling your gear to the consumer who buys solely based on price....the higher the better'. Wherein Dealer B/rep says, 'Hey, your prices are so high, we can make no sales'. What is the manufacturer to do, they cannot have one price for Dealer A/rep in his country and a much lower number for Dealer B/rep. So, they go with the higher number, which severely impacts in a negative way Dealer B/rep.

Personally, I think the solution might be for the manufacture to insist that Dealer A/Rep educate their consumer base that price asked is actually NOT necessarily directly tied to ability/quality. That way both A and B can enjoy a larger business exposure. ( as well as the manufacturer). Unfortunately, this 'education' also has to be encompassing..and the folks in the high end media are typically going to demur. NOT a good thing for the overall long term health of the industry, in my opinion!
Click to expand...
I can honestly say, manufacturers almost never ask dealers about pricing (they actually should though, but 99.99999% of the time do not). It’s usually a cost plus model or they have a strategic reason for the final MSRP.

The dealers job is to find the best product offerings in the customer’s budget and for their system, musical tastes, etc.
 
Mike said:
I can honestly say, manufacturers almost never ask dealers about pricing (they actually should though, but 99.99999% of the time do not). It’s usually a cost plus model or they have a strategic reason for the final MSRP.

The dealers job is to find the best product offerings in the customer’s budget and for their system, musical tastes, etc.
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I have written elsewhere about this absurd price inflation in this industry. The larger the "inbred" part of the industry, the more the price inflation. The more manufacturers dependent on other manufacturers products, the more resellers than necessary, the more industry accommodations including but not limited to ever increasing reviewers (long term loans), "in house resellers" whose primary purpose is to get a system they can't afford, shows, press, etc. the more customers the manufacturers have but not necessarily those like yourself with bricks and mortar stores, whose business is dependent on the end-user. Simple economics, surely not the whole story, but when this "inbred market" is selling at a % of X, the end-user MSRP has to be set higher.

Unfortunately, the bricks and mortar guys like yourself, share an inordinate amount of the cost as a result. I am not saying bricks and mortar can't survive, just that it is a much different paradigm than years ago and a large reason for the price inflation we see in this market.
 
Mike said:
I can honestly say, manufacturers almost never ask dealers about pricing (they actually should though, but 99.99999% of the time do not). It’s usually a cost plus model or they have a strategic reason for the final MSRP.

The dealers job is to find the best product offerings in the customer’s budget and for their system, musical tastes, etc.
Click to expand...
Interesting. This flies in the face of what has been told to me by several manufacturers. At the most recent THE show in LA, one went as far as to say that he was having a very hard time trying to figure a pricing strategy for his new amp, as his reps were telling him two different things. Both along the lines of what I posted above.
Are you telling us that the rep ( middle man) is not the one who is primarily driving the pricing strategy? Purely the manufacturer with no feedback from the rep…or their dealers.
 
Pearce Harrison said:
Interesting. This flies in the face of what has been told to me by several manufacturers. At the most recent THE show in LA, one went as far as to say that he was having a very hard time trying to figure a pricing strategy for his new amp, as his reps were telling him two different things. Both along the lines of what I posted above.
Are you telling us that the rep ( middle man) is not the one who is primarily driving the pricing strategy? Purely the manufacturer with no feedback from the rep…or their dealers.
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100% yes. You may have that one rare datapoint. But 99.9999% of the time, we are told pricing is based on cost plus or market.
 
MontanaJoe said:
I have written elsewhere about this absurd price inflation in this industry. The larger the "inbred" part of the industry, the more the price inflation. The more manufacturers dependent on other manufacturers products, the more resellers than necessary, the more industry accommodations including but not limited to ever increasing reviewers (long term loans), "in house resellers" whose primary purpose is to get a system they can't afford, shows, press, etc. the more customers the manufacturers have but not necessarily those like yourself with bricks and mortar stores, whose business is dependent on the end-user. Simple economics, surely not the whole story, but when this "inbred market" is selling at a % of X, the end-user MSRP has to be set higher.

Unfortunately, the bricks and mortar guys like yourself, share an inordinate amount of the cost as a result. I am not saying bricks and mortar can't survive, just that it is a much different paradigm than years ago and a large reason for the price inflation we see in this market.
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All fair points. The dependency of manufacturers on suppliers is a big one. Our industry is the small tiny fish. When a supplier is someone who is used to tens of thousands of orders from their automotive clients (think the company making face plates), we take the back seat and wait.
 
Mike said:
100% yes. You may have that one rare datapoint. But 99.9999% of the time, we are told pricing is based on cost plus or market.
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Weird. One would expect that manufacturers ( at least the ones with some marketing knowledge) would take input from their dealers, their reps and their own market research in regards to pricing. Perhaps this is why there are so many high end products that are priced so high that most consumers look at the product...and laugh!
 
It was my impression that manufacturers target a certain price point with a component. I want an amp that will compete with brand X and I want it to come in at this price point. Then designers have to select parts that as a whole meet that price point.

I do know sometimes manufacturers make adjustments. A speaker line had models too close together after introducing a new model then adjusted prices. I owned the model they dropped the price down about $1k. There went my, equity.

You can take a component or speaker at any price, compare it to the competitors and you will see a sort of step in pricing as you move up or down the lines.

I can see manufacturers accepting feedback, like I wish you had a widget at $x but I don't see dealers setting prices from the manufacturer. When I worked for a distributor we always got the prices from the manufacturer.

Dealers can set whether or not they are willing to allow a discount. Even some manufacturers keep a tight hold on that.
 
Pearce Harrison said:
Weird. One would expect that manufacturers ( at least the ones with some marketing knowledge) would take input from their dealers, their reps and their own market research in regards to pricing. Perhaps this is why there are so many high end products that are priced so high that most consumers look at the product...and laugh!
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If it’s a cost plus, then it’s irrelevant. But if it’s “market”, it would be good, but we would need to live with the product for a while and do our own comparisons to give a good number.
 
The manufacturer whom I had a nice conversation with at the THE show was telling me that it was very tricky for him to come up with a price for his newly designed amp. He was saying that it was an issue because of a few reasons. One was that he did not want to price the product too low, resulting in a loss of interest from consumers who only value a product based on price ( in his opinion, a fairly large majority), the higher the more valuable..and two, because he did not want to overprice the amp in regards to the competition as that would also result in few, if any, sales. As such, he was taking advice from folk in the industry and from his own research.
The problem he was facing is that he really was not sure as to the actual sales of the competing products, and of the cost of manufacture of those same products. He knew his costs,and he knew what his reps and dealers expected margins were, but he was troubled by the ongoing uncertainty in the high end market, plus the varying expectations of the various consumers in different countries to which his product would be sold.
My suggestion to him was to listen to all sources and to try and bring his amp in at a price that would appeal to the larger market, vs. the few that price is irrelevant.
 
Mike said:
If it’s a cost plus, then it’s irrelevant. But if it’s “market”, it would be good, but we would need to live with the product for a while and do our own comparisons to give a good number.
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Surely, if it is 'cost plus' that one would expect a manufacturer to have done some market research to validate that the end price after 'cost plus' would be somewhat attainable before bringing the product to market! Is that not the case...no??
 
Pearce Harrison said:
Surely, if it is 'cost plus' that one would expect a manufacturer to have done some market research to validate that the end price after 'cost plus' would be somewhat attainable before bringing the product to market! Is that not the case...no??
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You would hope so.
 
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