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> effects of Shimano's inability (or really, refusal) to control pricing from its European distribution Why should they control pricing, or why any producer sh

• GoatOfAplomb 6y ago
  It looks to me like trentnix already provided their answer to this question, by stating what happens when the producer doesn't control pricing: "The end result is that there is less sales tax in your community because of the absence of that brick and mortar retailer. There are fewer jobs. There are fewer local communities built around hobbies, crafts, trades, or whatever. But you can get products cheaper and your dollars have greater purchasing power. Maybe that's a worthwhile trade-off - YMMV." I'm not here to claim that the answer is convincing (or not), but I think it does qualify as an answer to your question.
• trentnix 6y ago
  The first major reason is that price controls influence and protect perception of value. The primary means a consumer uses to assess value when comparing product options is price. Lots of brands (particularly of the premium but still mainstream variety) such as Apple, Garmin, and Nintendo use price controls to influence the buyer's perception of value. Do you think that an iPad is never on sale because no retailer is willing to put it on sale? Do you think a Nintendo Switch is never on sale because no retailer is willing to mark down the price? There is always a retailer willing to undercut the rest in pursuit of a sale. Some retailers are even willing to do so in a predatory way, willing to absorb losses until the competition is eliminated or in pursuit of add-on sales that might help recoup lost margin. But those brands strictly enforce the prices their products can be advertised and sold at because it helps maintain the customer's perception that their products are valuable and in demand. Products in bike shops are almost always considered "premium". They don't sell the big box $100 bikes and cheap parts. They typically sell higher quality products targeted at aspiring enthusiasts or enthusiasts. So a price control is exactly how you can differentiate your product from the cheap schlock on the shelves at Wal-Mart or even Academy and Dick's Sporting Goods. The second major reason is because (although this benefit has diminished over time) having products on store shelves provides enormous marketing benefit. Most customers that walked into my store didn't come in knowing explicitly what they wanted. Many of them had done some research to be generally aware of their options, but our recommendations were often a massive influence in their purchasing decision. Bike, component, and apparel brands were often pretty myopic when it came to their marketing efforts (and that's why they are always exactly the same from brand-to-brand). They genuinely thought the average consumer in the market for an entry-level carbon bike (say 1500-2000 USD) was influenced by having a Tour de France team or having some great rider win races on their bike. While that sometimes made a different at the prosumer level, the meat-and-potatoes bike shop customer isn't influenced one bit by that type of marketing. But seeing an attractive bike at a compelling price on the floor of a reputable bike shop is how most sales begin. So brands making sure retailers can be profitable selling those options is essential or retailers won't bother stocking their stuff. If the bike shops can't be profitable, there will be fewer bike shops. And that means there will be fewer opportunities for customers to see you brand and your products. And it also means there will eventually be fewer riders - at least among bike enthusiasts. Because in my experience, bike shops are the hub of bike culture in most communities.
  • krzyk 6y ago
    I understand your argument (but I don't agree with it). Price fixing is banned by (I think) any reasonable country in the world and there is a reason for it. There will always be brick-and-mortar stores because some people want to touch and look at the product before buying. Others prefer to buy online for lower price.