Question for the guys Penn :)

marcus1975 said:

so what is the real price of a reel ,as in how much more do we pay {rrp}than the shops buy them for ?and another question for one of the penn guys is why dont you sell direct to the public ?

Mark

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Put simply Penn are a manufacturer and wholesale distributor. They do not want the hassle of selling their product to thousands of individuals, as then they would be a retailer with all the consequent costs of becoming so.

They make agreements with the retailers to sell their products, in varying quantities to the retailers, who in turn incur their costs setting the displays and employing the assistants who serve you the individual customer. Penn by law has to allow the retailers to set their own price.

If a retailer wants to undercut the market, by selling cheaper than cost, that is their choice, they may feel that by doing so they will be able to sell other products at a higher margin than their competitors and thereby cover the costs.

Also stock, reels etc, is money in another form, it either costs the retailer interest, if they have borrowed to pay for the stock, or lost interest that their cash could be earning in a bank deposit account, if they have not.

Either way they have to cover their own overheads, shop rent, heating, light, etc staff, insurance, bank fees, transport etc, this they recover by marking up the price at which they buy their stock from the whole-saler, which in turn make their margins by selling in bulk. The more you buy of something, usually the cheaper the price, except in the case of commodities, oil, copper etc, which I won't go into
now.

If you want a cheap Penn Reel, open a shop and order 100 off, then sell 99 and keep 1 for your self, and the profits from the sale of the other 99, but don't forget, you will have to set up in an area where you can guarantee to buy minimum quantities for a long time, and if you don't have the cash, or can't obtain the finance, you won't be able to get started. Don't forget however as well, that within your margin has also to be 17.5% VAT. This tax you as the customer pay at the time of purchase and in turn is paid into Gordon Brown's back pocket to give to Bambi to pay for the Iraq War.

Penn will not say what they sell to their retailers for, as their rivals will be able to
use the information to undercut or attack them in someway.

Here endeth the Business Studies Lesson.

Bass-ic Instinct said:

Competition between shops perhaps? From a friend who owns a tackle shop i know that there is the price shops buy for, the RRP, and then an expected profit margin. However shops realise that if the overprice items they will loose sales to cheaper rivals who offer the same goods at a reduced price. This is why many tackle shops offer price match deals, and how many smaller companies who buy smaller quantities cant afford to have such low prices due to higher initial outlay (cheaper in bulk) and the need for bigger profit margins. Hopefully this helps you, as this is my understanding of how the prices are actually set.

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This is all true.... but it actually confirms what I am saying, not the opposite! Competition results in varying prices, as each seller tries to attract custom away from others. Any normal market has price variation and fluctuation, different deals etc, but this variation appears to be completely non-existant at the moment with this particular product. Why is this?

If this reel was advertised by one seller at £110, even for a short period until stocks ran out, they would sell like hot cakes! There would still be a profit margin, albeit not as big (which wouldn't matter as the increase in sales would almost certainly cover that loss). Having said that, if they cannot then replenish their stocks, for whatever reason, then they may be shooting themselves in the foot...

Just look at other items of tackle in the magazines or online and you will see slight variation in advertised prices, which any normal market naturally has. I have been biting my tongue on this for a while... but I am afraid to say it appears something fishy is going on here, if you excuse the pun!:g:

thanks for all the replies guys ,i am not sure i follow it all but it makes very interesting reading .


before i make this next comment i just want to say this next comment is no way aimed at penn .

so let me get this right if i bought 100 reels from a supplier i would get them cheaper than the guy buying 10 ? am i right ?

so me being the bigger of the 2 dealers i could offer potential customers a reduced price without losing profit ,yes ?

once i get the other dealer out the way because they will no doht go out of business ,leaving me the run of the market .

is this in a way not price fixing ?

obviously the supplier wants to do best for its self but in the interest of fair trade shouldn't all dealers pay the same regardless of amount ordered .

Mark

WOW - You really know how to open a can of worms.

We could fill pages of this thread with further business studies lessons etc. (and the one listed was a real cracker), but suffice to say, dealers set the selling prices, we publish Recommended Retail Prices.

If dealers choose to sell at less, then it is from their profit margin. For example, a dealer CAN sell a 525 Supermag Xtra at any price, say for a crazy example £10, instead of £150. Would he sell more - in this case yes; would he lose money, yes, so why sell them at all when he can certainly sell them at £150. He would be better NOT buying any, so he has none to sell.

No manufacturer of ANYTHING will publish either the cost prices (ie. what it costs to manufacture the item), not will any manufacturer who sells via a distribution chain, publish selling prices to that chain - as someone else indicated, this would be commercial suicide, as it would let the competition know EXACTLY what they had to beat.

Don't know if all the above makes the muddy waters any clearer, or even worse...