Thoughts on Price of OMD :)

[geikou]

Argh! Ha, you're still not seeing it as a totality.

ALL the costs adds up, but you break it up into parts to digest. It's a combination of all the costings (taxes, shipping, insurance, warehousing, profit margin requirements, competitive benchmarking, sales volume, premiums etc) that determines pricing.

And again, it's about Singapore only, going by demand and presence of distribution.

Hong Kong has better pricing than Singapore, comparable to US actually a lot of times. Hong Kong's demand is HUGE, and a lot of trading occurs there (re-export).

Malaysia, Thailand, Indonesia, their demand for OMD will not exceed that of Singapore, and the costs of selling in these countries tend to be higher, hence higher RRP.

If I'm not wrong, Taiwan does not have a local distributor for Olympus.

That's what we were saying all along since a few pages ago. No matter how we break it down, and take it in totality, there doesn't seem to be a rational explanation how costs would add up to higher in Singapore or SEA than in USA, from a pure cost plus analysis. If we're talking about royalties, brand rights, etc then it's a different story.

So far, nothing contributed here lead us to go ''OK, that explains it!" Nothing contributed here is anything that we haven't speculated before already, shall we say.

If anything, our RRP in Singapore (exclude all SEA countries) should be low since our freight from China is low, distribution is easier due to small size and good infrastruture, favourable corporate taxes, relatively low consumption tax, etc.

Yep, I tried searching for Olympus Taiwan website once and it seems that they have a local distributor representing them instead. Olympus Hong Kong on the other hand seem to be their base for Asia-Pacific or SEA. I believe all those tv ads and print ads are made there.

 

[zan82]

That's what we were saying all along since a few pages ago. No matter how we break it down, and take it in totality, there doesn't seem to be a rational explanation how costs would add up to higher in Singapore or SEA than in USA, from a pure cost plus analysis. If we're talking about royalties, brand rights, etc then it's a different story.

So far, nothing contributed here lead us to go ''OK, that explains it!" Nothing contributed here is anything that we haven't speculated before already, shall we say.

If anything, our RRP in Singapore (exclude all SEA countries) should be low since our freight from China is low, distribution is easier due to small size and good infrastruture, favourable corporate taxes, relatively low consumption tax, etc.

Yep, I tried searching for Olympus Taiwan website once and it seems that they have a local distributor representing them instead. Olympus Hong Kong on the other hand seem to be their base for Asia-Pacific or SEA. I believe all those tv ads and print ads are made there.

Ok we're going round and round *slaps head*

1. Brand is profit maximizing/loss minimizing
2. Our demand is too small compared to US.
3. You make profits either by volume sales, or by value sales.
4. Since Singapore does not have volume, already the starting point for negotiation is lost
5. Brand charge higher base cost to Singapore
6. Add ALL cost (dealer GP etc) inside on top of higher base cost, you get higher RRP

Anyhows I'm done explaining for Olympus ha.

 

[geikou]

Ok we're going round and round *slaps head*

1. Brand is profit maximizing/loss minimizing
2. Our demand is too small compared to US.
3. You make profits either by volume sales, or by value sales.
4. Since Singapore does not have volume, already the starting point for negotiation is lost
5. Brand charge higher base cost to Singapore
6. Add ALL cost (dealer GP etc) inside on top of higher base cost, you get higher RRP

Anyhows I'm done explaining for Olympus ha.

We are going round and round. Because essentially, the same point was made already. In fact, the volume thing was one of the first explanations brought up by someone, if I remember.

But perhaps what we're saying is that it shouldn't be this way, and things could be done differently.

 

[zan82]

We are going round and round. Because essentially, the same point was made already. In fact, the volume thing was one of the first explanations brought up by someone, if I remember.

But perhaps what we're saying is that it shouldn't be this way, and things could be done differently.

Ha, how about the Korean way of doing then?

Spoil market with pricing, consumer wins with more premiums and savings, but brands lose horribly and incur huge losses, and it'd take a while for better and more innovative products to come out.

That's exactly what happened to TV business.

 

[geikou]

Ha, how about the Korean way of doing then?

Spoil market with pricing, consumer wins with more premiums and savings, but brands lose horribly and incur huge losses, and it'd take a while for better and more innovative products to come out.

That's exactly what happened to TV business.

Not interested in Korean, haha

 

[Diginaut]

When a market is big and the product range is large, the strategist doing the pricing will have greater flexibility in pricing.
The strategy is by using a method call 'costs transfer'.
zan82 might know what I am talking about although he has not brought this up.

 

[Alexander4965]

I been wondering to upgrade from GF1 to OMD-EM5, anyone know how much is the body for that?

Is it worth the upgrade since the sensor is around the same?

 

[fengwei]

I been wondering to upgrade from GF1 to OMD-EM5, anyone know how much is the body for that?

Is it worth the upgrade since the sensor is around the same?

If you got the money, and like what the new camera offers, just go for it. It's definitely a big step up from GF1 (image quality, built quality, features and etc...)

 

[keiser]

Ok we're going round and round *slaps head*

1. Brand is profit maximizing/loss minimizing
2. Our demand is too small compared to US.
3. You make profits either by volume sales, or by value sales.
4. Since Singapore does not have volume, already the starting point for negotiation is lost
5. Brand charge higher base cost to Singapore
6. Add ALL cost (dealer GP etc) inside on top of higher base cost, you get higher RRP

Anyhows I'm done explaining for Olympus ha.

Lots of interesting points and thoughts made on the supply side accounting! Any on the customer demand side? ... I have got a few thoughts below ...

1. Brand is profit maximizing/loss minimizing -> Branding = perceived value = pricing (regardless of allocated costing or distortions etc.) = customer willingness to be the "vegetable head" for price / offerings

2. Our demand is too small compared to US. -> Demand could be viewed at the global level rather than by region / countries e.g too much price disparity will affect brand / perceived value (see above) and ultimately overall demand. Also, taking into consideration on demand forecast base on recent global economic changes ...

3. You make profits either by volume sales, or by value sales. -> See respond to point 1 and 2

4. Since Singapore does not have volume, already the starting point for negotiation is lost -> See respond to point 2

5. Brand charge higher base cost to Singapore -> See respond to point 1 and 2

6. Add ALL cost (dealer GP etc) inside on top of higher base cost, you get higher RRP -> not sure about this one ...

Your thoughts?

 

[hanzohattori]

Lots of interesting points and thoughts made on the supply side accounting! Any on the customer demand side? ... I have got a few thoughts below ...

Your thoughts?

Customer side ? Give us ridiculously cheap price please! LoL
Nuff said

 

[elgkh]

Lots of interesting points and thoughts made on the supply side accounting! Any on the customer demand side? ... I have got a few thoughts below ...

1. Brand is profit maximizing/loss minimizing -> Branding = perceived value = pricing (regardless of allocated costing or distortions etc.) = customer willingness to be the "vegetable head" for price / offerings

2. Our demand is too small compared to US. -> Demand could be viewed at the global level rather than by region / countries e.g too much price disparity will affect brand / perceived value (see above) and ultimately overall demand. Also, taking into consideration on demand forecast base on recent global economic changes ...

3. You make profits either by volume sales, or by value sales. -> See respond to point 1 and 2

4. Since Singapore does not have volume, already the starting point for negotiation is lost -> See respond to point 2

5. Brand charge higher base cost to Singapore -> See respond to point 1 and 2

6. Add ALL cost (dealer GP etc) inside on top of higher base cost, you get higher RRP -> not sure about this one ...

Your thoughts?

1. This can be influenced (to a degree) by advertising. But takes years to achieve - Leica is a good example.
2. I don't agree that demand should be viewed at a global level, as each region has its own characteristics. The pricing should be in line with how the brand is positioned in the local market. A good example will be how certain cars are considered luxury brands here, but are in fact priced as a common brand in their home country.
3. Yes, and ideally you have both.
4. This means we have to pay a premium.
5. Not sure about this one, I thought that the cost price to each country will be the same?
6. The cost of selling the product here (staffing, rental for Olympus Studio, servicing department, advertising etc) has to be divided amongst less units (due to lower volume), which leads to higher selling prices.

Of course, Olympus could set a pricing strategy like Apple, but that will mean higher prices overall.

 

[keiser]

1. This can be influenced (to a degree) by advertising. But takes years to achieve - Leica is a good example.
2. I don't agree that demand should be viewed at a global level, as each region has its own characteristics. The pricing should be in line with how the brand is positioned in the local market. A good example will be how certain cars are considered luxury brands here, but are in fact priced as a common brand in their home country.
3. Yes, and ideally you have both.
4. This means we have to pay a premium.
5. Not sure about this one, I thought that the cost price to each country will be the same?
6. The cost of selling the product here (staffing, rental for Olympus Studio, servicing department, advertising etc) has to be divided amongst less units (due to lower volume), which leads to higher selling prices.

Of course, Olympus could set a pricing strategy like Apple, but that will mean higher prices overall.

Hi, Some of my thoughts and your comments ...

1. This can be influenced (to a degree) by advertising. But takes years to achieve - Leica is a good example. -> Don't think Oly is operating on a "cost plus" kind of pricing and positioning rite? Oly does not sound like "Dell" to me ...

2. I don't agree that demand should be viewed at a global level, as each region has its own characteristics. The pricing should be in line with how the brand is positioned in the local market. A good example will be how certain cars are considered luxury brands here, but are in fact priced as a common brand in their home country. -> The consolidated and rolled up profit line in your P&L is going be a single line of number (either red or blue) rite and thus your overall performance? Car prices are not good example as they greatly distorted by local taxes

4. This means we have to pay a premium.-> Only if the customer is willing to commit to the price / offerings as mentioned ...

6. The cost of selling the product here (staffing, rental for Olympus Studio, servicing department, advertising etc) has to be divided amongst less units (due to lower volume), which leads to higher selling prices.-> Only if the customer is willing to commit to the price / offerings as mentioned ...

 

[keiser]

Customer side ? Give us ridiculously cheap price please! LoL
Nuff said

Wah ... profound wisdom! kekeke ... already quite happy if offering is similar / fair

 

[zan82]

Lots of interesting points and thoughts made on the supply side accounting! Any on the customer demand side? ... I have got a few thoughts below ...

1. Brand is profit maximizing/loss minimizing -> Branding = perceived value = pricing (regardless of allocated costing or distortions etc.) = customer willingness to be the "vegetable head" for price / offerings

2. Our demand is too small compared to US. -> Demand could be viewed at the global level rather than by region / countries e.g too much price disparity will affect brand / perceived value (see above) and ultimately overall demand. Also, taking into consideration on demand forecast base on recent global economic changes ...

3. You make profits either by volume sales, or by value sales. -> See respond to point 1 and 2

4. Since Singapore does not have volume, already the starting point for negotiation is lost -> See respond to point 2

5. Brand charge higher base cost to Singapore -> See respond to point 1 and 2

6. Add ALL cost (dealer GP etc) inside on top of higher base cost, you get higher RRP -> not sure about this one ...

Your thoughts?

1. Impossible for volume products without global branding strength. Unless you're Apple/Leica/LV. Luxury goods with the exception of Apple is not produced with volume in mind, and brands till date are not willing to go the Apple way with design and customer experience winning engineers -> especially Japanese culture

2. Impossible till date too because of intermediaries. All parties in the chain has bargaining power. Unless again you're Apple, and can squeeze intermediaries. Margin for Apple dealers is ridiculously low and sometimes 1x credit card transaction can eat up their GP.

3-6. Since point 1 and 2 does not stand, this remains

Ultimately cameras are not luxury goods, and brands choose to go mass. At most these goods can be considered as masstige products, and not luxury products.

Besides, if brands go the Apple way, you do pay more? That's where their 96 billion warchest come from hahahahha....

I do admire how LV controls global pricing though, but they skip intermediaries and open up branches as part of LVMH group.

A good way of imaging can be like how feudal system works actually -> feudal lords have their armies with central government receiving taxes and income vs central government having all the power. Both have their pros and cons.

 

[zan82]

Customer side ? Give us ridiculously cheap price please! LoL
Nuff said

Ha only possible with Korean brands.

Samsung buy one camera give you free lenses, at ridiculously cheap price for their specs.

Then again, you'd be cursing and swearing if you're an early adopter of Samsung cameras wahahahah

 

[keiser]

1. Impossible for volume products without global branding strength. Unless you're Apple/Leica/LV. Luxury goods with the exception of Apple is not produced with volume in mind, and brands till date are not willing to go the Apple way with design and customer experience winning engineers -> especially Japanese culture

Hiya, before even producing a product, the marketing/planing side would already have to research into pricing possibilities and acceptability which lead to a projected profitability forecast for the go ahead rite? With that then lead into manufacturing and distribution strategy etc.. Therefore, I do not think that pricing / offering is not driven purely by the cost structure, but rather also whether the customer is willing to commit to the price / offerings. Do you not agree?

 

[zan82]

Hiya, before even producing a product, the marketing/planing side would already have to research into pricing possibilities and acceptability which lead to a projected profitability forecast for the go ahead rite? With that then lead into manufacturing and distribution strategy etc.. Therefore, I do not think that pricing / offering is not driven purely by the cost structure, but rather also whether the customer is willing to commit to the price / offerings. Do you not agree?

Ha I don't agree!!!!

Pricing yes, acceptability no. Only when things start not moving will price be eroded...sadly that's why TV business is in the reds last year. Pricing is not easy, really. Theoretically speaking we can fight wars, but actual implementation is tough as XXXX

Hopefully camera business don't follow suit...

 

[keiser]

Ha I don't agree!!!!

Pricing yes, acceptability no. Only when things start not moving will price be eroded...sadly that's why TV business is in the reds last year. Pricing is not easy, really. Theoretically speaking we can fight wars, but actual implementation is tough as XXXX

Hopefully camera business don't follow suit...

Then how does the new product gets the "go ahead" from the top if there is no profitability projection (which is a result of the projected pricing and costings etc.)? Are u suggesting that Oly shoot 1st before they aim?

 

[zan82]

Then how does the new product gets the "go ahead" from the top if there is no profitability projection (which is a result of the projected pricing and costings etc.)? Are u suggesting that Oly shoot 1st before they aim?

Like I say, pricing yes. Based on a rough price idea they projected upwards. Whether or not it's accepted, it's a risk they're taking.

If its base on acceptance, then you'd see them pricing at groupon/IT show pricing at stock clearance of old Pen cameras. Definitely people flocking to buy.

Look at initial Nikon 1 launch. No promotion, high RRP, low or no sales. Drop a bomb with huge ad spend, huge promotions, price adjustments and sales start coming in.

Anyhows, I guess no point speculating on Olympus :/

 

[NazgulKing]

Then how does the new product gets the "go ahead" from the top if there is no profitability projection (which is a result of the projected pricing and costings etc.)? Are u suggesting that Oly shoot 1st before they aim?

It didn't stop Olympus from releasing 2 EPL cameras within 6-8 months of each other, or an EP1 and EP2 within 6 months. So...