Klarinet Archive - Posting 000064.txt from 2003/11

From: "R. Williams" <rwilliams@-----.net>
Subj: [kl] Re: Music 123
Date: Wed, 5 Nov 2003 08:18:00 -0500

If Selmer has in fact instituted a minimum purchase of 12 of any particular
type of instrument, then the decision is designed specifically to force
small and medium sized dealers to purchase from a distributor or it is
designed to force smaller dealers off the rolls, I can think of no other
logical explanation.

There are several reasons from a manufacturers point of view for doing
this, but usually it boils down to the cost of handling and supporting
multiple marginal accounts. Historically, many manufacturers opted for
what is called three step distribution, namely manufacturer to distributor
to dealer to end customer. The distributor is expected to service the
needs of its dealers rather than the manufacturer, which means the
manufacturer deals with 50 customers instead of 10,000.

A place like Wallmart or WWBW represents two step distribution, dealer to
customer. And someone like RONCO, is one step manufacturer to
customer. The latter two have the advantage of keeping street prices down
since you eliminate the profit margins of the distributor. Two step
however may have the problem of allowing the super-dealer to become overly
powerful to the point they dictate pricing. Sears was notorious for doing
this and caused several major manufacturers to go under. For example, if
someone like a WWBW in the US became a majority of business for Selmer in
the US, they could say, we need you to cut the cost of an instrument by X
percent or we are dropping it. If that happens and Selmer has eliminated
its dealer network, then what choice do they have.

I only mention this because I know of at least 20 companies that took the
road of two step distribution, destroyed a loyal dealer network only to
have the major chains drop them over price issues. It can be a risky
proposition.

Best
RW

>From: "John Hansken" <hanskenj@-----.net>
>Subject: Re: [kl] music123
>
>This has been of great discussion in my class, along with Selmer's decision
>that if you want to order any instrument (like a pro modle) you have to
>order a min of 12 of that same type. (this is second hand info on my part
>and is shortend to bring the point out). Anywayz, the discussion is which
>these companies making it more and more difficult for the small music store
>to purchase insturments at a competetive rate, and to servive they will
>eventually have to purchase their instruments from a distribution center.
>WWBW gets extra special deals probably which makes thier cost even lower and
>that of course is where we will all probably be getting our instruments from
>if this keeps up. My personal oppinion thinks that looks mighty grim. Can
>we shed more light on this subject? I'd like to take your thoughts back to
>class for more discussion.
>
>John

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