SpeakerCraft Makes an Effort to Keep Prices High and Volume Low

Instead of trying to understand the real product, or how price discrimination works, I find efforts like this bizarre in our “free” market.  To be clear I get the knee-jerk reaction, but instead of using artificial mechanisms; why not try to justify the price in product + services instead of attacking those who are trying to detach the two?  After all, that’s the only real way for local dealers to compete with the economies of scale available from the-big-bad Internet.

SpeakerCraft’s strategy employs the latest investigative techniques to identify and remove unauthorized parties from selling SpeakerCraft products on the internet. Over the past year SpeakerCraft has worked closely with its legal staff, policing the internet for illegal online activity, the company says.  

“We have made progress, shutting many of these companies engaged in illegal activity down with respect to their unauthorized actions, but our efforts will not stop until we have fully protected our dealers and the SpeakerCraft brand,” said Jeremy Burkhardt, SpeakerCraft’s president. “We have invested millions of dollars to create a brand that our dealers are proud to represent and we have no intention of letting unauthorized sellers cannibalize this category.” 

Residential Systems

  • While I don’t have a problem

    While I don’t have a problem with the company going after people who are selling used product as new and other kinds of consumer fraud, I would like to know is where these “rogue” dealers are getting product to sell?  

    • At least from what I

      At least from what I understand of other gray market electronics, retailers will often find some price differential and then exploit that. For example, products are often times sold for less overseas in Asia than the US, so a retailer will purchase and import the goods undercutting the authorized dealers who are supposed to purchase directly from the manufacturer for whatever their negotiated pricing is.

  • I really don’t see how this

    I really don’t see how this hurts the manufacturer in any way.  They sell the goods at a price point they set so they’re still seeing the same profit margin.  Grey market goods are sold at a lower price because they bypass the middleman and usually don’t carry the manufacturer’s warranty.  Again, this actually benefits the manufacturer because they don’t have any follow-on costs to deal with after the sale. 

    The only injured parties here are the dealers that have to sell at a higher cost to maintain a profit margin that keeps them in business.  They just can’t compete with the grey market pricing.  I rarely buy any electronics from retailers unless it’s on sale and can beat any prices I can find online, which is quite infrequent.  I also don’t like buying grey market goods simply because I never know if and when I may have to have something serviced in the future.  I also prefer my user manuals written in English, not to mention the labeling on the controls and connectors.  Obviously speakers aren’t as much of an issue in this department.  Still, I’d rather get an item from a licensed dealer for the extra peace of mind.  OTOH, I don’t have a problem buying used A/V gear if I know it’s top quality and the manufacturer is still in business.

    • I think that’s the motivation

      I think that’s the motivation (keeping dealers happy).  Personally I prefer to buy from a local authorized dealer (usually Abt) if I can get a reasonable price for whatever it is exactly because they offer a better level of service both pre and post sale.  From the dealers perspective “grey” market sales lower margin so they pressure OEMs to do anti-competitive market things like this instead of choosing to compete on the merits of their product (which is different from just the bare device).

    • And also keep in mind, that

      And also keep in mind, that unhappy dealers (especially for high end equipment) eventually does hurt the manufacturer.  

      In terms of exploiting currency differences, you would think in an age of $100+ per barrel of oil, shipping charges, especially for large bulky items like speakers, would hardly be worth the time and trouble.