[glanglois]

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So you joined, made a post, then a long impassioned post to tell us how  upset you are at yourself that you left Pentax a month too soon?

* I've hardly left Pentax. I currently own 18 35mm slrs, a 645 medium format camera, two Pentax dslrs and enough Pentax glass that if melted down could glaze a cathedral. The market figures are crazy, however. Canon has a market capitalization of $55 billion. I don't know how large Nikon itself is, but it's part of Mitsubishi. Pentax was just sold for $125 million. Talk about David and Goliath! The only bright spot is that Ricoh has a $13 billion enterpise value and is owned (55%) by Hitachi. Ricoh, however, has a debt load larger than its market cap and too many employees. Its stock is down 20% in the last year. Buying a Nikon is just hedging. I might add that, as much as I love their equipment, Pentax has a 1.5% global share of the digital camera market.

I haven't had time to look into your other points but I do want to update some of your data.

Nikon are projecting sales of about 900B JPY or USD $11B for the FY ended March 30. They have not published final numbers yet.

It is part of the Mitsubishi keiretsu but that does not necessarily involve significant ownership interest by any or all companies in that group. In the typical arrangement of interlocking share ownership, it seems that, among the top ten shareholders, the five Mitsubishi member companies own only 13-14% of Nikon in total. In comparison, two US banks (JPMorgan Chase and State Street Bank and Trust) own just over 11%.

Please see: Nikon | Investor Relations | Stock Information

Ricoh ownership, per Wikipedia, is about 55% RIKEN and 45% Hitachi. But Ricoh's Web site page on shareholder info shows neither company in the top ten shareholders, although there are two major shareholders that are part of the Mitsubishi keiretsu and have a similar top ten position in Nikon.

As always, Japanese business is interesting (and sometimes confusing) to Westerners.

[Kunzite]

What I said is that shops that might have carried a few Pentax products a year ago are more likely to not carry them now....any smart Mom & Pop knows that if you weren't selling a DA* 50-135 at $800....you are not more likely to sell it at $1600. Profit does not matter if you don't have sales.....and price increases only increase sales in the minds of those living in some sort of fantasy land. Creating demand should be at the forefront of Richo's plan, not alienating it's base users....which is about all it has left.
A good marketing plan might incorporate the use of Pentax core users, the loyal, the long time users. I can imagine several ways to do this, but none of them include raising prices.
Regards!

They might do it, if only now they can get a decent margin on Pentax products (instead of being asked the impossible task to have the same razor thin margins as the online retailers). That's what UPP does.
Prices are most easily to adjust - within UPP, and I don't think Pentax Imaging (nor Pentax Ricoh Imaging) would be happy with high priced lenses that wouldn't sell. The only thing that you can do is: don't buy if you don't like the price (but if e.g. they'll have a rebate or a price drop that will make you think it's worth it...).

[eddie1960]

They might do it, if only now they can get a decent margin on Pentax products (instead of being asked the impossible task to have the same razor thin margins as the online retailers). That's what UPP does.
Prices are most easily to adjust - within UPP, and I don't think Pentax Imaging (nor Pentax Ricoh Imaging) would be happy with high priced lenses that wouldn't sell. The only thing that you can do is: don't buy if you don't like the price (but if e.g. they'll have a rebate or a price drop that will make you think it's worth it...).

this is the point many miss. sure there were a few indies carrying it at the B&M level, but many dropped out for a few resaons low margins due to online discounting getting out of conmtrol, minimum buys that meant buying a year or more supply upfront thhat they would themn make low margin on....
this addresses the issue, and likely upp will adjust based on sales and be spurred by aggressive rebate programs - (that if they are smart will be instant at POS)

[Rondec]

What I said is that shops that might have carried a few Pentax products a year ago are more likely to not carry them now....any smart Mom & Pop knows that if you weren't selling a DA* 50-135 at $800....you are not more likely to sell it at $1600. Profit does not matter if you don't have sales.....and price increases only increase sales in the minds of those living in some sort of fantasy land. Creating demand should be at the forefront of Richo's plan, not alienating it's base users....which is about all it has left.
A good marketing plan might incorporate the use of Pentax core users, the loyal, the long time users. I can imagine several ways to do this, but none of them include raising prices.
Regards!

Well, I think the prices will stabilize at somewhere in between, but as a dealer would be a lot more likely to let a 50-135 sit on your shelf if you were going to make 250 or 300 dollars on it, than if you knew that you would make only 15 or 20 dollars.

High end lenses are low volume items in general. This is true for Canon and Nikon too. They end up being high dollar items. A 70-200 f2.8 lens cost 2000 dollars. It doesn't cost that much to make, but there just has to be enough cut for manufacturer and dealer as well.

The issues for Pentax are two-fold (a) poor user base. You build this by getting your products into stores and by having products that people want. I believe that Ricoh is in the process of addressing this and that this will continue to improve over time. (b) having stand out products. This is where a company like Olympus has managed to do well, by not selling directly against Canon/Nikon/Sony, but by making products that are unusual. Maybe under Ricoh, Pentax can make lenses/camera bodies that are better than the big two with regard to focus speed, tracking, etc. but I would wager that the best they can do is to match them. In that situation, you have to be different and get people to want what you are selling. This will end up meaning a focus on size of cameras, style of cameras (to the irritation of long term Pentax users), but if it attracts people in the long run to the brand, I am more than fine with it.

[DeadJohn]

The trouble with this logic is that the 2 biggest Pentax dealers in the U.S.A. are arguably Adorama and B&H. This strategy actually penalizes them.

I agree that Pentax seems to be penalizing those 2 dealers, but their (Adorama and B&H) overall sales will be unimpacted. Those 2 stores carry all of Pentax' competitors. If sales of one brand got down then sales over other brands trend the other way as people change brands. Customers who shop for cameras in the local B&M are not Adorama and B&H's customer base.

[Blue]

I agree that Pentax seems to be penalizing those 2 dealers, but their (Adorama and B&H) overall sales will be unimpacted. Those 2 stores carry all of Pentax' competitors. If sales of one brand got down then sales over other brands trend the other way as people change brands. Customers who shop for cameras in the local B&M are not Adorama and B&H's customer base.

I see you are in N.Y. so that statement highlighted makes sense to you. That isn't true for the majority of us. For example, my sole indie B&M in a 3 hour drive radius barely ever carried any Pentax and now they have refocused their business to digital printing and C41 processing for 135 and 120/220. They also specialize in Sony now. They dropped Nikon and Canon over 2 years ago because of turn around time on sales. B&M can't have a lot of expensive gear sitting on shelves with the risk of obsolescence.

[jmg257]

What I said is that shops that might have carried a few Pentax products a year ago are more likely to not carry them now....any smart Mom & Pop knows that if you weren't selling a DA* 50-135 at $800....you are not more likely to sell it at $1600. Profit does not matter if you don't have sales.....

I thought the notion was that there weren't any Mom & Pop stores selling a DA* for $800...they NEEDED to get $1600. But who would pay Mom $1600 when they can pay Amazon $800?

Coeur Camera in St Louis was like that recently - they had a decent selection of Pentax gear in shop (not the top lenses) - but prices on most of it was unreasonable if one is simply aware of the much cheaper online prices. Now the online prices are similiar, so IF you were gonna buy Pentax, and IF you have a local shop like Coeur, why not just get it there where you can see the stuff and try it out? I would.

Of course the arguments against this are: 1) I have NO local stores; 2) my local store is B&H; 3) I prefer buying online. 4)Pentax is not (no longer) a good value. They all have one thing in common - you will now have to pay more. So bottom line - is Pentax gear worth paying more then you were? (Pentax seems to think so) How much more? {Or how much does Pentax have to improve perceived QA and warranty coverage etc to make them worth more?}

...price increases only increase sales in the minds of those living in some sort of fantasy land. Creating demand should be at the forefront of Richo's plan, not alienating it's base users....which is about all it has left.

I also think the idea of making prices comparative across the board is to increase Pentax presence in places like Target and the willingness of existing camera shops to handle them. Hopefully THAT WILL increase Pentax sales, and Pentax demand from new customers. Prices are already adjusting on some lenses, and IMO in a little while not so many will care so much what they were before April. Instead, once again, shoppers will need to ask if Pentax is worth the price?


One thing to consider is re: casual photogs & new sales - unless you happen to stumble across Pentax while checking what to buy online (as I did re:the K-5 - several days into my research..luckily the nex7 was delayed), you would have no idea they were even still in business. Now there is (supposedly) a bigger chance of Pentax being right there in stores (and circulars) beside Canon & Nikon and Sony...and not just regards to DSLRs. Maybe more people will consider them?

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Last edited by jmg257; 04-25-2012 at 12:12 PM.

[Kunzite]

I thought the notion was that there weren't any Mom & Pop stores selling a DA* for $800...they NEEDED to get $1600.

While I believe UPP makes sense, I can't agree with this; I really don't think a B&M store must get half the money in order to make a profit.

Well pointed out, much better brand visibility = very, very important. We all know about Pentax, how about others? (just marketing is not enough, unless they'll switch to teleshopping )

[eddie1960]

I thought the notion was that there weren't any Mom & Pop stores selling a DA* for $800...they NEEDED to get $1600. But who would pay Mom $1600 when they can pay Amazon $800?

Coeur Camera in St Louis was like that recently - they had a decent selection of Pentax gear in shop (not the top lenses) - but prices on most of it was unreasonable if one is simply aware of the much cheaper online prices. Now the online prices are similiar, so IF you were gonna buy Pentax, and IF you have a local shop like Coeur, why not just get it there where you can see the stuff and try it out? I would.

Of course the arguments against this are: 1) I have NO local stores; 2) my local store is B&H; 3) I prefer buying online. 4)Pentax is not (no longer) a good value. They all have one thing in common - you will now have to pay more. So bottom line - is Pentax gear worth paying more then you were? (Pentax seems to think so) How much more? {Or how much does Pentax have to improve perceived QA and warranty coverage etc to make them worth more?}



I also think the idea of making prices comparative across the board is to increase Pentax presence in places like Target and the willingness of existing camera shops to handle them. Hopefully THAT WILL increase Pentax sales, and Pentax demand from new customers. Prices are already adjusting on some lenses, and IMO in a little while not so many will care so much what they were before April. Instead, once again, shoppers will need to ask if Pentax is worth the price?


One thing to consider is re: casual photogs & new sales - unless you happen to stumble across Pentax while checking what to buy online (as I did re:the K-5 - several days into my research), you would have no idea they were even still business. Now there is (supposedly) a bigger chance of Pentax being right there in stores (and circulars) beside Canon & Nikon and Sony...and not just regards to DSLRs. Maybe more people will consider them?

And this is pretty much a good reason for the action on their part. While we are a loyal bunch the existing user base is smaller than what Canon is bleeding to Nikon right now, and the growth the company wants will not come from us. Not even close. If they manage the growth they desire even lost users won't make a huge difference.
The only way they are going to grow to at least the Sony level is to get in new users faces and get the name known. All the other rumours floating around point to this being the mid term (ie 3-4 year goal) and will require some pretty aggressive moves in the next year.
For me if this is what it takes I'm fine with it. If it means I buy a Sigma 30 rather than a 31LTD so be it.

[jmg257]

While I believe UPP makes sense, I can't agree with this; I really don't think a B&M store must get half the money in order to make a profit.
)

I do agree - I have no idea what the mark-up has to be!

{I am lucky enough to have a couple small guitar shops nearby that sell well below MAP...they seem to do ok!}

[eddie1960]

I do agree - I have no idea what the mark-up has to be!

{I am lucky enough to have a couple small guitar shops nearby that sell well below MAP...they seem to do ok!}

Odds are once things settle and there is a dealer network established local guys will start negotiating based on value adds (ie are you buying more than a lens - say a kit or filters and other accessories? then they will work the deal into the price while still reflecting UPP on the lens) You won't see crazy prices like before though, but using a filter and other accessories as a close tool even during rebate time frames would not be unusual. previously no way they had the margin to do that

[DeadJohn]

Odds are once things settle and there is a dealer network established local guys will start negotiating based on value adds (ie are you buying more than a lens - say a kit or filters and other accessories? then they will work the deal into the price while still reflecting UPP on the lens) You won't see crazy prices like before though, but using a filter and other accessories as a close tool even during rebate time frames would not be unusual. previously no way they had the margin to do that

I hope it doesn't end up that way. Buying Pentax will be like buying a car We'll be haggling over 3rd party warranties and other upgrades.

[glanglois]

I agree that Pentax seems to be penalizing those 2 dealers, but their (Adorama and B&H) overall sales will be unimpacted. Those 2 stores carry all of Pentax' competitors. If sales of one brand got down then sales over other brands trend the other way as people change brands. Customers who shop for cameras in the local B&M are not Adorama and B&H's customer base.

How much will this hurt B&H et al.? They will have reduced unit sales for Pentax but a much higher margin per unit, from what we can tell from here. So will total earnings from Pentax go down, up, or stay the same? Unless someone here knows the current Pentax USA wholesale pricing, and a solid projection of unit sales, we have little but speculation. (Even if we were to know the Pentax dealer pricing, we have no idea how many units will be sold under the new arrangement. No one knows. It hasn't happened yet. That's why business is based on managing risk.)

I will note, though, that I don't think Pentax (USA or Japan) has any inte3rest in killing B&H/Adorama's interest in Pentax. It's clear to everyone that local B&M, to the extent they exist, can never garner the sales that the big Internet dealers have been making.

[monochrome]

We'll be haggling over 3rd party warranties and other upgrades.

State the "terms" of your purchase beforehand, as I do when I haggle over a car.

Here's the way this deal is going to work:

• I want this car - no add-ons, no removals. I want THIS car!! (either from the lot or options sheet)
• You give me the Trade-In value of my car before we start. I keep my keys - here is the Valet key.
• You get ONE shot
• Give me the best price you and your sales manager are willing to sell me THIS CAR for
  • Write a sales agreement sheet with the Trade-In, all charges and the final price on the sheet
• I will write you a check / finance exactly the final price you bring back, and I will not apy any additional money to anyone. Final price, all taxes, all chanrges, I write a check / finance that amount and drive away with the car
  • You have one chance to talk to the sales manager
  • You will give me the total, complete, final price for THIS CAR!!
  • If there is a single instance of an offer to add anything, I walk out
  • If the final sales contract amount does not match the final sales agreement sheet, I walk out the door
• Can you do that?

I have found in my entire city ONE Honda dealer and ONE Subaru dealer that will sell me a car that way. I have walked out of dealerships during the intial discussion. I have walked out of dealerships during the price presentation (too high - no more chances, we are done). I have walked out of dealerships during the final paperwork with the Finance Manager. That time I had to find my car on the Used lot and thtreaten to call the police to get my car and Valet key back. When I called the (Auto Company) Zone Manager to say I would never buy another (Auto Company) product again he told me, "We won't miss you."

I have driven Hondas and Subarus since 1999.

[monochrome]

How much will this hurt B&H et al.? They will have reduced unit sales for Pentax but a much higher margin per unit, from what we can tell from here. So will total earnings from Pentax go down, up, or stay the same? Unless someone here knows the current Pentax USA wholesale pricing, and a solid projection of unit sales, we have little but speculation. (Even if we were to know the Pentax dealer pricing, we have no idea how many units will be sold under the new arrangement. No one knows. It hasn't happened yet. That's why business is based on managing risk.)

I will note, though, that I don't think Pentax (USA or Japan) has any inte3rest in killing B&H/Adorama's interest in Pentax. It's clear to everyone that local B&M, to the extent they exist, can never garner the sales that the big Internet dealers have been making.

You are thinking static market, like the Congressional Budget Office does - a classic projection error.

If Pentax increases market share B&H will increase unit sales and margins.