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04-18-2012, 06:26 AM   #1
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Lens prices and our channel strategy in the U.S. - Ned Responses

Lens prices and our channel strategy in the U.S. - Ned's Photo Journal

"I realize that many of you have expressed concern over our new unilateral pricing policy and specifically the lens pricing. However, the new policy we introduced has both short and longer term implications for our plans in the U.S. Recognizing that there is frustration and misinformation being discussed on various forums, I’d like to address a few of your concerns.

To clarify, we have not "raised" the prices on any lenses. The last increase we announced was over a year ago and applied to the DA* star lenses (such as the 16-50mm and the 50-135mm) as well as the FA50mm f/1.4.

One user comment I read summarized the situation quite well by saying, “I think you are seriously misunderstanding the whole conversation. Pentax has not raised prices. They have required authorized dealers to stick to MSRP [Manufacturer’s Suggested Retail Price] or some percentage of it (we do not know the exact terms). Pentax is attempting to police their sales channel just as many other manufacturers do. Any additional margin will go to the dealers not Pentax.”

The comment above is pretty accurate in his assessment of the retail distribution channels, not only for Pentax, but for every manufacturer in the photo industry. For our growth as a company, and the health of the photo retail marketplace, it is necessary to set guidelines for retail pricing to protect the integrity of the marketplace, and the value of a manufacturer’s products."

read complete article on the link....

See also:

Ned Bunnell Comments on Lens Price Increase

04-18-2012, 06:44 AM   #2
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He didn't mention increasing value of the products to make them worth the new prices. They may not be getting anymore money, but now their products are too expensive to compete, especially with the pathetic warranties. They should also more carefully consider their MSRP on some of the lenses. I guess we will speak with our wallets and force the adjustment. Maybe they only want to sell lenses during rebate periods? Getting into b&m stores won't help if everyone compares the cameras and goes canikony for the better third party support.
04-18-2012, 06:46 AM   #3
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So basically he's telling us to deal with it. I might not wait for September to switch systems after all...
04-18-2012, 06:53 AM   #4
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QuoteOriginally posted by kenafein Quote
He didn't mention increasing value of the products to make them worth the new prices.
The point is, they're not new prices. This measure is just about preventing the U.S. from trying to undercut the established value of the products in the rest of the world. You're completely entitled to feel that Pentax warranties are too short, or any other criticism you may have for them, but I think it would be more effective to protest those as a separate issue.

I've wondered myself about the U.S. warranty periods offered. In Canada we get 2 years by default, and it's the same in some other countries. Perhaps Pentax just goes with whatever the regulatory minimum is per country?

04-18-2012, 06:54 AM - 1 Like   #5
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QuoteQuote:
So basically he's telling us to deal with it. I might not wait for September to switch systems after all...
What brand will you switch to - and why?

Hmmm... with people jumping ship, it might soon be a good time to start stocking up on used gear!
04-18-2012, 06:58 AM - 2 Likes   #6
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My theory on the prices: Pentax intend to replace most of these lenses over coming quarters (say 12 quarters or three years). At these price points the replacement lenses will have better waranties, batter AF motors - whatever faults we think the current lenses have. In so doing they could raise the wholesale prices (narrow the marging) and justify the retail price - so they're establihing their "Price Bands" now and will correct the "Value Bands" going forward.

Of course, many of you will argue they should have kept the prices as they were and raised prices when introducing new, improved lenses. Perhaps - but IMHO that would just extended the "angst" period for years instead of weeks.

Just a thought. And Ricoh does have a plan.

Last edited by monochrome; 04-18-2012 at 07:12 AM.
04-18-2012, 07:08 AM   #7
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I must admit I don't really get it. I realize that for some people it is important to be able to touch and see the items you are buying, but generally the traditional brick&mortar stores seem to be dying. I have not been inside a camera store in 25 years, and I live in the greater Chicago area. Of course I haven't been inside a Best Buy for years as well, despite having one just a few miles away. I buy laptops, computers, TVs, projectors, and pretty much everything else electronic online. Even the Costco that we are memebers of does not usually attract me, even though I probably could pick up items at roughly the same price as what I pay online. I personally bought into Pentax due to a past history with their film cameras, and due to online reviews and what appears at the time to be a good value/qualify - I never saw the camera or the lenses I bought in person.

My point is that it seem Pentax is investing in a channel that will be hard to penetrate (how many of these dealers will carry anything that resembles a full line of lenses anyway), and is likely to deteriote as a whole over the next decade. And Pentax seem to do this be tying the hands of the online market place in terms of price. Who knows - maybe it will pan out in total... I kinda doubt it....
04-18-2012, 07:11 AM   #8
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It's seems useless to have a plan when the current situation is a substantial increase in price without any added value. From what he said, Pentax doesn't benefit and neither does an existing user except for potentially allowing them more access to hold a camera before buying it.

I think we can assume his hint meant getting the cameras into Best Buy retail stores. I'd never personally buy a camera from there, but it will at least show the sheep that Pentax exists. That's an expensive proposition for the rest of us.

Eventually it might work well for them. The big negative for us is that we are paying middlemen more for the same thing.

04-18-2012, 07:13 AM   #9
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QuoteOriginally posted by Philoslothical Quote
The point is, they're not new prices. This measure is just about preventing the U.S. from trying to undercut the established value of the products in the rest of the world. You're completely entitled to feel that Pentax warranties are too short, or any other criticism you may have for them, but I think it would be more effective to protest those as a separate issue.

I've wondered myself about the U.S. warranty periods offered. In Canada we get 2 years by default, and it's the same in some other countries. Perhaps Pentax just goes with whatever the regulatory minimum is per country?
I acknowledged that Pentax isn't getting anymore money, but now that the end user is paying so much more, value needs to be addressed ;or I don't see them attracting new users to the brand. Look at Hyundai. They had to offer better warranties and service to establish themselves as a trusted brand. Pentax needs to take some lumps to establish the brand in the US and elsewhere. If they can't do it with prices, then by some other means. A 10 year limited warranty would be a good start. How many lenses really have problems in that time period?
04-18-2012, 07:13 AM   #10
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QuoteOriginally posted by sjwaldron Quote
I think we can assume his hint meant getting the cameras into Best Buy retail stores
Best Buy is dying before our eyes. Maybe he means Ritz/Wolf.
04-18-2012, 07:15 AM   #11
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Well, Ned's late, but he did offer us something substantive, although not what we'd like to read.

Ricoh has a plan, but so far their implementation of it has sucked for users.
04-18-2012, 07:16 AM   #12
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QuoteQuote:
We realize the need for Pentax to better monitor prices across our distribution channels will likely result in higher lens costs to you. Therefore, once we’ve established this program, we will consider running lens rebate promotions in the future. We tested this program successfully several years ago and these type of rebates offer a good value to consumers and increased traffic to our dealers.


No, it's not a "deal with it" - they agree that the lens costs are higher to us and may try the lens rebate promotion (similar to how the k-5 right now is $1199 instead of $1499).
04-18-2012, 07:19 AM   #13
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QuoteOriginally posted by monochrome Quote
Best Buy is dying before our eyes. Maybe he means Ritz/Wolf.
Ritz/Wolfe makes more sense to get full line represented

BB would end up floorlining the KR and K-o1 with a couple of kit lenses tops
the rest would just be listed on the website
04-18-2012, 07:24 AM   #14
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QuoteOriginally posted by Philoslothical Quote
The point is, they're not new prices. This measure is just about preventing the U.S. from trying to undercut the established value of the products in the rest of the world. You're completely entitled to feel that Pentax warranties are too short, or any other criticism you may have for them, but I think it would be more effective to protest those as a separate issue.
Yes, they are new prices. He's playing semantic games. A manufacturer can set MSRP at any level they like. What counts is how many hard-earned dollars (euros, etc.) the customer must part with to buy the product.

When PopPhoto reviews a lens or camera, they never quote MSRP. They always show the "street" price, because that's the only number that counts. To the customer that IS the price.

Personally, I don't understand this strategy. If the wholesale price has not increased, why should Pentax really care what the retail price is? If the retailer wants to accept a smaller margin, then so be it.

Setting prices is a complicated process. Not only must one consider the cost of manufacturing and distribution, but many other factors. In business school, they have entire classes on how to set prices to maximize profit. If you set the price too low, you'll sell a lot, but margins (and thus total profit) will be small. Set them too high and margins are great, but you will sell less product and may make less total profit than if you sold at a lower price. That is the tricky balance that they must strike.

If, by forcing retailers to double their per-unit profit, it cuts into sales by 60 percent, the retailer makes less total profit and Pentax makes a LOT less. If sales drop by less than 50 percent, then the retailer makes more. Only the customer gets screwed.

If Ned had said that, now that Pentax is no longer owned by Hoya, they had to pay a lot more to Hoya for lens blanks, or if he said that the dollar to yen exchange rate was unfavorable, I could understand it. But if wholesale prices don't go up, and sales go down, I don't see how Pentax benefits from this.

Many customers like to "shop around" to get the best price on items they buy. To me, this is a sound practice, but Pentax has just made it impossible. If all retailers MUST sell at MSRP, then shopping around is pointless.
04-18-2012, 07:27 AM   #15
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I posted this as the comment on that blog entry. Don't think it will get approved though...

QuoteQuote:
I did not follow any of the discussions on the matter, however I have plenty of Pentax gear...
It looks like there are two sides, which do not speak same language - Pentax on one side, which does not see any price increase (of course! there is MSRP for that) and consumer on the other, who will see general price increase.
Is it good or bad? Don't know. But what I find bad is focusing on physical retailer store distribution... Yes, I believe, there are people asking for this, but in this day and age it sounds too conservative. Cutting of some discounted online sales will turn off younger generation to other brands. And when retail prices get more to the level of other top level brands, the comparison might not be on the Pentax's side, unfortunately. I'm using K-mount equipment for all my life, but seeing what other brads doing, I think this price increase might be very good for me - I should be able to fetch bigger chunk of gold for all the glass I can sell... and move elsewhere, if I do not see clear direction from Pentax soon...
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