On 18 Feb 2002, Mike Jarvis wrote: > What about the case of the previously mentioned Levis? If their > production costs dropped to 0, do you think the price would drop? > > How about sodas? I doubt production *could* get cheaper, yet neither > Coke or Pepsi ever drop prices. > > The entire system is predicated on point 2) (someone else will decrease > *their* price and reap the rewards) and the public buying the best > product for the best price. They don't. Added price adds perceived > value (it costs more, it must be better). If the world worked as it does > in textbooks, you would be absolutly correct. And no, I don't have an > answer or a better system.
Maybe you should change where you shop. Even if coke don't change their price, the supermarkets are willing to loss-lead on that sort of thing. The RRP might stay the same, but I rarely run out of bottles before it's 2-for-1 or some other vaguely competitive offer on coke again. Which is exactly the problem levi had with tescos(?) Levis complained that by selling their product cheap, it lessened their brand image and value. It worked for them, but not for most commodities, and not for things like perfume and alcohol. So maybe levi are the bad boys, but it's not indicative of the state of consumer brands in general. The manufacturers have enough capacity to deep-discount when someone places a huge order, the stores themselves are invariably in the position to cut away a large amount of their share, by efficient purchasing and distribution networks cutting down their overheads. And if the shops didn't do this, it would be them at fault, as a large proportion of the RRP is their share for all of their admin costs. the hatter
