HELP Electrocompaniet stole Christmas

This is simply Byzantine and Neanderthal. I recognize that some companies' management decides to price products differently in different markets. Their hope is that their pricing isn't transparent because customers dont travel that much, dont have friends in other places, or are too lazy to get competitive quotes on a product.

Companies have gone through GREAT efforts to make this happen. After all, why should the wealthy who can pay more, pay what the poor pays? Its all about segmenting customers and applying a pricing policy. Its like B-School 101. So, certain companies brand their products differently or distribute under different names to hide their pricing (alcohol companies, automotive companies, etc). Some forbid publicizing their prices, hoping that ignorance would be bliss (check out some camera gear in shutterbug sometime). Some use grey market warranties.

The essential element is to do anything a company can do to avoid price transparency. Basically, don't let a customer buy something for less than they are willing to pay for it by not telling them there is a lower price.

The biggest con artists, before the mid 1990s, was the airline industry. No one had a clue what the right price for a ticket would be. Basically, some clueless $10/hr telephone agent would use archaic text commands in a green screen terminal to call up prices based on the customer's request. The problem was, that airlines price every seat differently on every flight. They call it Yield Management. It gets so damn confusing to the customer, you end up in mini revolts about airlines not sharing accurate pricing.

Then the internet happened. Customers could log into expedia, etc. and see prices for all tickets on competing airlines, and change dates/times/flights to get a cheaper price. You know what happened?

The cheap, who always traveled cheap, traveled more because they realized just how much cheap travel there was. The business men, who routinely got screwed by the airlines by paying full fares, got HUGELY upset and starting booking cheap tickets. The airlines suddenly became awash in people wanting cheap travel, but their infrastructures cost too much for those low profit customers. And now, one by one, they are going into bankruptcy.

So, what does this have to do with EC? The company thinks it can swindle the customer by pricing items differently in different markets. Its probably right in some regards. However, the problem with goods vs. services is that goods have a lifetime...and they may end-up anywhere in the world after their initially sold. So, while EC practices 1980's pricing strategy games with its consumers (pissing them off more now than ever because we can SEE the european and asian pricing), the consumers eventually want to sell their products as they continue the road toward audio nirvana. And you know what, EC? These customers sell them to the highest bidders, just like you're doing on new products because now there are internet sites, like this and ebay, that makes pricing COMPLETELY transparent. And voila, the products end up in the USA.

So, what is good for the goose isn't good for the gander? EC can sell its products for whatever it likes to specific markets, but restrict free trade of the used products by its customers through grey market warranties and explicit policies to not upgrade so-called "grey market" units? Its no wonder that customers get angry.

You know what I like? I like companies that warranty and service their products because they know that the products and the accompanying services are their ONLY vehicle to make a customer relationship. Companies that dont understand this are going to go the way of Communism - extinct because the governments/companies forgot that their citizens/customers are their #1 objective. Customers should be anyone using one of your products. I could cite a dozen CRM books on this exact subject, but I'll let EC figure out how to manage their own customer relationships. Hint: customer acquisition is the first part, initial customer retention/cross-selling/servicing is the second, and 2ndary customer retention/cross-selling/servicing is the third. Your competition shouldn't be on PRICE, it should be on product differentiation and COGS.

I, too, have been shopping for certain components, a preamp and a CDP. I struggle with BAT because they wont support 2ndary customers with the initial warranty, so I'll probably go to a company like Thor or ARC that warranty products, not initial customers. As far as CDPs, EC wont get a nickel from me, either as a customer of new products or as a customer of old products. I want a relationship I can trust when buying a $5k CDP.

Ah, distribution. So-called "channel conflict." What I love is when companies forget that their business isn't about distribution, its about designing a kick arse product and maintaining its relationship with its consumers. I should only need to mention the automotive industry in this context as one of the best examples of a distribution channel hijacking a company's focus. Ford, GM, Honda, Nissan, etc. I've consulted with 2-3 myself. EVERY company I've personally done work for wants to CONTROL its sales and service experience because its distributors has been pillaging its customers with horrendous sales experiences and burning down the rest of the relationship in the service counter where service managers drive over 50% of a dealership's revenue. Such absolute BS has given rise to certain companies taking stronger hold of the experience: Saturn, Hummer, Lexus. I worked with one that FUNDAMENTALLY is going to change the way you buy their cars because they can't stand their dealer's practices.

Interestingly enough, I've also consulted for a consumer package goods company (like Johnson and Johnson and Proctor Gamble) that had the same issue. As it turns out, CPGs have zero relationship with their customers because the darn grocery stores stole it away from them. Its the grocery stores that collect all the customer buying behavior and control how the shelves are stocked with goods. So this company is trying to create a relationship directly with customer, working with large grocery chains to drive business into their stores, but maintaining relationships directly with the customers of certain products.

So, what has this to do with EC? Their industry has probably the craziest distribution chain in the world, besides that of honey. We all know how hard it is to find all the products you want in the same retail store, and that's partially due to the distribution chain's antiquated structure and partially due to the fact that stores simply can't stock every $10K amp, $5K CDP, and a range of inexpensive items for the normal hi-end consumer who is not yet an audiophile (in the $1-2k range of components). Its also partially due to the fact that many of our favorite esoteric companies can't manufacture enough products to sell to the mass market via Best Buy, etc. Bose, and say whatever you like about their products, has done a GREAT job at recognizing that customers come #1. They sell goods in all sorts of channels: retail stores, company outlets, online direct, online retail, direct via TV commercials and magazine articles, etc.

My point is that distribution isn't a revenue and CRM strategy, its a cost strategy. If you let your cost strategy drive your business, then you end up in the status quo. If you let your CRM strategy drive your business, everything suddenly changes. EC's priciple problem is that its European, and it thinks that distribution is a country-to-country thing while the EU has open trade and free borders. No passports are required to go anywhere. In a very small continent, it'll take you a couple of hours by train to get to 2-3 different countries. Customers routinely shop where the bargains are. So, EC tries this crazy anti-competive distribution scheme that keeps every country in its own box, pleasing its distributors, but screwing their customers.

I'd suggest that EC reorient their focus and figure out how their customers like to buy their products, rather than how their distributors would like customers to buy their products...