http://www.the-digital-picture.com/canon-news/
I must be missing something here or perhaps I don't understand the idea behind MAP.
What on earth would incent a retailer to carry Canon gear if they have no control over the pricing of their inventory?
Canon's Minimum Advertising Price to go into effect Nov 1
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I must be missing something here or perhaps I don't understand the idea behind MAP.
What on earth would incent a retailer to carry Canon gear if they have no control over the pricing of their inventory?
Everyone does it. If you want to carry their gear (what camera store wouldn't want to carry cannon?) then you agree to their terms. Ever seen the new pair of Nike sneakers priced differently at different stores...nope. Generally it applies to a few items and sets a floor. Not sure if it applies to the electronic store fronts which is why you see deals pop up on eBay etc however I assume those agreements have been modified in the digital age to include those so my guess is there will not be any more stellar deals coming from authorized sellers, everything now will be grey market.
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BL said:
This is what Mercedes-Benz has been doing for decades to preserve 'Residual Values' (which in turn allow for new premium prices too). Ask any Merc dealer who strayed from this policy - they lost their franchise!
What you are missing is that this is a Manufacturers Recommended Selling Price (MRSP). All corporations spend money on R&D, Marketing, Advertising, Production (COSTS basically) so they wish to maximize their REVENUE - the best way to do that given a fixed amount of SUPPLY => fix PRICES. It is called control. It is also basic marketing theory - company sets the price not the customer (nor any wholesaler or distributor). This is marketing 101, never ever let the consumer dictate price to the manufacturer. Canon designs and produces the product, that gives them the right to insist on a minimum new price.
Preemptive note: before some naiive bright spark decides to respond with elementary (as in elementary school or high school) economics regarding SUPPLY & DEMAND, let me first say that there is no one magic equilibrium point where these are supposed to meet (there are in fact multiple equilibrium points based on a plethora of factors). Suffice it to say, Canon cannot determine or control 'Demand' (that depends on what consumers wish to spend and what they can afford to at any given time), but they can shape 'Supply'. Part of their supply strategy is predicated on an assumed selling price. Hence the control policy.
Postcript: if B&H or Adorama wish to sell for instance the new 6D for $999 (hypothetical illustration) then by Christmas Day they would no longer be a seller of any Canon products - Canon would refuse to supply them for undermining their products. Canon would be absolutely right to do so too. It is their prerogative.
If any of you disagree with this policy, you can invest a couple of billion dollars of your own money and compete with Canon, Nikon, Sony, Pentax etc.
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Well, this really sucks. I was just getting ready to buy a 135mm f/2.0L lens. B&H had it yesterday (10/30/12) for $879 with the rebate. Now WITH the rebate it is $989.
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curtisnull said:
Yeah, but if you buy it at the higher price, you will also be able to resell it at a higher price in the future (than if you'd bought it at the special discounted price) - or at least you will be unwilling to let it go too cheap, plus any potential buyer will have to buy off you or go to a store and pay the high new selling price. It is all relative.
The 35mm f/2L is a superb piece of glass that will always have a high resale value, so if you kept it for 2 years then sold it for $200 less than you paid for it - it has cost you $2 per week. Forget amortizing it over the medium term, think about it as an investment in a 'real asset'.
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Apple uses the same tactic. Look around. No matter where you buy - the Apple Store, Best Buy, Amazon...name the outlet...for any given Apple product, the price differences among any outlets you care to check will never be more than about $10 different in either direction.
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gbchriste said:
Absolutely. The new iPhone costs about $250 to $300 to manufacture, yet Apple Inc. sells it for double that. They sold 5 million iPhone 5's in the first weekend - that's $1.25 billion to $1.5 billion gross profit. Now do you think if they dropped their margin in half, they would've sold 10 million iPhone's the same weekend? Maybe they would have sold only 8 million units, thus reducing their profits to a $1 billion or less. It is just basic math.
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Not sure if Canon is changing their price for retailers too, otherwise they are not making a dime more.
For example, let's take 5D3. Assume Canon builds 5D3 for $1000, sells them to retailer for $2500 (totally pulled out from my a**, no idea what's the real price), and MSRP is $3500. Canon makes $1500 each, and retailer makes $1000 each, assuming they sell them for $3500.
If retailer sells the camera for $2800 (like we saw the 5D3 often at Ebay), Canon still makes the same $1500 each, just the retailer is making less profit.
So even if Canon forces everyone to sell at certain minimum price, Canon itself is not making a dime more unless they also change the price they sell to retailers.
Some effect might come from the fact that some people buy directly from Canon. That might increase if you cannot get cheaper price from any other shop, but that's impossible to estimate.
For example, let's take 5D3. Assume Canon builds 5D3 for $1000, sells them to retailer for $2500 (totally pulled out from my a**, no idea what's the real price), and MSRP is $3500. Canon makes $1500 each, and retailer makes $1000 each, assuming they sell them for $3500.
If retailer sells the camera for $2800 (like we saw the 5D3 often at Ebay), Canon still makes the same $1500 each, just the retailer is making less profit.
So even if Canon forces everyone to sell at certain minimum price, Canon itself is not making a dime more unless they also change the price they sell to retailers.
Some effect might come from the fact that some people buy directly from Canon. That might increase if you cannot get cheaper price from any other shop, but that's impossible to estimate.
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Sony has forced dealers to advertise full price for years, Nikon started last year, and Canon this year. In addition to that, the Supreme Court may rule that you cannot import a copyrighted item into the USA and resell it.
However, there are many sellers in the mean time that are not Canon Authorized resellers who will undercut prices, and combo deals may still abound.
Canon also has ongoing rebate deals, so prices will not immediately jump. If sales continue to drop, we will continue to see lower and lower prices, you can bank on that.
However, there are many sellers in the mean time that are not Canon Authorized resellers who will undercut prices, and combo deals may still abound.
Canon also has ongoing rebate deals, so prices will not immediately jump. If sales continue to drop, we will continue to see lower and lower prices, you can bank on that.
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From Wikipedia
On June 28, 2007, the Supreme Court overruled Dr. Miles, discussed below, holding that such vertical price restraints as Minimum Advertised Pricing are not per se unlawful but, rather, must be judged under the "rule of reason." Leegin Creative Leather Products, Inc. v. PSKS, Inc., Slip Op. No. 06–480 (Decided June 28, 2007).[4] This marked a dramatic shift on how attorneys and enforcement agencies address the legality of contractual minimum prices, and essentially allowed the reestablishment of resale price maintenance in the United States in most (but not all) commercial situations.
In Dr. Miles Medical Co. v. John D. Park and Sons, 220 U.S. 373 (1911), the United States Supreme Court affirmed a lower court's holding that a massive minimum resale price maintenance scheme was unreasonable and thus offended Section 1 of the Sherman Antitrust Act. The decision rested on the assertion that minimum resale price maintenance is indistinguishable in economic effect from naked horizontal price fixing by a cartel. Subsequent decisions characterized Dr Miles as holding that minimum resale price maintenance is unlawful per se - that is, without regard to its impact on the marketplace or consumers.
During the Great Depression in the 1930s, a large number of U.S. states began passing fair trade laws. These were intended to protect independent retailers from the price-cutting competition of large chain stores by authorizing resale price maintenance. Since these laws allowed vertical price fixing, they directly conflicted with the Sherman Antitrust Act, and Congress had to carve out a special exception for them with the Miller-Tydings Act of 1937. This special exception was expanded in 1952 by the McGuire Act (which overruled a 1951 Supreme Court decision that gave a narrower reading of the Miller-Tydings Act).
The fair trade laws became widely unpopular after World War II and so the Miller-Tydings Act and the McGuire Act were repealed by the Consumer Goods Pricing Act of 1975.
In 1968 the Supreme Court extended the per se rule against minimum resale price maintenance to maximum resale price maintenance, in Albrecht v. Herald Co., 390 U.S. 145 (1968). The Court opined that such contracts always limited the freedom of dealers to price as they wished. The Court also opined that the practice "may" channel distribution through a few large, efficient dealers, prevent dealers from offering essential services, and that the "maximum" price could instead become a minimum price.
In 1997, the Supreme Court overruled Albrecht, in State Oil v. Khan, 522 U.S. 3 (1997).
Several decades after Dr Miles, scholars began to question the assertion that minimum resale price maintenance, a vertical restraint, was the economic equivalent of a naked horizontal cartel. In 1960, Lester G. Telser, an economist at the University of Chicago, argued that manufacturers could employ minimum resale price maintenance as a tool to ensure that dealers engaged in the desired promotion of a manufacturer's product through local advertising, product demonstrations, and the like. Without such contractual restraints, Telser said, no frills distributors might "free ride" on the promotional efforts of full service distributors, thereby undermining the incentives of full service dealers to expend resources on promotion. Six years later, Robert Bork reiterated and expanded upon Telser's argument, contending that resale price maintenance was simply one form of contractual integration, analogous to complete vertical integration, that could overcome a failure in the market for distributional services. Bork also argued that non-price vertical restraints, such as exclusive territories, could achieve the same results.
In 1978, the U.S. Supreme Court held that non-price vertical restraints, such as vertically imposed exclusive territories, were to be analyzed under a fact-based "rule of reason." In so doing, the Court embraced the logic of Bork and Telser as applied to such restraints, opining that, in a "purely competitive situation," dealers might free ride on each other's promotional efforts.
In 1980, the U.S. Supreme Court held that the repeal of Miller-Tydings implied that the Sherman Act's complete ban of vertical price fixing was again effective, and that even the 21st Amendment could not shield California's liquor resale price maintenance regime from the reach of the Sherman Act. California Liquor Dealers v. Midcal Aluminum, 445 U.S. 97 (1980).
Thus, from the 1975 enactment of the Consumer Goods Pricing Act to the 2008 Leegin decision, resale price maintenance was again no longer legal in the United States.
On June 28, 2007, the Supreme Court overruled Dr. Miles, discussed below, holding that such vertical price restraints as Minimum Advertised Pricing are not per se unlawful but, rather, must be judged under the "rule of reason." Leegin Creative Leather Products, Inc. v. PSKS, Inc., Slip Op. No. 06–480 (Decided June 28, 2007).[4] This marked a dramatic shift on how attorneys and enforcement agencies address the legality of contractual minimum prices, and essentially allowed the reestablishment of resale price maintenance in the United States in most (but not all) commercial situations.
In Dr. Miles Medical Co. v. John D. Park and Sons, 220 U.S. 373 (1911), the United States Supreme Court affirmed a lower court's holding that a massive minimum resale price maintenance scheme was unreasonable and thus offended Section 1 of the Sherman Antitrust Act. The decision rested on the assertion that minimum resale price maintenance is indistinguishable in economic effect from naked horizontal price fixing by a cartel. Subsequent decisions characterized Dr Miles as holding that minimum resale price maintenance is unlawful per se - that is, without regard to its impact on the marketplace or consumers.
During the Great Depression in the 1930s, a large number of U.S. states began passing fair trade laws. These were intended to protect independent retailers from the price-cutting competition of large chain stores by authorizing resale price maintenance. Since these laws allowed vertical price fixing, they directly conflicted with the Sherman Antitrust Act, and Congress had to carve out a special exception for them with the Miller-Tydings Act of 1937. This special exception was expanded in 1952 by the McGuire Act (which overruled a 1951 Supreme Court decision that gave a narrower reading of the Miller-Tydings Act).
The fair trade laws became widely unpopular after World War II and so the Miller-Tydings Act and the McGuire Act were repealed by the Consumer Goods Pricing Act of 1975.
In 1968 the Supreme Court extended the per se rule against minimum resale price maintenance to maximum resale price maintenance, in Albrecht v. Herald Co., 390 U.S. 145 (1968). The Court opined that such contracts always limited the freedom of dealers to price as they wished. The Court also opined that the practice "may" channel distribution through a few large, efficient dealers, prevent dealers from offering essential services, and that the "maximum" price could instead become a minimum price.
In 1997, the Supreme Court overruled Albrecht, in State Oil v. Khan, 522 U.S. 3 (1997).
Several decades after Dr Miles, scholars began to question the assertion that minimum resale price maintenance, a vertical restraint, was the economic equivalent of a naked horizontal cartel. In 1960, Lester G. Telser, an economist at the University of Chicago, argued that manufacturers could employ minimum resale price maintenance as a tool to ensure that dealers engaged in the desired promotion of a manufacturer's product through local advertising, product demonstrations, and the like. Without such contractual restraints, Telser said, no frills distributors might "free ride" on the promotional efforts of full service distributors, thereby undermining the incentives of full service dealers to expend resources on promotion. Six years later, Robert Bork reiterated and expanded upon Telser's argument, contending that resale price maintenance was simply one form of contractual integration, analogous to complete vertical integration, that could overcome a failure in the market for distributional services. Bork also argued that non-price vertical restraints, such as exclusive territories, could achieve the same results.
In 1978, the U.S. Supreme Court held that non-price vertical restraints, such as vertically imposed exclusive territories, were to be analyzed under a fact-based "rule of reason." In so doing, the Court embraced the logic of Bork and Telser as applied to such restraints, opining that, in a "purely competitive situation," dealers might free ride on each other's promotional efforts.
In 1980, the U.S. Supreme Court held that the repeal of Miller-Tydings implied that the Sherman Act's complete ban of vertical price fixing was again effective, and that even the 21st Amendment could not shield California's liquor resale price maintenance regime from the reach of the Sherman Act. California Liquor Dealers v. Midcal Aluminum, 445 U.S. 97 (1980).
Thus, from the 1975 enactment of the Consumer Goods Pricing Act to the 2008 Leegin decision, resale price maintenance was again no longer legal in the United States.
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It's only making used items more tempting to buy because of the biggest gap between the prices. It's seriously ridiculous.. all the prices just went like 15% up.. 2900 without rebate for 70-200II .. WTH?
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Dylan777 said:
As far as I see it Canon does everything and more to protect mid- to high-range investments like the 5d3, that's why they spec'ed the 6d as it is. If an investment is safe as far as electronics goes, it's with Canon ff and L.
That being said the 5d3 is a special case because most people though that $3500 was mildly to ridiculously overpriced given the competition and the improvements over the 5d2, and I'm sure the price will continue to drop until it's at least on d800 level.
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I can see the logic behind Canon writing minimum pricing agreements into their supply contracts. If these did not exist, there would be a ‘race to the bottom’ which would negatively impact upon Canon’s product perception, but more seriously, would destroy Canon’s dealer network. Effectively, supply of Canon products would end up being concentrated in the hands of a few large retailers (like Amazon), who could offer the lowest prices by best exploiting their economies of scale. These few retailers would then be in a position to dictate terms to Canon. It is therefore hardly surprising that Canon is taking action to maintain the status quo.
I think that people are annoyed with this move because Canon have created the perception that their products are getting more expensive than Nikon’s, whilst at the same time offering little to no added benefits for their users. This is particularly true with the 5D MkIII, where Canon is seeking to price it against the D800e, when the market price was started to fall to closer to the D800. The strategy will only work (i.e. generate more revenue for Canon) if the demand for the 5D MkIII is sufficiently inelastic, that is the number of people who do not purchase a 5D MkIII at the higher price is more than offset by the additional revenue from those who do. I’m sure that Canon will be monitoring this closely and will react accordingly.
I think that people are annoyed with this move because Canon have created the perception that their products are getting more expensive than Nikon’s, whilst at the same time offering little to no added benefits for their users. This is particularly true with the 5D MkIII, where Canon is seeking to price it against the D800e, when the market price was started to fall to closer to the D800. The strategy will only work (i.e. generate more revenue for Canon) if the demand for the 5D MkIII is sufficiently inelastic, that is the number of people who do not purchase a 5D MkIII at the higher price is more than offset by the additional revenue from those who do. I’m sure that Canon will be monitoring this closely and will react accordingly.
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Canon is NOT making any more money from this move as they aren't changing their wholesale prices. This is a move to protect small businesses and brick and mortar stores. The internet stores can afford to cut margins on Canon gear much more than your local retailer because of their lower overhead and massive sales numbers.
Look at it this way...how many stores in your city actually carry (in stock) a 5diii or 1dx? The local stores will only order one for you because the inventory costs on the big ticket items is hard to justify if the margins are cut down by internet pricing. One advantage (only one for the consumer) of this move by Canon is that you might see more local retailers carrying high end gear.
Unfortunately for the B&M stores, there will still be an advantage to ordering online to avoid state sales tax (in most states).
For those crying supply/demand or free market this isn't any different than the government setting price floors on milk. The Government recognized that a free market would result in the obliteration of small farms in the US. Canon has realized (rightfully so) that internet sales were endangering every brick and mortar store sales.
For those who want to blame someone about this look away from Canon to the big box electronics stores. I suspect that it wasn't the small business mom and pop camera store that made this happen. It was most likely the larger retailers (best buy, wolf etc) that were putting the pressure on Canon to change the policies.
Look at it this way...how many stores in your city actually carry (in stock) a 5diii or 1dx? The local stores will only order one for you because the inventory costs on the big ticket items is hard to justify if the margins are cut down by internet pricing. One advantage (only one for the consumer) of this move by Canon is that you might see more local retailers carrying high end gear.
Unfortunately for the B&M stores, there will still be an advantage to ordering online to avoid state sales tax (in most states).
For those crying supply/demand or free market this isn't any different than the government setting price floors on milk. The Government recognized that a free market would result in the obliteration of small farms in the US. Canon has realized (rightfully so) that internet sales were endangering every brick and mortar store sales.
For those who want to blame someone about this look away from Canon to the big box electronics stores. I suspect that it wasn't the small business mom and pop camera store that made this happen. It was most likely the larger retailers (best buy, wolf etc) that were putting the pressure on Canon to change the policies.
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