[Epic] The Article you asked for (LONG).

From: Kelvin <kx.henderson_at_...>
Date: Thu, 05 Jun 1997 10:58:46 +1000 (EST)

Well, enough people have asked, so here is the article that Michael sent the
Colonel and I (there were too many to post them privately, so here it is for
all). No offence to the Colonel or to Michael intended by posting this
article, but as Michael is off this list now, I hope he won't mind.

>>Here's the Inside Scoop I was talking about, all the following are either
>>quotes, or comments from other people, none are by me.
>>
>>OK, I dug up some old "official rumors" things and came across this jewel (or
>>rather... lump of coal). This is in the October 1996 "Inside Scoop" article.
>>
>>and I quote...
>>
>>"The vast majority of people who buy Citadel Miniatures do so to play Games
>>Workshop games. Every one of those games is designed not only to provide
>>players
>>with the most fun they can have for their table-top battlegaming dollar, but
>>also to sell more miniatures. It is a common misconception that Games Workshop
>>is a game company - we are not. What we are is a miniatures company. To
>>play our
>>games, a player needs to collect large armies of small metal men. They do not
>>need, nor can they really use two mummies. They need at least five to play the
>>game (if they want mummies at all).
>>
>>In Games Workshop games, a player needs to collect, convert, and paint dozens,
>>or even hundreds of figures to represent armies of shambling undead or vile
>>underhanded Skaven. This is a battle on a grand scale. Miniatures are core to
>>the success of our games. Not only a few miniatures, but hundreds.
>>
>>As you can imagine, armies are not made up of loose assortments of a few
>>individuals. They are formed from units of men. In Warhammer 40,000 these
>>units
>>range anywhere from three to forty (and more). In Warhammer the units are
>>usually much larger, consisting of a minimum of five troopers and having no
>>upper limit. In fact, the rules are designed to reward players for having
>>large
>>formations of troops. What all this translates into is lots of toy soldiers
>>being sold to lots of people who love our games."
>>
>>---
>>
>>
>> THE INSIDE SCOOP
>>
>> DISCOUNTING: THE BANE OF THE SUCCESSFUL RETAILER
>> by: Joe "no discount here" Sloboda
>>
>>We sales guys at Games Workshop fight a constant battle against the evil
>>that is
>>known as discounting. While the great majority of stores do not discount
>>(as a
>>policy), there are enough out there who do, so we find ourselves having to
>>maintain a constant vigil. Though it may seem like a simple enough
>>concept, it
>>is worth taking the time to define "discounting." A discount, for our
>>purposes,
>>is not a 10% off sale. A discount is not the act of giving a "freebie" to a
>>customer who has just purchased $200 worth of figures from you. Discounts are
>>evil things like "15% off everything all the time" or "all special orders are
>>30% off." Discounts are the surest way to destoy your business, aside from
>>having nothing to sell.
>>
>>You need to ask yourself, "Why am I discounting?" Most people come up with
>>one
>>of these reasons: One - As a service to my customers, Two - To get more
>>business, Three - To compete with another store, or Four -To get rid of
>>stuff I
>>don't want anymore.
>>
>>The last is the easiest to deal with. If you are trying to get rid of a
>>product
>>forever, go ahead. You have already accepted that the product is long dead.
>>All the other reasons are dealt with below.
>>
>> TO GET MORE BUSINESS
>>
>>While offering a discount may seem like a great way to encourage business at
>>first, it is in fact, nothing of the sort. I know many of you are sitting
>>there
>>now saying things like "He's wrong! My sales have doubled after offering
>>only a
>>20% discount! I'm doing much better." I know charts are boring and tedious,
>>but look at the one below. <chart omitted> After a 30% discount, even the
>>most
>>fastidious retailer who assumes only a 15% overhead cost (which is very
>>difficult to achieve - ask your accountant) in a retail store, would have to
>>sell almost two and a half times as much product to maintain profitability.
>> If
>>the retailer were an average businessman and had a 25% overhead cost, then he
>>would need to sell almost six times as much product. Go ahead, discount
>>20% to
>>double your sales. To be sure, you will get more business. Your profit,
>>however, will be much less. In other words, you're working harder for less.
>>
>> AS A SERVICE TO MY CUSTOMERS OR TO
>> COMPETE WITH ANOTHER STORE
>>
>>The last section dealt with cold hard cash. Aside from that, there are many
>>other reasons not to discount (Games Workshop products, or any other for that
>>matter). If you are trying to offer your customers a reason to shop with you,
>>discounts are easiest way out. You are not actually servicing the customer.
>>When considering whether or not to buy something, price is not all important.
>>In order of importance are the following factors.
>>
>> 1) Do you have the product?
>> 2) Is your service good?
>> 3) Can you create the need for the product?
>> 4) Is the product good?
>> 5) How much is it?
>>
>>Think about it, given one of the following two choices. Where will you shop?
>>
>>CHOICE ONE: Electronics Software Shop. They have everything in stock all the
>>time. The store is bright and accessible, with a good layout and location.
>> The
>>sales people are well dressed, friendly, and knowledgeable, but not pushy.
>>They
>>carry the best software titles in the industry. The only time you ever
>>bought a
>>defective piece of software there, they took it back and replaced it (from the
>>stock they have there - no wait for what you already bought!). They sell at
>>retail.
>>
>>CHOICE TWO: Jed's Program Hut. Jed special orders most things. You once had
>>to wait three weeks to get a game from him. Jed's mood changes daily.
>>When you
>>ask Jed for the piece of software you are looking for he says "Why would you
>>want that? Well, it's your money!" Jed offers you 20% off, but you never
>>know
>>what to expect, except that everything about Jed's shop is unprofessional.
>>
>>If you shop with Jed you need help.
>>
>>What all this means is that if you are using price as the way to rise above
>>your
>>competition, you are short-selling yourself. There are so many other ways to
>>compete. You can offer service to your customers that they will appreciate
>>more
>>than a discount. Don't blow your margin because it seems like the easiest way
>>to win. Discounting is like embracing the dark side of the force. Like Yoda
>>said (sort of), "It's the quick and easy way to strong sales, but it will
>>eventually consume you."
>>
>>Even beyond these issues are concepts like perceived value. When you sell
>>something below its retail price you are telling your customer "It's not worth
>>it!"
>>
>> DISCOUNTING IS ALSO A TRAP
>>
>>Let's say that some other retailer opens a store near you and sells what you
>>sell. He's decided to go for your customers rather than pursue the
>>thousands of
>>high school kids that live in the area, so he discounts 20%. You decide to
>>beat
>>his discount and drive him out of business. You offer 25% off! Well, guess
>>what? Because neither you nor the competitor are trying to out service each
>>other (relying on store discount alone), customers shop with you. He goes
>>under
>>six months later. Yay for you! Now you want to go back to retail. Oops.
>>The
>>customers are mad. They leave. You have no money to advertise to get new
>>customers or to spend on new displays in the store (too attract people)
>>because
>>you have thrown your profits out the window for six months. You are going to
>>join your competitor in the food lines pretty quickly. Does this sound harsh?
>>It should. We have dealt with thousands of retailers over the years, here and
>>in other countries. If there's one thing that indicates to us that we are
>>going
>>to lose an account, it's the fact that his sales jump dramatically. When we
>>inquire why, he tells us his is discounting. Even selling triple the
>>amount of
>>stuff is not enough in most cases. We get triple sales for six months,
>>then the
>>store is gone, and we get nothing. This is the bottom line. We do not
>>want you
>>to discount because we want you to keep your customers. We know we will do
>>better in the long run if you are still there selling our products. Don't go
>>away. Don't discount.
>>
>>Ok, so you've decided not to discount. Great! A few questions remain
>>unanswered. How do you stop discounting if you already are? What services
>>can
>>you provide customers to keep them buying? How can Games Workshop help you
>>sell
>>at retail? These subjects will be addressed in a future column of the Inside
>>Scoop.

-Kelvin.....

===================================================
      "Boy, Elizabethan pronouns still send a
             tingle up the old spine!"
                  -The Tick
===================================================
         email: kx.henderson_at_...
Received on Thu Jan 01 1970 - 00:00:00 UTC