Kogan needs to put more in than he is taking out
Have you noticed how commoditisation creeps up into the industry like a virus that can’t be shaken?
I thought about this last Friday evening when I watched Ruslan Kogan promoting his ‘one-size-fits-all’ range of home branded TVs on a Today Tonight segment badged ‘TV wars bringing down prices’.
Kogan with the wisdom of 27 years, gleefully explained that he just trips off to the Asian factories where Sony, Panasonic, Samsung and other established brands make their TVs. He then puts in his order for a Kogan range and then sells them locally for a fraction of the retail price.
He explained: “We’re cutting out all the middlemen so traditionally products go from agents to importers, wholesalers, retailers they all want their cut,” he said.
You and I know that it’s too good to be true, or as my Irish father-in-law used to advise, “If it where that easy everybody would be doing it”. But the trouble is the consumer (or million plus viewers watching) believe Kogan, because frustratingly, he actually sounded plausible.
But what Kogan, TDT or even Gerry Harvey who was asked for a rebuttal, didn’t explain was that it was the global CE companies who over the past 80 years (after actually inventing TV and every other CE technology) have invested constantly in developing the industry which he now desires to exploit. If they hadn’t, the Korean and Chinese factories wouldn’t have anything to copy and then to sell onto the Kogan’s of this world.
As for the “middlemen” which Kogan refers to as if they were somehow undeserving of any income for doing a decent job, they are you, me and the people sitting next to you on the motorway or the train. If we don’t have jobs to service clients and customers then how can this industry or country continue to progress and develop?
If you are annoyed by this unbalanced coverage like I am, you can let me know what you think on my Facebook Page.
August 17th, 2010 at 2:57 pm
Commoditisation is a world-wide problem today and in some cases could be construed as extreme opportunism and bullying tactics by some operators and is affecting many specialised industries in a way that is not in the best interests of anyone—in particular, the consumer, in the long run.
There’s a true saying that goes like this: that great bargain you have just scored comes at someone’s expense, ultimately probably someones job, but in a long circular route will be finally added to your account in terms of reduced service, less industry training, fewer technicians and spare parts, less personal attention; even less people to answer the ‘phone. It may not happen tomorrow morning, but it will happen.
The photographic industry is a prime example of commoditisation gone awry. In a mad scramble for throughput, companies let greed overcome caution, planning and brand-value and opened the stable door to almost all-comers in almost 100% of their product menus.
Photographic industry leaders (not second and third level) abandoned 50-years of careful brand-building and positioning to simply take the money and worry about the consequences tomorrow. As a result, one leading brand in particular, has lost its aura of brand supremacy and industry observers believe it can never be recovered. But the value of all the leading brands in the photo industry are severely diminished to where paying a premium to access the finest products and services has gone just about disappeared. Now its just a game of price—and in many cases price manipulation.
The nett result of this lack of foresight and understanding is very little support or knowledge at the counter except at a reduced number of specialists who could become an endangered species; an army of consumers who know little more than how to switch on their cameras and press the button, the unedifying cases of washing machine and refrigerator salesmen advising customers about a $5-thousand dollar camera that requires professional explanation and ongoing support; plus a severe lack of profit at all three levels—manufacturing, distribution and retail.
Add to this, the 10-cent mass produced print syndrome which is simply used as a traffic builder in big stores but which is destroying the fabric of careful specialist printing which might cost between 25-cents and 39-cents at retail. The real cost of producing a 10×15 colour print, the broad spectrum of reality taken into account is around 18-20 cents depending upon many factors. So if in fact the 10-cent print is a money maker for the mass market, it begs the question about which specialists are subsidising that price and being greatly overcharged for their materials in the process.
The real tragedy here is that such tactics have not greatly enhanced the overall number of prints made in Australia and such insane pricing, for which there was no consumer pressure in the first place, has done nothing for the quality of printing or the training of the operators for that matter. So why buy a $3000 camera to get cheap, mass-produced 10-cent prints.
Commoditisation is everywhere and is almost universal across the retail market where only one thing seems to matter and that’s price. The exceptions would be the Swiss watch industry, BMW and other elite products which are still well-managed and very profitable.
The focus on price alone will slowly destroy many brands and ultimately there will be less choice, less service, less specialisation in industries that cry out for such an approach. Already the consumer is in that territory in famous brand televisions for example. Phillips, Toshiba, Pioneer, Hitachi, Fujitsu (the list goes on) all gone from the scene. Killed off by commoditisation.
The consumers may have won the battle for the time, but they are certainly losing the war—slowly but surely.
August 18th, 2010 at 3:06 pm
AMAZING!!!!
One could read that the cost of positive comments from Connecting Women is a free trip to China, or id it just that Koglan doesnt advertise with you enough?
To infer that Koglan and/or other “house brands” are unsafe due to their price is poor journalism in the least and now places you in the same sensationalist trash media pile as ACC and TT.
Shame Clair Shame.
August 18th, 2010 at 6:16 pm
I agree with what Allan, in particular his final comment that the consumers are losing the war-slowly but surely.
I run one of the ‘endangered species’ specialist outlets in the audio/visual industry. This is an exciting industry to be in at this particular time in history, technology is moving ahead at an astounding rate, with the primary driver being digital. At the same time it is also becoming more complex, and understandably it is more difficult for the consumer to keep up to speed with developments.
What this industry has to offer the consumer right now is extraordinary. However the greater majority of consumers who have paid for this technology never enjoy it to its full capacity.
This is primarily due to the fact that the consumer is being taught that price is king. Consumers are educated by popular media. When they look at the motoring section of any newspaper they will find ads for both hatchbacks and for luxury sports cars, with the appropriate pricing. They know that you can buy a very serviceable vehicle for $13,000 – they also know that if they want better it is available – at a price. When they see an ad for a flat screen TV it is only for the lowest prices achievable. To them this then becomes the reality for our industry.
The consumer cannot be held responsible for this; it is the industry that is doing the educating. This is being driven not only by the bottom feeders like Koglan, but also the majors who are constantly battling it out for market share. More importantly it is also being fed by programs like TDT and ACA who appear to be hell bent on teaching the consumer on how to get the very best deal.
Yes the customer is getting a great deal – but at what price.
Service and knowledge in this industry should be paramount. However the margins on offer leave nothing for training or for proper staffing levels. Daily we have people contact us with systems that they own which they cannot connect or operate, and in many cases the equipment is not suitable for the customers requirements, the components supplied are incompatible, or the wiring, generally installed by a third party, is wrong. Not only does the customer lose out, but so does the industry. What incentive is there for this client to show any interest in this industry in the future? Once bitten – twice shy.
Both the popular media and this (and similar) industry need to learn that we should be advertising and reporting in a balanced manner. One that indicates that yes the consumer deserves to get a good deal, but it must leave enough to ensure that they are able to make an informed decision, and that their purchase will be supported in the future.
September 3rd, 2010 at 9:50 am
Hi Claire, thank you so much for sharing this – it has given me heart to continue to make a noise about the need for balance in leadership of both the masculine and feminine principles. And it’s great to hear of a well established and respected male who is in tune with the.
Now I’m even more jealous of your cruise
Best wishes and fun travels
Claire
October 11th, 2010 at 7:03 pm
Agree with John
November 21st, 2010 at 10:46 am
Have you ever tried returning a product to Kogan? What a nightmare!!