Economics of the Equipment Industry?

[AIREAYE 248]

The problem with asking stores when you are doing a paper about the industry is the store is just a snapshot of a small corner of the industry. Were I you, I'd go with whatever I had the most complete information on and write the paper around that. So the paper would be about the industry and use whichever company you have the most numbers for to illustrate your points. Structure it like a business school case.

Hmm that would be Easton and Reebok-CCM, but I'm not too keen on doing Reebok-CCM because

1. Formerly two equipment/sporting giants in Reebok and CCM (CCM with a richer history), amalgamating into a part of one group

2. I originally wanted to compare Bauer vs Easton as they are arguably 1 and 2 in the industry

3. With Bauer vs Easton, I could only comapre 4 differnt lines of gear (Vapour/Supreme vs Synergy/Stealth) but now I've got to include Synergy/Stealth vs O-Tech, _K / U+ , Vector

[Trooper 8]

Then why don't you just do the paper on pricing in an oligopoly? In an oligopoly communication between players lends itself to stable prices, albeit high ones much of the time, and the avoidance of price wars. There are similar outcomes to a monopoly. Use hockey to highlight your points. You could probably get the retail guys (some of them probably on here) to help you track the prices of some select top-end gear over the past few years to illustrate this.

[AIREAYE 248]

Then why don't you just do the paper on pricing in an oligopoly? In an oligopoly communication between players lends itself to stable prices, albeit high ones much of the time, and the avoidance of price wars. There are similar outcomes to a monopoly. Use hockey to highlight your points. You could probably get the retail guys (some of them probably on here) to help you track the prices of some select top-end gear over the past few years to illustrate this.

LOL that's exactly what I'm doing, but all this 10K report stuff and data is to PROVE that the industry is an oligopoly

[dsjunior1388 81]

public relations dept at most brands will likely be glad to help you.

FWIW, I highly doubt most PR departments will help you just for a paper that only your teacher/professor will read. In my experience when I'm writing a piece for the schools magazine I get immediate cooperation, but when It's just for a class I get basic and essentially useless information and get rushed off the phone. If you can promise some sort of publication or visibility for the story, even to a very small degree, they will be much more likely to help you out with in depth info.

[AIREAYE 248]

It also encourages shops to buy more product up front because they know they won't be able to get supplemental shipments late in the year.

Wow, that's a great tidbit there. Just to be clear, are you an LHS owner Chadd?

FWIW, I highly doubt most PR departments will help you just for a paper that only your teacher/professor will read. In my experience when I'm writing a piece for the schools magazine I get immediate cooperation, but when It's just for a class I get basic and essentially useless information and get rushed off the phone. If you can promise some sort of publication or visibility for the story, even to a very small degree, they will be much more likely to help you out with in depth info.

Actually, this is an official component of the International Baccalaureate Program, it's not just a simple business essay. But for all intents and purposes, it will definately not be published :P

[chippa13 1844]

The extended essay is a requirement for students to engage in independent research through an in-depth study of a question relating to one of the subjects they are studying.

[AIREAYE 248]

correct, so that's what I'm doing right now...I'm not asking any of you to do research FOR me. I'm doing my own research, by ASKING YOU. It's like asking an LHS owner for data, that's independant research by me.

[chippa13 1844]

Figuring out where to find the information is just as important as what you do when you find it. It is all part of the learning experience of putting together a research paper.

[AIREAYE 248]

Figuring out where to find the information is just as important as what you do when you find it. It is all part of the learning experience of putting together a research paper.

Absolutely true :) I already had my framework for research set up before posting this thread, I just wanted some input and tips from you guys. Got all summer and most of the autumn to do research and write :D

[Chadd 916]

Wow, that's a great tidbit there. Just to be clear, are you an LHS owner Chadd?

I worked in one shop for a few years and ran another one for another couple years. I am no longer working in a shop on a day to day basis.

[chippa13 1844]

Absolutely true :) I already had my framework for research set up before posting this thread, I just wanted some input and tips from you guys. Got all summer and most of the autumn to do research and write :D

Well, good luck to you and get cracking. If there is one thing I remember about research papers it is that the deadline always looms faster than you think.

[dsjunior1388 81]

Actually, this is an official component of the International Baccalaureate Program, it's not just a simple business essay. But for all intents and purposes, it will definately not be published :P

Wasn't diminishing your project by any means, I was just pointing out that in my experience most PR people won't do much if they can't add a clipping to the company's portfolio based on the findings.

[AIREAYE 248]

Hmm another question occurred to me regarding the release of new product lines:

I understand that each company releases a new line (ex. Vapor, Supreme) every year, with alternating series. But my question is why would they release a new line IF the response on the older line was overwhelmingly positive (ex. One95 stick, original Synergy, CNT etc.)?

The answer may seem obvious as the average consumer (not the equipment knowledgeable) wants to see change and the company changes that to increase demand continuously and to stay competitive, but I was wondering if there was some other aspect.

[Trooper 8]

Hmm another question occurred to me regarding the release of new product lines:

I understand that each company releases a new line (ex. Vapor, Supreme) every year, with alternating series. But my question is why would they release a new line IF the response on the older line was overwhelmingly positive (ex. One95 stick, original Synergy, CNT etc.)?

The answer may seem obvious as the average consumer (not the equipment knowledgeable) wants to see change and the company changes that to increase demand continuously and to stay competitive, but I was wondering if there was some other aspect.

Look at the Customer and Competition parts of the Cs of marketing. It's the norm now and you can fall behind quickly if you don't keep up. If you didn't come out with a new product and sales tanked, there's no time to make up ground for that year. Everybody else does it and customers expect it.

[starsfan71 9]

Well I mean they probably already spent money in R&D so they might as well release the stick. I don't know if that is right though....

[Axxion89 32]

You don't want to be the only company that doesn't put out the "newer and improved stick" because your sales would plummet as most consumers would assume that the newer improved model will be better than the older last years model. Not true for all industries though but in hockey I see it a lot. It's all marketing, keep that in mind with ANYTHING you buy or here that is new/improved/remodeled/etc

[AIREAYE 248]

You don't want to be the only company that doesn't put out the "newer and improved stick" because your sales would plummet as most consumers would assume that the newer improved model will be better than the older last years model. Not true for all industries though but in hockey I see it a lot. It's all marketing, keep that in mind with ANYTHING you buy or here that is new/improved/remodeled/etc

Thought as much :)

It seems that with these so-called 'conspicuous industries' (as dubbed by me :P ) such as the auto, sport equipment, clothing (major companies only), cosmetics etc. Marketing is HUGE for them. They and consumers know and expect novelty and change in the effort of 'looking good'.

[Trooper 8]

Thought as much :)

It seems that with these so-called 'conspicuous industries' (as dubbed by me :P ) such as the auto, sport equipment, clothing (major companies only), cosmetics etc. Marketing is HUGE for them. They and consumers know and expect novelty and change in the effort of 'looking good'.

That's a good observation. These are industries where people do research and are very cognizant of the product lines.

[AIREAYE 248]

UPDATE: I've had a lotta crap going on over the past 2 months so here it is:

-asked Sportchek manager about oligopoly in the industry, asked if he could share sales data or inventory data to help me prove its an oligopoly. Expected no answer, got none :) LOL All he said was that most of Sportchek's gear were Bauer and Easton and they had the full lineup of each...doesn't help me though lol :P

-deciding to write the essay ASSUMING the industry is an oligopoly WITHOUT any sales data

-moving on, I require MSRP prices of products (USD, CND doesnt matter as long as it's consistent throughout essay) because MSRP is the baseline and isn't changed by sale pricing or clearance pricing etc. I was going to look into HockeyMonkey's site, but does anybody know if their 'Regular Price' is in fact MSRP?

Next step: trying to find a public financial report from Kohlberg Group and Bauer Hockey

PS: All of you equipment junkies should read Bruce Dowbiggin's book 'The Stick'

[shooter27 116]

Next step: trying to find a public financial report from Kohlberg Group and Bauer Hockey

Won't happen, PE companies will keep portfolio company financials private unless the company has publicly traded debt that requires them to disclose. You're time will be more efficiently spent looking through old Nike filing to try to find information about Bauer, you're much more likely to find information that way(although it may be somewhat out of date)than getting it through Kohlberg.

[AIREAYE 248]

well, I talked to gary at Duke's Source for Sports, asking for MSRP for the S19, X:60 and 10K sticks:

S19: $339.99

X60: 279.99

10K: 249.99

I believe these are in CND

With this baseline comparison and the rest of my research completed, the essay will commence!

can i post an excerpt? I'm concerned about plaigarism...

[AIREAYE 248]

New dilema:

Ive discovered a wonderful graph representing the demand for Price point products, but

-Source is Wikipedia...

http://en.wikipedia.org/wiki/Price_point

- Is it true that manufacturers produce less of price point A (elite products like the S19, X:60 etc.) and more of point C (entry level like S1, X:20 etc.)?

[JR Boucicaut 3789]

Seriously?

[iceNsteel 0]

New dilema:

Ive discovered a wonderful graph representing the demand for Price point products, but

-Source is Wikipedia...

http://en.wikipedia.org/wiki/Price_point

- Is it true that manufacturers produce less of price point A (elite products like the S19, X:60 etc.) and more of point C (entry level like S1, X:20 etc.)?

You really didn't realize that more low price point products will be sold than top end products? Really, in a given day do you see more Jetta's or Porsche 911's on the road?

[AIREAYE 248]

You really didn't realize that more low price point products will be sold than top end products? Really, in a given day do you see more Jetta's or Porsche 911's on the road?

Haha I dont think a price difference of ~$200 can be compared to several thousands of dollars, but I get your point. That's why I'm not so quick to reach a conclusion, but good thing that my essay is about the behaviors of firms and not the purchasing behavior of consumers :P

Looking around, it seems definitely true that lower priced gear sell better. That's why stores like Canadian Tire and Sportchek carry more low-end gear than high-end. But without any sales data, that's something I can't prove and thus can't include.