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ARCHIVED FORUM -- April 2007 to March 2012
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This is the first Archived Forum which was active between 17th April 2007 and 1st March February 2012

 

Latest post 05-15-2008 8:05 AM by 9 LEE. 62 replies.
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  • 05-11-2008 8:07 AM

    How far is too far?

    After a few threads where things got a bit heated, I got to thinking about the dilemma posed here, that while Bang & Olufsen has always been an expensive brand, recently they have become too expensive. I was wondering what, in forum members' opinions, could be done to lower Bang & Olufsen's prices without sacrificing quality?

    Apple was brought up as an example in a previous thread, but it is important to note that they manufacture in China. Would that be satisfactory if it meant a significant reduction in price?

    What about materials? A few have commented that the BeoLab 9s, etc. look cheap, but they are using lower quality materials. Would this be acceptable?

    I'd like to hear some ideas! 

    There is scarcely anything in this world that some man cannot make a little worse and sell a little more cheaply. The person who buys on price alone is this man's lawful prey. - John Ruskin

  • 05-11-2008 9:07 AM In reply to

    Re: How far is too far?

    If people want cheaper B&O products with the same quality, then B&O should do what every other electronic company does (save the cottage producers in UK/US/Franceetc...)........

    ......Manufacture in China.

    I bet they could probably knock 25-30% of their prices at a slash!

    10%

  • 05-11-2008 9:19 AM In reply to

    Re: How far is too far?

    One myth to dispel,for a start, is that a product manufactured in China is per se necessarily "cheap,and cheerful".

    The Chinese will manufacture to whatever quality/price point is demanded by the customer eg Apple ,Toshiba(with the late XE1 HD DVD player),and Shanling CD players.

    It is difficult to know whether,or not,a move to a cheaper far eastern manufacturing base,given the extra cost of transport back to eg Europe,and the additional EU import taxes, would produce a signifcant saving to an end buyer.

    Again,one wonders if the cost of production in Denmark/Europe is the real reason for the perceived lack of value in certain products.

    One thinks of small manufacturers such a Gryphon,Copland,and Primare,who can manufacture,and sell,product competetively at various price points.

    My Hi-Fi system is Ensemble which manufactures in Switzerland,and still sells at competetive prices.

    So,with B & O,there may be reasons other than the cost of manufacture that account for very high,and increasing,prices.

    Perhaps the new CEO will institute a thorough financial review to identify possible areas for saving costs without impacting upon quality.

     

     

  • 05-11-2008 9:55 AM In reply to

    • VANTAGE
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    • Joined on 09-02-2007
    • Paris, France
    • Posts 22
    • Bronze Member

    Re: How far is too far?

    You are completely right.

    B&O has always been more expensive than other brands, but I do agree that they are going to a bit too far these days. You always had to have a 'certain' level of income to be able to afford B&O stuff in the past, but right now, you are not far from having to be a member of what Rolls-Royce calls "UHNW-people" (ultra-high new worth), their core target for their exclusive cars, to be a B&O customer.

    When the Beovision Avant came out in the mid-90s, at the equivalent of 5,000 €, even with a built-in VCR, I thought we were reaching the top. Now, for this amount, you can just buy a BV8 with a stand and an external DVD-player. You can forget about the BV7, even in its 32" form, let alone the BV9. Basically, for the price of one Beovision 9, you could get four Beovision Avant models... Yes, the BV9 is far more advanced, has a bigger screen, etc, but for God's sake, we are talking about a TV after all!

    Now I do realize that an OK Asian manufactured LCD TV, at eg. 2,000 €, is much more expensive than its past CRT equivalents of 10 years ago too. But in relative terms, the price gap has grown significantly between B&O and other brands. B&O's products are still amazing (my parents have a BV7-40" Mk.III, indeed an amazing product in terms of picture, sound and build quality), but I guess the key for B&O is to justify its price premium vs. other brands.

    And compared to 10-20 years ago, that is much tougher, for at least 2 reasons:

    - LCD and plasma technology move much faster, making it more difficult for a potential B&O customer to accept to pay such a high price for a technology that will be more or less outdated 2 years down the road;

    - With flat screens, it's harder to give a product the famous 'B&O look and feel', differentiation being less easy, at least to the casual observer.

    So what's the solution? It all depends on B&O's strategy: maybe it is on purpose that they are losing their larger customer base, because they want to go for these 'UHNW-people' only (higher income per sale). In that case, B&O's main competitor wouldn't be Loewe or Accuphase, but rather a piece of modern art or a yacht... But if B&O's strategy is to keep a relatively large customer base like in the past, they have to cut their prices, and therefore, to keep the same margins, their manufacturing costs. I really don't think lower quality materials is an option.

    Take a look at the car industry, Bentley being a good example in my view. They have their traditional products, aimed at the select (lucky) few, and a more mainstream product line (mainstream being all relative of course), based on technology from the Volkswagen group. It enables them to sell a car called Continental GT that remains quite expensive, but less so than their other coupés further up their range. The Continental GT is a brilliant car, powerful, luxurious, ie. it has everything one would expect from a Bentley. It's also simpler and cheaper to manufacture, lots of part being shipped from Germany to England, where only the final assembly takes place. The more expensive Arnage is hand-made, has more customization possibilities, finer details, etc, hence its higher price.

    The bottom line is that I would have no problem if a B&O-product was made in a country where labor costs are cheaper ("made by Bang & Olufsen" is more important to me than "made in Denmark"), if it means a better price/quality ratio. Right now, even as a hardcore B&O fan (but not a UHNW person), I am not sure I will replace my beloved BV3 by a BV7-40" when the time comes. 14,000 € for a TV-set, even a great one, sounds a bit over the top to me. Except if I win the lottery maybe.

    Klaus

    BV 3-32" - BS 9000 Mk. II - 2 x BL 8000 - 2 x BL 6000 - BL 2

  • 05-11-2008 11:32 AM In reply to

    Re: How far is too far?

    As a longtime owner of B&O products, I tend to think about each purchase as a ten year investment.  Although I would like a B&O TV, it just doesn't pass my self imposed 10 year test.  I still have my MX5000 which is almost 20 years old and works perfectly but I purchased a 32 inch Toshiba LCD as my interim TV.  I was operating under the delusion that someday flat screen technology would become ubiquitous and B&O could then produce a 10 year TV.  That does not seem to be happening.  There are just too many evolving TV standards such as Oled, sed, and recently Super HI-Def.  I can afford a complete BV4 system but I have this feeling that after 5 years, it will be hopelessly dated and I will be disappointed.  You might suggest that I trade in my Beovision every 4 years or so but there is a problem.  US dealers are not very generous with trade ins or will not do it at all.


    Bang and Olufsen does not do digital very well!  I broke my 10 year rule and purchased a Beomedia 1.  I do like it mostly for internet radio but I use iTunes with an Apple TV for video and music.  Its not a matter of money exactly, iTunes is just better.  I especially like the movie rental functions on the Apple TV.  The movie rental feature as yet does not have a large enough library but in a short time that will change.  I know that when the Beosound 5 is introduced, it will be very cool looking and I will probably want one.  However this time, I will be comparing it to iTunes and Apple TV.  I will wonder if $6000 is worth it for a beautiful media player.


    What B&O product would I purchase?  I am going to purchase the Beolab 5s without hesitation.  Although some would say it is weird looking and just too expensive, I like the design and the wonderful sound.  Beolab 5s easily meets my 10 year criteria.


    There has been a lot of discussion that B&O really produces products for the wealthy or a least the near wealthy.  That might be true but the rich can be very fickle.  In a survey of some wealthy North Americans, they were asked if they would buy a Bentley manufactured in Germany or the UK?  There was a unanimous answer.  They would only purchase a Bentley from the UK because of course Bentley is British.  Conversely nobody wanted a Porsche made outside of Germany.  Some would think this is silly and they are probably correct.  This leads to my conclusion that Bang and Olufsen is a Danish manufacturer.  If B&O outsources too heavily, they will loose the Danish distinction.

    Beosound 5 BL9 BC2 BL8000 Beovision 7 BL6002  BL11 

     

  • 05-11-2008 11:54 AM In reply to

    • 355f
    • Top 100 Contributor
    • Joined on 04-19-2007
    • Posts 655
    • Bronze Member

    Re: How far is too far?

    TerryM:

    One myth to dispel,for a start, is that a product manufactured in China is per se necessarily "cheap,and cheerful".

    The Chinese will manufacture to whatever quality/price point is demanded by the customer eg Apple ,Toshiba(with the late XE1 HD DVD player),and Shanling CD players.

    It is difficult to know whether,or not,a move to a cheaper far eastern manufacturing base,given the extra cost of transport back to eg Europe,and the additional EU import taxes, would produce a signifcant saving to an end buyer.

    Again,one wonders if the cost of production in Denmark/Europe is the real reason for the perceived lack of value in certain products.

    One thinks of small manufacturers such a Gryphon,Copland,and Primare,who can manufacture,and sell,product competetively at various price points.

    My Hi-Fi system is Ensemble which manufactures in Switzerland,and still sells at competetive prices.

    So,with B & O,there may be reasons other than the cost of manufacture that account for very high,and increasing,prices.

    Perhaps the new CEO will institute a thorough financial review to identify possible areas for saving costs without impacting upon quality.

     

     

     

    Even taking into account transportation and other costs the price difference compared to EU countries is approx 45%.

    The new CEO has very little to do with processes already started-

  • 05-11-2008 1:22 PM In reply to

    Re: How far is too far?

    "All comming to a store near you- or in your case- your store within 12 months."

    Chinese manufacturing? Do you have a scoop? Otherwise I don't get the reference.

    There is scarcely anything in this world that some man cannot make a little worse and sell a little more cheaply. The person who buys on price alone is this man's lawful prey. - John Ruskin

  • 05-11-2008 1:59 PM In reply to

    • 9 LEE
    • Top 10 Contributor
    • Joined on 02-14-2007
    • Moderator - UK
    • Posts 5,223
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    Re: How far is too far?

    TripEnglish:

    "All comming to a store near you- or in your case- your store within 12 months."

    Chinese manufacturing? Do you have a scoop? Otherwise I don't get the reference.

    I think some of the questions we ask, and some of the answers we give have already been thought of, solved, and are being implemented already!  They may be famously slow to catch on sometimes, but they aren't dim!

    Lee

    Smile 

    BeoWorld - Everything Bang & Olufsen

  • 05-11-2008 2:05 PM In reply to

    • moxxey
    • Top 25 Contributor
    • Joined on 04-14-2007
    • South West, UK
    • Posts 2,360
    • Bronze Member

    Re: How far is too far?

    TripEnglish:

    After a few threads where things got a bit heated, I got to thinking about the dilemma posed here, that while Bang & Olufsen has always been an expensive brand, recently they have become too expensive...

    Items are only 'too expensive' when people stop buying them. On one hand we have AU board members saying that B&O AU are the most profitable territory and are doing well. On the other hand, they're saying the products are too expensive. Well, they can't be profitable, successful and not attracting customers.

    There are about <10 people on this board - out of the entire B&O customer base - who keep stating the products are too expensive. Yes, they are. However, other people are buying, so they are not too expensive to them.

    I'd love the now even more expensive BMW M3 to be more affordable, as I can't afford that, but BMW keep justifying the price increase due to popularity. The demand matches and exceeds their (limited) supply. 

    Same with the Rolex Daytona. If you can find one at RRP, walk out the store and you'll be able to flog it for more than the purchase price. These watches meet their demand.

    If B&O's sales drop significantly, then they'll see a problem and react. However, the sales haven't fallen enough to justify lowering prices, wholesale. Retail stores in the UK are all down, it's not just B&O.

  • 05-11-2008 2:10 PM In reply to

    Re: How far is too far?

    Let's hope so Lee.

    I agree with one of the above posts that Chinese manufacturing doesn't neccessarily speak the the product's quality as it once did. I've been really pleased with my Apple products and it has never bothered me that they aren't made in Cupertino California. I've always been torn about Danish manufacturing "making it" as other companies successfully use the entire world as a parts bin and assembly line. While I certainly love the fact that our products are "hand made" in DK, I can't say I'd cry a river over 30% price reductions and a Made in China etching so long as quality control didn't suffer.

    I do understand that the Avant at $8.5k US was an astonishing amount of money and that some of our televisions have soared into the stratosphere by more than doubling that amount within a decade (maybe if my income more than doubled I wouldn't be as sour!). So I think that at least a full robust lineup at BeoVision 8 price pricepoints is certainly in order.

    There is scarcely anything in this world that some man cannot make a little worse and sell a little more cheaply. The person who buys on price alone is this man's lawful prey. - John Ruskin

  • 05-11-2008 2:41 PM In reply to

    Re: How far is too far?

    TripEnglish:

    Let's hope so Lee.

    I agree with one of the above posts that Chinese manufacturing doesn't neccessarily speak the the product's quality as it once did. I've been really pleased with my Apple products and it has never bothered me that they aren't made in Cupertino California. I've always been torn about Danish manufacturing "making it" as other companies successfully use the entire world as a parts bin and assembly line. While I certainly love the fact that our products are "hand made" in DK, I can't say I'd cry a river over 30% price reductions and a Made in China etching so long as quality control didn't suffer.

    I do understand that the Avant at $8.5k US was an astonishing amount of money and that some of our televisions have soared into the stratosphere by more than doubling that amount within a decade (maybe if my income more than doubled I wouldn't be as sour!). So I think that at least a full robust lineup at BeoVision 8 price pricepoints is certainly in order.

    For me the comparison between Apple and B&O just doesn't work.  B&O is a small almost boutique manufacturer and thus the exclusivity almost means a higher price.  Nobody would buy a Rolex made in China unless they have been fooled.  Rolex is well known and widely available.  B&O outside of Europe is not well known and not widely available.  If a Bang & Olufsen TV is the deal breaker for many people because of the price, maybe B&O should stop making TVs.  However since B&O is going to produce a 105 inch TV, I think that price may not be the real problem.  As Lee said, "They are not dim".

    Beosound 5 BL9 BC2 BL8000 Beovision 7 BL6002  BL11 

     

  • 05-11-2008 5:24 PM In reply to

    Re: How far is too far?

    Seems to me that B&O are aiming for a significantly differant market.

    If you look at, say, a set of Pentas, then it would have taken me around 6 months to save for them - when they were new, nowadays it would take much longer for Lab5s.

    You could look at the same thing for almost any B&O product, MX or LX tv, how many hours of work would it take for you to pay for one ?

    Now compare it with a tv placed in a similar position within the range - it will take quite some time longer.

    This is what I mean when I say B&O has left some of its loyal base behind, actually the situation is a little bit worse, because when you start integrating into a a/v system, the prices go a long way further - you could justifiably argue that such an option was not fully available in the past so in a sense the fully integrated a/v system is a new porduct comprising as may elements as you choose.

     How does B&O design its products toward a price ? What sort of markers do they use ?

    Some might say that B&O simply does not design to price - thats a mistake for any company and it appears to me to be a departure from the past.

    So how can it change? well clearly B&O will find it extremely challenging to manufacture the same products to a significantly lower price, so maybe the product range needs a change.

    To be seen making a 'downmarket' range probably would not be helpful, and yet such low end products have been critical to the existance of B&O in the past.

    So one way to look at this is to start with what price ranges should B&O design toward, a lower end tv of £2K ? or £3K ?

    It's not at all hard to design something to very high prices, the difficult part is to do it within a budget and yet not appear to do so.

    So maybe we should ask ourselves, what should the price ranges be for B&O ?

    £2K up to? for a tv.

    What sort of range for a set of speakers?

    For an MP3 player do you really thing the current B&O option is realistic, considering what actually lies beneath?

     

  • 05-11-2008 5:44 PM In reply to

    • Stan
    • Top 150 Contributor
    • Joined on 04-17-2007
    • Posts 593
    • Gold Member

    Re: How far is too far?

    I'm going to repeat what I just said in another thread... I'm not sure that Apple is worthy of all the "build quality" accolades we seem to give it.  Initial build quality, perhaps... but as far as longevity is concerned - I'm sure they're as good/better than other computer companies, but they are a long way behind B&O on this one. 

    I have a dead iPod mini and iBook G4... both dead from manufacturing/design/process defects.  Worked great for a couple years, then crapped out.  My wife's 1st gen Nano is acting up.  Meanwhile, I have B&O products twice their age that still seem nearly new. 

    Here's a link to the history of the iBook defect so it's not just my word or personal bad luck.

    http://en.wikipedia.org/wiki/IBook_G3#Quality_issues

    I don't want to necessarily say that Chinese manufacturing is to blame, but my personal experience with doing business in China is that they will take any advantage whether given or not.  If you don't have exceedingly strict controls in place to catch this, then it's your fault because you should understand that this is how things work (like the robber who says it's your fault because you didn't have your home properly secured).  Unfortunately, based on the recalls happening in the US, this seems to be a lesson that continues to be learned the hard way.

    I will pay a premium for "Made in Denmark".  However, I doubt if I will ever spend > $10K on a TV... although, over the years, I've spent almost 2 twice that on B&O audio, link and phone products. 

    Stan

  • 05-11-2008 6:03 PM In reply to

    • 355f
    • Top 100 Contributor
    • Joined on 04-19-2007
    • Posts 655
    • Bronze Member

    Re: How far is too far?

    Stan:

    I'm going to repeat what I just said in another thread... I'm not sure that Apple is worthy of all the "build quality" accolades we seem to give it.  Initial build quality, perhaps... but as far as longevity is concerned - I'm sure they're as good/better than other computer companies, but they are a long way behind B&O on this one. 

    I have a dead iPod mini and iBook G4... both dead from manufacturing/design/process defects.  Worked great for a couple years, then crapped out.  My wife's 1st gen Nano is acting up.  Meanwhile, I have B&O products twice their age that still seem nearly new. 

    Here's a link to the history of the iBook defect so it's not just my word or personal bad luck.

    http://en.wikipedia.org/wiki/IBook_G3#Quality_issues

    I don't want to necessarily say that Chinese manufacturing is to blame, but my personal experience with doing business in China is that they will take any advantage whether given or not.  If you don't have exceedingly strict controls in place to catch this, then it's your fault because you should understand that this is how things work (like the robber who says it's your fault because you didn't have your home properly secured).  Unfortunately, based on the recalls happening in the US, this seems to be a lesson that continues to be learned the hard way.

    I will pay a premium for "Made in Denmark".  However, I doubt if I will ever spend > $10K on a TV... although, over the years, I've spent almost 2 twice that on B&O audio, link and phone products. 

    Stan

    A lot of sense here.

    To keep the USA economy going american companies have screwed the chinese to unrealistic pricing levels, as a result the chinese adopt tactics that to most seem less than gentlemanly!

     Apple may be innovative in design but for production im afraid its not that good.- not designed to last- built in premature obsolescence- very good for apple! They are very good however for charging license fees for everything to other manufacturers- They are certainly 'vending it'

  • 05-11-2008 7:58 PM In reply to

    • Russ
    • Top 100 Contributor
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    • Joined on 05-07-2007
    • Washington, DC USA
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    Re: How far is too far?

    casdave:

    Seems to me that B&O are aiming for a significantly differant market.

    If you look at, say, a set of Pentas, then it would have taken me around 6 months to save for them - when they were new, nowadays it would take much longer for Lab5s.

    You could look at the same thing for almost any B&O product, MX or LX tv, how many hours of work would it take for you to pay for one ?

    Now compare it with a tv placed in a similar position within the range - it will take quite some time longer.

    This is what I mean when I say B&O has left some of its loyal base behind, actually the situation is a little bit worse, because when you start integrating into a a/v system, the prices go a long way further - you could justifiably argue that such an option was not fully available in the past so in a sense the fully integrated a/v system is a new porduct comprising as may elements as you choose.

     

    Well, here we reach the crux of the issue as far as Televisions go, I think.  Way back when, in the days before HDTV was an issue, Bang & Olufsen brought to the US the now revered MX-5000/5500.  It sold for roughly $2,500USD.  In 1992.  For a 26" table-top TV which could handle stereo broadcasts.  Think about that for just one moment...it's OK, I'll wait....  In 2000 we finally received the Avant-US.  $8500USD.  One HD input, no 'real' HD.  30" screen.  Allowing for inflation, and ignoring innovation, why is it so very shocking to anyone here that the BV-8 costs $4,000, and doesn't do surround, or that the BV-7 32 costs approximately $12,000.  Forget the BV-7 40 MK3, forget the BV-9, look away from the BV-4.  10 years ago there was nothing in B&O's portfolio at those screen sizes.  What did comparable premium good cost in '92 and '00?  A Rolex Daytona has been mentioned here, I keep mentioning cars, but someone else mentioned the BMW M3 already.  What did they cost then?  What about now?

     

    When I was in Graduate school a Rolex Daytona could be had for $1,500USD.

     

    Russ 

    We kid because we love.

     

    Bang & Olufsen Tysons Galleria

    McLean, VA USA

  • 05-11-2008 8:29 PM In reply to

    Re: How far is too far?

    I have sort of re-hashed the comments below from an earlier thread of mine. It is basically the known price of B&O products of yeasteryear inflated for todays (2007) prices using the UK RPI index.
    I will have to do a more thorogh study but to me, there is an "over-inflation" in the price of TV's but everything else - it may supprise is has not been super inflated.
    B&O way expensive yester year. It is expensive today. If it is less affordable, one should look to Mr Brown and Mr Blair (if you are a UK tax payer).
     

    On the price front, I have looked at a number of products over the last 25 years. Adjusting for today's money (UK RPI), a lot of comparable products are similar in terms of their capability and niche:-

    A Beocentre 9000 in today's money would be £2,600, comparable to say a Beocentre 2. The Beocentre 7002 would be £1,900.

    The Beosystem 8000 and Beosystem 5500 would be approximately £5,000 and £4,000 respectively (excluding remotes or loudspeakers or stands).

    A Beocentre 2300 would be £1,400 alongside the comparable Beosound 4 today.

    On the loudspeaker front, the Beolab 5000 panel speaker would today retail at approx £1,600 and the Beovox MS150.2 at £2,000. The Penta (MK1) would retail today at £3,000. Thus the BL3 and BL9 could be called comparable and favourable in terms of integral amplification, performance and price.

    The BL5 is so far out in it's own league it is arguable beyond comparison of any B&O loudspeaker before it.

    On the TV front, there is evidence of a margin gap between old and new. LX2800 for example would be £1,900 today and comparable to the BV6 of £3700.

    The integrated A/V solutions are again more difficult as what you get today is significantly more than yesterday. A point could be argued that an AV9000 (Monitor, centre speaker and VCR but without the control centre) would retail today at over £10,500. A BV7-40 is £8,400 but with superior sound generation and distribution.  Also the AV9000's cloth curtain was definitely no stranger to the service department!

    10%

  • 05-12-2008 2:49 AM In reply to

    • moxxey
    • Top 25 Contributor
    • Joined on 04-14-2007
    • South West, UK
    • Posts 2,360
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    Re: How far is too far?

    RussR:

    A Rolex Daytona has been mentioned here, I keep mentioning cars, but someone else mentioned the BMW M3 already.  What did they cost then?  What about now?

     

    When I was in Graduate school a Rolex Daytona could be had for $1,500USD.

    Who cares what they cost or whether you (or I) can afford them! People buy them and still buy them. If Rolex charge £5500, people will pay more.

    The problem with this forum is that it's gone really personal. If people here can't afford or justify a B&O BV7-40, then they are simply viewed as 'too expensive'. They then go on a personal rant over and over again, which we read every week, how they think B&O can't justify their prices, quality etc etc. So what? Do you think they should reduce the price(s) just so you can then afford and justify the purchase?

    I don't disagree with that, I wouldn't pay nearly £9000, new, either. However, this is the key point: a lot of people are, so until these people stop buying, B&O will retain the price. It's basic principles of business. Most people won't buy Armani shirts, at around £120 per shirt, they are viewed as 'too expensive' by many and can't be justified....but Armani can still charge £120 as people still buy.

  • 05-12-2008 3:04 AM In reply to

    Re: How far is too far?

    here here moxxey

    as I had said in another thread that was getting personal, its all about individual choices so dont keep bleating on about it.

    The only time it will change is when enough people vote with their feet & B&O will have to revaluate their pricing structure.

  • 05-12-2008 3:19 AM In reply to

    • Puncher
    • Top 10 Contributor
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    • Joined on 03-27-2007
    • Nr. Durham, NE England.
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    Re: How far is too far?

    moxxey:
    RussR:

    A Rolex Daytona has been mentioned here, I keep mentioning cars, but someone else mentioned the BMW M3 already.  What did they cost then?  What about now?

     

    When I was in Graduate school a Rolex Daytona could be had for $1,500USD.

    Who cares what they cost or whether you (or I) can afford them! People buy them and still buy them. If Rolex charge £5500, people will pay more.

    The problem with this forum is that it's gone really personal. If people here can't afford or justify a B&O BV7-40, then they are simply viewed as 'too expensive'. They then go on a personal rant over and over again, which we read every week, how they think B&O can't justify their prices, quality etc etc. So what? Do you think they should reduce the price(s) just so you can then afford and justify the purchase?

    I don't disagree with that, I wouldn't pay nearly £9000, new, either. However, this is the key point: a lot of people are, so until these people stop buying, B&O will retain the price. It's basic principles of business. Most people won't buy Armani shirts, at around £120 per shirt, they are viewed as 'too expensive' by many and can't be justified....but Armani can still charge £120 as people still buy.

    This would suggest that you think B&O are happy with how things are going in their market and don't see any imminent problems with their strategy. This to me seems at odds with what we know has happened of late - replacing the CEO, closure of retail outlets etc.

    Ultimately how they manage their internal costs is the key. It depends how much of your £9000 they get to keep. If prices are spiralling because they cannot survive on the margin they are making then this is a real problem, if prices are rising because they think they can increase margin every year then this is pure greed on their part and deserves the comments made here and elsewhere. If there are purely passing on annual cost increases in materials and labour then this is lazy and, while it seems to have been accepted in the past, is now at odds with the rest of the consumer electronics market; whereas, previously, B&O products crept up compared to static prices from other vendors, we now have a situation where B&O prices are rising while everyone elses fall. This is a significant difference and one that I suspect is being considered (worried about) very seriously in Struer.

    Without getting drawn to much into the marketing "segment categorisation" issues I think B&O has moved away from a brand which sat nicely with a "professions" income level and is heading toward the "top earners" band as mentioned elsewhere. If this is their intention then I am saddened but cannot influence theie strategy. I suspect however that this is not the case and that there may be some serious "re-thinking" going on in Denmark.

    Generally speaking, you aren't learning much if your lips are moving.

  • 05-12-2008 3:40 AM In reply to

    • 355f
    • Top 100 Contributor
    • Joined on 04-19-2007
    • Posts 655
    • Bronze Member

    Re: How far is too far?

    moxxey:
    RussR:

    A Rolex Daytona has been mentioned here, I keep mentioning cars, but someone else mentioned the BMW M3 already.  What did they cost then?  What about now?

     

    When I was in Graduate school a Rolex Daytona could be had for $1,500USD.

    Who cares what they cost or whether you (or I) can afford them! People buy them and still buy them. If Rolex charge £5500, people will pay more.

    The problem with this forum is that it's gone really personal. If people here can't afford or justify a B&O BV7-40, then they are simply viewed as 'too expensive'. They then go on a personal rant over and over again, which we read every week, how they think B&O can't justify their prices, quality etc etc. So what? Do you think they should reduce the price(s) just so you can then afford and justify the purchase?

    I don't disagree with that, I wouldn't pay nearly £9000, new, either. However, this is the key point: a lot of people are, so until these people stop buying, B&O will retain the price. It's basic principles of business. Most people won't buy Armani shirts, at around £120 per shirt, they are viewed as 'too expensive' by many and can't be justified....but Armani can still charge £120 as people still buy.

    When it comes to price comparison, I think one has to look at what is happening to pricing in the SAME sector. The debate that customers will always pay more is of course one which has been suported by B&O for some time- a nissan micra is £5000 but a ferrari is still £140K  so the BV9 still has further to go!! The Armanai shirt analogy is an interesting one, the issue here is that versace, canali, zegna, pal zileri ,paul smith  all charge the same or more for a shirt so Armani is not 'out of sector on pricing and the quality of materials and fit is as good if not better than most brands mentioned as a consequence they are 'in the market' on price and they sell because of that.

    And yet with the closure of so many B&O shops and many more to come it is clear individuals will no longer pay the price ( unless these closures are due to early retirement following profits made on selling BV9!!) The business model of B&O has had its day.

    B&O have changed, they changed 18 months ago and we have to wait 12 months or less to see it and the days of lower technology products for huge prices will be over

  • 05-12-2008 4:06 AM In reply to

    • 355f
    • Top 100 Contributor
    • Joined on 04-19-2007
    • Posts 655
    • Bronze Member

    Re: How far is too far?

    Puncher:
    moxxey:
    RussR:

    A Rolex Daytona has been mentioned here, I keep mentioning cars, but someone else mentioned the BMW M3 already.  What did they cost then?  What about now?

     

    When I was in Graduate school a Rolex Daytona could be had for $1,500USD.

    Who cares what they cost or whether you (or I) can afford them! People buy them and still buy them. If Rolex charge £5500, people will pay more.

    The problem with this forum is that it's gone really personal. If people here can't afford or justify a B&O BV7-40, then they are simply viewed as 'too expensive'. They then go on a personal rant over and over again, which we read every week, how they think B&O can't justify their prices, quality etc etc. So what? Do you think they should reduce the price(s) just so you can then afford and justify the purchase?

    I don't disagree with that, I wouldn't pay nearly £9000, new, either. However, this is the key point: a lot of people are, so until these people stop buying, B&O will retain the price. It's basic principles of business. Most people won't buy Armani shirts, at around £120 per shirt, they are viewed as 'too expensive' by many and can't be justified....but Armani can still charge £120 as people still buy.

    This would suggest that you think B&O are happy with how things are going in their market and don't see any imminent problems with their strategy. This to me seems at odds with what we know has happened of late - replacing the CEO, closure of retail outlets etc.

    Ultimately how they manage their internal costs is the key. It depends how much of your £9000 they get to keep. If prices are spiralling because they cannot survive on the margin they are making then this is a real problem, if prices are rising because they think they can increase margin every year then this is pure greed on their part and deserves the comments made here and elsewhere. If there are purely passing on annual cost increases in materials and labour then this is lazy and, while it seems to have been accepted in the past, is now at odds with the rest of the consumer electronics market; whereas, previously, B&O products crept up compared to static prices from other vendors, we now have a situation where B&O prices are rising while everyone elses fall. This is a significant difference and one that I suspect is being considered (worried about) very seriously in Struer.

    Without getting drawn to much into the marketing "segment categorisation" issues I think B&O has moved away from a brand which sat nicely with a "professions" income level and is heading toward the "top earners" band as mentioned elsewhere. If this is their intention then I am saddened but cannot influence theie strategy. I suspect however that this is not the case and that there may be some serious "re-thinking" going on in Denmark.

     

    They get to keep a HUGE amount of your £6000 for your TV!  just look at the gross margin in the accounts- they have higher profit margins than anyone in the industry. But BnO like the financial services industry made money when the sun shined and now that strategy has changed

  • 05-12-2008 6:49 AM In reply to

    Re: How far is too far?

    355f:
    Puncher:
    moxxey:
    RussR:

    A Rolex Daytona has been mentioned here, I keep mentioning cars, but someone else mentioned the BMW M3 already.  What did they cost then?  What about now?

     

    When I was in Graduate school a Rolex Daytona could be had for $1,500USD.

    Who cares what they cost or whether you (or I) can afford them! People buy them and still buy them. If Rolex charge £5500, people will pay more.

    The problem with this forum is that it's gone really personal. If people here can't afford or justify a B&O BV7-40, then they are simply viewed as 'too expensive'. They then go on a personal rant over and over again, which we read every week, how they think B&O can't justify their prices, quality etc etc. So what? Do you think they should reduce the price(s) just so you can then afford and justify the purchase?

    I don't disagree with that, I wouldn't pay nearly £9000, new, either. However, this is the key point: a lot of people are, so until these people stop buying, B&O will retain the price. It's basic principles of business. Most people won't buy Armani shirts, at around £120 per shirt, they are viewed as 'too expensive' by many and can't be justified....but Armani can still charge £120 as people still buy.

    This would suggest that you think B&O are happy with how things are going in their market and don't see any imminent problems with their strategy. This to me seems at odds with what we know has happened of late - replacing the CEO, closure of retail outlets etc.

    Ultimately how they manage their internal costs is the key. It depends how much of your £9000 they get to keep. If prices are spiralling because they cannot survive on the margin they are making then this is a real problem, if prices are rising because they think they can increase margin every year then this is pure greed on their part and deserves the comments made here and elsewhere. If there are purely passing on annual cost increases in materials and labour then this is lazy and, while it seems to have been accepted in the past, is now at odds with the rest of the consumer electronics market; whereas, previously, B&O products crept up compared to static prices from other vendors, we now have a situation where B&O prices are rising while everyone elses fall. This is a significant difference and one that I suspect is being considered (worried about) very seriously in Struer.

    Without getting drawn to much into the marketing "segment categorisation" issues I think B&O has moved away from a brand which sat nicely with a "professions" income level and is heading toward the "top earners" band as mentioned elsewhere. If this is their intention then I am saddened but cannot influence theie strategy. I suspect however that this is not the case and that there may be some serious "re-thinking" going on in Denmark.

     

    They get to keep a HUGE amount of your £6000 for your TV!  just look at the gross margin in the accounts- they have higher profit margins than anyone in the industry. But BnO like the financial services industry made money when the sun shined and now that strategy has changed

     

    True, but this ia a low volume sector, if B&O didn't have high margins on each TV sold they would go out of business, as would any manufacturer of high-end goods.

     

    Simon 

  • 05-12-2008 7:54 AM In reply to

    • Russ
    • Top 100 Contributor
      Male
    • Joined on 05-07-2007
    • Washington, DC USA
    • Posts 641
    • Bronze Member

    Re: How far is too far?

    Hi Moxxey,

    I'm on your side here.  My point was to take issue with those who seem to feel that the Televisions have recently gone 'out of reach' for the common man.  I think it only reasonable to consider pieces for which there is some close analog between the current line and the older ones.  As others here have mentioned, there really are no close analogs for the multi-channel, larger screen systems.

     In a similar vein, and as I'm sure TripEnglish would point out, some of the issues brought up here with regard to new technology panel TV's: B&O's strategy of trying to maintain it's profit margins on those pieces is indeed risky, and controversial.  The problem for us is to look at the issue from their point-of-view.  For several years various manufacturers have taken one of 2 paths with these TV's.  Some have allowed, or been unable to prevent, the sale of their panels through various channels, both 'brick-and-mortar' and online at prices far below the MSRP.  This has pushed the sale  price down faster than the cost, although cost has, of course, dropped dramatically.
     

    Once something like this starts, it is almost always a self-feeding death spiral, and not everyone survives.  And it has happened in other market spaces for various reasons. I got to watch large companies get pushed out of the cell-phone boom in the late 800's and 90's, for instance.  Of late, our erstwhile heroes Sony and Pioneer have taken steps to get out before they are forced out.  Sony no longer sells plasma at all, and Pioneer has stopped manufacturing, and will rebadge panels, like most others.  B&O decided early on to take a different tack, and so did Fujitsu.  On the Plasmavision website, however, we see a huge blue banner 'Important Announcement' which directs us here:

    http://www.fujitsu-general.com/global/news/2007/07-V06-29/index.html

    Fujitsu, one of the originators of the technology, and an OEM for many other brands, has left the 'consumer' market space because they can't make any money, because others have driven the retail price below the point of profitability. 

     B&O obviously want to provide their customers with a 'soup-to-nut' single-brand solution.  In order to do that they seem forced to avoid the death spiral, and wait out the storm until the market corrects itself.

     

    Russ

    We kid because we love.

     

    Bang & Olufsen Tysons Galleria

    McLean, VA USA

  • 05-12-2008 8:26 AM In reply to

    Re: How far is too far?

    i don't think they're out of reach of the common man , i just think the competition has not only caught up , but utterly surpassed bno particularly in the way the whole av world has developed

    it's all technocodswallop today not the hand built engineering quality that bno could play on in the old days

    with turntables and other machines with moving parts they had a chance against the big boys as they always had superlative craftsmanship and quality products , that way they could differentiate themselves not just with their design ( which is just aboot all they have these days ) but with their handcrafted quality and attention to detail

     nowadays it's all oem outsourced 3rd party derivative junk , you can't blame bno , it's the way the market has gone 

    just plug this chip into that circuit board and hope for the best 

    i really have no idea what bno should do to survive in the future , maybe they won't ? 

    popgear is grate™

  • 05-12-2008 8:42 AM In reply to

    Re: How far is too far?

    beolife:

     

    The only time it will change is when enough people vote with their feet & B&O will have to revaluate their pricing structure.

    By which time it may be too late to recover.

    Remember the German Camera Industry with their philosophy of people will always pay a premium for the quality of their products?

    By the time they realised the impact of the Japanese,it was too late.

    Yes,one can adopt a philosophy of "If you can't afford the price(s),look elsewhere",but don't be surprised if existing,and new customers,do precisely that.

    One hopes that,as has been intimated,the coming 12 months produces an encouraging response from B & O.

    In the meantime,what kind of message is B & O trying to send to the buying public?

    Take the current campaign,being advertised in today's regional paper,by my local dealer

     "Purchase an additional pair of loudspeakers with any Bang & Olufsen television before the 31st May 2008 and receive a fully customised Beo5 remote control free of charge.

    (Normal price £450)".

    One might just about accept the concept of a remote control as an optional extra on a B & O entry level TV,but on a BV4,BV7,or BV9?

    Hardly an endearing concept to a potential new buyer.

     

     

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