This might sound like a rant but I ask this only to satisfy my own curiosity. I've noticed that companies that offer plastic structure kits, most notably Walthers, will retire a structure only to reintroduce it years later. Sometimes, it will be slightly modified, sometimes just renamed, and sometimes with no changes at all. I learned this because a number of years ago, I planned to use a Walthers structure call Miranda's Bananas as a produce warehouse in the industrial area of my large city but just as I was putting the finishing touches on the plan, the structure was retired and unable to acquire one, I was forced to use a substitute. I was never happy with it because it just looked out of place. Recently, Walthers offered a kit called Grocery Distributor which I am almost certain is just the Miranda's Bananas kit recycled. I bought one as soon as it became available and replaced the structure I had used as a substitute and it looks outstanding.
A company certainly has the right to offer whatever products it thinks will maximize its profits, but I'm trying to understand what the business sense for retiring a kit and then years later reissuing it. Wouldn't they sell more product if they kept all of these in production continuously instead of offering them, taking them away for a while, and then reissuing them? Aren't they losing sales when customers are forced to buy a kit from someone else because the one they wanted is no longer in production?
By retiring a kit they create artifitial demand, people will buy before they need it or some to fill the void at a higher price.
Sounds a bit like locos, but less extreme. They want to make certain size batches, make them available when produced, then have gaps and decide whether to make more of the same or a variation. They want to optimize their production cost plus inventory (tied up cash until sold) costs to maximize profit. Free market, supply / demand, etc.
With the lessening number of LHS's, I'd guess the existing inventory is less than it used to be on a given item; i.e., some at Walthers and some at the reduced number of LHS's. At least Ebay is an alternative that didn't used to exist, that makes finding an out of current production / retail inventory item easier to find, if lucky.
It's just a different time than what I was used to in the 60's.
Paul
Modeling HO with a transition era UP bent
Every time a mould is taken out of a press and a different one put it costs lost production.
Stocking a three year sales supply of a product costs for material, labour and storage costs interest on the moneys paid for these things.
Greater profits come from making just enough kits, or product to sell quickly enough to get your money out before incruing much interest charges, either real or accounting if you spent cash for the costs.
If you must have a certain kit, get it while you can.
Dave
The other side of the coin of course is that nobody likes to see stuff in the Walthers catalog or in their sales flyer that is out of stock. So if they are sold out of a kit or model and it is going to be a couple of years before they can have another run which is better or worse -- to catalog the kit but it is actually not available, or to let the kit disappear and then bring it back?
Also, when the manufacturer is in China and allots X amount of time and resources to Walthers, Walthers has to decide whether it makes better business sense to have more new products or to try to squeeze more sales out of existing tooling. And even then there can be time gaps between "runs."
New products get the publicity and the reviews and a sudden rush of sales (if they are lucky). Walthers has kept certain kits in the catalog for years, such as the New River Mine, but I think they are the minority; others are sold off fairly quickly and are never seen again, or they try a variation on it to try to recover more of the tooling costs (the Wadhams "pagoda" gas station/Chinese restaurant for example). I assume they were disappointed in how that one did.
My hunch is that the manufacturer runs off a supply and Walthers sells it off and then decides whether to make it a real catalog item, but even if they do, it makes no sense to have it in the active catalog if they know it will be years before it can be rerun.
I would never assume that anything offered is a "permanent" part of the catalog these days, be it a structure kit or a piece of rolling stock.
Dave Nelson
davidmurrayEvery time a mould is taken out of a press and a different one put it costs lost production.
So how long (days, weeks) is a mold actually in use and how many units (1000, 10,000) do you think they make before they replace the mold with a mold for a different product?
and how long (months, years) before the put the mold back in service?
after all, there are limited resources: number of presses, workforce
greg - Philadelphia & Reading / Reading
Sometimes you have to look closer for who actually makes the kit. It may be a Heljan kit from Denmark. Bachmann, Walthers, Model Power may sell the same kit with slightly different packaging. It's the same kit.
You just have to scour the etailers for current production or see if it resells on ebay. Gone are the days when a hobby shop could keep it on the shelf until it sells at the MSRP.
No industry makes the same product indefinitely unless you're Levis and you keep making the 508 until the end of time. There's so many t-shirt designs, shoe designs, and so on I'd have loved to replace, but they came once and left never to be seen again.
So let's go with Miranda's Bananas. Walthers makes the tooling, manufactures a bunch of kits, and throws them to the four winds. Now they have to look to how its selling and see if its worth making more of them. Maybe they sold well, but not well enough to justify using a fraction of their capacity to make more. But it was popular enough to not retire permanently. A few years later, through their research (train shows, ebay, people asking the Walthers booth at the big shows, etc.), they think there's enough of a market for more, but their research also shows that maybe calling it "Miranda's Bananas" pigeonholed it as a specific-sounding industry and rebranded it as a more generic "distributor."
Other times, the research could show its worth keeping in semi-permanent production (New River Mining) or the tooling languishes forever as something that no one is interested in (that modern-style gas station they did in the mid-90s).
In a perfect world, Walthers would make exactly the number of kits that people want to buy. They would always be available, and Walthers would be assured of the most money possible. Unfortunately, it's not a perfect world.
Walthers has hundreds of kits, and running them costs money up front. Which ones should they run? How many? For how much? And how far apart should production runs be? It's not an easy call to make.
There is no benefit to Walthers for over-producing a kit. None. If they do, they are out the money with little chance to recoup it. If they under-produce the kit, they are assured of a quick sell out and they can run it again. Of course, they'd love to hit the production number exactly on the demand as it would maximize their return on investment, but then they'd probably like to win the lottery, too.
There is no "artificial demand". Either there is demand or there isn't. Money talks, and that's what they, as a business, should listen to. Remember that they have sales data, and we do not.
This isn't the 1980's, when you had a few dozen kits in constant production. The Walthers Catalog is huge compared to those days, and our hobby just isn't big enough to keep every kit ever made in constant production.
Paul A. Cutler III
Paul3 In a perfect world, Walthers would make exactly the number of kits that people want to buy. They would always be available, and Walthers would be assured of the most money possible. Unfortunately, it's not a perfect world. Walthers has hundreds of kits, and running them costs money up front. Which ones should they run? How many? For how much? And how far apart should production runs be? It's not an easy call to make. There is no benefit to Walthers for over-producing a kit. None. If they do, they are out the money with little chance to recoup it. If they under-produce the kit, they are assured of a quick sell out and they can run it again. Of course, they'd love to hit the production number exactly on the demand as it would maximize their return on investment, but then they'd probably like to win the lottery, too. There is no "artificial demand". Either there is demand or there isn't. Money talks, and that's what they, as a business, should listen to. Remember that they have sales data, and we do not. This isn't the 1980's, when you had a few dozen kits in constant production. The Walthers Catalog is huge compared to those days, and our hobby just isn't big enough to keep every kit ever made in constant production. Paul A. Cutler III
This post should be stickied at the top of every thread about manufacturers.
Disclaimer: This post may contain humor, sarcasm, and/or flatulence.
Michael Mornard
Bringing the North Woods to South Dakota!
Kits are not in continuous production. They make and store in inventory a number of kits that they think will sell out in a specified period of time. If they sell out faster they might run another batch. If they don't sell out then they will be "retired". They don't think of the profit or loss of a single kit. They think of the profit on a production run.
When a kit has been retired for a while there are great design and production savings when they modify and produce it as a new kit.
Lackawanna Route of the Phoebe Snow
Paul3 ... This isn't the 1980's, when you had a few dozen kits in constant production. The Walthers Catalog is huge compared to those days, and our hobby just isn't big enough to keep every kit ever made in constant production. Paul A. Cutler III
...
I think that is the real crux of the problem.
And so kits that sell well and quickly get rerun quickly, others that didn't do quite as well there is a few years in between. And for those that didn't sell well or too slowly, you won't see them again.
So as we've come to learn in the minority scales. If you really want it -buy it now before it's gone, maybe forever.
Enjoy
Paul3 This isn't the 1980's, when you had a few dozen kits in constant production. The Walthers Catalog is huge compared to those days, and our hobby just isn't big enough to keep every kit ever made in constant production.
Is it really huge compared to then or is it just full of pictures of items that are not in stock? I know that my expenditures on model railroading are much less today than they were back then, even though I have more funds available to spend. The reason is there is little product on the shelf to buy.
In contrast to what some have stated, I'm not going to buy product I don't need on the off chance I might need it someday. Nor will I wait for that perfect kit to maybe be re-released several years from now. Instead I'll either subsititute or build it myself. Granted my scratchbuilding skills get better, but I'm not buying what I would have if it were in stock.
jim
A company certainly has the right to offer whatever products it thinks will maximize its profits, but I'm trying to understand what the business sense for retiring a kit and then years later reissuing it.
What do you you mean by retiring? An injection molding machine can make a lot of different things based on the molds that are being used at the time. It makes more sense to run a relatively large run of a given set of moldings, remove the molds, replace them with molds for another product and run a relatively large batch of that different product and so on and so on. The individual molds are just stored for later use after a given production run. Some info on mold life expectancies: http://www2.basf.us//PLASTICSWEB/displayanyfile?id=0901a5e180004878
Wouldn't they sell more product if they kept all of these in production continuously instead of offering them, taking them away for a while, and then reissuing them?
Why would that help? Mantua (in its various guises) made the same generic Pacific for over 50 years without a whole lot of change. For that matter, so did Bowser in the form of their steam locomotive kits. How did that help those two companies? At least Bowser had the sense to go into other areas (and the same business model of batch production - try getting an SP AS-616 now - well actually, according to the road number it'a a DRS 6-6-1500, but that's quibbling)
Aren't they losing sales when customers are forced to buy a kit from someone else because the one they wanted is no longer in production?
No. Except in the realm of locomotives (e.g. the infinite number of fools making Big Boys), manufacturers don't generally duplicate models deliberately. A few years ago, Walthers did a model of Los Angeles Union Passenger Terminal. How many of them do you think they'd sell if they were still in active production? The molds are still there, they can be re-used any time Walthers deems it profitable to re-issue the model. One of the problems with continous production is that you can create more inventory than you can reasonably sell. Not a good thing. The model railroad market is not monolithic. It consists of a lot of micro-markets. There are a few people in the market for <insert RR name here> SD70ACe. There are a lot more people NOT in the market for such a model. The fact that they've even been produced commercially is a tribute to the effect technology has had in lowering the cost of product development as well as the making small production runs profitable. I'm continually astounded at the variety of models produced by Athearn alone. Not all of them are currently available, but the fact that such an amazing diversity of models has been produced at all speaks volumes.
Andre - who could care less about the SD70ACe (or any other model representing anything built or modified after about 1954). AND, to paraphrase an SNL skit, if it's not Southern Pacific, it's crap. I don't know about you, but just those two criteria really restrict the types of items I'm willing to purchase.
andrechapelonExcept in the realm of locomotives (e.g. the infinite number of fools making Big Boys), manufacturers don't generally duplicate models deliberately. A few years ago, Walthers did a model of Los Angeles Union Passenger Terminal. How many of them do you think they'd sell if they were still in active production? The molds are still there, they can be re-used any time Walthers deems it profitable to re-issue the model. One of the problems with continous production is that you can create more inventory than you can reasonably sell.
And THIS needs to be sticked at the top of every thread about manufacturers.
Or perhaps instead of one of those "prove you are not a robot" Captcha thingummies, we should develop a "You cannot post in this thread unless you pass the following test on basic economics and business practices."
Another thing to keep in mind...Even if something sells out, it's unlikely to be ordered again right away. Then it gets a production slot that may be a year off. For something that's a slow seller, it's going to be a long wait for the next train...
There's just no way they keep making them slowly
Mike Lehman
Urbana, IL
And the first question should be to explain massive difference between the market for wheat and the market for Athearn Southern Pacific MT-4 4-8-2's (the upcoming ones with the skyline casing, disc main drivers and the large Southern Pacific lettering on the tender, not the as-built version, which is a whole different market altogether).
You could also stick in a trick question about the "Paradox of Thrift".
Not to mention requiring people to write a treatise on why reducing the MSRP of an Athearn HO scale MP15AC by 50% will not significantly affect the overall demand for the product.
Andre
andrechapelonNot to mention requiring people to write a treatise on why reducing the MSRP of an Athearn HO scale MP15AC by 50% will not significantly affect the overall demand for the product. Andre
I'd settle for "Discuss pricing of luxury goods in terms of the revenue curve."
Bayfield Transfer Railway andrechapelon Not to mention requiring people to write a treatise on why reducing the MSRP of an Athearn HO scale MP15AC by 50% will not significantly affect the overall demand for the product. Andre I'd settle for "Discuss pricing of luxury goods in terms of the revenue curve."
andrechapelon Not to mention requiring people to write a treatise on why reducing the MSRP of an Athearn HO scale MP15AC by 50% will not significantly affect the overall demand for the product. Andre
Yeah, I suppose that would work, but then you'd have to introduce the concept of price elasticity of demand, and that would require people to use math. http://en.wikipedia.org/wiki/Price_elasticity_of_demand
Of course, there are other factors involved, but the mere mention of math will probably kill the discussion altogether. Naw, no it won't. People love to complain too much and, as hobbies go, complaining on websites is cheap, especially since math isn't a requirement for complaining.
Here's a thought experiment for you. If the price of complaining on the Internet were raised significantly, how would that affect the amount of complaining that takes place on the Internet? Of course, this would have to be a price rise on every site that exists. After all, if Kalmbach started to charge for complaining, people would just migrate to other (cheaper) websites to complain (to which they would add complaints about Kalmbach charging for complaints).
People complain because it's a lot easier than root cause analysis and research.
"Why do companies do that...?" Companies don't do anything. They're inanimate. But they're made up of people. So someone at the company, after analyzing a great deal of information, decided it was the right thing to do. Sometimes they're right. Sometimes they're not (New Coke, anyone?). But no one deliberately makes a bad decision, and very few of them are arbitrary. If you approach every conscious act by a person with this philosophy (that they made the best decision possible with the best information they had, based on their best understanding of it), seemingly counterproductive acts of Government and Business become much less baffling.
Connecticut Valley Railroad A Branch of the New York, New Haven, and Hartford
"If you think you can do a thing or think you can't do a thing, you're right." -- Henry Ford
New Coke is a fascinating example because Coke actually made the completely rational and correct decision. They were losing ground to Pepsi and their market research indicated a reformulation to more of a Pepsi flavor would help their sales. Blind taste tests even showed people preferred New Coke over Actual Coke and Pepsi. Then the market goes and acts irrationally and says "no DON'T sell us exactly what we asked for!"
NittanyLion New Coke is a fascinating example because Coke actually made the completely rational and correct decision. They were losing ground to Pepsi and their market research indicated a reformulation to more of a Pepsi flavor would help their sales. Blind taste tests even showed people preferred New Coke over Actual Coke and Pepsi. Then the market goes and acts irrationally and says "no DON'T sell us exactly what we asked for!"
Did you REALLY just say that the New Coke disaster occurred because the customers didn't know they wanted it?
Do you work for Coke?
No, the reason it failed is it was based on bad demographics, they based the decision on new customers and largely ingnored their current customers and also based on a one time consumption of a small amount. The real trick in the beverage area is not to get people to try but to stay loyal. I participated in some street tests for both products (coke and pepsi) and I have to tell you the taste you get from a small amount vs a whole can is very different, especialy in the diet area!
I am probably biased, being a Pepsi drinker all my life. Add to that the fact that none of the women in my family can tolerate Aspartame so we never eat or drink diet anything.
That said, if the existing customers didn't like it, it was a bad decision. Perhaps they should have marketed it as a new product with a new name, and let the market determine which one sold better. Focus groups are not always representative of your customers.
Phoebe Vet That said, if the existing customers didn't like it, it was a bad decision. Perhaps they should have marketed it as a new product with a new name, and let the market determine which one sold better. Focus groups are not always representative of your customers.
See, that's where it gets weird: old customers did prefer it, if they didn't know they were drinking it. In Coke's research, people would select New Coke as the preferred one, then proceed to get angry when told they liked New Coke. The whole thing is one of the most bizarre series of events.
People literally wrote books on how much huge chunks of it just don't make sense.
Getting back to the models, and forgetting that the LION did not read the entire thread, the issue to him seems quite simple.
Campany A retires a product. But the molds and tooling still have high value, so they sell them to another company, which of course uses the tooling to produce the item, for why else would they have paid money for them.
Now Company B goes out of business, and the molds and tooling, along with all of the comany assets are sold again, perhaps to a company using a manufactory in China. Now maybe Company C owns the tooling, maybe they make this item, maybe the shelve it. Maybe Company D in China releases the model on their own hook, maybe C or D sell it under another lable.
Round and round it goes as long as the molds and tools continue to exist. NOTHING is ever fully "retired" for the tooling has value, and someone else will buy it. And Walthers will sell it.
ROAR
The Route of the Broadway Lion The Largest Subway Layout in North Dakota.
Here there be cats. LIONS with CAMERAS
Phoebe VetI am probably biased, being a Pepsi drinker all my life. Add to that the fact that none of the women in my family can tolerate Aspartame so we never eat or drink diet anything.
Getting off topic again... LION is a PEPSI customer, and DIET PEPSI at that. We have Diet Pepsi on tap, (Post mix) and LION likes that better than the Bottled (or canned) product. LION drinks about 5 gallons of the stuff every 8 days. (Comes in 5 gallon cans, it does.) Him dispenses this into thenty-seven 24 oz bottles.
LION drinks one before noon, another before supper, and mouts the third on a bracket by the head of his bed so that him can take a sip (through a long, long straw) betime during the night. That way him needs not get up to take a sip.
Wdlgln005 Sometimes you have to look closer for who actually makes the kit. It may be a Heljan kit from Denmark. Bachmann, Walthers, Model Power may sell the same kit with slightly different packaging. It's the same kit. You just have to scour the etailers for current production or see if it resells on ebay. Gone are the days when a hobby shop could keep it on the shelf until it sells at the MSRP.
I noticed quite some time ago that many kits sold under the Walthers name are actually recycled from other manufacturers, Heljan in particular. I remember back in the 1970s and 1980s it was not that uncommon to see the same kit sold under two or three different brands.
Also, a number of Walthers structures are Styrene versions of old Magnuson (now SS limited) resin kits. Merchants Rows I & II are as well as are a few of their larger structures.
NittanyLion Phoebe Vet That said, if the existing customers didn't like it, it was a bad decision. Perhaps they should have marketed it as a new product with a new name, and let the market determine which one sold better. Focus groups are not always representative of your customers. See, that's where it gets weird: old customers did prefer it, if they didn't know they were drinking it. In Coke's research, people would select New Coke as the preferred one, then proceed to get angry when told they liked New Coke. The whole thing is one of the most bizarre series of events. People literally wrote books on how much huge chunks of it just don't make sense.
I like what the Coca-Cola CEO said regarding the claim that New Coke was just a ploy to gain market share by offering a new product and ramping up demand for their old product. He said, "We're not that dumb, and we're not that smart".
The bananas don't come for free.
Walthers is only ensuring it can still make money from one of its assets. It's cheaper to take an existing mold and make a "new" product than make a new product from scratch.
Regardless, I found a seller on eBay selling the original Kit for $99. Is that a good price?
Jaime