HO Scale limited runs

[NW Modeling List]

I think the reality is that the model companies realized that the world
changed and that to make a profit, they had to change the way they marketed
and sold their products.  It was common for modelers to not buy the initial
run of products but wait until the discounters offered a lower price a year
or two later.  That action cuts into the manufacturer's margin as it drives
the overall market price (not cost) down on specific items and items in
general.  

For instance, everyone knew that LifeLike would eventually mark down their
remaining inventory and sell it through their discounting arm.  They were
competing against themselves in essence.  (Dumb.)

 

One of the reasons that the PRR owned so much stock in other railroads and
coal  fields in the 1880-90's and early 1900's was to control the freight
rates; railroads were undercutting each other to move coal so much that the
profit margin was negligible for the railroad.  By being on the board of a
railroad, the PRR men wouldn't allow poor or risky business practices that
would be ultimately bad for all railroads. 

 

With the model makers making limited runs, they can take control of the
pricing again.  By limiting the production, they can reduce or eliminate the
discounting efforts of the distributors or dealers to compete between
themselves.  This keeps the prices up and the resulting margins for the
manufacturer.  For most distributors, this is a good thing.  For a 'basement
bomber' whose business depends on having a lower price than anyone else, he
will find it difficult to get inventory or get inventory at a price that
makes it possible to him to discount effectively.

 

This is a normal business cycle.  Mass production requires extensive
distribution systems to get the thousands of items to thousands of buyers.
Periodically, the manufacturer has to 'clean up' his distribution system and
distribution business model to get his costs and pricing back into a
desirable ratio.  

 

The market has changed, too.  Most of the buyers today do not want to build
anything, paint anything or decal anything.  You can observe this at any
model/toy train show.  The scratch building parts don't sell, decals don't
sell in any volume and complex kits go unsold.  

 

Gary Rolih

Cincinnati

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