Why GP's are bad?

[Steve Meyer]

Fellow Audians;

I think we all need to realize that we ARE a very
small market of people. Especially, when considering
the number of 20v owners, Urq owners, or any other
sub-group. Yes, there are more and more A4 and A6
turbo owners, but with increased sales comes increased
numbers of people who only buy Audis because the are
new, different, whatever...not becuase the have always
dreamed about making them faster! (like most of us on
this list) We are talking about groups of
10s..maybe20s. Small volume retailers/manufactures do
not have the capabilities to cut into their profit
margins to justify a group buy.

Many of these companies that make these specialized
products are very small companies as well. The simply
don't have the resouces to cut into their profit
margins. The only saving grace for them to do this
would be the positive effect it would have on people
views of the manufacturing company and would lead to
future buys. This only works for companies that make
other Audi related items, and would be an incredibly
small number. Probably not large enough to influence
agreeing to a group buy. Another benefit to the
manufacturing company would be brand recognition. The
idea is hopefully people on the list who did not
participate in the group buy would purchase from the
manufacturer because of their earlier generousity.
Once again, this would be a TINY number of people and
signifigent enough to warrant a discounted price.

 Here's another example:

Bottle of beer:
Price $2.00  Cost $.65  Profit* $1.35
Let's say I sell ten beers a night.  I make $13.50
How cheap do I have to go to get more people to come
in: Will cutting my price in half, double my sales.
Then I only make $7. I would have to sell 4 times the
number of beers to actually make more money.
In a small market there may only be a total of 15-20
people who want a beer. In a large market the quantity
will start make up for a small profit margin.
If I only lowered my price to $1.75, it probaly
wouldn't be a big enought change to lure people in.
Of course, beer is different than car parts, one
person can drink several beers, but you get the idea.

And this model doesn't even bring into account how
much I'm really making on a beer. Payroll, electric,
insurance, advertising etc. The profit margin is even
smaller, making the effects even worse.

So, yes group buys are bad for the Audi community as a
whole. If the larger product companies can afford to
make no profit on a certian item to lure people into
buying there other products then the small companies
that specialize in some the the things we need(and
make better than some of the larger companies) will be
forced to either stop producing the item, make it with
cheaper parts(making an inferior product), or sell at
a smaller profit margin that will eventually lead them
to bankruptcy. 

Steve
frustrated with running a bar and grill in a very
small Iowa town.


	
		
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