The Calvary is Comin'

TAG!!!
I got your back, Charlie...

(and Marcus and Sean)

I was recently involved in a battle on this very subject with the members of NESBA. What I found to be odd, was that while many people flamed my attempts to protect the value of a Penske Racing Shock, very few people spoke up to defend what I was trying to explain...ONLINE. Offline, I had tremendous support which is why I stuck my neck out, and to be honest, why I am going to DO IT AGAIN!!! It is easy to have Grandes Huevos from behind a keyboard.

As a manufacturer, distributor, dealer, and retailer of many products, I know what it feels like to be in any position on the food chain. These opinions expressed will help you see the point of view of the small business owner.

I will review some of the highlights of my arguments from that thread, and try and put them in order.

I think it is absolutely outrageous for someone to consider themselves to have been "SCREWED" if they pay a retail price for a product. That is an absolute insult to any product manufacturer. You got what you paid for. If you don't think you are getting what you pay for, then don't buy it. Is that hard to understand?

Since most people in racing are consumers, and not business owners, it is hard for them to fully appreciate what it means to make money through the world of "capitalism and a free market economy". But this is simple to explain.

Pretend you have four 40K a year employees in your office (of which you are one), and one day the boss hires a new college grad (person with no net worth and minimal life expenses i.e. no "overhead"). The new kid marches in, stands up and announces to your boss, that he is willing to work for $15 an hour instead of $20 an hour, and that since he is willing to work for less, he would like to get 5 hours the available work that each of the other employees has to boost his income (sales). The boss thinks this is a great idea, and figures that this dawn of a price war will be good, because it will force the other four employees to drop their hourly wage to $15 to be able to keep their 40 hour work week. What would you do?

Just sit there and say, "Oh well, I am a victim of the free market!"? Or would you stand up and fight for the value of the work you have provided for years, and since you need the income (house, kids in school, car i.e. "overhead"), find some way to stop the interloper?

(BTW, I find it odd that the government won't allow a manufacturer to control the price of his products, but yet Labor Unions are somehow legal...)

I don't think it is fair to compare any of this to a country that has government fixed pricing either. Pit Bull is protecting the inherent value of their product, not R&R's or Woodcraft's. What the consumer doesn't understand is what discounting does to the PERCEIVED COST or VALUE of a product.

EXCERPT FROM NESBA THREAD:

The biggest problem is that deals like this devalue legitimate products and services. The public impression eventually becomes that a Penske Shock only costs $600, not $750.
Take Fox for instance. Fox Shox cost $430 right? Not so. They are $599. Ohlins are $650 right? Not so. They are $899. It's just that wholesalers and parts guys all over the industry have mounted them to their own bikes and sold them at cost to their sportbike buddies, and the net result is that no one will pay more than dealer cost for a Fox or Ohlins. I don't want that to happen to Penske Shocks.

There is very little market for shock sales past the racer, and what little market there is with "track-days" riders is the end of the road. It isn't like we are Dunlop, where giving products at cost to racers helps sell tires to millions of street riders.
I don't care how many shocks (XXX) sells as long as they are not wholesaled. He (as an employee, not a business owner) will get a paycheck next week, one way or the other.
There are many deals like this on lists all over the world everyday. I don't attempt to think I can stop it from happening. But I wouldn't be able to stand around forever and never express my viewpoint.

You certainly can buy your shock anywhere. The problem is that it is no secret that a Penske is what you (most people) will want to buy. I have have played an integral role in making that product be the one you choose to buy. It isn't a commodity, so I have a problem when anyone tries to sell it wholesale. It is truly a value-added product. You will get more than you paid for. Whether or not you buy it from me. I have a vested interest in making sure that this product retains its value.

This is what Pit Bull and Arai are trying to do. Not generate more retail sales for themselves. Everyone is so afraid that everyone out in the world is trying to screw them. It is simple to figure out who these people are. Ask your friends on this list, or at the track. Has Pit Bull ever been screwed by anyone? Do you know how hard it is to have a polished reputation, even if you REALLY DO WANT ONE? It is F'n HARD WORK, let me tell you!!!


ANOTHER EXCERPT:

As far as functioning in within the confines of Capitalism and a Free Market Economy, a consumer is allowed to have two of three basic facets of any item:

1. Product Quality
2. Knowledgeable Service
3. Cheap Price

You can only have 2.

You can have a quality product with knowledgeable service, but it won't be cheap.

You can have Knowledgeable Service and a cheap price, but it won't be for a quality product.

You can pay a cheap price for a quality product, but there won't be knowledgeable service to support it.

Should anyone attempt to dispute this, and claim to offer all three, I will let the members see through the smoke on that. It is possible to offer all three, but of course these are the businesses that fail everyday. While the people may claim to be knowledgeable, they typically aren't. People that have knowledge that is of any value don't give it away, unless they make a living using some other means and just don't place any value on that knowledge. Let's just say that free or cheap knowledge is about like free or cheap racing parts. It's more of a problem than it is worth.

This always leaves me in a bad position. Usually after a guy has wasted a bunch of time and money on his bargain basement suspension that the local self-proclaimed "expert" built, they have to pay us anyway, and usually at far greater expense since the amateurs tend to unknowingly damage components while they "make them better".

A free turd is still a turd.

Here is an entertaining anecdote:

HOW MUCH DOES THE RIGHT KNOWLDEGE PAY?
Charles Steinmetz (1865-1923) was a pioneering genius in harnessing electricity. After he retired, Steinmetz’s former employers at General Electric occasionally relied on his brilliance.
Such was the case when an intricate set of machines broke down. In-house experts could not find the cause of this malfunction so GE leaders called Steinmetz.
After testing various parts, Steinmetz finally pinpointed the problem and marked the defective part with a piece of chalk. Steinmetz then submitted a bill for $10,000.
Surprised at this unexpected high price, GE honchos asked Steinmetz to resubmit an itemized statement. He complied with a new invoice that listed only two items:
Marking one chalk mark: $1.00
Knowing where to place it: $9,999.00
Adapted from The Little Book of Anecdotes, Clifton Fadiman, Little, Brown and Co.


In the instance where some small businessman has taken time and money (and years) to build a business, bought a building, paid employees, bought inventory, built displays, brought revenue to your community, paid taxes (for your kids schooling), and so on:
If a guy walks in there, tries on helmets on his display, takes his employees time, and then calls up a mailorder house to order the helmet- He has just STOLEN from that business owner. The difference is when you go to ANOTHER bike shop in your town, and maybe they have the color you want, the size you need, or a more knowledgeable salesperson, and you buy it there, well that was fair business. But people know that what they are doing isn't fair when they use a bike shop for a fitting room.

This would be like if you were a computer programmer, and you worked for days on a program, and you were ready to hit the enter key to finish your work, and got up to take a leak. Your co-worker sees your boss coming and senses an opportunity to undercut you, so he presses the enter key as your boss walks by, and not only takes credit for your work, he gets a bonus, and worse, your boss then thinks you haven't done anything all week, so you don't get paid. How would you feel?
That's how that bike shop owner feels when you drive up with a new helmet on your head, that you didn't buy at his store, and now want to try on gloves.

But if anyone is foolish enough to try an litigate this matter, let me warn you, you will lose big. This complaint Kneedraggers has is so tiny it won't matter at all. I can guarantee you for FACT, that all of the major product distributors have pricing guidelines (I also don't care if you call if fixing) for many of the product lines they sell. Tucker Rocky in particular has an entire list of products that HAVE to be sold at no less than a minimum price, or your dealer rights will be revoked. Little companies Pit Bull and Kneedraggers are a zit on the ass of Tucker Rocky, and trust me, the amount of money Tucker spends solely on legal each year is more than the gross sales of either of the aforementioned companies. If they can do it, I promise you, Pit Bull and Arai can. (Incidentally, Held Gloves has the exact same policies, so you can add them to your list of companies to boycott.)

I went to Reading PA to discuss my this problem with the mangement of Penske. Call me a bad guy, but I personally put a spike throught the heart of the deal offered to NESBA members. Penske, while being extremely cautious about any measures regarding pricing has adopted a new policy as a result of this recent ordeal, that will pull dealer rights of companies found to be wholesaling their products.

The chain of responsibility does not end when the manufacturer accepts a check from the distributor. That is not all that is required for him to "make his money". If a manufacturer is stupid enough to allow his dealers to whore out his products, then eventually, he will not be able to charge the margin he needs to get from his dealers. The naive discounters don't realize they are taking value-added products and converting them into commodities. The result is as soon as the internet discounter realizes he isn't going to make it, he tries to raise his prices. But he can't, because he has made his customers perceive a false value for the products he sells. Then he runs back to the manufacturers to get a better deal. Then the manufacturers are screwed into giving more margin to the very person who has devalued his products, since they no longer have a retail value. His company goes onto to tiny margins, ceases to be profitable, and then an otherwise fine product will be forced into closure, all because the no one had the balls to protect its value in the first place.

(And don't compare this to a car. Car pricing is completely imaginary. The very fact that the consumer is duped into thinking he is really slick for "paying invoice" is a joke. The dealer makes a whole other price tier below that. You can now consider "invoice" to be "retail". This is the only way for car manufacturers to make the customer feel like he has gotten a "deal".)


In the end, online discounters don't really give a crap whether or not they are hurting small business owners. They have a MULTITUDE of products they are selling, and companies like Pit Bull have ONE. If one of the online retailer's products goes belly up, so what, they just find another one to whore out.

I do feel your pain when it comes to shoddy bike shops in America. I wish there was an answer to that problem. But it all comes back to people trying to cut costs "to be competitive" (as the consumers want). Like I said, the consumer has asked for discount parts and service, and now you are going to get an 18 year kid with two years of experience on a dirt bike helping you. This isn't a situation that will turn around in any short period of time.

In my opinion the dawn of death for any small business in America comes when it is forced to engaged in a price war. Regardless of what the product or service is, when it shifts from value-added to a commodity, it isn't long before bankruptcy. (Oh yeah, all of the business majors can go ahead and chime in; I never went to college, so I will be an easy target to tear apart)

I believe in being honest with my customers, and any of them will tell you that. Frequently, my honesty is a pill many people don't like to swallow, and I am held at fault, or my reputation as a nice guy may be tarnished. I don't beat around the bush with the fact that I have to make money. So many consumers are offended that they have to put money in someone else's pocket, but they cetainly don't show up and work for a discount at their own jobs.

I would suggest you buy Pit Bull Stands. They are the best, by far.

Thanks for your time.



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Max McAllister
President
Traxxion Dynamics, Inc.

 

PS, it seems I screwed up, and hit the wrong button. I will repost to the appropriate thread!!! Sorry!

 

high regards for your company, but my attention span is too short for all this

[This message has been edited by Eric (edited 01-03-2002).]

 

Max , very well put , the only problem is that most racers will not get it. I have read all the praise heaped on your products and service here on this BBS but the big problem is most racers are not very loyal unless they can get it for cost or reduced prices. They don't stay involved in Racing very long so what do they care if a great business survives or not. At my Shop we don't discount! if they can get it cheaper good for them. I look at all these supposed racer discount programs and i am amazed that to get the MONEY ! you have to list them as a sponsor and also run the Decals. What do you as a racer get SQUAT!. Better to pay for the windsreen or whatever than to whore yourself out. I think even JU would agree on this point.

 

Hey Max, you stated your case well, and it makes sense. but IMHO, the bottom line is that 90% of the consumer public don't give a rats ass if small business survive, as long as they don't have to pay as much for stuff. Meaning, once they drive one guy out of business, history has shown us someone else will be there to get us what we need. I'm not saying this is a good way for folks to think, having worked a parts counter i got pissed too when guys would mail order stuff they tried on with my time.

But that's life, look at it. $.99 value menu was answered with the $.49 value meal. chevy will pay off your ford loan and give you a "great deal" on a chevy. The list could go on for days.

Guess what i'm saying is I appreciate your passion on this, and I nodded off a bit in the middle, but it seems you are getting screwed on some penske stuff? Keep doing what you are doing, while products are typically discounted, knowledge is priceless, and as long as you have the most in your field, you will always be in control.

Just my .02 on it, but chances are i missed your point completely and am just rambling.

 

Hey Max, you hit it right on the head...

and I did go to college, have an MBA and teach undergrad, and grad level finance and accounting. Your business sense is as keen as anyones.

------------------
Terry
Hi-Side Racing
The Racer's Source
www.hi-sideracing.com

 

max is right. it is the same in my business. hospital "x" is buying my medical devices for x number of years. brand "c' says they can sell theirs way cheaper to them. hospital x goes with brand "c" for next contract. patients then recieve inferior devices coupled with poor clinical support that will last five to seven years until device needs to be replaced. hospital then begs for services from my company, but wants to pay brand "c" prices. now the account is ruined, and the dilemma to lower revenues to keep business or abandon the account exists. you get what you pay for eventually.

 

I just can figure out how to make a cool smilie, but here is an attempt:



Did it work?

BTW Are you guys just sitting around waiting for someone to post? Dang, if you could race that fast, you'd all be World Champs!!!

------------------
Max McAllister
President
Traxxion Dynamics, Inc.

 

Kick ass!!! I just made a smiley!!!

(See, I am actually easy to please...)

Watch this- (with my new found talent...)



That one is funny!!!

As you can tell, I am a total "yellow plate" to internet lists!

 

not a cool smilie, but a smilie just the same.

 

Wow, thats a lot to take in but I agree.

Wasnt riding the 125 a whole lot simpler Max? Atleast we could have more fun

Chuck DiGregorio

P.S. Im back on a 125

 

I agree to a point but please be aware Max that just because someone has access to a bbs, NESBA, does not mean they reflect the opinion of the club or it's members. Some people who post on the chat board at NESBA are not members just like here. I know for a fact that NESBA appreciates every sponsor they have and back them 100%. I can honestly say I have never had work done by you but was fortunate enough to see you in action dealing with the general public at Pocono and I was impressed. You answered questions to people who seemed to really have no interest in having work done at the time.

------------------
97 GSXR 750

[This message has been edited by sportbikepete (edited 01-03-2002).]

 

Uhm, I think a few things need to be adressed about the NESBA thread that haven't quite been brought to the correct light. The original sponsor of the club, Trans Am Cycles, is also a Penske dealer. The parts manager at said dealership (also a club member) offered a discounted deal to NESBA members only (you had to provide proof of membership to get the discounted pricing) for a one time Penske shock order. Max caught wind of this and came to our BBS accusing the parts manager of basically being an online parts whoar who was devaluating Max's share of the market. While I don't necessarily disagree with Max's arguments, in fact I agreed with him on the NESBA thread as far as his businesss acumen is concerned, he hasn't represented this particuliar situation correctly. During his arguments Max repeatedly refered to himself as a sponsor of NESBA where he had invested "thousands of dollars" into our control riders bikes. Being a control rider myself I can tell you that everyone I know of in the club has paid full retail for his services. It finally got to the point where the president of the club openly asked Max what the heck he was talking about as he was unaware that there was any sponsorship deal in place (after all, as the negotiator of all sponsorship deals with the club he should probably know.) What further concerns me now is Max's assertion that he personally traveled to Reading to quash the deal we had going through the club!?!? Did you do it in hopes of gaining the clubs business? Let's see, a limited, one time offer, given to members of a club (not the general public, and a club which happens to be sponsored by Penske,) through a brick and mortar retailer threatened you how? It doesn't even begin to hold true to the model you have put forth - the online parts whoar who has no overhead or accountability cutting your throat by underselling to the general public. And to tout that thread as your shining example of how you defended your way of life against the onslaught of parts whoars is patently ridiculous. I thought everyone had reached an amicable resolution to this whole deal when that thread (on the NESBA board) closed down. I thought I could go on feeling comfortable recommending your' services to the hundreds of newbies to the track we get every year at the 50 plus track events we put on. Now I'm not so sure. How can I support a businessman who has gone out of it's way to quash a legitimate deal put together through the club with one of the clubs true sponosrs for no other reason than spite? I can't and I won't. I'll vote with my consumer dollar and my voice. Shame on you Max.

 

And that is why I buy from you Max.

Thanks.
Marcus McBain

 

Did you mean the cavalry? ( troops on horseback? )

Calvary was the site of the crucifixion.
Or maybe that is appropriate.

I thought this thread was going to be about someone violating quiet time on Sunday at Road Atlanta.

 

hey Divorce3times, isn't this your two sides to every story theory in full swing?

I know you are lurking somewhere.....

 

In case anyone wants to peruse the original:
http://www.nesba.com/bb/Forum4/HTML/000922.html

 

I don’t have anyone’s back on this. I have three Pit Bull stands and that is the only stand that I will use in the future. I do not have the opinion that anyone is trying to screw anyone. Simply put, if you do not feel that you are getting good value for your money then go else ware. And now it’s time for Paul Harvey: The rest of the story.

Max, I can appreciate your passion and desire to maintain a reasonable margin on Penske shocks. I have used you exclusively for four years now and find your service, products and knowledge second to none. I will use no other. I can honestly say that I have and will continue to recommend your services to others in the future; hell I even have your poster up in my workshop. With that being said and in all due fairness to NESBA, its venders, and our many members (customers.) I do not, in my opinion, think that your initial address of the situation was completely accurate or fair to Jon Pap. No need to rehash all of the details here and get into another whizzing contest. But I think it was your initial approach of almost attacking him and the situation, that got the ire from most NESBA members. On another subject on the same thread, you specifically mentioned providing discounted and free support to several NESBA control riders. I have been a control rider with NESBA for 3 years and I am now the director for the Midwest. I can tell you that I have never nor has any other control rider received any of your discounted/free support. Why shouldn’t an organization like NESBA who have a large customer base be able to negotiate a better pricing structure through a valid Penske dealer to offer our members a better price if certain quantity levels are obtained? Hopefully, we will secure an event vary close to your business location in 2002 and you could come on over.
Now if you could make a GSXR fork seal that does not leak you would be a hero. G

 

Or watch a fresh war:
http://www.nesba.com/bb/Forum4/HTML/001060.html

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97 GSXR 750

[This message has been edited by sportbikepete (edited 01-03-2002).]