Boxerworks.com

Interesting article, I missed that in The Star.
I was in a business where back in the '60s a company had 62% of their market, and they pulled a similar trick to Honda's, but with even worse results. The dealers they put out of business DIDN'T roll over and die; (corporate plan) they went and found competing product and drove the lead company's market share down to 9% the next year. When I was in the business,(in the early '80s) they had gotten their share back up to 27% and thought that was about as good as they'd ever do.
The Honda powerhouse store near me tried to screw me when it was just a car dealer, why would I give them a second chance to do the same thing? I have nearly always purchased a car based on quality/availability of parts and service. Let's face it. most of us here can't afford to buy a car that is anywhere near as much fun as our airheads. Once you accept that, then the brand of car you drive is unimportant, as long as the vehicle's features satisfy your needs; (and fun is not one of them) It doesn't matter if it is a Kelvinator, a Maytag, or a Kenmore.
Now Honda is putting their bikes alongside lawn mowers and snow blowers. This will be a case study in business schools some day, trust me.

old R90 guy, that is an interesting post. In the business I'm in, bicycles, there is a similar type of marketing scheme happening to what you describe. I can't quote figures but here's a little about what is happening.

The two biggest bicycle makers in the US are Trek and Specialized. They are locked in a battle for first place. I was a Specialized dealer from the beginning of their company. Specialized grew quickly as a result of making some real innovations in the products offered to cyclists. Specialized "innovated" a way to control their independent dealers. They introduced "programs". That is, they dictated what and how much the dealer would buy. (One thing that amused me was that Specialized eventually called this program "partnering" with the dealers.)

Most of the dealers went along with this program. I started noticing that it had an effect on my business that I didn't like. At the end of a given year, I had inventory that I had been forced to buy, still in stock. Also, I had to pay for that inventory. That inventory had to be sold with less or no profit and sometimes, at a loss. Of course, that cut into the bottom line. Eventually, I had trouble paying my bills. After about three years of this effect pulling my business down, I paid my bill and didn't buy anything else from the big S. Specialized has taken over some of the bigger stores in our area. They were able to do this by force feeding them so much produce that they couldn't sell that the stores eventually couldn't pay their bills. Another tactic that big S employed is that they had dealers sign contracts with them and they could look at the dealers' books and dictate the percentage of their products that were in the store. That never happened with me. I once went to a meeting of dealers that was put on by Specialized. Basically, I was tricked into going. It was a rah-rah meeting that reminded me of the one and only Amway meeting I was tricked into attending. No thanks!

I have the feeling that business follows some of the same cycles as nature. It doesn't always grow. It ebbs and flows. Diversity is rewarded. Having only big stores is like mono crop farming. Small stores appeal to some customers. Small stores are usually manned by someone who is more concerned with the product/customer relationship. Our store found and reported defects in some bikes that could have resulted in big time lawsuits and recalls. The fact that we had a pace of business and trained enough employees, etc. worked in Specialized's favor.

In the end, it is business and there are different approaches and not only one approach works. Megalomania seems like a dead end for people and companies.

Chuey

Didn't Cannondale try some similar tricks back when they were a super-powerhouse in the industry? Now, they're just "one of many."

In the late 1970's, Kawasaki did the same thing (dictate dealer inventory). There was some idiotic required product mix...if you wanted 5 Z-1's (later, KZ-900, KZ-1000), you had to buy 10 KZ-400s. The 900/1000 were hot sellers, but the KZ-400s were a real POS. The dealer had a choice, neither of which was good. Take lots of 900/1000s, and get killed sitting on the KZ-400s, or not take 900/1000s, and not sell anything. This was when interest rates were 18%.

Either way created problems for dealer, many of whom went out of business.

Kawasaki probably could have put a REAL hurt on Honda at that time if they listened to the dealers instead of their marketing fools. They could have sold 3x the number of Z1s that they did.

I learned a great deal about inventory control AND marketing as a 17 year old.

To this day, nothing is sweeter to my ears than a warmed-over Z-1 with a Kerker exhaust system. They were pure magic.

Major Softie wrote:Didn't Cannondale try some similar tricks back when they were a super-powerhouse in the industry? Now, they're just "one of many."

They were sold to the same conglomerate that owns Schwinn, Mongoose and GT. The company changed their name to Cannondale Group. I do not know what C'dale did as far as marketing but they have always had their problems. I find their bikes generally kind of hideous but of course, I work on a lot of them. That means I ride a fair cross section of them. For the most part, they are very nice riding bikes. Still, there is something that makes them not attractive at all to me. One of the only companies to make super crapola bikes in the last twenty years is GT. They are still skating on the acceptance they have due to being a popular BMX bike. There may be some that ride just fine, but some of them are real turds. Of course, that matters little due to the brand loyalty that has been nurtured in our society.

Cannondale's motorcycles sounded pretty cool according to the press they generated. I'm under the impression they're collector's items now.

Chuey

Honda and most of the rest of the manufacturers are completely out of touch with their customers and they don't even know it!

Look at what Honda did with the VFR! That was probably the most beloved model since the 750 and rather than deliver the enthusiasts and customers an updated version of the same bike, we've been offered some kind of weird Robo Bike. So what are guys doing? Well, the market for older VFRs and Blackbirds is rocking! Honda never needed to become some kind of lifestyle company because it has been since the 60's but the new generation of managers and planners have dropped the ball.

And I'm another one... I have my two Airheads and the only thing that would get me into the market again might be something like a Ninja 250. Small, light, good handling, quicker that they have any right to be, 60+ mpg in town, easy on the upkeep, insurance is almost nothing and the damn things run almost forever.

The 250 Ninja market is exactly where Honda needs to go in order to create the next generation of loyal customers and if they reintroduced the Honda 50 at a reasonable price (Cheap!), I'd be all over one and it's something that the grandkids could ride when they're ready.

Oh... And HD is contemplating moving out of Milwaukee so that they can dump their unions... Isn't a good part of HD's image tied into Milwaukee and the supposedly wonderful work force there? How is firing Carl and moving to Texas to hire Carlos gonna look?

And I could go on....!

These marketers need to talk to someone other than themselves.

Trek shut down dealers when they elevetated other regional dealers to some sort of Trek Store status. Recently, Trek pulled the plug on Gary Fischer-only dealers.

When Hobie introduced the excellent Mirage Drive pedal kayaks, a dealer would have to buy a certain number of regular kayaks along with.

Curt wrote:Trek shut down dealers when they elevetated other regional dealers to some sort of Trek Store status. Recently, Trek pulled the plug on Gary Fischer-only dealers.

When Hobie introduced the excellent Mirage Drive pedal kayaks, a dealer would have to buy a certain number of regular kayaks along with.

I'd love one of those Pedaled Hobies. I live right on the ocean and having my hands free to shoot pics or fish would be incredable, Are they a good boat?