Why RRP?

[AndreZA]

Okay, I'm back on the RRP (recommended retail price) issue. I still don't understand why distributors need to tell shops how much to sell their stuff for but here is my scenario.

 

The past weekend I went looking for for mountainbike shoes. The shop I go into only has Italian brand shoes. The cheapest is R1499. They are those entry level Sidis that's made in the east with a RRP of R1290. "Don't worry about the price, I will give you a discount" comes from the sales person as I ask the price. Other shops normally have the RRP on the sticker and then give you discount ontop of that.

 

That is why I don't understand why distributors can sell stuff to shops for RXXX.99 and let them decide how much profit they would like to make. If they want to make 0.1c it is their business, if they want to make 300% the public will decide if they stay open.

[CAAD4]

It's a subtle form of price fixing....

[The_Break]

It has a lot to do with marketing and trying to place your product in the right market segment for your strategy. It works this way in many industries, however what IS strange is that RRP is not always consistant from country to country even if you take logistical costs and volumes into account.

[andretraut]

RRP is a concept used in the retail market to protect the consumer. If you entered the shop looking for a pair of shoes, and were offered entry level Sidi's for R1499, oblivious of the fact that it should retail for R1290, chances are that you would have bought it. But since Sidi applied the RRP concept and widely advertised the Nevada's to sell at nothing more than R1290, you are so much more wiser, and in a position to tell the shop assistant where he/she can stick the R1499 mtb shoe (with the two climbing spikes already attached to intestify the discomfort). Be greatfull that we are protected in this regard against inflated profit margins.

Edited December 22, 2010 by atraut

[MariusL]

I prefer ads in magazines and online stating the RRP - then I know how mush it should cost if i go to my LBS...

[Daniel XTR]

Competition Commission Requirement

IF they under price, its their choice.

Ulitmatley it protects you.

I know its hard to sometimes see it this way, but it is.

[AndreZA]

Why don't they just called it "Maximum price that may be charged". Then you would now anything above it is actually screwing with the distributors plans. It is as if shops now stick to that price and basta with competition.

[Grebel]

If the price is right, buy. If not keep looking. It also applies to other industries where they have list price and the retail price is WAY under...WTF?

[pastapouch]

I think where its used incorrectly is when its used to dictate a minimum. I mean, if you have R1400 for shoes, and a shop an Sandton sells it, and another in Roodepoort sells it, the Roodepoort should be able to sell it for much less.

[Daniel XTR]

Why don't they just called it "Maximum price that may be charged". Then you would now anything above it is actually screwing with the distributors plans. It is as if shops now stick to that price and basta with competition.

 

Well, setting the maximum price is Price fixing, because, then everyone will agree to a price and make profit off it. Simple really. Recommended price is what the distributor recomendeds, and sells it to the retailer at various pricing depending on volume, etc etc. which the retailer can pass onto you, or keep his own.

EG: Wheelset A costs R5000. Importer sells it to bike shop A at R500 less 30%, shop B is bigger so he gets it at less 45%. The RRP is in place, but the margin to retailer differs.

 

You cannot enforce a price, min or max.

 

It does benefit end user, so prevent bunches setting a price on a product.