The high cost of low prices

To say a toy is only worth the plastic is like saying a car is only worth its scrap metal. The real value of a toy (other than pure enjoyment) is it's educational value. What does it teach the user? What physical and/or mental skills does it enhance? Perhaps the public should be educated to evaluate toys based on the skills enhancement it would make in their children (or themselves, in the case of adult games). A great toy is an investment in a child’s future.

I'm with PH. A lot of problems have arisen with the age of the Internet and the miscconception of what free actually means. I shake my head everytime someone asks me to join another group demanding that Facebook, Myspace and such remain free. There is no such thing as free. There is a cost somewhere. And as the consumer base fails to support what it enjoys, these things are lost. I think there is a lot to be said for value over price in our disposable culture, but the line has to be drawn starting with the discounters... and they are unlikely to sacrifice their market advantage to do so.

Consumer Behaviour Changes are the driver, the majority react to price. Until more consumers change the retailers will not. Re: Entertainment Industry..... consumers don't like paying the price for a CD hence the rise in pirated music etc and itunes. Price , price , price

All good points, gentlemen & lady! Price is one of the 4P's we all learned about in Marketing 101. The problem is that it is not just the first "P" but often the only "P" that buyers are judged by. Until such performance metrics are evolved, it will be hard to ask for more from these folk who are, literally and figuratively, just doing their jobs...

Richard and Brian, great posts! To add, and I hammer on this repeatedly, I also believe it goes back to the consumer not viewing us as part of the entertainment industry. Books, movies, CD's, video games, etc. all command higher prices because they are perceived as more than their parts. Have you ever heard someone say that a CD or a DVD only costs $.30 to make why should we pay more? I recently wrote Joel Stein, columnist for Time Magazine and asked why the media didn't write about toy/game inventors and he replied, "And the answer to your question is the same reason no one cares about brilliant plumbers or set designers or poets almost anything. If I could force people to care about cyclists i'd write about them in Time every week. Sorry." We need to elevate our designers/inventors so retailers/consumers/media appreciate them and understand that part of their creative magic is in each product (like a movie star, author or a musician in theirs), that it is more than the physical components.

Richard: As a sales professional, this is a notion we face everyday; however, it's good to see you bring it to the forefront for a broader audience. We can't present a product to most retailers without the first question being "what's my discount?" before even assessing how the product will perform. One of the biggest issues, in my view, is that the (larger) retailer has become lazy. I know this could draw flack from some of our very own customers, but I would challenge every retailer to figure out ways to support a higher perceived value for the products they sell. We do a good deal of business with catalogs; we love this channel, because catalogs have learned the art of "romancing" product. They persuade the consumer, through pictures and copy, as to why the product is truly a premium. Specialty stores go to great pains to learn about the qualities of the products they sell, so that they can pass these on to their shoppers. Big box stores, on the other hand, have come to rely on the vendors' marketing dollars and the "license of the week" to sell products on their behalf. This is neither good nor bad, qualitatively, but certainly is one of the components of a price-driven market. In many cases, the retailer has the credibility and power to influence the consumer, but declines to do so and instead uses price as a competitive advantage and consumer draw. Years ago, while working for Ralston Purina, we helped re-design the pet department at Target. We recommended that they add premium foods, Veterinarian-grade pet care products, and signage that TOLD THE CONSUMER WHY THEY SHOULD SPEND MORE on these items. Lo and behold, sales of premium products went up, shoppers bought a wider variety of items in the department, and Target became a destination for pets. Was it a lot of work? You bet! Was it a paradigm shift for the leadership at Target? At the time, yes. But did it greatly reduce reliance on price as the primary driver? Absolutely! It's good to see retailers like B&N rolling out enhanced sections, and expanding their assortment of meaningful products (per your earlier blog). I'd like to see more retailers stepping up to become real merchants again - not that price will ever go away as a big factor in the distribution chain, but at least it wouldn't be the only factor...