Can manufacturers force companies to set minimal prices on goods?

[N'Syncro]

Is it legal for a companies supplier to force them to sell an item for a certain price (and not sell it at a lower price), or even deny selling the company that item at all if the supplier thinks they have sold items to cheap or may sell items too cheap?


Illegal or perfect legal?

I know Red Bull forces all their resellers not to sell RedBull for cheaper than $2.74 a can... Even Walmart. If a reseller is caught doing so, the reps are ordered to go in, buy every can on the shelf, and then never sell to them again.

[Mr. Burns]

Re: Can manufacturers force companies to set minimal prices on goods?

Apple does it. IPod's are the same price everywhere.

[hifiguy]

Re: Can manufacturers force companies to set minimal prices on goods?

In Canada...NO!

Apple does not dictate the price, look at Visions and Soundsaround flyer last week. Nano's discounted below retail.

With respect to Apple Ipods, most retailers don't discount because there is very little mark up in them to begin with (about 8% at full retail) and they are very hard to get in any reasonable quantity. Why would you discount a product that everybody wants and is perfectly willing to pay retail for?

The bottom line is that in Canada, the supplier CAN NOT dictate what price the reseller sells the product for. They can suggest that it not get sold below MSRP, but that is all they can do. There is MSRP for all products, but what it gets sold for is up to the reseller.

[gtx]

Re: Can manufacturers force companies to set minimal prices on goods?

In Canada...NO!

Apple does not dictate the price, look at Visions and Soundsaround flyer last week. Nano's discounted below retail.

With respect to Apple Ipods, most retailers don't discount because there is very little mark up in them to begin with (about 8% at full retail) and they are very hard to get in any reasonable quantity. Why would you discount a product that everybody wants and is perfectly willing to pay retail for?

The bottom line is that in Canada, the supplier CAN NOT dictate what price the reseller sells the product for. They can suggest that it not get sold below MSRP, but that is all they can do. There is MSRP for all products, but what it gets sold for is up to the reseller.

disagree with that comment my marketing class said you cannot dump
product into the market,the manufacturer will pull it's product if you are
hurting his other buyers.

[hifiguy]

Re: Can manufacturers force companies to set minimal prices on goods?

I'm not saying a supplier does not have the right to pull their product. They just can not dictate the price the reseller sells at.

With respect to "dumping product into the market", what do you think Costco does? Much of their consumer electronics is "grey market" meaning it was not purchased through the Canadian distributor but brought in from the US. Costco then puts their standard one year exchange warranty on it and out the door it goes.

Another example: Best Buy nails a current model Toshiba TV below cost. You think Toshiba is going to pull their line-up from them...I don't think so. Toshiba won't be happy about it and will certainly speak to the product buyers, but legally, their is nothing they can do about it.

[Canadian Turbo]

Re: Can manufacturers force companies to set minimal prices on goods?

I am not sure on the legality of the issues but if a retailer enters into an agreement to sell a product they will have to agree to all the suppliers demands so price can be an issue. All the supplier has to do is pull their products if the agreement is broken.

[shaunmic]

Re: Can manufacturers force companies to set minimal prices on goods?

Regardless of what the end seller sells the product for. The distributor and the manufacturer and whoever else was in the food chain already made theier money. If you as a retailer want to make nothing in profit that's your bussiness. Yes some product manufacturers will say what the selling price is to maintain market integrity. However this is usually on newer products

[shaunmic]

Re: Can manufacturers force companies to set minimal prices on goods?

Is it legal for a companies supplier to force them to sell an item for a certain price (and not sell it at a lower price), or even deny selling the company that item at all if the supplier thinks they have sold items to cheap or may sell items too cheap?


Illegal or perfect legal?

I know Red Bull forces all their resellers not to sell RedBull for cheaper than $2.74 a can... Even Walmart. If a reseller is caught doing so, the reps are ordered to go in, buy every can on the shelf, and then never sell to them again.

Check again Walmart dictates prices to the manufacturers.. Redbull is a small fish in a really big pond in which Walmart is a greatwhite shark. If walmart is selling for 2.74 then they are doing it to make money. If costco started selling it for 2.50 then so would wallmart and they would most likely say to redbull that they have to drop their price or they will drop the product.
That is the way of modern big bussiness
thats why the small guys can't survive!!

[kuhli]

Re: Can manufacturers force companies to set minimal prices on goods?

I think the net effect is that the supplier of the product will compromise the business of the retailer if they're unhappy with their sales approach.

Red Bull has zero legitimate competition, therefore they can dictate price effectively by managing the amount of product the retailers receive. They also own all of their own distribution, this makes it even easier.

Toshiba has a lot of competition and as a result want to compete. They couldn't care less how much the retailer makes.

Incidentally, Red Bull's offer from Pepsi of 7.4 billion is based on them keeping their price up...and that's not enough money for the Red Bull boys. They're doing a great job!

[Billip]

Re: Can manufacturers force companies to set minimal prices on goods?

Check again Walmart dictates prices to the manufacturers.. Redbull is a small fish in a really big pond in which Walmart is a greatwhite shark. If walmart is selling for 2.74 then they are doing it to make money. If costco started selling it for 2.50 then so would wallmart and they would most likely say to redbull that they have to drop their price or they will drop the product.
That is the way of modern big bussiness
thats why the small guys can't survive!!

It's too simplistic to say that Wal-Mart dictates prices to it's suppliers. Wal-Mart puts incredible pressure on it's suppliers to bring down prices, but in the end it's the suppliers who choose if they want their products in a Wal-Mart. It's an equal decision... if the economics work out for both, then so be it. Most suppliers choose to drop their pants though just to have their product sold by the largest retailer in the world.

[Road Runner]

Re: Can manufacturers force companies to set minimal prices on goods?

In Canada...NO!

Apple does not dictate the price, look at Visions and Soundsaround flyer last week. Nano's discounted below retail.

With respect to Apple Ipods, most retailers don't discount because there is very little mark up in them to begin with (about 8% at full retail) and they are very hard to get in any reasonable quantity. Why would you discount a product that everybody wants and is perfectly willing to pay retail for?

The bottom line is that in Canada, the supplier CAN NOT dictate what price the reseller sells the product for. They can suggest that it not get sold below MSRP, but that is all they can do. There is MSRP for all products, but what it gets sold for is up to the reseller.

I agree, from what I understand its almost completely up to the retailer how much they want to sell the product for. That being said, margins etc are one of the more significant dictating factors which keeps prices fairly uniform across the board (ie; iPods).

I know certain industries are more picky than others however and in some industries, if you sell your product below the MSRP you may not get a formal cut off from the supplier, but you may begin to see your shipments getting "lost or redirected". The higher end fashion industry is notorious for this (that is heresay from my marketing prof though).

[N'Syncro]

Re: Can manufacturers force companies to set minimal prices on goods?

Check again Walmart dictates prices to the manufacturers..

That was directly from the mouth of a Red Bull rep. He's a family friend, and told me that a few weeks ago to my face. Red Bull sells their product to everyone for the same price, regardless of if its a mom&pop shop that buys 2 dozen cans a month, or a giant like Walmart that probably buys 2 million cans a month.


There's alot of differing opinions here, but nothing really concrete.




To bring up another point of discussion: Do you think it's legal for manufacturers to restrict resellers from selling on Ebay? It's kind of the same arguement.

I know for a fact that some do. In the automotive industry:
1)Momo restricts it, unless you have special permission from them - and you can only sell for MSRP
2)RS-R Exhausts will deny warrenty on any of their products being sold on Ebay.

[James]

Re: Can manufacturers force companies to set minimal prices on goods?

In Canada...NO!

Apple does not dictate the price, look at Visions and Soundsaround flyer last week. Nano's discounted below retail.

ya..visions and soundsaround = canadian retailers so i guess that makes sense if its canadian law...but companies like futureshop (owned by BB which is a US company) or radioshack or london drugs have to sell it at what apple dictates

[hifiguy]

Re: Can manufacturers force companies to set minimal prices on goods?

ya..visions and soundsaround = canadian retailers so i guess that makes sense if its canadian law...but companies like futureshop (owned by BB which is a US company) or radioshack or london drugs have to sell it at what apple dictates

The law is applicable to all businesses operating in Canada regardless of whether or not they are Canadian owned. 3 weeks ago, Best Buy had the 4g Nano discounted below MSRP of $299CAD

[Tuna]

Re: Can manufacturers force companies to set minimal prices on goods?

The law is applicable to all businesses operating in Canada regardless of whether or not they are Canadian owned. 3 weeks ago, Best Buy had the 4g Nano discounted below MSRP of $299CAD

remember, a lot of times when a store "discounts" certain units it's usually because the supplier either offers a discount on their price, or approves a price break. Car companies do it all the time.