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What’s the difference? Heaps!

September 22, 2101: The influx of so many new camera models in the space of a couple of weeks has prompted us to look at manufacturers’ pricing differential policies for Australia.

We are primarily focussed on comparing Australian pricing with the US, where B&H makes it oh-so-easy for local bargain hunters to grab a great deal, especially with that sub-$1000 GST saving.

The inspiration for this casual overview was twofold. First, there’s a growing tendency by some camera companies to issue press releases on new cameras without supplying that all-important factor in the equation, the RRP – even though these models are often due on dealers’ shelves in a matter of weeks!

This is frustrating for publications like Photo Counter and Photo Review as we pride ourselves on timely supply of full details to our readers. The price of a product is a fairly critical factor in the equation, we would have thought.

Lack of local pricing simply prompts the curious reader to fill the vacuum by Googling up a US version of announcements, which almost always carry pricing details. They could even go straight to B&H to check out pricing, with obvious potential to then place an order!

But more specifically, my colleague Margaret Brown reported last week on the new Pentax K-r, at a local RRP of $999 with a kit lens. In the US the K-r is US$849.

‘Hang on, that can’t be right,’ I thought. ‘If it’s US$849 it must be at least $1300 Aussie. Margaret’s made her annual error, and there’s still 3 months to go in 2010!’

I called CR Kennedy to check, and the $999 price was confirmed. Lo and behold! It would appear the camera is actually slightly less expensive (less GST) in Australia than the US! (Well this week at least, with the Aussie dollar creeping towards parity with the greenback!)

I then looked at the new flagship compact from one of the top brands. In the US it has an MSRP (‘Manufacturer’s Recommended Selling Price’, aka ‘RRP’) of US$499. Australian pricing was not included in the local press release but a US report noted that the camera was the same price as the superseded model. So if that holds true in Australia it will be $799 – say $720 excluding GST. Converted to US dollars, that’s around US$670. So the price difference in raw recommended prices, excluding GST is just over 30 percent!

Little wonder local retailers can’t work up the energy to get behind the PMA/PICA GST petition! It’s a second order issue in the context of worldwide corporate pricing policies from some suppliers.

But it’s not just one supplier taking this approach. We had a look at a flagship DSLR announced last week by another top brand. Once again, no local price was supplied in a press release which otherwise was exploding with detail. Anyone of a curious bent can quickly find out, however, that the US price for the new DSLR is US$1700 (A$1800) while the European price is 1700 Euros (A$2350). Based on pricing patterns over the last 12 months or so, the Australian price is most probably going to be closer to the European than US price.

It’s hard to understand why it is a good idea to launch a product to sophisticated, net-savvy European consumers with a 30 percent mark-up compared to the US price, but perhaps barriers to entry of grey products into the European Union countries has something to do with it. There are certainly no such barriers in free-trade-loving Australia.

When we look at a couple of other new releases from a third company, and found a mid-range DLSR carrying a 20 percent premium to the US price (excluding GST), while the new flagship compact is closer to 30 percent up on the US price.

So all other things being equal (and I’m assuming the relatively low local RRP for the K-r isn’t an aberration) Australian consumers will get better value for money, spec for spec, by buying the Pentax K-r than an equivalent DSLR, simply because of a difference in approach to local pricing.

The brands with a lower differential between local price and overseas prices should be easier to sell – an increasing number of Australian consumers research on the net prior to purchase, and will be well aware of availability of models from some manufacturers at far lower pricing overseas. Retailers need to do likewise to match their consumers’ product knowledge.

But Pentax/CR Kennedy isn’t the only supplier that seems to be able to keep the price differential between Australia and the US under control. The recently-released Ricoh CX4 has a local RRP of $499, a US price of US$399, and a UK price of 250 Pounds, and this level pricing approach carries through the Ricoh range.

It’s worth noting that both CR Kennedy and Tasco Sales are third party, Australian-based suppliers. Does this give them more freedom from head office ‘guidance’ when setting local prices?

Contradicting this thesis, Samsung is another supplier whose potential customers don’t get a rude shock when they make an online price comparison, so there must be more going on.

A percentage of price-conscious consumers will always want to make purchases at the lowest possible price, for a variety of reasons ranging from low income to a fear of being bested by the system. (The ‘I’m too smart to pay retail’ syndrome.)

These people – particularly the younger among them – are likely to drift way from discount outlets, where they previously would have assumed sharpest pricing, to the internet, where they can buy locally or save even more buying from wherever in the world the product is cheaper. They are being catered for by B&H and eBay.

The majority of consumers, however, are so far either oblivious or indifferent to the fact that some Australian camera prices are pumped up, and continue to purchase locally. It’s the best of both worlds for the leading camera brands – good local margins and international market share maximisation.

It’s a moving picture, though, and likely to become more of a challenge as internet buying grows in popularity.

The Australian photo industry desperately needs data on internet sales, and exactly how many sales are bleeding to offshore internet retailers. And perhaps even more interestingly for retailers trying to decide on their product mix, which brands and even individual products are coming into the country in single units in the greatest numbers.

What do you reckon?

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