Group buy feeler post - RS2 cam

Brandon Hull Hull at
Tue May 25 17:35:25 EDT 2004

Sort of an interesting thread especially as it involves one of the
pioneering venders to the Audi community and someone who I regard as a
quintessential Audi aficionado.  My only contribution to the debate is
to observe that the discussion revolves around the economic principal of
price discrimination as it relates to supply and demand curves.
Usually a manufacturer issues a suggested retail price to it's
distributors.  This number is essentially an average "market clearing
price," the price at which you will match the maximum number of buyers
with the available inventory of product.  Trouble is, the demand curve
extends a fair ways past that average price.  There are some buyer who
would pay more for a product, and many more (approaching infinity) who
would pay less.  Ideally, the seller would like to capture customers all
along that demand curve, eg, sell the same part for different prices
depending on the price sensitivity of each buyer.  This is the principal
behind coupons, load-based airline pricing, seasonal travel discounts,
new-car "options," and so on.   For this to happen successfully, though,
you have to insulate the buyers from each other, for instance
geographically (Price drugs cheaper in South Africa and build your
outlet store two hours from major metropolitan centers) or by
differentiation based on features or service.  
At the end of the day, the success of a group purchase should be
measured by the vender if the total number of units sold at a discount
times the ASP exceeds the total number he would've sold individually
times each price.  I would think that group buys would be excellent
devices for price discrimination: they are finite in time, they involve
some hassle on the part of the buyer.  On the other hand, I think a
vender would be wise to make sure that the rules of price discrimination
apply so as to maximize the benefit of the exercise, eg, run a special
that is full price but adds features or service.  Also the vender should
make sure he realizes the lower costs available in a group purchase eg
it is a lot easier and cheaper to ship 100 hoses to one address than one
hose to 100 addresses.  

Anyhow, interesting debate.  I personally have never participated in a
GP because the discount was never worth being insulated from the vender
in the event of problems.  And because the Audi community used to be
tiny, and it didn't appear the venders were getting all that rich...

Anyhow, my .02,
e//S2, now for sale

> Vendors who don't want to do group purchases don't have to accept the 
> business.  Free country.

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