HOT PLATE vs GIBSON????

Old news. THD licensed the design to Gibson. It says THD on the back.

 

I'm just curious, is gibson charging more for the same thing? I mean, it is an honor to have such a name drawn on the front.

 

The gibson retail price is $20 more, but the street prices are the same it seems.

 

I could be wrong, but I thought I saw them listed for the same price in Musicians Friend.

 

You're not wrong.

 

I'm intrigued by this at a business level.

Isn't THD sacrificing their own market share by building for Gibson?

Obviously THD doesn't think so. What am I missing?

 

How so? We get paid whether it says THD or Gibson on it?
Also, since we just raised prices they're now the same street price.

 

What I'm interested in is will I be seeing Gibson attenuators over here in Finland in stores that sell Gibson guitars and amps? Attenuators are really in short supply over here, only one store in Helsinki sells THD and Weber stuff. Not that I would buy one (already got an attenuator collecting dust in the cabinet because I've got a Power Scaled amp) but it would be nice when trying out amps.

 

Nope, only two markets they can sell in...US and Japan.

 

Thanks, Ed.

1. I was thinking (perhaps mistakenly) that THD's margin would be lower selling to Gibson than to a retailer.
2. I assumed (likely mistakenly) that THD could distribute to everywhere Gibson does as efficiently (same cost) as Gibson does.
3. Assuming that the market doesn't change by adding a re-branded item (probably an addditonal bad assumption), the total number sold is a constant (save, perhaps, for increased floor stock).
4. In such a scenario, THD might sell fewer directly to outlets if they sold to Gibson -- thus, reducing their profit.

Yes, many assumptions.

I know I've got 1 or more wrong, I just don't know which.

 

In the current Musician's freind catolog they're both on the same page at the same price.
Everyone relax.

 

The color scheme of the THD is definitely more badass. They should charge more!!!

 

Just ordered an 8 ohm THD Hotplate from Torres Engineering for $249 + $10 shipping.

 

The Power Stealth has an XLR out, while the Hot Plate appears not to from the specs from Musician's Friend.

 

You've forgotten one scenario by focusing on margins (instead of market share), namely:

If Gibson is going to sell an attenuator, do you want it to be your attenuator (and make something) or someone else's (and make nothing)?

Like Ed says, this way, this way they make money regardless of what name is on it.

In addition, should Gibson go with their own direct stores or eventually merge with Guitar Center/MF, again would you want Gibson's name on your attenuator or someone else's? Plus do you want to be in the door or outside the door at Gibson should they start looking for more products to stock their direct store shelves or want to rebrand any other products you make?

Business 101, as practiced by Walmart/Microsoft/Intel/etc:

- Forget margins initially on the selling side.
- Focus on market share completely instead.
- Market share leaders become the low cost producers (by spreading R&D/overhead/marketing costs over more units, running production facilities at a higher utilization, and enabling greater discounts with suppliers).
- Make up lost margins in the selling price by controlling costs and getting lower prices from your suppliers.
- No one can beat the low cost producer because:
1. Eventually they'll make more money on each item than the competition.
2. Those extra profits can be used to sustain competitive advantages against your competition (better distribution, better products, better quality, better inventory, better customer service/support, whatever you need it to be).
3. The competition will never be able to sustain a price war with you.

- If you're the market share leader -> low cost producer,
you win.
EVERY time.

- Think either/or scenarios, and the choice for gaining market share becomes obvious.


Congrats, Ed. I think it's a strong endorsement of THD's quality and reputation for that product.

 

John,
I disagree completely with your comment:
"Only in a marketplace where the customers do not care about quality and diversity"

Customers buy what they want, for whatever reasons they want. There's plenty of evidence customers of Walmart/Microsoft/Intel/Gibson/THD care about quality and diversity, and they still choose to buy from those companies.

And how can you dominate an industry "if the customer simply doesn't want your product"? By definition, the market share leader is selling MORE of their product in that market than all of the rest of their competitors. By definition, customers MUST want your product if you're the market share leader, otherwise they wouldn't be buying it, right?

So absolutely is DOES do you good to dominate the industry, because it means your meeting more customers needs/wants than your competition, and your long-term profitability and viability is secured. Alternatively, if you lose your market share leadership, your long-term viability and profitability will be challenged.

I think you may have missed my point, and I don't believe your comments address hear and play's questions, which were aimed at understanding why a company like THD would knowingly and willingly give up margin on their existing attenuator sales by rebranding them for Gibson. The reasons I listed can explain those kinds of decisions, even if THD makes less margin on every unit that Gibson sells, and even if sale of those units by Gibson means that they will sell less units of THD-branded attenuators.

I never said there's not room for competition, nor room for competition to make a profit. If you're the market share leader, by definition you're selling more than all of your competitors, so you must have some competition to do that, and if that competition is sustained, by definition, they're probably going to make a profit. They just won't be as profitable as the market share leader in the long run.

A company's motives don't have to be to take over the world to be a market share leader. They just have to be the goal of being number one in their industry. I could have listed dozens of companies that you've never heard of that are market share leaders in their industries that trounce their competition.

Moreover, there's nothing intrinsically wrong with a company wanting to dominate the competition or be the market share leader. After all, if you own a company (or own shares in a company), you're hopefully concerned about the long-term viability as well as the short-term profitability of that company. The best way to guarantee that is to be the market share leader, and remain the market share leader.

If you're the market share leader, then in the long-run you'll not only be the most profitable company, you'll also have the most resources available to spend on R&D, new product innovation, better customer service, better quality control, better distribution, or whatever it is you choose to spend money on to defend your market share leadership.

Again, folks can knock market share leaders like Walmart/Microsoft/Intel all they want, but the bottom line is they're winning in their industries, and they're by definition meeting the needs/wants of most customers.

So sure, there are absolutely "a host of small companies who make a better quality product, often at a better price, and who spend their time just doing that rather than plotting how to take over the world."

So sure, there will always be an Apple for every Microsoft, and there will always be someone a smaller company trying to do something better than the market share leader (as that's the only way they'll be able to catch up with them). And Apple's leadership want to grow and be the market share leader just as bad as Microsoft's leadership wants to stay the market share leader, because both companies know the long-term viability and profitability of the company is at stake.

And one might consider that it might be rough working for companies like Walmart and being criticized for winning in your industry, but it might be roughter to work for Kmart and lose your job because your company is in bankruptcy.

If you don't believe that market share and long-term viability are intrinsically linked, then research General Motors current status as they've lost nearly half of their market share over the past 35 years (giving up a HUGE worldwide lead in market share), and because of current overcapacity in the auto business, GM's long-term viability is now an issue.

So sure, there have been lots of smaller auto companies making better quality automobiles over the past 35 years, and that's why GM is just a shadow of the former giant it used to be. GM has likely permanently lost the market share battle and now it will never be able to win it back.


So THD's decision to rebrand their attenuators for Gibson makes business sense, even if they give up margin and focus on market share instead. It's the kind of move that would help THD gain market share leadership (if they don't already have it) or keep it (if they've already got it).

My guess is, they've already got it, and the Gibson deal will help them keep it.