Quote from: DesertHound on June 05, 2015, 12:19:42 PM
Surely that's why we need to explore ways in which the prices can be brought down (note, prices brought down for entry level models, not the "all singing, all dancing" varieties).

Bachmann have been very candid about this (their press briefing on this is on RMWeb) - it's labour costs in China that have caused big price increases recently. That's irrespective of the quality of model (30 year old design or latest cutting edge) being made unfortunately.

Cheers,
Alan

Quote from: Buffin on June 05, 2015, 12:17:53 PM
V interesting thread about the economics of the industry 

One issue for me is the magazine reviews. In Model Rail, for instance, they are astoundingly detailed, far beyond any demands I might have. Any deviation can lead to savage marking down. Is N gauge a rivet counters' ghetto?

Good point Buffin. I guess it all comes down to the individual. For me no (I don't know much about the real trains), but for others yes, and that's perfectly understandable.

So, using my example above of VW Passats, we could now segment the market between the rivet counters and the non-rivet counters. The non-detailed loco is your VW and the "all signing, all dancing" version is your Audi. Voila.

Again though, a valid point has been made as to the economics of producing two different versions, particularly re market size. Hence I don't know if the economics would support it. What I think would support it is a larger market. How do we get a larger market ... ah, it's chicken and egg time 

Mention was made of the old Poole tooling being too old now. Surely they could dig out a few pieces to bring out a basics range, thereby attempting to grow the market. Just a thought.

Do something to grow the market and then the economics will change, enabling more models for different segments of the market to be produced (as Railsquid excellently pointed out in Japan).

Cheers

Dan

Quote from: Dr Al on June 05, 2015, 12:21:51 PM

Quote from: DesertHound on June 05, 2015, 12:14:54 PM
That said, the mission is to try and grow the market size, if at all possible.

Specifically for the N market size I think the way to do this is have outstanding high quality models, like those we are now getting;  precisely not a 'budget' lower quality range. Couple this with N's big advantage of space then it becomes a very attractive scale.

IMHO superb quality is what will make existing modellers in OO (or others) consider switching - Poole standard models will not.

Is N not currently growing anyway (anyone know of any stats?), precisely because of this?

Cheers,
Alan

A valid opinion. Is this how it is in Germany also I wonder.

Quote from: DesertHound on June 05, 2015, 12:19:42 PM

Quote from: paulprice on June 05, 2015, 12:14:08 PM
... but for someone outside the hobby they must seem huge,

Paul

Surely that's why we need to explore ways in which the prices can be brought down (note, prices brought down for entry level models, not the "all singing, all dancing" varieties).

I think Mark's opening post was about making N gauge accessible to those who cannot afford current prices.

I'm not saying I hold the answers, nor that market size isn't an issue (it clearly is). 

Cheers

Dan

Dan

Its not an easy one, I use to be responsible for supplying stock into Europe from a company which had its own plant in China, and I can tell you the production issues are a total nightmare, a good example was the problem of turning down known sales or older products, because we had to get newer ones to produced and to market, and to make the production runs economical it terms or set up times etc we had to run large batches which mean excess stock, at least until word got out about the new ranges but this could take months, and with a relatively cheap unit cost I was still having nightmares about stock holding, and import duties for stuff that once it was made I had to get to the UK, I dread to think what sort of stress the chaps at Bachman and Hornby are under.

I mean my previous company was managing to run at a profit, but is Hornby or are they still running at losses like in more recent years?

Quote from: Dr Al on June 05, 2015, 12:23:54 PM

Quote from: DesertHound on June 05, 2015, 12:19:42 PM
Surely that's why we need to explore ways in which the prices can be brought down (note, prices brought down for entry level models, not the "all singing, all dancing" varieties).

Bachmann have been very candid about this (their press briefing on this is on RMWeb) - it's labour costs in China that have caused big price increases recently. That's irrespective of the quality of model (30 year old design or latest cutting edge) being made unfortunately.

Cheers,
Alan

That's true, but labour cost is something that would decrease, per unit of production, should more models be produced for a larger market. Okay, labour cost isn't strictly a fixed cost (it does increase with an increase in production), but there would be economies of scale in many areas through increased production (of course you would only increase production if there was a demand to be met).

Dan

One thing I didn't see mentioned in all this topic, if i missed it, please forgive.. still on the first coffee of the day..

The market has changed over the years.   I started in N gauge in the 70's.  My first loco was a Grafar holden tank which threw it's coupling rods across the room every time it started up.. sooo  in 1972 the peco jubilee came out..  9 pounds 10 shillings.  (still have the box).   If you take that by most of the general inflation rates between then and now  thats about 160 - 180 pounds in todays money.  Whilst it stacks up quite well against the latest farish, it's still sub par on some fronts and the new ones are comparatively cheaper..  however what has changed is that todays market comprises people who want instant gratification and less modelling and they want it now..  its the current generations curse to my mind.

For me..  that Jubillee was one Xmas present and one birthday present, and I was lucky.  I was brought up where if you wanted something like that, you saved...  today.. it has to be available right now and be affordable right now in someones eyes.

Even today, I still have to save for my trains..  and start putting money away when they are announced in the full knowledge that there will be enough available when it's released..  but how often do I see people saying.. oh man that's way to expensive when it's released after it was announced 2 years previously.  I agree there a major difference between finding 150 pounds now, or finding a couple of quid a week for 18 months.

Personally, I don't think the market in UK N gauge is big enough for a cheap range..  frankly, it's only just big enough for the few manufacturers we have now.

For anyone interested in the real financial costs of releasing a UK locomotive, I would suggest that you do some research on the Interwebs of the actual manufacturing costs and the real costs of distribution, packaging, spares, QA and marketing, and then if you feel that you have a good handle on all of that, and can produce the thing..  go kickstarter with it and see if you get the backing.

An alternative would be to see if any of the old manufacturing tools from Farish are still available and see if they are avialable for sale..  then with the above do a kickstarter...  that will give you far more feedback than just postulating a theory within a subset of enthusiasts.

As a final comment, i would point out that by comparison to some of our continental friends, there's a lot of locomotives ready to run on the continent that are 2/3 times (or more) expensive than ours that regularly sell out on pre-order before manufacture

I think, in summary, the biggest change is not an increase in price, its the expectations of the current marketplace..  not that that is a bad thing.. manufacturers need to be aware of the I want it now and cheap fraternity..  but I think they have a pretty good handle on what currently sells and how much people will pay.

After all..  CJM models are at least 3 times the cost of farish/Bachmann..  have no working lights, are not DCC ready (although they can be chipped) and still regularly sell out years in advance.

Those expectations also drive the.. out of the box.. on the track rtr need..  the "modelling" aspect of our hobby is getting rarer..  hey.. me to on this   not pointing fingers, due to time constraints and to me that provides even less market for a cheaper version.

Regards

Graham

Quote from: DesertHound on June 05, 2015, 12:26:24 PM
Mention was made of the old Poole tooling being too old now. Surely they could dig out a few pieces to bring out a basics range, thereby attempting to grow the market. Just a thought.

This is a fair point in terms of logic of the existing tooling.

I would suspect that Bachmann want to distance themselves from the elderly models now though, and drive their own high quality range so that that's how their brand image is seen. Common sense seems to suggest that having a brand image of producing fairly ancient tooled models isn't a particularly good or forward looking one?

Cheers,
Alan

Quote from: DesertHound on June 05, 2015, 12:31:45 PM
That's true, but labour cost is something that would decrease, per unit of production, should more models be produced for a larger market. Okay, labour cost isn't strictly a fixed cost (it does increase with an increase in production), but there would be economies of scale in many areas through increased production (of course you would only increase production if there was a demand to be met).

True I guess, but the markets take time to grow in model rail - it simply won't come overnight or even in a couple of years - a lot of folks perception of N is still that of the bad old days of pizza cutter wheels, poor running (which in itself isn't really true, it's a perception) and split gears. It's why I think excellent quality high detail, high standards is the road to growing N.

In the interim, labour costs are clearly escalating steeply from the cheaper times we used to know. That's just something we'll have to accept in the short term no matter what the model is :-( .

Cheers,
Alan

Quote from: paulprice on June 05, 2015, 12:31:26 PM

Quote from: DesertHound on June 05, 2015, 12:19:42 PM

Quote from: paulprice on June 05, 2015, 12:14:08 PM
... but for someone outside the hobby they must seem huge,

Paul

Surely that's why we need to explore ways in which the prices can be brought down (note, prices brought down for entry level models, not the "all singing, all dancing" varieties).

I think Mark's opening post was about making N gauge accessible to those who cannot afford current prices.

I'm not saying I hold the answers, nor that market size isn't an issue (it clearly is). 

Cheers

Dan

Dan

Its not an easy one, I use to be responsible for supplying stock into Europe from a company which had its own plant in China, and I can tell you the production issues are a total nightmare, a good example was the problem of turning down known sales or older products, because we had to get newer ones to produced and to market, and to make the production runs economical it terms or set up times etc we had to run large batches which mean excess stock, at least until word got out about the new ranges but this could take months, and with a relatively cheap unit cost I was still having nightmares about stock holding, and import duties for stuff that once it was made I had to get to the UK, I dread to think what sort of stress the chaps at Bachman and Hornby are under.

I mean my previous company was managing to run at a profit, but is Hornby or are they still running at losses like in more recent years?

Fair cop Paul. That's a whole new can of worms we're opening there. I can only imagine the challenges faced. That said, isn't this part of "doing business" and a challenge which should be overcome, as opposed to seen as a constraint on growing your market? I'm not for one minute discounting your sentiments, just wondering why it should be a barrier, as opposed to a challenge to be overcome.

I don't know the ins and outs of the Bachman manufacturing, but I think they contract their manufacturing to third party factories - is this the case? If it is, then this only goes to back up what you say about what a nightmare it must be Paul.

That said (and me being strictly a Poole fan), I believe in reaping what you sow and by moving the factory so far away from the home market Bachmann and Hornby must have known they would face these issues. Didn't Hornby encounter some serious production issues in China a few years back? I'm not saying the companies would have survived had they continued with an "on-shoring" policy, just that if you move your factory to the other side of the planet then logistics has just become a whole lot more complicated.

Would be interested to hear more on the logistics front Paul. This really is an interesting discussion we are having.

Cheers

Dan

Quote from: DesertHound on June 05, 2015, 12:41:19 PM
I don't know the ins and outs of the Bachman manufacturing, but I think they contract their manufacturing to third party factories - is this the case?

No, I believe their parent company, Kader, has a factory in China where all Bachmann products are produced for all their markets.

Edit: more info here:
http://en.wikipedia.org/wiki/Kader

Cheers,
Alan

P.s. This phrase of the wikipedia article is telling:

"Kader's business model for each take over, from its original purchase of Bachmann to the present day, is to buy a perceived quality brand in the target market or country. The company then closes local in-country production facilities, and then improves quality by re-engineering the models in Hong Kong, and reduces cost by producing the models in mainland China."

Cheers,
Alan

Quote from: Dr Al on June 05, 2015, 12:44:02 PM

Quote from: DesertHound on June 05, 2015, 12:41:19 PM
I don't know the ins and outs of the Bachman manufacturing, but I think they contract their manufacturing to third party factories - is this the case?

No, I believe their parent company, Kader, has a factory in China where all Bachmann products are produced for all their markets.

Edit: more info here:
http://en.wikipedia.org/wiki/Kader

Cheers,
Alan

Good info, cheers.

The other reference piece - Bachmann on price increases:

http://www.rmweb.co.uk/community/index.php?/topic/85287-bachmann-why-price-increases-are-necessary/

HTH,
Alan

Quote from: DesertHound on June 05, 2015, 10:54:01 AM
Good morning All

I was just about to put pen to paper (or should that be finger to keyboard), when I read GrahamB's post above. I think Graham is bringing us back to Mark's initial posturings, which were;

" ... for those interested in this hobby who could afford something at a lower price."

We seem to be talking a lot about substitution of product (that is buyers opting for the cheaper range over the more detailed range, hence undermining the good work done by Bachmann with their newer models). Many people have said "please let's not go back to the bad old days", when really nobody is suggesting that we give up the strides made by Bachman et al.

Where GrahamB and Mark are coming from, to my mind, is in a) growing the market and b) having product offerings for those who cannot afford current prices.

a) Growing the market:

One way to grow a market is by reducing the price. Yes, this might be achieved through introducing a second, cheaper product, but for entry level hobbyists, current prices might just be too high. Think of a hobby or fleeting interest you've had in the past. You wouldn't wish to commit large sums of money to kit / equipment if you weren't sure if you would like the hobby or not. Therefore you opt for "entry level" kit so that you can try the hobby out. This could be anything from an SLR camera to golf clubs to kite surfing equipment - you name it. Many hobbies have different product offerings depending upon your experience with the hobby, your level of interest, your willingness / ability to pay etc.

A market can also be expanded in size by a lowering of price. Think of low cost airlines. They created a market which did not exist before they were formed. People now fly as often as they take a bus, all thanks to the lower price point offered by the low cost airlines. Yes, they did alter the product slightly from the "full service" airlines, in order to be able to offer the service at a lower price, and hence "create demand".

b) having product offerings for those who cannot afford current prices:

Bachmann, in bringing out an "entry level" range, needn't cannibalise the Graham Farish brand they've worked hard to build up. It could be branded as something else, so as to be distinguishable from Graham Farish. Associating it with Graham Farish, I believe, would just confuse the consumer, especially those not so into the hobby as us on here.

A good example of this is Volkswagen. Now, if I'm not mistaken, isn't the VW Passat estate also available as a SEAT, a Skoda and an Audi? It's the same car with a different badge and different trimmings. The best reason for this is to be able to maximise revenue, selling the car to as much of the market as possible, segmenting the product (via different badges and trimmings) so that the price can be best matched to each market segment's willingness to pay? This is a bit like my example above of groups A/B/C/D and having a product which you can sell to each group. Without three of the four brands of the car, VW might only be able to sell to 1/4 of the market.

So, should there not be consideration given to an n gauge market segment that might be being missed? I don't know the answer, should this be considered, and I imagine the manufacturers do consider this from time to time. Ultimately they are privy to commercial information and sales figures so they are best placed to decide upon this.

My inkling, however, is that if something doesn't happen with the major manufacturers then somebody else will try it, since it's just not a hobby that is affordable to most people these days. My money would be on Hornby having a better understanding of the entry level market. If nobody else tries it then I think the manufacturers will not be around in x years to come.

I know as modellers we want the best we can get. I think Mark was trying to bring to the table an option for others, who might then grow into modellers and also want "the best they can get". However, if the only car available on the market was a Rolls Royce, then 99.9% of us wouldn't be driving.

Best

Daniel

Thanks Dan
My initial posting was regarding the former Poole bodyshells being fitted to a basic chassis similar to the old Lima types both in N and OO gauge as an economy range. 1 motor bogie and a feed coming from the trailing bogie to the motor bogie.
Obviously production line costs will be the same as no one is going to change their hourly rate depending on what the production line run is each day. but development costs maybe cheaper if a basic chassis was produced that has no circuit boards, lights and DCC equipment to worry about.

Cheers Mark

Moira

I really like your post. You bring up many valid points. One thing that stands out to me from your observations, is that the market does indeed seem to have many segments. Forgetting N specifically for a moment, we have a market for;

Entry level younger age (more toy-like perhaps)
Entry level older age (basics range)
Current highly detailed range
Range for kit-bashers and modellers

Now, if only each of these segments could be catered for. From these discussions we are having I too think the market is too limited (small) to sustain all of the above. I still ponder the question though of trying to increase the size of the market, and this can be manufacturer led, but not over night.

I'm just working on a Grafar loco right now, one of my first. It's an LMS 0-6-0 maroon. SWMBO just walked in and said, why does it have SMALL, MEDIUM, LARGE on the side?