Too many chefs cutting into a small pie?

This topic is an off-shoot of the DI 53' trailer topic which got sidetracked on issues about another manufacturer doing another similar product in N scale.

Competition in the field of model railroading in general, regardless of scale, can be a bad thing for modelers.

(What!!!....???) Yes, you read that correctly. We all hear that competition is good... it keeps prices at reasonable levels... etc... But... that depends on the goods being sold.

In a broad market... such as food... which we ALL must have to survive... competition is a good thing. You can have 10 manufacturers that provide similar "hotdogs" that would vary slightly in flavor, texture & cost.

A narrow market... which includes most hobby interests... can be difficult... and more-so when dealing with scale size as a limiting factor within the hobby... basically the pie gets smaller and smaller. The N scale model railroading "pie" is about 1/3 the size of the HO scale model railroading pie.

HO can support more manufacturers doing similar products because there are enough potential buyers to support them. There is enough potential sales to support the tooling required for a new product... even if it's been done by another HO manufacturer. N scale's pie is too small still to support multiple manufacturers competing directly with each others similar products. Ultimately one or both will end-up loosing money and new product development will cease.... due to an apparent lack of interest... thus manufacturers drop out and don't produce items we still need.

While it may seem a bit of ironic... (non-competitive... collusion) the need for N scale manufacturers to "conspire" to make different products and NOT compete against themselves is in the best interest of the hobbyists that want certain products made.

While I have no proof of this... I'm sure that both IMRC and Micro-trains suffered from the direct competition of the FT's. Had one chosen to do FT's and the other chosen to do F3's, they both may have done better financially. I think that IMRC may have done better in the head-to-head battle... but neither did as well as they could have. This may not have had a serious effect on either of the manufacturers, but, perhaps it could have delayed other product developments.

We are running out of products to create in N scale... eventually duplication of products may be inevitable. It is probably for the best that there are fewer chefs cutting into the N scale pie.... specially not to duplicate the efforts of another manufacturer.

 

I agree with ya Joe although this may be the exception in overlapping. Atlas has made it clear that they won't mfg a product being done by another company and Kato seems content with modern power (their F3's didn't include SP, SSW, or Pennsylvania and the ATSF paint was the wrong color). MTL hasn't announced any other power to my knowledge so perhaps the FT's were just a test. I like the mix of products and hope it continues without much overlap. I agree that it would not be good for the intustry.

 

While I understand what you are saying, and it does make sense, I am not totally convinced. Your conclusions are based on the premise that competition has no effect on the size of the “pie” at any given time. What if competition helps increase the size of the pie so the pieces get bigger? What if more modelers come over to N-scale because competition is keeping the prices down?

But having absolutely no information on the current and past size of the market, I can only hope that more manufacturers and duplicate runs in our scale means that the pie is indeed getting larger – or at least large enough to support some duplication.

 

I have heard Charlie Valk joke about the "Big Annual Meeting" where N scale MFG's divvy up possible projects. To do so for real would be collusion, of course, but I doubt the Federal Trade Commission would find anything in MRR big enough to investigate.

It would make sense for them to cooperate a little, to avoid more model dupes like F3's, bethgons, now autoracks (although there seem to be enough differences in the actual prototypes there) etc.

Without this cooperation, I'm sure the MFG's logically speculate a bit, just like we do. For example, to me it made perfect sense for IM to do specialized locos that no one else offered to break into the market, ala Tunnel Motors. Since they go to Atlas for motors and trucks, I guess Atlas probably asked, and IM told them, what they were going to do, if it wasn't obvious. Atlas probably gave the blessing, since they had no plans to do TM's.

I'll bet Kato gives out the least info to others, and possibly Athearn, new to N is similar. That may have resulted in matching Bethgons and SD 70 projects......

 

No competition? That means we're stuck with Kato's non existent SD40-2 loco, non-existent F7 loco, non-existent SD45, etc., etc.

What is Atlas THINKING??? If they would simply produce those models and make them available on a consistent basis, they would clean up! And if it bothers Kato enough, they'll come out with COMPETING locos.

The consumer only wins with competition.

Disclaimer: this post should not be construed as a personal attack on any forum members. It's just my opinion.

 

If the question is one of cost vs. profit, prices of N scale units and accessories should go up accordingly to keep the profit incentive intact for the developers of the product. The consumer will suffer with higher prices in exchange for quality products. Otherwise, manufacturers will concentrate their efforts in the HO market. It is the burden we must bear for not having the most popular niche in the model railroading market.

 

I don't think we are suffering with the ever higher quality of products we are getting in N!

As to prices, I don't want to start that debate, but I think if dual scale MFG's were pricing based on market demand, the differential would be higher than it is.

In fact, aren't Kato AC4400's actually more expensive in HO than N? That must be based on actual plastic that goes into them and their boxes, because or if it were based on amortizing costs over units sold in each scale, then N at half the market of HO, would surely be higher, no?

 

I would think it would mainly depend on what costs need to amortized. Sometimes manufacturers utilize the same (or slightly modified) mechanisms from a previous run. Or perhaps the cost was amortized from inception with a set amount of releases in mind? It really depends on their accounting methods.

 

This is actually very true... While there is a seemingly ever widening selection of makers and products, there is only so much money to go around. New startup companies are only going to sit around waiting to start making a profit for so long. It takes a lot of money and time to develop just one model. That's whether your a company like Atlas, or a small guy doing resin kits. Either way, it's a big investment. And after a multi month development period for a new model, you finally release it, and it just sits there. It is very discouraging. A lot of theses small companies are actually run by retired people for the fun of it, believe it or not. In many cases they barely make a profit. Which in turn just makes it that much harder for the people that are trying to make a profit, because they have to compete with those people's prices.

If you can somehow survive long enough to build up your catalog to the point that you have enough items to sustain you as a whole, then you can make it. But to get to that point is the hard part. So yes... When you've got a bunch of companies taking a shot, but never really getting off the ground because there just isn't enough money to go around... Many of these companies are just clogging up the system. The thing that made the Internet revolution so good, is also what makes it bad. You as an individual can start a business and make sales for a tiny fraction of what it would cost before the Internet came along... No more huge advertising costs, or store costs. BUT... The down side is, so can anybody else, which is a big part of the problem. There's a lot of small businesses that just shouldn't be in business. They don't take it seriously, and their efforts are poor at best. They can not only take hobbyist dollars out of the pockets of the better companies that really know how to put out a good product, but they can also contribute to giving people a bad overall experience with poor business practices and lack of professionalism. The same can be said for retail too. There's a huge amount of retailers now. I recently sent a purchase for an out of production model through 3 sites that had it listed as being in stock. All three eventually told me it wasn't in stock. One of them took two weeks to do so, which made my chance of getting it even worse. After that I got smart and e-mailed first, before I sent the payment through. Another 3 told me they didn't have it in stock, even though it said it was on their site. I finally gave up.

These are the kinds of things that are bad for the hobby as a whole and just take away money from the companies that deserve it, and would do far better things with it.

Dave
Los Angeles, CA
-DPDP Model Accessories-
http://eje.railfan.net/dpdp/

 

Don't be too sure about that. If the Fed's will go after Martha Stewart over $65,000 in profits the FTC could do what it likes as well. In some are's they have even begun proceedings against independent gasoline stations in a common area charging price fixing and collusion.

 

$65,000 seems like quite a bit of money to me. I guess I must live on the wrong side of the tracks.

 

Charlie VLK did NOT joke about an Annual Meeting where manufacturers divy up the market - it doesn't happen.....
It does, however, make sense in a market that cannot support multiple competing products for a manufactuer to check around before spending $100s of thousands on tooling.
Competition does take place in the market but in terms of accuracy, features, variety of prototype, etc.., not price.
For example, Bachmann "F9s" have never impacted sales of Kato F7s, even though the Bachmann loco is the same prototype..... the price difference just doesn't matter to most of us.
There is and will increasingly be duplication of prototype, but hopefully not with new products coming out at the same time with roughly the same quality and features (the FT situation could have been avoided with a few phone calls).
No one gains because there is not enough elasticity in the price structure for prices to be driven down....the manufacturers get hurt and that doesn't benefit us. The manufacturers need their competition (how many LifeLike passenger units would sell without ConCor and Kato cars to pull behind them?).
Charlie Vlk

 

Competition is a good thing.
Yes, the smaller, weak companies will get squeezed out, but that's for the best, isn't it? I don't know how many times I've read posts along the lines of "I wish somebody would do an SD100, but please not Mfg X". Well, when Mfg X does the SD100, and you know nobody else will do it, do you buy a 2nd class product?

 

I don't think the "N scale model railroad market" is as big as many people think, not so much because there are fewer people involved with N scale, but because the market is so diverse. As Charlie Vlk so ably pointed out, The Bachmann "F9" and the Kato F7 don't really serve the same market at all, so aren't actually in competition. I'd say the same is generally true between Industrial Rail and Parkway cars on the one hand, and Micro-Trains and InterMountain cars on the other.

But, there is definitely competition. Most all modelers have a finite budget for their hobby, and are forced to choose between competitors' products. "Should I buy an InterMountain SD40T-2 or an Atlas C630?" for example. "I can't afford to buy both", says the modeler.

Another factor splitting the "market" into segments is era. Articulated auto racks leave me cold, but I'm sure ventilated boxcars leave modern era modelers equally cold!

 

There is that fact about the size of the market of HO v. N. Quite simply, what are the other marets to look at, aside from the model train aspect?

There are the Modelers, which is a really rough name for it. These guys don't care what it looks like, because they have their saws out already and their airbrushes ready for those undec units. Some demand really high detail and really good operation, but in general, they know how to weigh the price versus the value instead of belching about it later...

There are the collectors and the runners...those who demand everything in a little box that hasn't been opened yet...This is the LOUDEST croud when it comes to things like fans that are a scale 6" too small...(Though my mother has built some funiture, and she calls herself a carpenter now, she is still FAR from the skills that a trained professional has...She enjoys her furniture in her house and it does look nice, but...old arguement.)

There are the car and vehicle enthusiasts. This crowd doesn't care about the trains, but they are deep into cars.

Within them, you have the Enthusiasts, the collectors, and the modelers once again...

The Enthusuasts will buy anything, pretty much escribes the promotional products. Someone colelcting model Crovettes will also snap up a HO or N corvette jsut because it is a VETTE!! This lot also include businessmen and firefighters, who collect things with their company on it, or are given too many gifts with their company on it.

The collectors primariliy go their start with Matchboxcars, and in Europe, there is a huge market for these guys. They collect anything pretty much...and they get VERY critical of the condition of these damn things!

And there is the Modelers. And there is a fast that it is much easier to reall super detail an HO vehicle then it is to do an N Scal vehicle. YOu want to see som results, check out : 1:87 Vehicle Club . All they do is model the trucks, though some also do diaramas for their trucks as well.

There are the military gamer societies, which have primarily been the market for Roco Tanks and trucks.

There are the ship building and airplane buiding clubs...airplane typically dogo with the lareger scales, boats with the smaller scales. 1:87 planes aren't all that common, but there is more 1:72 then you can shake three fingers at...and with the boats, they seem to like the smaller scales...1:400, 1:300...and a lot of peculiar ones all the way up.

Last in this list is the Toy market: Which toy is harder to swallow? Which toy matches all of the cheap matchboxcars they already have at home? which one of these toys is stronger, more durable....And as these kids become adults, they too start their own collections...I think that is where the IMEX and BOLEY trucks might be aimed...

So, is competition bad or good? As a consumer it is always good so long as the businesses stay in business. Once they go out of business, it is EVEN BETTER FOR THE CUSTOMER!!! Look at the current value of things like Ulrich trucks! Those customers that don;t have it will now pay a PREMIUM for the stuff, which is fgreat for those customers who followed along when the company was in existance...this is ofcourse, if the product was of good value when made...though it can be of poor value, there are those items in this world...

The FT dilemma was GREAT for the modelers.

There is a little bit about there needing to be high prices to attract new companies. To be honesty, I already don't want their products because I know right now their product is going to be valued way too high for an entry market product.

All these new manufacturers do is lift the market to an inflated value, which can be disasterous if there is any bubble in the momentum. As such, these new manufacturers are Bad As they prescribe a new price schedule that is out of the ordinary competition bracket. There are many of those who will buy something now matter what the price because they don't have one. If you wish to dispute this, look at how Lifelike Heritage steam is affecting the prices of Bachman Specturm steam: bachmann now knows they can sell at a better price then they did before, so they are now doing that.

Supply and demand are still in effect in our small market, which make the results very easy to see.


When too many chefs cut in, the food will be awful for the price, and the consumer will wait until the food is at the right price. Simple as that. The more supply, the less demand.

 

If Atlas, Kato, and Bachmann "chefs" collaborated to produce an SD40-2model, it would probably be awful. However, The Atlas, Kato, and Bachmann "chefs" are all working in their SEPARATE "kitchens", so you'd get 3 different versions of the SD40-2. Consumers should have a choice as to which "dish(es)" they prefer.

Also, speaking of supply, it can easily be reduced by heavy demand. Look at Coke, Pepsi, and RC Cola. They've made an ocean of cola over the years, but somehow there are enough people drinking it as fast as they make it [allow the "cola" above to represent the SD40-2 loco type, and the "Coke," "Pepsi," and "RC Cola" brands to represent Atlas, Kato and Bachmann, for example].

All IMHO.

 

Kisacth, this has broken down. First, the model train market may at most be a couple hundred thousand people worldwide...those that will shell out any amount of dough at anytime.

See we DO have three competitors working in ONE kitchen. Only in this kitchen, only KATO is making the SD-40. Now while it is a good unit, it doesn't HAVE to be the best because there is NOTHING competing against it. At the same time, Kato can judge the demand for this model for be justification to raise the MSRP to 110 for their next model because demand for a plastic engine justifies it, and likewise, Atlas will see that hmmm, Kato can sell a locomotive for 110 so why cannot Atlas? And though they are both selling COMPLETELY different models the second time around, they are still nothing more then simple mechanisms covered by an intricate shell. Just like that, the floor for locomotives jumps. It is a bad thing if you are on a budget, but it is a good thing to help the manufacturer keep up with inflation...or make better money while they can, as some companies like to lay down one really expensive product, wreck the floor, and then disappear...

So in reality, if you want to see more manufacturers make FTs, the recent run was an AWESOME thing. Food Luck seeing another one come out in twenty years! And YES the models WERE DIFFERENT!!!

We are only getting ONE model, even though there are THREE manufacturers. You get only ONE version of the soup, and that soup may have a fly in it and still be acceptable because it is the ONLY soup.

If all three were working on the same product...well, as evident by the Kato/Atlas Years, those are rumored to be some of the Best N scale models available when they came out...so as evident to that, how can you say that if they were all working in the same kitchen, the soup would turn out awful? I think this has shown that in truth, the opposite is true.

In the Field of Automobiles, especially large trucks, each component on a truck used to come from a different manufacturer. why? Simply put, each specialized manufacturer was best at making those parts. End result: Early Peterbilts.

 

I think that if there were too many "chefs" I would have a nice running MP15 in N scale.

Russ