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The BRAND IMAGE TAX - should I pay it?(31 posts)

The BRAND IMAGE TAX - should I pay it?glen michael
Mar 4, 2002 3:33 AM
my marketing professor has been talking about Brand Image Tax for a week. that in many sectors it is 10 to 50 % of the cost of the item. I am shopping for a new mid level road bike and wonder how much this added amount for brand image is? Clearly brands like Trek, Specialized, Cannondale, and Litespeed add a lot to their prices for the cost of getting their 'image'. And brands like Jamis, Giant, Motobecane, KHS, and Mercier ~ add very little if anything. My question is since every bike I am looking at seems to have the same components; what percentage do we calculate is added to high image bikes for the Brand Tax?
And is it worth it?
If you want toMcAndrus
Mar 4, 2002 4:54 AM
I'm not trying to be glib. If you're studying marketing then you know the brand preference tendencies all consumers have. You know that there is perceived value in a recognized and trusted brand name. You also know that companies spend huge amounts of dollars to protect the image of those brands. (My company does this as well.)

And, as in all other product niches, if you shop around you'll find quality as good or nearly as good in lesser prestige brands. This is true in bicycles and cars and railroad maintenance equipment (sorry, had to get in a plug).

I can't speak for the brand markup specific to cycling although there are posters here who may be able to. I'd say in general your second group of bikes is pretty good, with Giant leading that pack. (I only say this because I own one ;-).) Personally, I also would drop Specialized down into that second group.

If you're going for best value, then the prestige brands are not worth the premium. You can get as good for less money. If you're going for image or proven quality - which the honest among us will admit we do at times - then the premium is worth it.

Which of the two do you feel is more important: value or brand preference?
welcome to america, baby..... nmSpirito di Finocchio
Mar 4, 2002 4:55 AM
re: The BRAND IMAGE TAX - should I pay it?cosmicallyconscience
Mar 4, 2002 5:30 AM
I am disappointed. I was hoping this was a new tax that would be burdened upon the rich to help pay for needed government programs that help clean up the environment. Since it isn't, I will go ahead and say this about it. I am sure you can get just as good of a bicyle in those brands you mentioned. My ex girlfriend rides a KHS very happily. She switched from Bianchi. Liked the KHS much better. Giant obviously is used in major cycling events, and there is a lot of bike there. As for the rest, I don't know, but you are buying image when you puchase a TREK. This has nothing to do with my boycott of TREK either.
should we boycott Mercier - since France has so much nuke power?mike on 2
Mar 4, 2002 7:35 AM
just wondering who all we should stop buying from and why?
Best USE the street price when you compute it - Tax is about 30%ferguson
Mar 4, 2002 5:42 AM
when you compute the Brand Image tax you should be careful to use the going price on the street - NOT the list price.
you can get a Trek 2300 for about $1500; a Motobecane le Champion for about $1100; a Fuji Team for about $1500 - they are all about the same bike. You can get Lemond Zurich for about $1600; a Mercier Serpens for abot $1200; Cervelo Prodigy for about $1500 - again same bikes basicly. so the tax looks like about 30% to me
might work - except Mercier Serpens is Nicer Than Lemond Zurichmike on 2
Mar 4, 2002 7:21 AM
unless there is something I do not get on the specs; the Mercier is a better bike than the Lemond anyway. So if you are computing this so-called brand tax - it is complicted ~ which is what keeps the brand's in a condition where they can charge more
Tax on the naiveDCP
Mar 4, 2002 6:34 AM
As a consumer lacking technical training, it was a relatively easy choice for me to pay a premium for a Trek product (LeMond). All else being equal, a Jamis was clearly the better value, but for me at least, everything else was not equal. Trek's designs and build quality have withstood the test of the market for many years. Its warranty, unlike the warranty on my MTB Schwinn, will be there if I need it. Were I a technically sophisticated buyer, or one expecting to use up a frame every two years, those issues would not be as important and my decision might have differed. Since bikes are not simple commodities of equal value, it is not simply brand image which explains the premium.
like lottery is a Tax on Failing Math?mike on 2
Mar 4, 2002 7:30 AM
extreme brand loyality is a tax on failing or skipping marketing class. Maybe some frame designs ride better than others for some people - but in general several bikes made with Reynolds 853 and equipped with Ultegra - ride VERY VERY close. frame designs on sport Reynolds road bikes are all very close and quality of weilding together Reynolds tubes is not a big issue on any brand mentioned
Maybe, but...djg
Mar 4, 2002 9:12 AM
It's not uncommon for the jackpot to rollover such that, on a straightforward expected value calculation, the lottery ticket is not a bad deal. There's not that much math going on there--early elementary school stuff so far as I can tell. Now what to do about very small chances and very large magnitudes of possible benefits (or harms for that matter) is more complicated, but complicated for philosophical/psychological reasons more than mathematical ones.

I dunno what people learn in marketing class and I don't care.

I don't own any Reynolds 853 bikes, but I've ridden a few and they seemed different to me. Not surprising, perhaps, given different geometries, and what seemed to be different shaped and sized tubes (albeit all from the same steel alloy originally treated in the same way), but that's how they seemed. I rode a Zurich (two actually) and didn't like it at all. I have liked other Reynolds bikes though. A friend has a Zurich and loves it. I think we're both reasonable people, even if neither of us studied marketing. And certainly there were aesthetic differences, about which folks could have all sorts of different opinions. Heck, I might prefer the KHS to the Lemond, independent of price, but that's not to say that the KHS is a better value for everyone.

Some folks wax rhapsodic about Seven's TIG welds. I don't get it. But I do get turned off by a certain level of sloppiness, even when I think the weld is plenty sound. Hard for me to say that one level of care is worth it and another is not, except to say that one is worth it TO ME.

Now, how much any of that is worth--like a warranty, or a generalization based on past brand experience, or a psychological association with a certain bike racing history (or contemporary history), or the love of a cool paint job, or the love of an appalling paint job--is kinda hard to say across consumers. But it seems to me that companies, in seeking to establish brand image and identification, are not merely playing to suckers (even if lots of brand marketing is bullshit). I happen to have a record-equipped Colnago. Shopping around (overseas), I paid less than I would have had to pay for a similarly equipped Airborne. I don't think I did anything especially clever--I just shopped around, found something I wanted at a price that seemed good to me, and bought it. I think that's what most folks do.
"The Dismal Science"cyclaholic
Mar 4, 2002 6:37 AM
They don't call economics "the dismal science" for nothing.

I would not try to dispute that there is a kind of "brand image tax" on certain established products, but I would be careful not to oversimplify and jump to the conclusion that consumers are getting the same products at different costs.

Since you listed Trek first, let's use them as the example. They don't make their money by just selling bikes. They are widely diversified, producing several lines of cycling accessories and are even in the business of selling other brand names of bicycles. Very complicated situation. Money is flowing in from many different sources.

Competition is intense at all levels of the cycling food chain. Their carbon fiber models - all established as top notch products - have to compete with several other fine brands. If quality is not up to snuff, then sales will sag. MBK and Specialized, using them as examples, are not competing with Kestrel. Trek is.

Same goes for the aluminum models. They're are several different brands that offer very good products at the same price level. In addition to the intense competition that this brings, they must also deal with the bargain basement competitors who do all they can to cut into their market share. This is serious business. Look at what happened to Schwinn - the dominators of the American bicycle market 30 years ago -when bargain basement bikes from Japan and Taiwan flooded the market. Those bikes were junk and you can't find them now (anyone have an Azuki?), but Schwinn was severely hurt by this.

The brand image definitely helps the company to compete. How many people have been swayed to buy a Trek over a similarly equipped and priced Kestrel? That's where the strength of things like the USPS sponsorship, the Lance factor, and the "I want a bike like that guy has" comes into play.
are you saying my 30 year old Fuji is Junk? - it still worksgeorge
Mar 4, 2002 7:08 AM
I do not understand your point; to start with. But you statement that bikes from Japan are Junk is crazy. My Fuji touring bike has way more miles on it than anyone's racing bike I have seen. And it still works great. Slamming a bike due to courtney of origin shows very little understanding of any industry today.
How senseable. nmSpoke Wrench
Mar 4, 2002 7:28 AM
That's not what he's saying.McAndrus
Mar 4, 2002 8:31 AM
Cyclaholic is saying that a behavior of a free market is that new competitors compete with established brands by entering the market at the low end - with products of lesser quality sold at lower prices. There are always consumers who will sacrifice perceived quality for a price advantage. Heck, even I buy off-brand toilet paper because it saves me a few cents a roll.

Entering the market at the low end is common competitive practice and it's one of the reasons companies work so hard to maintain the brand preference in the mind of the consumer. If you doubt this just read the latest Motobecane flame war. Even quality concious consumers such as we are attracted when an apparently equivalent product is offered at such a steep discount to its competitors.
The most expensive bike you can buy...Spoke Wrench
Mar 4, 2002 7:02 AM
is the one that you get insted of the one you really wanted.
The most expensive bike you can buy... TELL MY WIFEgeorge
Mar 4, 2002 7:11 AM
your point is exactly what I tried to tell my wife about a BMW325 ~~ can you help me convince her? or do I have to live in my budget
Tell her this:Spoke Wrench
Mar 4, 2002 7:25 AM
The most depressing thing I can picture is my kids standing around my coffin and talking about "How senseable dad was." Sorry kids, the last check from my checking account is going to the undertaker and it's going to BOUNCE.
thanks for reminding me of what's importantgeorge
Mar 4, 2002 8:06 AM
I do not know if you are a parent; but either way ~ truely - thanks for reminding me what is important. I should ride a bike to keep in shape so I can be there for the kids - as you reminded me. But over spending when I can put more away for their college is wrong-headed at best. Gotta keep that picture on my desk in focus - thanks
the ultimate rationalization...merckx56
Mar 4, 2002 8:09 AM
mercedes did an ad a few years ago that really put the whole expensive purchase thing into perspective.
the tag line was: "the ultimate rationalization: good quality costs less in the long run."
Of course.......Len J
Mar 4, 2002 10:19 AM
just remember that the entire basis for Mercedes advertising for years was:

"Let's give people rational reasons to make (what is really) an emptional decision!"

In other words, most people who want a Mercedes, want it for purely emotional reasons (How it will look, how it will make them feel, how it will make thier friends feel, etc), the Advertising & promotional material is aimed to help the buyer rationalize the decision theve already made.

Len
The answer should be in your TPS Reportgreg N
Mar 4, 2002 8:59 AM
beware of the Rich Elitists - they hate your shopping dealspat in cal
Mar 4, 2002 11:32 AM
Glen, you better not ask about relative value here. Very few people on the board understand that $1000 is a lot of money. Guess they do not have the average USA income of $500 or less per week. Or maybe they have free rent and no car payment. But deals are looked down upon. so do not get TOO involved in specs for the money - people here will get upset.
Don't be ridiculous.cyclaholic
Mar 4, 2002 12:03 PM
There is nothing this world I hate more than elitism. Nobody is better than an another person based on what kind of bicycle he or she rides. That's ridiculous.

One of the great things about bicycles (and the components and wheelsets that go on them) is that you don't have to buy a new one each year. If you get a good frame with good wheels and good components, you will be set up for a long time. You can spend the rest of your money on other things. That's where value comes from.

I can assure you that, due to the very tough forces in our local economy, I am on a very strict budget. But I already have two bikes with two very good frames that are well equipped and I don't have to spend any more money on them for a long time.

I just built a new wheelset and had to settle for a good but slightly heavier hub than I really wanted. I simply maximized what I could get for my available dollars. There's no shame or inferiority in that.

The option was there for me to go cheap and maybe save $80. Similarly, I could have saved hundreds of dollars by buying bargain basement bikes some years ago, or getting Sora components or the like. But I wouldn't be as happy as I am now.

I'm gonna build a killer wheelset. I can't do that today, or even two months from now, but I will reach this goal by budgeting wisely and being patient. I suggest that this approach will work for everyone, even for the non-rich cyclists such as myself.
Oh dear. This reply drips with the venom of the . . .morrison
Mar 4, 2002 12:06 PM
fiscally oppressed. How can you possibly justify this statement? Have you surveyed the median or mean incomes of the posters on this board? Have you studied our spending habits, disposable income, net worth, debt loads, etc.? And what do you mean by, "deals are looked down upon?" (I will forgive, for the moment, the misplaced preposition.)

I would suggest that people are cautious of deals, but one would be hard-pressed to find someone who objected to saving money. I assume you will throw the following examples back at me, so allow me to lodge anticipatory responses:

1. Many posters on this board encourage you to purchase from your LBS rather than order your frameset on-line, at a substantial savings. True enough. But this doesn't reflect a desire to spend more money. Rather, it reflects a desire to establish a relationship with a lbs that will prove more profitable in the long-run. (Tune-ups, repairs, discounts on accessories, etc.)

2. Many posters on this board encourage only the purchase of top-priced bikes and accessories. True enough. But, as amply has been demonstrated by the foregoing replies, there is a value associated with a name-brand product. What would you rather do . . . spend an extra $500 for a product that is fully warrantied, and for which you can find technical support nationwide, or save $500 and purchase a product from a company that might not be there to offer you assistance in six months, let alone six years. If I owned a bike shop, and had the technical know-how, I might choose the latter. Until that day, however, I'll gladly spend the extra 500.

I suppose I could write a bit more, but I have to run. The dealership called and my new SUV has arrived. I almost bought the Escalade, but I was disappointed in its low-sticker price. I opted, instead, for the Mercedes. It's not as roomy, but it costs more, so I think I'll like it better.
Did James Carville take over this board???Geof
Mar 4, 2002 1:17 PM
Seriously, the liberal drivle is getting old. It's fine to state a point and have an opinion, but jeez... put it into some real perspective and base it in TRUTH.

Have you ever heard of saving money??? That's how lot's of us get the dollars to spend on the Ksyriums or whatever. And BTW, I'm prolly a "rich, elitist, Republican snob" to you although I make less than 100,000 a year. Sorry if you have to work at some low paying job... Go out there and make something of yourself, pay some dues and THEN you can be a rich, elitist snob too.

I'll be riding my Dura Ace, Ksyrium equipped Roadster all the way to the bank... And I'll probably get a good deal too...
You totally missed the point - and my politics toopat in cal
Mar 4, 2002 2:02 PM
I am not saying that people who work hard and earn good money do not deserve it. actually I feel the opposite - they totally deserve it and should spend it how they like. What i am saying is; on this board posters are very quick to reccommend a newbie go from their $500 or $600 budget to $1500 to $2000 to get 'quality' stuff. And that is wrong and elitist. You can buy a very nice new road bike with components that will last for years and with a carbon fork for under $600. Like it or not - that's a fact. And for a beginner - it is plenty of bike. As for policits - does not belong here
Easy to miss the way you stated it...g-money
Mar 4, 2002 4:11 PM
The way you presented your response did not get that through. Obviously, I wasn't the only one to take it this way. I also don't think that suggesting a 'beginner' to buy more bike is elitist. It's all about spending money on quality ONCE... I think you misinterpret the responses as elitist, when actually they are generally stated from experience. A kid might only be able to afford 700.00 or so, but could then ride that bike and nickle and dime himself to death as he or she gets the bug, winds up spending 1500.00 on a bike that's worth 700.00. Do you get the point? I don't think the overall attitude is one of elitism, just knowledgable helpfulness...
I have seen the Elitist attacts - haven't you?pat in cal
Mar 5, 2002 12:18 AM
Maybe I did not make myself clear; but I have a Motobecane Record that I got for $550. It is a solid little bike with an aluminum frame and a carbon fork. It has a lifetime warranty; my dealer in San deigo gives me great service. But I have seen plenty of posters in here attack the Motobecane Team as having a crap frame (most of then probably never rode one). Well where is that coming from? You would not call it Elitist to attack a bike because it is not a high enough price?
Finally the truth emerges...Crankist
Mar 5, 2002 6:11 AM
...any one who owns a better bike than a Moto is an elitist! I just think your pride was hurt from the
recent (too many ) postings.
Mike
Getting defensive, aren't we?cyclaholic
Mar 5, 2002 10:25 AM
Your bike will be a great test case.

How many miles a year are you putting on it?

Are you racing on it? Are you dropping riders on the elitist bikes?

How are your shifters holding up? Are they Sora? Do you like that funky thumb move you have to make all of the time? Do you realize that it will cost at least $150 to replace them?

How are your wheels doing? Can they take 5000 miles a year w/ minimal maintenance?

Will this bike endure 5 or 6 years or will you be buying new one soon?
elitist advise?Turtleherder
Mar 5, 2002 11:52 AM
I think you may have misconstrued the advise that many of the posters offer. They do not advise getting a $1,500-$2,000 bike to be snobs, they are offering the advise because they assume that anyone that would take the trouble to find this board and ask for advise is serious about cycling. The posters know from experience that it will not take long for a committed person to outgrow that $500 bike and yearn for something else. It just saves money in the long run to start with the good mid-level bike and grow into it as a cyclist.