We occasionally receive photos from shareholders, taken on their own initiative, showing what they find in the field (where Winning Colours Stain Remover is sold or used). We do not ask anyone to do this, because it may contravene store policies. However, much can be learned from the information, on various levels. Two recently received photos prompt a brief overview for you of our retail pricing.
The first picture shows a hardware store shelf, where Winning Colours has a single facing for the large bottle, but the Winning Colours is missing. That’s because the Winning Colours is sold out. Store personnel told the shareholder this, adding that more product would be arriving on Monday. Notice the shelf price: $12.99 (The MSRP is $9.99)
The second picture shows a general merchandiser’s store shelf, where there is a cluster of Winning Colours small bottles being pulled forward from the back of the shelf as product is removed from the front. Notice the shelf price: $5.97 (The MSRP is $3.99)
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It is surprising how often we have heard about Winning Colours being sold for more than the MSRP. We have no control over this as a legal and practical matter. Over the long term, the market itself regulates prices. Naturally, we feel that there is an important difference in the consumers’ mind between our MSRP and the actual posted sticker price. Our view is that in settings where Winning Colours is sold for more than the MSRP, product velocity suffers. Velocity would likely improve to compensate the store’s forfeited margin with higher profit through volume. When stores try to obtain more for a product than the MSRP, it constitutes an experiment. The extremes of these experiments have been interesting to watch. A few days ago, an independent storefront in California, who just came on board, felt very comfortable selling their first 4-ounce Winning Colours for $10 based on what the product would be doing for the customer. We have also heard of a retailer in the South who was charging – and I am not making this up – $39.99 for the 30.7 ounce bottle, based on what they felt it would do. I have been told from time to time that Winning Colours Stain Remover should be higher priced, while (fewer) others feel that it should be lower because generic cleaners are lower.
Our view is that a generic spray cleaner sitting on the shelf in a supermarket priced at $2.99 for a 25 ounce bottle is not the proper benchmark of what it is worth to consumers to solve problems. Clearly there is a wide range of opinion; it is ultimately highly personal to the consumer. We feel that $9.95 for the 30.7 ounce bottle and $3.99 for the 4 ounce bottle strikes a perfect balance of the various factors. At the MSRP prices, Winning Colours is truly affordable for any household and delivers terrific value (especially because of the dilution factor), while at the same time being high enough in price so that the supply chain that manufactures and brings these products to the consumer through the retail distribution structure can survive and prosper.
In 2011 we will be sharpening our focus on communications with our existing retail partners to learn what their experiences are in this regard, and to share our general findings with them. Improved velocity in existing stores is a highly profitable form of growth and is at the top of our agenda for 2011.
