Mikes Cigars loses Oliva.

[SeanGAR]

Originally Posted by Texan in Mexico

I don't want to divert this thread but basically - there is great debate as to whether this was done as a true shift in ideaology for a market leader or to generate fervor in the market.

Honestly we will probably never know, even Robert Goizurta has given contradictory accounts of the build up to its launch, many feel this was done purposely, and unfortunately he succumbed to lung cancer in 97.

My belief is that it was a weighed risk that perhaps didn't fulfill its potential but did create such a fuss that he we are talking about it on a Cigar Forum more than 20 years later.

It is an incredible case study. There is much more to it and I'd be thrilled to point you in the direction of some support material and you let me know what you think!

Thanks for your reply.

Travis

Travis,

Interesting there can be different ways to interpret what happened. I was in my PhD in Food Science in 1985 so was paying attention to this and a few years later have spoken to a student's father who was a VP in coke at that time. Looked to me (based on what I've read and heard) to be a top down decision that was based on flawed interpretation of sensory testing and market dynamics. I don't drink pop so I was largely insulated from what happened in the marketplace once they announced they were changing the formulation, but I do remember fellow students going nuts to buy a lifetime supply of the old stuff. At the time, I was more interested in ensuring a supply of J. Lohr Gamay Beaujolais and Caymus Cabernet.

Shoot me a PM with some info or links if you would. I'd be interested in another viewpoint of what happened.

/Sean

[taltos]

Originally Posted by croatan

Correct. This is a vertical price restraint. For many years, courts looked very unfavorably on them, but they've recently been analyzed under the rule of reason.

This seems to be very similar to the Fair Trade Pricing on sporting equipment such as guns and fishing rods and reels back in the '50's and'60's.

[jaymz]

Originally Posted by SeanGAR

Some competitor squealed on Mike's and complained that they were undercutting their price. I prefer capitalism and competition in the marketplace, not communistic pricing practices. I won't buy more Olivias as a result of this, but I doubt that will make a dime's difference in their bottom line. I really don't care, it is the principle.

What is good for the consumer and the economy is that companies obey the contractual agreements that they are legally bound by. In a capitalist system, Oliva has the right to sell their products at the price they determine is good for their company. They also have the right to require certain concessions be made by the retailer carrying their wares. The retailer also has the right to not agree to those terms, and refuse to stock Oliva's product. If what the OP said is true, Matt's Cigars got caught violating a legal contract multiple times and got slapped on the wrist for it. This was dishonest business practice and should be discouraged. If a company is willing to defraud a company as large as Oliva, how honest do you believe they will be in their dealings with you as a customer. I as a customer will be thinking twice about purchasing anything from Mike's Cigars in the future.


(FYI - in a communist system, the state would own both the cigar manufacturer *and* the retail outlet, and the employees would receive whatever money the government felt like doling out to them)

[Nimbus]

Originally Posted by houdini

Good deal too!

I am tempted to pull the trigger, but I must have some self control!

Originally Posted by jaymz

What is good for the consumer and the economy is that companies obey the contractual agreements that they are legally bound by. In a capitalist system, Oliva has the right to sell their products at the price they determine is good for their company. They also have the right to require certain concessions be made by the retailer carrying their wares. The retailer also has the right to not agree to those terms, and refuse to stock Oliva's product. If what the OP said is true, Matt's Cigars got caught violating a legal contract multiple times and got slapped on the wrist for it. This was dishonest business practice and should be discouraged. If a company is willing to defraud a company as large as Oliva, how honest do you believe they will be in their dealings with you as a customer. I as a customer will be thinking twice about purchasing anything from Mike's Cigars in the future.


(FYI - in a communist system, the state would own both the cigar manufacturer *and* the retail outlet, and the employees would receive whatever money the government felt like doling out to them)

What I was saying just much better. Well said. People seem to have forgotten what free market is and that our nation was once the place where it happened.

Originally Posted by Pat1075

Just a quick point to all those calling this price fixing it is not. Price fixing is an illegal practice which occurs when two or more businesses in an area who are in a similar trade like cigars decide they will sell the same product for the same price. So if shop A decided they would sell Oliva G for 5.60 a piece this week so would shop B. then over the weekend the owners of shops A and B would meet and decide the would raise the price of oliva G to an even 6.00 on monday. it would work the same way with price drops too. That would be price fixing. Thats all thank you.

It would have been quicker to just type:

Cigar shops are not gas stations, that's price fixing

Chas

[SeanGAR]

Originally Posted by jaymz

(FYI - in a communist system, the state would own both the cigar manufacturer *and* the retail outlet, and the employees would receive whatever money the government felt like doling out to them)

Prices are fixed in communist and socialist systems. They are not in a free market. Your comment about who owns the store and what employees are paid is irrelevant.

I'm still waiting for a copy of Mike's contract with Olivia.

Originally Posted by SeanGAR

Prices are fixed in communist and socialist systems. They are not in a free market. Your comment about who owns the store and what employees are paid is irrelevant.

I'm still waiting for a copy of Mike's contract with Olivia.

Setting a minimum price for a retailer to sell your goods is not price fixing. Price fixing is when the retailers get together and artificially raise prices on agreement. Msrp is standard in a free market. As is decreasing supply to increase demand. So is flooding the market to devalue something. All of it is free market tactics. You may not agree with them but it doesn't make them communist. You made an emotional comment that was incorrect. No harm or shame in it.

[rrplasencia]

[quote=jaymz;259321]dishonest business practice and should be discouraged. If a company is willing to defraud a company as large as Oliva, how honest do you believe they will be in their dealings with you as a customer. I as a customer will be thinking twice about purchasing anything from Mike's Cigars in the future.
[quote]

I've dealt with mikes on a wholesale level. Sometimes what goes around comes around. I've had direct dealing with Miami Cigar and Fuente Newman. Both ask you to sell their cigars at their suggested msrp, which is extremely fair price(Padron does the same). You don't have to do it, but then you don't have to become one of their retailers. That is a free market. There are plenty of other cigars i could have carried (especially in Miami) but i wanted those, ergo i agreed to the terms.

[SeanGAR]

Originally Posted by Legend

Setting a minimum price for a retailer to sell your goods is not price fixing. Price fixing is when the retailers get together and artificially raise prices on agreement. Msrp is standard in a free market. As is decreasing supply to increase demand. So is flooding the market to devalue something. All of it is free market tactics. You may not agree with them but it doesn't make them communist. You made an emotional comment that was incorrect. No harm or shame in it.

If you set or fix a price of something, you are fixing the price. If that disagrees with specific accepted jargon ... well, gee. I can understand why Olivia is interested in maintaining cigar prices in the market, but Mike's prices on most things are 10% below MSRP. Big whoop. I get more than that here at my local. But I'm not a competitor and am not going to squeal to Olivia. I haven't purchased anything from Mike's in years, I really don't care.

Originally Posted by Texan in Mexico

I don't mean to get off topic but a big part of what I do is market research, campaigns and the New Coke idea is generally recognized as one of the greatest marketing coups of all time. Easily one of the Top 10.

According to Snopes and the folks at Coke and other sources http://www.google.com/search?q=New+C...x=&startPage=1, this was not a marketing ploy.
http://www.snopes.com/cokelore/newcoke.asp

one more
Windows Vista: The 'New Coke' of the PC age | csmonitor.com

[MiamiE]

I know there are a lot of B&M owners on here, but as a consumer I am out to get the best deals and for the most part B&M's do not provide better deals than the internet retailers. Times are tough for everyone.

Originally Posted by SeanGAR

If you set or fix a price of something, you are fixing the price. If that disagrees with specific accepted jargon ... well, gee. I can understand why Olivia is interested in maintaining cigar prices in the market, but Mike's prices on most things are 10% below MSRP. Big whoop. I get more than that here at my local. But I'm not a competitor and am not going to squeal to Olivia. I haven't purchased anything from Mike's in years, I really don't care.

Your jargon with regards to price fixing was not the issue. You were claiming communist practices. I and a few others here simply disagreed and and clarified that it was in fact free market that was happening. This is how free market works. You don't like it fine. You don't have to. We simply wanted to clarify that it was not communism.

Originally Posted by nozero

According to Snopes and the folks at Coke and other sources http://www.google.com/search?q=New+C...x=&startPage=1, this was not a marketing ploy.
]

May not have been but the execs at coke spun it to work for them. Which it did.

This was my point. These guys aren't morons. And assuming anyone, let alone guys in charge of a multi-million dollar company, is stupid just because you don't see their reasoning is foolish. And arrogant. I try to remind myself of that whenever I think something is stupid. Well there must be a reason. What is it? What am I not seeing? Etc. I don't know everything yet. :-D

[SeanGAR]

Originally Posted by Legend

May not have been but the execs at coke spun it to work for them. Which it did.

This was my point. These guys aren't morons. And assuming anyone, let alone guys in charge of a multi-million dollar company, is stupid just because you don't see their reasoning is foolish. And arrogant. I try to remind myself of that whenever I think something is stupid. Well there must be a reason. What is it? What am I not seeing? Etc. I don't know everything yet. :-D

I am reminded of a friend who screwed up and missed his flight, thinking he read 220 when it was 1220.

The plane he missed crashed killing all on board.

He still screwed up by missing the flight, but it turned out well for him.

Same thing with coke.

[doctorcue]

So we should all agree to disagree. Aren't we here to smoke?

Originally Posted by SeanGAR

I am reminded of a friend who screwed up and missed his flight, thinking he read 220 when it was 1220.

The plane he missed crashed killing all on board.

He still screwed up by missing the flight, but it turned out well for him.

Same thing with coke.

Yeah they are still morons. Just lucky morons.

Figures.

[SeanGAR]

Originally Posted by Legend

Yeah they are still morons. Just lucky morons.

Figures.

Exactly.

I'm glad that you now agree with the Coke VP I spoke with regarding this escapade.