Hornby's financial updates to the Stock Market

[ruggedpeak]

With Bachmann having to move their UK prices upwards to be more in line with their Lililiput "European" ranges, will Hornby decide in favour of a similar course of action to make their own UK product lines more profitable?

I think we all hope not, and Hornby pricing has gone the other way with endless sales. A key issue seems to be a very large amount of stock that will not sell even when discounted. A photo from a recent show showing one of Hornby's concessions showed tables full of suprisingly large numbers of discounted Hornby items. Hornby have to make more stuff that sells promptly at a reasonable and at least semi-profitable price before it starts thinking about premium pricing.

[Dunsignalling]

I think we all hope not, and Hornby pricing has gone the other way with endless sales. A key issue seems to be a very large amount of stock that will not sell even when discounted. A photo from a recent show showing one of Hornby's concessions showed tables full of suprisingly large numbers of discounted Hornby items. Hornby have to make more stuff that sells promptly at a reasonable and at least semi-profitable price before it starts thinking about premium pricing.

Agreed. They also need to address the issue of regional proportionality in distribution to their concessions. I am not the only one who will have seen lots of unsold LNER/Eastern Region items on shelves in the West Country. Presumably the same happens with GWR/SR up North and in Scotland.

 

More important, and something that Hornby shouldn't have any difficulty in doing; is to identify models (or particular variants thereof) that are being left unsold nation-wide so that they can be "rested" for a few years.

 

Poor sales everywhere indicate that whatever demand once existed for a model has been satisfied for now.

 

John

[Caledonian]

Agreed. They also need to address the issue of regional proportionality in distribution to their concessions. I am not the only one who will have seen lots of unsold LNER/Eastern Region items on shelves in the West Country. Presumably the same happens with GWR/SR up North and in Scotland.

 

More important, and something that Hornby shouldn't have any difficulty in doing; is to identify models (or particular variants thereof) that are being left unsold nation-wide so that they can be "rested" for a few years.

 

Poor sales everywhere indicate that whatever demand once existed for a model has been satisfied for now.

 

John

 

Ahem... I refer to my earlier posts about the large quantity of GWR locomotives and shunters' trucks to be seen piled up on the discount shelves in the Newcastle upon Tyne concession

[Dunsignalling]

Ahem... I refer to my earlier posts about the large quantity of GWR locomotives and shunters' trucks to be seen piled up on the discount shelves in the Newcastle upon Tyne concession

Knew I'd seen something to that effect, but couldn't find it when I scrolled back, or I'd have given you due credit.

 

Regards,

 

John

[antrobuscp]

There were some comments earlier about not underestimating kids, and to follow that up, I can assure you that there are children who consider it important that a passenger train has a brake coach. 

I'm sure you're correct, that some kids would want to create a "proper" train, after all 50+ years ago I was one of them. However, I'm equally sure that many would buy one brake coach to stick on the end of a train of other types.

 

On pricing, it is not that long ago the Hornby were being criticised for being too expensive. The "dash for cash" has hit their pricing, but I suspect that when sanity returns the pricing of the 2 largest manufacturers will not be too far apart. Most people have/will, I suspect, become much more choosy about what they buy.

 

Personally, I am not averse to a simplification of the detail on models - design clever as in a sensible thought process about what should be included and what is separately moulded or part of the main body components should be a reasonable response to increasing costs. As the idea was applied by Hornby a short while ago, it resulted in detail where it was not obvious, and poor compromises when the detail was obvious. Sensible compromise needs to be designed in from the concept stage - i.e. good planning and consistent policy, both of which appear in the recent past to have been lacking at Hornby.

 

I rather suspect that when asked if we want detail on a model we say "yes", but then when the cost is known too many will back track and not buy. In that situation the manufacturers will eventually decide for us and make compromises - or go out of business. For example, I'm perfectly happy with the Oxford Rail Adams Radial irrespective of any extra detail that might appear on the Hornby version. I will certainly not pay the likely (even discounted) asking prices for the forthcoming Heljan GWR tanks - even if I never get one. That's my personal value judgement but I suspect many others will do likewise. If it's a choice between the manufacturers closing the doors or producing models, somewhat less detailed, but at prices the majority feel they can/want to pay, then I'd rather see the latter.

 

Colin

[The Stationmaster]

There were some comments earlier about not underestimating kids, and to follow that up, I can assure you that there are children who consider it important that a passenger train has a brake coach. 

 

Ah but how many of them (or indeed how many 'modellers') will know - by relevant dates - whether it should have one brake coach or two, where they should be marshalled in the train and which we round they should be? Most contemporary trains don't have brake coaches so the only way a child (or modeller) is going to know whether or not a train happens to need one (or more) is from research etc.   This isn't a criticism of any lack of knowledge but, I hope, an illustration that such a 'fact' might not necessarily be immediately obvious and thus might not necessarily influence sales through the internet or even many shops which don't happen to have someone who says 'you need a brake coach in that train'.

 

Many model railway folk run what they like, some choose a particular company or part of the country and some go into much greater details about getting everything correct for the place/period they are modelling.  All of those factors are just as likely to have some sort of influence on sales as many other factors.  When it comes down to it the manufacturers and commissioners etc must have a pretty good idea what will sell profitably because they are putting their money where their ranges/releases for this year are.  But it is clear that it isn't always plain sailing with numerous examples of repeat productions (mainly from Hornby) which haven't sold while others are slow movers and this leads to massive underselling which in turn can distort customers' perception of prices.

 

Like Black 5 Bear I don't have the slightest interest in NSE (although I did like the red lamp posts) - and, for further example, I can't stand blue liveried diesels - but if someone wants to make any of them it's hardly down to me to complain or criticise - they have made a commercial decision by which they stand or fall.  And, apart from hoping they remain in business to sometime produce something else which does suit me, that is their decision and not something for me to moan about.  If I can get the right things sometimes to a standard I like which I can afford and which, if necessary I'm prepared to repaint, renumber, dirty or whatever else then I'll be happy (and almost inevitably if it's got leading pony or bogie wheels I know I shall be visiting Mr Gibson or the like for some which look much better).  

 

As ever there is a simple answer - if you don't like 'it' get together with those of a like mind and crowd-fund DJM or somebody to make something or relivery something the way you're convinced is going to be a surefire commercial success. 

[Mike Storey]

@ Caledonian, isn't that a heck of an assumption that sales are going to be geographical by nature.

 

I live in Peterborough and work in York but my 'affliction' is all things GWR, There is a Southern enthusiast in Retford (where my train has come to a halt as I write) and there are no doubt modellers of Scottish region areas on the South coast. How can you identify that? Sales will, by the nature of our world, be spread to all four points of the compass.

 

That explains all the brown and cream stuff on the shelves at Trains4U when I lived there!

[Coryton]

Question is are there enough of them to sustain a business? And how best do Hornby reach them?

 

Both good questions. I hope Hornby have a better idea of the answers than I do!

 

I'm sure you're correct, that some kids would want to create a "proper" train, after all 50+ years ago I was one of them. However, I'm equally sure that many would buy one brake coach to stick on the end of a train of other types.

 

I'm sure you're right.

 

Personally, I am not averse to a simplification of the detail on models - design clever as in a sensible thought process about what should be included and what is separately moulded or part of the main body components should be a reasonable response to increasing costs. As the idea was applied by Hornby a short while ago, it resulted in detail where it was not obvious, and poor compromises when the detail was obvious. Sensible compromise needs to be designed in from the concept stage - i.e. good planning and consistent policy, both of which appear in the recent past to have been lacking at Hornby.

 

 

I would much rather see a return to less detail if it means lower prices. I have no idea what proportion of potential customers would agree. From what I've seen, the Hornby Mk1's look pretty good, though it would be nice if they'd do them in blue and grey.

 

For me, the most important difference between modern models and older ones is flush glazing and the much, much better livery application. I'll quite happily have moulded toilet filler pipes rather than separate wire ones and unsprung buffers etc. if if keeps the price down. 

 

Like Black 5 Bear I don't have the slightest interest in NSE (although I did like the red lamp posts) - and, for further example, I can't stand blue liveried 

 

 

I recall comments at the time that drivers were finding the sudden appearance of things painted red everywhere a bit disturbing...

[Andy Hayter]

Who would be a model railway marketing analyst??

 

Ggetting it right must be very difficult indeed.  Chosing the model in the first pace is difficult enough - although wish lists today must be a significant help, and i am sure this is why we see members of the top 10 being picked off.

 

But having made the initial run, what then? 

 

They sold out very quickly - great we should make some more - but only if we are convinced that there really are 1000+ (maybe only 500+) potentail sales.

 

So we look at Ebay - going for sales price doubled.  And this proves what?  First sale - that there are at least 2 customers (with perhaps more money than sense) .  Second sale?  (there might be a third potential purchaser.  etc..  That is all you can with confidence define from such auction prices.   The mistake is to believe that this shows that there is a market for a second run.

 

To make the point the original Bachmann C class full fat livery sold out in no time.  Since then items have appreared on Ebay and sold at up to £325 (Cannot remember the exact price).  Followed by several others that have sold at progressively lower and lower price.   Today, perhaps as many as 10 have been sold and one has been stuck at £175 for weeks.

 

From the first sale Bachmann could have been forgiven for thinking there is real demand for another run.  But with only 10 or so sales, the price has now dropped to what they would probably have to sell at to be profitable at todays costs - and currently no takers. 

 

It is easy to be misled by auction sales values to believe that this is the market value,/; that there is real demand and that you should have a second/third run of said model.

 

Getting it right is very difficult, and sometimes Hornby et al fail to do so.  We can be critical (or even happy) when they don't. 

 

As for regional sales, I am sure they exist, just as I am sure that there are as many exceptions as there are adherents to the rule.  To make the point when I joined our local club in NE England I was of course drawn to LNER practice along with many (not all) members.  Models were made and contributed to the club's various layouts.  Nevertheless my main interest was and remains pre-nationalisation French SE operations.  And this from a Kent born lad.

 

In general I thin a manufacturer can therefore count that there will be a significant skew in sales regionally.  LNER models may sell perhaps 50% better in the Eastern portion of the country.  GWR perhaps rather better in the South than the North. 

 

And despite all of this knowledge/assessment of the market, I bet the Bachmann C class in SECR liveries sold well beyond expectations in regions that were not around SE London. 

 

As I started, Who would be a model railway marketing analyst??

[davknigh]

Andy Hayter wrote

"As I started, Who would be a model railway marketing analyst??"

 

This is precisely why companies like Rapido have gone to pre-ordering so as to determine if a market exists in the first place. How many times have you heard someone say, "Oh, I'd buy one of those" until they saw the price then backed out for any one of a number of reasons.

 

Cheers,

 

David

 

edited for clarity

Edited March 5, 2016 by davknigh

[RJS1977]

Who would be a model railway marketing analyst??

 

Ggetting it right must be very difficult indeed.  Chosing the model in the first pace is difficult enough - although wish lists today must be a significant help, and i am sure this is why we see members of the top 10 being picked off.

 

But having made the initial run, what then? 

 

They sold out very quickly - great we should make some more - but only if we are convinced that there really are 1000+ (maybe only 500+) potentail sales.

 

So we look at Ebay - going for sales price doubled.  And this proves what?  First sale - that there are at least 2 customers (with perhaps more money than sense) .  Second sale?  (there might be a third potential purchaser.  etc..  That is all you can with confidence define from such auction prices.   The mistake is to believe that this shows that there is a market for a second run.

 

To make the point the original Bachmann C class full fat livery sold out in no time.  Since then items have appreared on Ebay and sold at up to £325 (Cannot remember the exact price).  Followed by several others that have sold at progressively lower and lower price.   Today, perhaps as many as 10 have been sold and one has been stuck at £175 for weeks.

 

From the first sale Bachmann could have been forgiven for thinking there is real demand for another run.  But with only 10 or so sales, the price has now dropped to what they would probably have to sell at to be profitable at todays costs - and currently no takers. 

 

It is easy to be misled by auction sales values to believe that this is the market value,/; that there is real demand and that you should have a second/third run of said model.

 

Getting it right is very difficult, and sometimes Hornby et al fail to do so.  We can be critical (or even happy) when they don't. 

 

As for regional sales, I am sure they exist, just as I am sure that there are as many exceptions as there are adherents to the rule.  To make the point when I joined our local club in NE England I was of course drawn to LNER practice along with many (not all) members.  Models were made and contributed to the club's various layouts.  Nevertheless my main interest was and remains pre-nationalisation French SE operations.  And this from a Kent born lad.

 

In general I thin a manufacturer can therefore count that there will be a significant skew in sales regionally.  LNER models may sell perhaps 50% better in the Eastern portion of the country.  GWR perhaps rather better in the South than the North. 

 

And despite all of this knowledge/assessment of the market, I bet the Bachmann C class in SECR liveries sold well beyond expectations in regions that were not around SE London. 

 

As I started, Who would be a model railway marketing analyst??

 

On the other hand, there may be other potential bidders who aren't bidding for the stuff on Ebay either because they don't know it's there or it's gone out of their price bracket. Conversely if the manufacturers don't make another run of something, they won't sell any...

 

There might also be a case for leaving it a few years before doing a re-run of a certain model, in order to pick up people who either weren't in the hobby first time round or were modelling something different at the time.

 

It should also be remembered that if originally only one run was planned, and it has sold out without discounting, then the tooling and development costs should have been paid for,which means that even if the manufacturers have to offer the second run at a reduced price, they won't necessarily be making a loss on them.

[The Stationmaster]

 

Andy Hayter wrote

"As I started, Who would be a model railway marketing analyst??"

 

This is precisely why companies like Rapido have gone to pre-ordering so as to determine if a market exists in the first place. How many times have you heard someone say, "Oh, I'd buy one of those" until they saw the price then backed out for any one of a number of reasons.

 

Cheers,

 

David

 

edited for clarity

 

 

Yes however I suspect 'the general market' won't fall for that sort of marketing and it does still have its risks.  I understand from a couple of retailers that the general level of drop out on pre-orders is c.10% which could be significant if it isn't factored into a pre-order situation.  That might mean 100 models (on a typical run of 1,000) - at say £100 retail (conservative estimate) means somebody is immediately £10,000 short of their target number which might destroy profitability on that model.  So alternatively they accept more pre-orders than models they intend to make - but what happens if nobody then drops out or the drop out rate is less than the over-ordered number.

 

The only way I can see pre-orders having an effect is in deciding whether or not to go ahead in the first place but it must still involve a bit of risk although perhaps not such a big risk, and I won't pre-pay.  I tend to the very basic rule that it is not my job to finance somebody's business by loaning them my money - unless they offer me suitable security against the loan and a guaranteed rate of interest.  So if they want to borrow my money they must offer a proper deal and I do not consider 'a proper deal' to include me paying in advance for an unknown quantity in terms of quality, detailing, fidelity and so on - that is why they are in the model making business and I am not.

[RJS1977]

Not to mention that some of us like to see what we're buying before we buy it (even if it's seeing  one that belongs to a friend,on a layout at a show, or even a video review on RMWeb!)

[davknigh]

The only way I can see pre-orders having an effect is in deciding whether or not to go ahead in the first place but it must still involve a bit of risk although perhaps not such a big risk, and I won't pre-pay.  I tend to the very basic rule that it is not my job to finance somebody's business by loaning them my money - unless they offer me suitable security against the loan and a guaranteed rate of interest.  So if they want to borrow my money they must offer a proper deal and I do not consider 'a proper deal' to include me paying in advance for an unknown quantity in terms of quality, detailing, fidelity and so on - that is why they are in the model making business and I am not.

Rapido is not the only manufacturer that does pre-orders in North America in fact most companies have gone this route. The thing is that the vast majority of these companies have form so potential buyers have a good idea of what will be in the box ahead of time. Another factor is the involvement of dealers in the pre-ordering process. I ordered my GMD-1 through a dealer, had I not claimed it, it would have gone into general stock and been sold later, so as long as the manufacturer produces good product the system works.

 

Cheers,

 

David

[Ozexpatriate]

Yes however I suspect 'the general market' won't fall for that sort of marketing and it does still have its risks.  I understand from a couple of retailers that the general level of drop out on pre-orders is c.10% which could be significant if it isn't factored into a pre-order situation.  That might mean 100 models (on a typical run of 1,000) - at say £100 retail (conservative estimate) means somebody is immediately £10,000 short of their target number which might destroy profitability on that model.  So alternatively they accept more pre-orders than models they intend to make - but what happens if nobody then drops out or the drop out rate is less than the over-ordered number.

Mike, what I see happening in the US is that in addition to pre-orders, retailers also order extras 'on spec' (particularly for less expensive items like freight cars - you pretty much need to pre-order them too) if they happen to think it will sell - rather like retailers buy from manufacturers already.  Yes, everyone assumes some risk, but I don't think the manufacturer will order exactly the number pre-ordered either.  There are some people who will still want to buy one if they see it on a shelf in the shop.

 

They wait and see if they have enough pre-orders to turn a profit (Rapido and BLI certainly do this) then they order a run (presumably at slightly more than the number of pre-orders less some level of expected drop-out. It's still much more predictable that the guessing that Andy alluded to earlier.

 

At some point this week I made the observation that re-liveried second editions sell less well than the first editions, coaches excepted.  Coaches themselves contain risks. Hornby sold an enormous number of the original Manusell olive liveried coaches in multiple re-issues. Had they made even more, I think they might have sold.

 

The Hawksworth coaches on the other hand were a different story. Despite being very well received, only the first issue was snapped up quickly. The second issue sold slowly indeed.  I suspect a second issue of the Collett coaches might be as well received as the re-issues of the Manusell olive SR liveried coaches. 

Edited March 6, 2016 by Ozexpatriate

[Ozexpatriate]

Ah but how many of them (or indeed how many 'modellers') will know - by relevant dates - whether it should have one brake coach or two, where they should be marshalled in the train and which we round they should be? Most contemporary trains don't have brake coaches so the only way a child (or modeller) is going to know whether or not a train happens to need one (or more) is from research etc.   This isn't a criticism of any lack of knowledge but, I hope, an illustration that such a 'fact' might not necessarily be immediately obvious and thus might not necessarily influence sales through the internet or even many shops which don't happen to have someone who says 'you need a brake coach in that train'.

 

Many model railway folk run what they like, some choose a particular company or part of the country and some go into much greater details about getting everything correct for the place/period they are modelling.  All of those factors are just as likely to have some sort of influence on sales as many other factors.  When it comes down to it the manufacturers and commissioners etc must have a pretty good idea what will sell profitably because they are putting their money where their ranges/releases for this year are.  But it is clear that it isn't always plain sailing with numerous examples of repeat productions (mainly from Hornby) which haven't sold while others are slow movers and this leads to massive underselling which in turn can distort customers' perception of prices.

Mike, I find that sort of research - other than by asking suitable questions here - quite difficult.

 

I wish the manufacturers would be a bit more responsible with their collateral by providing more operational details in their catalogues (online or in print). At a bare minimum some indication of period for the livery chosen - but that may be unreasonable, getting such details right is expensive and difficult for them. When they do try they seem to get many simple details wrong - or possibly worse for the uninitiated, get them correct but for a corner case - like a GWR livery that persisted through 1956 on an individual tank locomotive.

 

Having had an interest (from a great distance) in the GWR for many years, it wasn't until I discovered the very nicely assembled gwr.org.uk website some years ago that unlocked the mysteries of the different GWR liveries for me. Manufacturers had been supplying and I had been quite cluelessly purchasing models for donkey's years. (Mind you there was a big gap between my ignorant teenaged/young adult purchases and my forty-something or older purchases.

 

The notion of accurate formations was well beyond my abilities and frankly still is. Of course people who limit themselves to what is available in RTR are additionally limited when it comes to correct formations.

 

Even with access to lots of good books (which I don't have where I live) understanding enough operational details including track design, signalling, timetabling / diagramming, train formations etc (let alone more obvious things like liveries and the proper paint colour of the buildings) is quite difficult to develop.

Edited March 6, 2016 by Ozexpatriate

[Ozexpatriate]

Ahem... I refer to my earlier posts about the large quantity of GWR locomotives and shunters' trucks to be seen piled up on the discount shelves in the Newcastle upon Tyne concession

Relative to the shunter's truck, given the huge number of the things that were available all of a sudden I suspect they were piled up on retailers' shelves in the West Country too.

 

Worse than buses. None for decades and all of a sudden there were well over half a dozen different variants from two companies.

 

Sadly they serve as a cautionary tale to the idea that it's good to produce multiple liveries at once. (I think they're a bit of a corner case, but nonetheless there were an awful lot of them available all at once.)

[Clearwater]

Michael

 

I agree re research. I too have only appreciate the subtleties of gwr liveries from gwr.org, rmweb and coachmann's writings. In terms of research, I'd heartily recommend David Geen (and others) books called "gwr in the 1930s". I brought it cheaply second hand from Amazon

 

http://www.amazon.co.uk/Great-Western-Railway-1930s-v/dp/1870754247

 

Excellent pictures but more importantly the captions and the appendix detail the coach diagrammes. Has massively improved my own recognition abilities of top lights, concertinas etc! It's also made me realise how many saints, Bulldogs, Dukes and earlier panniers etc were operating in the 30s. Probably not much help to you, but I'm looking forward to seeing the Hungerford layout at AllyPally in a couple of weeks.

 

David

Edited March 6, 2016 by Clearwater

[jjb1970]

The only way I can see pre-orders having an effect is in deciding whether or not to go ahead in the first place but it must still involve a bit of risk although perhaps not such a big risk, and I won't pre-pay.  I tend to the very basic rule that it is not my job to finance somebody's business by loaning them my money - unless they offer me suitable security against the loan and a guaranteed rate of interest.  So if they want to borrow my money they must offer a proper deal and I do not consider 'a proper deal' to include me paying in advance for an unknown quantity in terms of quality, detailing, fidelity and so on - that is why they are in the model making business and I am not.

Very well said, this sums up my feelings on the concept of being asked to pay up front. I'll admit I did it for the APT-E for the unfortunate reason that I considered my desperate desire for a model of the APT-E to be more important than my principles in this one case but it is not something I'd support as a general model. I have zero objection to manufacturers making a profit as they carry the risk of a project. Despite the well discussed increases in Chinese labour costs I think that a significant part of the big Bachmann price rises is about increasing their margins to better match what they'd expect in other markets. And I am fine with that, its their business, they offer a product and I decide whether or not to buy. If the product offers value in my opinion I'll buy and I'm happy for them to make their profit, noting that value and price are different concepts. However if companies transfer the risk to consumers it does beg the question why I should underwrite their risk and also provide their profit?

I'd apply a different attitude to kick start projects where enthusiasts try and get models made that wouldn't be made otherwise, but for an established model manufacturer I really don't agree with the idea. I can sort of live with pre-order where it is just a commitment. I'll admit I've walked away when the time between stated delivery and actual slipped by a very long time and where price rose significantly on the basis that whilst I feel guilty for the retailer if they are at risk of a loss, when it comes to the manufacturer the commitment was based on an advised delivery date and price.

We see guys like Dave Jones, the owner of Kernow paying for tooling and making major financial commitments where the consequences of the model bombing or suffering endless delays are going to be immediate and personal for them and they're not asking their customers to carry their risk (except in the case of DJMs kick start projects which is a bit different). Whatever profits they make they deserve as they're taking the risk.

[Oakydoke]

I think we all hope not, and Hornby pricing has gone the other way with endless sales.

I thought the consensus was that those "endless sales" are a result of a desperate need for cash and to bail excess stock overboard ASAP, rather than a result of a lower price policy?

 

A key issue seems to be a very large amount of stock that will not sell even when discounted. A photo from a recent show showing one of Hornby's concessions showed tables full of suprisingly large numbers of discounted Hornby items.

Possibly a further indication that they are producing too many models and more volume than the market can sustain?

That might suggest that they should rationalise what they are offering; e.g. reduce the production runs of the more detailed and expensive models and raise prices accordingly and, if they wish to maintain a budget offering, rationalise the Railroad catalogue to a smaller, more clearly defined and focussed range.

That might just introduce the sort of differentiation between high detail main range and Railroad, that so many people have been calling for.

The problem could be that such a course of action might require Hornby's domestic model train arm to be downsized into a slightly smaller business. Will their need to recover from debt allow that?

 

Hornby have to make more stuff that sells promptly at a reasonable and at least semi-profitable price before it starts thinking about premium pricing.

Surely nobody is going to set out to be "semi-profitable".

That's a sure fire road to ruin.

[Guest]

I'd apply a different attitude to kick start projects where enthusiasts try and get models made that wouldn't be made otherwise, but for an established model manufacturer I really don't agree with the idea.

I completely agree.

 

Here's an example, but not a modelling one. It's a neat little project just the sort that you see on Kickstarter but it's not being made by a startup. It's being made by an established manufacturer who should have absolutely no need of Kickstarter funding.

 

https://www.kickstarter.com/projects/-oi/oi-the-bike-bell-that-doesnt-look-like-a-bike-bell

 

I pre-ordered backed it anyway because I like it and my principles are worth nothing

[Clearwater]

I'm afraid I'm increasingly of the view that it will become harder for the mainstream manufacturers to take large commercial risks on more unusual prototypes, particularly to the level that those of this site would want.

 

I'd suggest that the return for prefunders needs to be in the form of a discount, say £30-35, on the full rrp for funding at risk plus the satisfaction of getting a model they want that otherwise wouldn't be produced. That was part of my reasoning for suggesting £25 level for preorders. Commercially, there need to be a few conditions, notably that the model is not retailed at less than the rrp for a given time period.

 

For this type of idea to work, we need to see clearer timeframes that get delivered. Perhaps the commissioner needs to take the cost risk up to CAD stage, which I assume is comparatively small, and thereafter seek funding to accelerate the tooling, book the factory slot etc. I'm assuming that once at cad stage, the model specification is reasonably clear and the final cost more, not completely, predictable. When I get chance, I'll play around with excel to see how the numbers would need to work

 

David

Edited March 6, 2016 by Clearwater

[ruggedpeak]

Who would be a model railway marketing analyst??

Personally this gets to the nub of it. I have studied Hornby and its last recovery strategy as part of an MBA I am doing. Quality data and info is hard to come by, hence more opinion than fact. More importantly the other half is a marketing consultants to global brands, doing all sorts of market and consumer intelligence as well as product innovation. Her expertise is the qualitative side, understanding what people actually want and will pay for (which is often different from what they say when asked!). She knows her stuff and I worked with her for a while so have some understanding of the processes.

 

What is clear is that there is very little good data on the model railway market, as it is treated as a subset of toys. It is not really big enough for the analyst firms to produce reports on as there are few companies who can afford the £500+ reports cost. Hornby appear to have made an attempt, but it seems that either this was not done properly, or they ignored it. I am of the view they may be lacking a proper marketer who understands trains and modellers and people who buy toys on their staff (or at least not in a senior position). Certainly there seems to be insufficient engagement by Hornby in the marketplace visiting retailers, talking to customers, attending shows etc to build that non-data 'feel' for the market (as others have said above). That is what sits alogg side the qualitative data. I believe by employing an ex- major corporate accountant as head of sales, they have lost the non-numerical information they need to make good decisions, such as making products that people want and will buy at a reasonable price.

 

This case study reinforces my view that Hornby has gone far too digital and got lost in a sea of IT, data and spreadsheets:

 

http://www.matillion.com/case-studies/Hornby-aligns-strategy-to-execution-using-matillion-bi-sales-analysis/

 

As I keep saying, social media and spreadsheets don't sell anything - hard graft and basic sales skills do that, along with a strategy aligned to a well understood marketplace. Time for Mr S and his team to roll up their sleeves and be seen at model stores and shows across the UK rather than hiding behind screens.

 

The major manufacturers need to get a much better understanding of the market, but with customers spread across the full spectrum from those fully digital to those reading the odd mag and popping down their local club, and parents or grandparents looking for presents, this woud require a reasonable investment, which I don't think the big players can afford right now. However proper in depth research seems to be required.

Edited March 6, 2016 by ruggedpeak

[ikks]

Personally this gets to the nub of it. I have studied Hornby and its last recovery strategy as part of an MBA I am doing. Quality data and info is hard to come by, hence more opinion than fact. More importantly the other half is a marketing consultants to global brands, doing all sorts of market and consumer intelligence as well as product innovation. Her expertise is the qualitative side, understanding what people actually want and will pay for (which is often different from what they say when asked!). She knows her stuff and I worked with her for a while so have some understanding of the processes.

 

What is clear is that there is very little good data on the model railway market, as it is treated as a subset of toys. It is not really big enough for the analyst firms to produce reports on as there are few companies who can afford the £500+ reports cost. Hornby appear to have made an attempt, but it seems that either this was not done properly, or they ignored it. Having observed the strategic mistakes they have made, and looking at their personnel, I am of the view they may be lacking a proper marketer who understands trains and modellers and people who buy toys on their staff (or at least not in a senior position). Certainly there seems to be insufficient engagement by Hornby in the marketplace visiting retailers, talking to customers, attending shows etc to build that non-data 'feel' for the market. That is what sits alnog side the qualitative data. I believe by employing an accountant as head of sales, they have lost the non-numerical information they need to make good decisions, such as making products that people want and will buy at a reasonable price.

 

This case study reinforces my view that Hornby has gone far too digital and got lost in a sea of IT and worthless data and spreadsheets:

 

http://www.matillion.com/case-studies/Hornby-aligns-strategy-to-execution-using-matillion-bi-sales-analysis/

 

As I keep saying, social media and spreadsheets don't sell anything - hard graft and basic sales skills do that, along with a strategy aligned to a well understood marketplace. Time for Mr S and his team to roll up their sleeves and be seen at model stores and shows across the UK rather than hiding behind screens.

 

The major manufacturers need to get a much better understanding of the market, but with customers spread across the full spectrum from those fully digital to those reading the odd mag and popping down their local club, and parents or grandparents looking for presents, this woud require a reasonable investment, which I don't think the big players can afford right now. However proper in depth research seems to be required.

In total agreement.

Rgds........Mike

[87004]

Very well said, this sums up my feelings on the concept of being asked to pay up front. I'll admit I did it for the APT-E for the unfortunate reason that I considered my desperate desire for a model of the APT-E to be more important than my principles in this one case but it is not something I'd support as a general model. I have zero objection to manufacturers making a profit as they carry the risk of a project.

Only we weren't asked to pay up front in this case.  We paid a £50 deposit to an off-shoot of the national museum.  If the project completely failed (unlikely) I'd assumed we'd get our money back from Locomotion models.  There was and is some risk that the model may not be to our liking, but Rapido are well regarded in their market.  I saw this as a low risk.