Maerklin Price hike

An interesting new policy then by the new owners.

To improve revenue streams on declining sales they have decided to increase prices by 6%.

I have been touring Europe for a few weeks and this has allowed me the opportunity to study continental prices of model trains and slot cars first hand when visiting model outlets.

Slot cars offer the better price comparisons as they are identical no matter where they are sold.

Scalextric slot cars in France seem to retail for 55€ where slot cars have a very small market. To be honest I was shocked by this high price.

In Spain the same identical product retails for almost half the money at 30€ and Spain is the largest market in the world for Scalextric slot cars.

Scalextric slot cars in Germany seem to retail for about 47€ and in the UK for about 40€.

These are all identical products produced by Hornby.

I was astounded by these price differences accross Europe for the same product. The range being €30 to €55.

And it may go some way to explaining why Scalextric as a hobby is more popular in some European markets than others.

The same principles seem to apply to the model railway hobby around Europe. Higher prices = smallish interest. Lower prices = largish interest. You basically do not get shelves and shelves of model trains like you do in the UK in European hobby shops (Germany excepted) with model trains taking up a very small proportion of shelf space in the typical French or Spanish hobby shop where prices are a lot higher than we in the UK are used to. In fact in Spain the typical hobby shop is going to have shelves full of Scalextric slot cars. Think of Hattons or Rails of Sheffield but stocking Scalextric.

Now it has to be said that Germany does seem to be an exception to this rule as hobbyists there seem prepared to pay extraordinary high prices for model railway equipment.

Having increased prices by 6% I do wonder how this will impact the hobby in Germany and Northern Europe where Marklin are seen as market leaders.

Happy modelling
Gary

I use Hornby Scalextric as the example as the range is identical in several countries so comparisons are straightforward.

The price range was all based on standard stock for sale within the various retail outlets. Scalextric has a RRP in the UK for the broad car range of £27.99 or about 40€. Accepted that dealers do discount in the UK. However why should the same broad range of Scalextric cars appear on the shelves in France for 55€ and in Spain for €32?

France is probably the smallest Scalextric market in Europe and Spain definitely the largest. At 55€ for a car that will be damaged when raced slot car racing is a very rich mans hobby in France. Scalextric competitors all seemed to apply similar price hikes in France and price reductions in Spain.

Surely for a market to grow you bring prices down to broaden the appeal.

Unless of course you have a strategy of raising prices, narrowing the appeal to the super rich, and cutting back on production as you move to offering a niche product.

Maybe this is the Marklin strategy.

Happy modelling
Gary

I don't really think a 6% increase in price is that big of a difference and I doubt if Marklin would ever think of their product as serving a niche market. Surley if you went into any hobby or toy store for that matter in Germany you would know that isn't true. Now what they may consider is to offer tiered lines so that they can address different price points. Some have remarked that this is the function of Trix but if you looked at the product the quality is every bit as good as Marklin. I would think that the Marklin brand is such that other lines if they choose to produce them would also have the Marklin label.

France is a strange country, their hobby market is surprisingly small and I do think there it's a rich man's hobby. Have you seen their die-casts cars? Simply wonderful but most are not targeted to kids but rather collectors.

QUOTE (Rowan @ 12 Jul 2006, 02:47) <{POST_SNAPBACK}>Giday Neil, there must be a latter one , cause the one I just got says the there will be no price increase.That was Newsletter 8. Or is maybe there is a Trix newsletter and a Märklin newsletter.
Rowan, that was the same newsletter and Noel said there would be no price increase here in Australia. Infortunately I buy all my stuff from Germany as it's considerably cheaper.

QUOTE Some have remarked that this is the function of Trix but if you looked at the product the quality is every bit as good as Marklin.

Trix is identical to Maerklin it just has a DC motor instead of AC.

QUOTE The German government recently increased their rate of VAT by 3%. I think it took it from being 1.5% below the UK rate (17.5%) to 1.5% above it, so the German rate is now 19%

I'm hoping this will not affect purchasers from outside the EU as we do not pay VAT.