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A counter-capitalist mentality?

March 30, 2010
Filed under From the Editors

In Economics 101, I learned when demand increases, price increases. I also learned when demand decreases, so does supply, which often results in labor cutbacks. I know, genius, right? However a dealer I recently spoke with doesn’t believe in subjecting his business to these basic economic laws.

Wilkins Harley-Davidson Co-owner and General Manager John Lyon refuses to raise unit prices even if they can’t keep the bikes in stock. He’s a firm believer in price consistency. After years in business, his customers have taken notice, and some have reached the point where they don’t even ask for the price because they know the dealer will always be fair. The result has been an incredible repeat customer base and extremely strong word of mouth advertising.

If price consistency is what it’s going to take for customers to keep coming back, then this is the route we need to take to get through this tough economic time. We need to rethink some of the traditional concepts we learned in Econ 101, and cater exactly to what the customer wants, even if that means not raising prices in times when we can get away with it. If we can manage that, like Wilkins Harley-Davidson has done, word of mouth will spread like wild fire and business will flourish.

Lyon’s untraditional business practices have led him to nearly double sales in the past four years. The dealership had its best year in 2009 when countless others were failing. Plus, they’re the No. 1-ranked Harley-Davidson dealer in New England for customer service and has been for the past decade.

This is an example to follow.

Comments

One Response to “A counter-capitalist mentality?”

  1. Christopher Kourtakis on April 13th, 2010 9:23 am

    Karin, you bring up a great point. However, I think that their excellent customer service is driving their pricing structure. If they provide superb customer service, they get returning customers, develop relationships and are trusted in their pricing.

    As we all know, many customers shop for a year or two before they make their purchase. If they see that the price did not go up significantly or not at all, they are more likely to purchase from that dealer.

    As Scott said, it is all about the commitment. If a dealership is willing to commit to the basic principles, then the customers will keep coming back.

    On the flip side, I work with a dealer who is the most expensive dealer in the country for the products they sell. However, people buy for the customer service, the dealer events, and other benefits that the dealer offers. Paying a high price, knowing you will get a return on your investment will also drive revenues and will act differently from the traditional supply and depend model that we were all taught in econ 101.

    [Reply]

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