Thread: Festool Market Strategy

Originally Posted by cava

As a side issue, I heard a new advertisement regarding Miele on the radio yesterday.

They were offering 19% off RRP if certain packages are bought - so much for their price maintenance policy.

um, how that works is clear - the distributor provides that relief. To all retailers.

To contrast, a retailer not subject to this price fixing is able to offer an independent discount, essentially from their own margin.

The point is, and I have been in this type of industry for some 30+ years, that I have never heard of Miele discounting their products this much.

A reasonable assumption is that their exclusivity price wise, is causing them financial concern.

There could be a few reasons for Miele's approach. Firstly, note that you have to purchase a number of items (how many?) so to give a discount is the normal way of things. They may also be trying a different marketing strategy to see how it goes. Perhaps some of those appliances are on run-out and they want to clear them out. They could even be wrapping all three of those ideas together in one strategy.

Further to what poundy just said: Festoll have done a similar thing from time to time. You buy a tool and a vac or some sort of combination, and the price is either better or you get something at no or vastly reduced cost. I don't know if Festool (Oz) themselves bear the profit loss, or whether it is shared with the dealers. It could even be shared with the manufacturing company of Festool itself (remembering that the Oz operation is not owned by Festool at all).

As I understand it, Festool offers different profit returns to the dealers for different levels of performance - sell so much stuff and your purchase price is discounted by x%. Fill in a certain % of wty cards and another discount kicks in. That is the model in Germany (or at least was) and it may have been adopted here. Doesn't really matter though - at the end of the day if the retailers aren't making enough money they'll stop selling Festool.

Miele have always done this style of promotion and it usually relates to packages of say a washer and a dryer or a kitchen combo or a baking tray with an oven etc
The price point is usually over 10k when I was doing it and it is Miele offering the discount not the retailer doing it adhock
The retailers still make the same gross margin regardless and still operates in the same controlled environment

We get what seem to be monthly offers in the mail from Meile.

Originally Posted by cava

The point is, and I have been in this type of industry for some 30+ years, that I have never heard of Miele discounting their products this much.

A reasonable assumption is that their exclusivity price wise, is causing them financial concern.

If you are a Miele for Life customer, you will sometimes find that they offer deep discounts on certain packages.

Also, when a line is about to be replaced/upgraded, there will sometimes be very significant discounts.

Well, all this talk of Festool got me looking at Festool stuff today while wandering through a tool shop while the missus was looking at gardening stuff. Picked up a CSX drill - and it was on sale, and came with a free Stein. Those generous Germans are always looking after us . I will say that I didn't have anyone come over to provide any advice or answer questions etc while I fondled the tools for about 10min... although I did say I was "just having a look" when I first walked into the store. But I did get a free Stein... almost bought a ETS EC sander but then thought I may still prefer a Mirka so left that decision for another time.

Edit - one of the main points I meant to make was that it was nice not worrying about looking for cheaper pricing elsewhere or haggling etc.

Cheers, Dom

Originally Posted by DomAU

almost bought a ETS EC sander but then thought I may still prefer a Mirka so left that decision for another time.

Cheers, Dom

Dom, I used my recently purchased Mirka for the first time this weekend, most impressed, their sanding discs are brilliant

Originally Posted by Huon pine fan

Dom, I used my recently purchased Mirka for the first time this weekend, most impressed, their sanding discs are brilliant

Great. Did you also look at the Festool. Major reason(s) for going with the Mirka? I have heard the papers are great and the sander as well. It's lighter and lower profile than the Festool, I like the paddle and the overall feel of the Mirka, and they are about the same price. Mirka seem to have had more warranty / quality control issues from browsing the forums - and poorer turn-around for repairs / warranty issues by the sounds of it. Did you buy locally or online/overseas? If overseas, do you know if Mirka provide local warranty support for international purchases?

Sorry, a bit (lot) off topic. Just this once

Cheers, Dom

Dom, I had purchased a DTS400 which I was happy with to a point but not really knocked out with, particularly at the price. I already had a Metabo 150mm ROS and wasn't happy with a recent job with that. I had seen a lot of good reports on the Mirka and in particular their abrasives. At the recent TWWS in Melbourne they were there and what I saw seemed pretty good so I rolled the dice. I can't comment on warranty or related issues and, like Festool, they certainly aren't cheap but as I said very happy based on my limited use to date. I guess that only time will tell as to whether I made a good choice.

Originally Posted by DomAU

Assuming you build to the tolerances. Setting tolerances is one thing - ensuring products are built to them is another.

Cheers, Dom

Well after struggling with the binding height adjuster for too long and finally cracking it today when it was taking me a good 2min and lots of effort to release and adjust the depth of cut i decided to pull the HK85 apart and see if it was a design fault or manufacturing defect.

It took me the better part of an hour and a half but it turned out there were a few rough spots on the casting of the housing that were binding the release lever, as well as a slightly undersize / misslocated locating slot on the lever that was rubbing on it's cast guide. Some liberal filing sorted it out.

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Now the saw adjusts so nice and easily and smoothly!! Wow! If I knew that all that frustration could have been avoided for just 1.5hrs work I'm kicking myself for not doing it earlier.

Also, seems like quality control / manufacturing were to blame here, not design. Built in Hungary not Germany... .

Cheers, Dom

Thinking more on that and back to my previous thoughs on maintaining quality irrespective of price. I think that Festool moving production out of Germany would make me turn away from their products far more than price increases. I won't buy another Festool tool that isn't manufactured in Germany - or at least will be severely deterred from doing so.

Cheers, Dom

I looked at a domino for a while but at 1700+ for a tool with limitations and 2200 for it's big brother it's impossible to justify the cost as a hobbyist. Not when it's more than 50% of a major workshop machine for a joinery tool.

A bit of anecdotal evidence for those who go on about the cost of operating in Australia from some acquaintances. One importer/retailer brought in phone aerials (back in the day) for 50 cents a pop, retailed for 120+. Another from an electrical engineer who's company imported a certain type of circuit board for less than 200 retailed them for 15000. Greed doesn't operate within any rules.

Originally Posted by cava

The point is, and I have been in this type of industry for some 30+ years, that I have never heard of Miele discounting their products this much.

A reasonable assumption is that their exclusivity price wise, is causing them financial concern.

Miele, according to a mate who works for them, had a landmark year last financial year. A billion in sales for the first time if memory serves (don't quote me). GM apparently isn't happy with this and quoted some ridiculous target for this year.

Originally Posted by CgT

I looked at a domino for a while but at 1700+ for a tool with limitations and 2200 for it's big brother it's impossible to justify the cost as a hobbyist. Not when it's more than 50% of a major workshop machine for a joinery tool.

It's a funny thing, value, and justifying a price for something as it's completely personal. If you look at it from a purely business perspective placing a monetary value on a tool is easier as you can add up the time saved or value-add to the bottom line profit vs the cost. For a hobbyist it's far more unquantifiable. Someone that uses a Domino once a year may value it just as much as someone who makes 30 projects a year with it. Likewise, justfying a price premium for one tool over another is not, in my opinion, just a relative measurement but an absolute one. One tool may cost double that of a similar one but if the absolute difference in price is less that the additional value-add, to the individual, then it would still be the prefered option.

Of course it also comes down to wealth; a Ferrari may be 50 times the price of a Hyundai but is still excellent value to someone with the money - and the $980,000 difference in price, in absolute terms may not be a lot to a super wealthy individual. Just as paying $20 for an ok tool vs $10 for a slightly worse one (despite being twice the price) could be seen as a better deal to someone on a lower budget / income.

Cheers, Dom