TWY,
re: Circuit City is probably not involved. The salesman
claimed they display what the OEMs (Compaq and H.P.) send and request to be displayed. The payoff would go to the OEMs. Foolish for Circuit City since the salesman
claimed sales have gotten worse. Either they should also demand a cut or they should refuse to display what the OEMs want but only what Circuit City wants based on previous sales patterns. This does not seem to be the case. I don't know how much of this can be believed since the salesman appear to be kept in the dark.
That's not the way it works. The buyer for Curcuit City makes a decision on what is displayed, the complete product mix. The decision is based on a number of factors, advertising dollars, price, perceived value, payment terms, liberal price protection, special funds for any number of contrived reasons (by the retailer), competitive considerations with other retailers, and of course sales history based on any number of criteria, from PC brand to processor brand to price point to amount of memory, on and on. Negotiations and decisions are complex, to say the least.
The slotting fee's would be paid by the OEM's to the retailer. Manufacturer's will generally resist this like the plague, they don't want to get into a situation like the grocery industry, where the manufacturer's are bidding for space. As it is, Curcuit City is probably getting 180 day terms (they sell the product months before they pay for it), about 10% of purchase dollars for advertising (that they may or may not do), discounts for paying on time in 180 days (that they probably won't do, but will take the discount anyway), blanket price protection if they feel they have to discount the product to move it.
I've been in 100's of these negotiations over the years (in different product categories).
Would Intel contribute to funds to help secure shelf space for their OEM's? Maybe. But their contribution would be limited by the smallish percentage of the total system cost, so it probably wouldn't be significant anyway, in the final product mix decision.
John |
