Reply to a Gakken post comment


Last week, when I wrote that there’s been no activity from Gakken for months, and no new kit in a year, Micheal replied with “Most likely they don’t have any new ideas to run with. I would’t mind them coming out with a one tube AM transmitter. Instead those have to modify their existing kit.”

I’d like to use the space here to give my thoughts on the current Gakken kit situation. First, I don’t think it’s a simple matter of not having any new ideas. At the back of each kit mook, there’s a survey card readers are asked to fill out. The card includes a list of potential kit ideas and the company then looks at the popularity of each idea to see which ones might have an audience. So, the company has ideas, and it kind of knows how well each one might sell.

I think the problems are:

1) Having something to base the magazine on. If the kit is part of the mook series (and not one of the higher-priced stand-alone kits), the authors need to write about the underlying principles behind the kit, the history of that type of machine, and interview a few well-known specialists in that field. Plus, they want 3-4 pages of pictures of antiques for a photo spread. If they pick a kit with nothing to write about, or they re-do something they’ve published before (like the cameras, or the steam engine), they won’t have enough material for a 40-60 page magazine.

2) The prices of the kits have been going up and the kits have gotten more elaborate. The first kit, the little putt-putt boat, had maybe 5 parts and cost 1,600 yen. The latest kits have been getting up around 20-40 parts and anywhere between 3,500 and 3,900 yen. That means the costs for producing the kits are going up, not to mention the salaries of the writers and editors. There’s kind of an unspoken ceiling that Gakken is hesitant to break through because they’re afraid of losing customers. If the kit price goes over 4,000 yen, people are going to question whether the kits are worth buying.

3) The government raised the sales tax by 2-3 percent a couple years ago to 8%. At the time, they said it was to raise money to reduce the national debt, but most of the taxes have gone to efforts to rewrite the constitution to let Japan create more of a standing army, and as donations to disaster-hit regions around the world. The result of the increased taxes, instead of jump-starting the economy like the government hoped, has been a scaling back of household spending, and the closing of many smaller boutique companies, and an increase in unemployment. Gakken has lost sales in all of this, and they’re naturally going to look at what products sell better than the others, and cut anything that isn’t selling well. This is especially a problem for customers because the government is still convinced that higher sales taxes are going to fix everything, and are insisting on bumping them another 2%, to 10%, in 2017. Companies know this, and they’re looking at moving their marketing focus from the domestic to international markets.

In summary, boneheaded sales tax decisions by the current ruling political party are killing the markets in Japan, and spending is going down (while wages aren’t changing). This, coupled with the continuous increase in kit complexity and sales price, is causing Gakken to rethink which products to keep selling in order to maintain their profits.

 

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