Sales: guns, meals, widgets

18/12/2012 § 7 Comments

In all the articles and posts I’ve read about guns over the last few days, I haven’t seen much on the economics. It is useful to remember that guns, bullets, and accessories — whatever they may symbolise — are also just products that are designed, manufactured, marketed, and sold. Economic theory about mythical widgets applies to guns, too.

I have read enough about the small-arms industry to know that I don’t know. So, let’s talk about restaurants.

Let’s say that you have a family restaurant in a medium-sized town. It’s a dinner restaurant, open only in the evenings. Thursday, Friday, and Saturday nights are your big days. The rest of the week, you are open more for show than anything else.

One day, you decide to increase business. Maybe you have a new child, maybe the rent has gone up — the reason doesn’t matter. What do you do?

First, it is important to remember that existing clients are more valuable than potential clients. You’ve got a bit of a capacity constraint — you couldn’t do more seatings on Friday or Saturday, and people can eat only one meal at a time. So, you try to get your existing patrons to eat out on Mondays and Tuesdays. On the menus, you place little notices: ‘Two-for-one Tuesdays!’, ‘Mondays are hard enough already — we’ll cook for you!’

Maybe that doesn’t generate enough business. So, you diversify. Wednesday nights become Quiz Night or Bingo Night or Open Mic Night — something different to appeal to a new market segment. These people wouldn’t usually go to a dowdy family restaurant, but Wednesdays are a bit quiet in town and it’s something to do.

Let’s say that this town still has blue laws and businesses are closed on Sundays. You spot an opportunity. Sunday is the one day that families are actually together; during the week they are rushing off to their own activities and can’t eat together. If you could get the law changed, you would have a new market. So, you petition the city council.

Now, what’s the pitch? Do you say, ‘Hey city council, I want to open on Sundays so I can make more money’? Of course not. That would be crass and grasping and socially inappropriate. How about, ‘We want to take the burden off Mum so the whole family can eat together’, or ‘Some people work on Friday and Saturday nights — they want a chance to eat out with their families, too.’ You position yourself as providing a service, as benefiting the community, as supporting family togetherness.

So it is with guns. Hunting is a declining activity in the US. It requires one weapon at a time. Maybe someone hunts a lot of different animals and needs a total of, say, three weapons. And guns, because of what they do (contain small explosions), need to be sturdy. A friend of mine used to use an 80-year-old .22 rifle from his grandfather. There’s not a lot of turn-over in that kind of market.

Self-defence! That represents diversification. Existing customers now need new products for a different use. New customers — people who have never hunted — can also be attracted. Bigger market, more sales.

But not everyone wants to walk around with a police pistol on their hip for all to see. Small, discreet pistols are a new product to appeal to a different group of customers. The problem, though, is that concealed carry isn’t always legal. Just like the restaurant in my story, the weapons manufacturers have an economic interest in getting the laws changed. Of course, they aren’t going to say it’s about markets and profits — that would be crass and grasping. So, instead, it is about freedom and families.

Whatever else guns are or represent, they are also products. The companies who make them are trying to increase their customer base, increase sales to new and existing customers, and make money.

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§ 7 Responses to Sales: guns, meals, widgets

  • james hogan says:

    Fantastic! Love it Bill :) Great story:D

  • Eric House says:

    this is where I’ve seen the best idea so far to contain gun violence- attacking the supply of ammunition. Ammo is the perishable aspect of firearms. as you note, a well-cared-for weapon will last for decades, but bullets are one and done. Treating bullets like controlled pharmaceuticals would seem to offer a balanced way out of the current mess.

    • Bill says:

      I’ve seen the same suggestion, and I think there’s some merit. The details would need some work, to deal with people who load their own. The analogy I think about is people brewing their own beer. As long as beer isn’t expensive, the people who make their own are interested in the craft. Make beer too expensive and more people get into homebrew just to save money.

  • All true. What evidence can you point to that lobbying for concealed carry led to worse outcomes when concealed carry was enacted?

    • Bill says:

      What I’ve done here is lay out the general case: business seeks to make profits and will push for advantageous regulations. I don’t know the area well enough to prove the specific example but would welcome any good analysis.

      I also know that the stricter gun laws in NZ make me feel safer, ceteris paribus.

      • I’m pretty sure that there’s been no evidence that concealed carry has worsened outcomes. There’s weak evidence of improved outcomes, but it’s fragile – change the specifications, and you’re back to no evidence.

        Or at least that’s what the National Academy of Sciences concluded when they reviewed John Lott’s work. Lott found benefits from concealed carry, but his specifications were fragile. You can’t change the sign on Lott’s findings, but more thorough analysis seems to make it indistinguishable from zero.

        See here, for example.

        http://scienceblogs.com/deltoid/2005/01/26/naspanel10/

        “On the basis of the very mixed evidence, the panel concluded that there was no basis for a conclusion that the passage of right-to-carry laws either increases or decreases crime.”

  • JC says:

    There’s a big thing not covered here. A recent Gallop poll identified that one of the main attractions of guns is 66% said they used them for *fun* and sport at ranges where they could blast off at targets. Fun was 20 percentage points higher than hunting and on a par with home protection and you certainly can blast off hundreds of percent more rounds at targets than shooting intruders or killing possums.

    Assuming Gallup has got it right then the fun element is likely to be an even bigger attraction and legitimate activity going forward and would seem to ensure the perpetuation of the gun culture.. the thing is the culture is growing and the slightly but surely shrinking anti-gun proponents are getting more shrill as states loosen their gun laws with the courts agreeing.

    Whats going to happen when Connecticut dies down?.. .. well, the pro-gunners will eventually win the day with their arguments that schools and some other public places are really not gun free areas but mass murderer safe areas, that mass murderers must be met with armed people to kill them or force them to flee and that the real elephant in the room is mental illness.. thats where the real battle lies.

    JC

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