Will yesterday’s Supreme Court 2nd Amendment decision increase firearm sales? Think again...

Posted by Patrick Lefler on June 29, 2010

1 comments | 862 reads

Yesterday, the Supreme Court ruled that the constitutional right to bear arms overrides state and local laws. While the decision may strengthen Americans’ rights to carry firearms, it probably won’t result in an increase in firearms sales. In fact, I’d argue just the opposite.

In a Wall Street Journal article published today, author John Jannarone makes this same point that gun sales could actually decline because of yesterday’s Supreme Count ruling. Does Jannarone’s theory seem counterintuitive? Not really and here’s why...it all has to due with the power of scarcity.

We’ve already seen the power of scarcity influencing the firearms market for the past 18 months or so. Gun sales surged in late 2008 and all of 2009 due in large part to the fear that the Obama Administration would clamp down on firearms. When people perceive that items are (or will be) scarce, a greater value is placed on that item which clearly influences behavior. The Supreme Court ruling affirming an individual’s right to carry firearms should have the immediate effect of reducing the perception of scarcity that has existed since late 2008. And that should translate into reduced demand and weaker sales.

Here’s the takeaway: In an earlier post, we examined the paradoxical reason why Oldsmobile exceeded all U.S. sales projections in 2003 - General Motors, its manufacturer decided it was going to discontinue the line due to poor sales. In this case, yesterday’s Supreme Court decision - which will probably make it easier for American’s to purchase firearms going forward - will have the opposite effect in reducing sales because of the power of scarcity.

Reader feedback is the lifeblood of this blog - whether you agree or disagree with what you've read, please feel free to post your opinions in the comments section below.

Republished with author's permission from original post by Patrick Lefler.

Patrick Lefler

Patrick Lefler is the founder of The Spruance Group -- a management consultancy that helps growing companies grow faster by providing unique value at the product level: specifically product marketing, pricing, and innovation. He is a former Marine Corps officer; a graduate of both Annapolis and The Wharton School, and has over twenty years of industry expertise.

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EdisonB

September 6, 2010

Automakers are coping up

Automakers are coping up with poor sales they're earning. The decline of sales has called the attention of the government. There has been a lot of effort to recapture former market share among the Big Three domestic automakers. The auto industry as a whole, however especially the domestic automakers, have been desperate to get more individuals into new automobiles. There was some help from the auto rebate program, Cash for Clunkers that helped some individuals feel secure enough about buying. Profits for GM, and other automakers, thanks to Cash for Clunkers did somewhat improve, however since 2009 General Motors sales and other auto profits have declined. The consumer confidence just doesn't exist; look at the real estate market.

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