How does the Gurkha brand not destroy itself?

[Shlippy]

I'm not starting this thread to bash Gurkha cigars or talk about the cigars themselves. I have my opinions of them. Some I've liked, some not so much. Here, I'm interested in talking about the Gurkha business model.

What fascinates me is how Gurkha can continue to exist as a brand. On one hand it tries to sell (and is apparently at least somewhat successful at selling) outrageously expensive cigars. And on the other hand, as we all know, they also sell at ridiculous discounts like 95% off MSRP and 2 - 3 bucks apiece.

Seems to me such a tremendous undercutting of its own product would dramatically dilute the Gurkha brand and make their high- and even mid-range, profit-making sticks essentially unsaleable. It would be as if Lamborghini or Ferrari sold their $250,000 cars for $25,000 through some dealers. How long would it take for people to no longer think of Lamborghini or Ferrari as a luxury brand? Not long. If something is selling for 90 to 95% off then its entire pricing structure is a joke.

It's also why Honda and Toyota take the names Honda and Toyota completely off their Acura and Lexus luxury brands: to keep the different lines separate in the minds of consumers. To separate high from low. To maintain exclusivity. The reason people pay big money is for exclusivity. Once a luxury brand no longer maintains exclusivity, it must collapse.

It reminds me of the Sharper Image company. When I was a kid I would look through their catalogs and see all these fancy, high-priced gadgets and thought the Sharper Image was cooler than hell. Then the internet came along and everybody realized the Sharper Image was selling cheap Chinese gadgets at huge markups. Once that happened the Sharper Image went bankrupt.

How has that not happened to Gurkha?

 

[sean]

Their expensive cigars are just a gimmick... the bulk of their business is selling mediocre sticks to guys who wanna put big flaming sticks of poo in their faces at bachelor parties, weekend poker games, and on the golf course. Gurkhas occupy large percentages of humidor square footage in b&ms thanks to the hundreds of different blends they pump out... this also helps keep them in business, as no one is as visible (well accept for Rocky).

 

[quazy50]

Their expensive cigars are just a gimmick... the bulk of their business is selling mediocre sticks to guys who wanna put big flaming sticks of poo in their faces at bachelor parties, weekend poker games, and on the golf course. Gurkhas occupy large percentages of humidor square footage in b&ms thanks to the hundreds of different blends they pump out... this also helps keep them in business, as no one is as visible (well accept for Rocky).

Agreed. It's about volume. They market them selves well so that the occasional smoker will buy their sticks at the B&M for a higher price when going for a bachelor party, wedding, or on the golf course. They probably still make profit on their highly discounted sticks as well. Sort of like JC Penny marking everything up and then putting the inventory "on sale". It's not really in sale, it's just a marketing ploy. The suggested MSRP is just that, suggested and they mark it up for the discount.


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[Omerta]

Id imagine, though I don't know much about production and quality of cigars, that gurkha cigars aren't actually worth the msrp. Would be like me saying my junk car is worth 100,000 but I'd sell it to you for 1,000. It's really worth a 1,000 to begin with. From the beginning they have all attention of selling their sticks for the sale price. I'm sure their profit margin is pretty high even with the sale cause I doubt they put next to anything into their cigars

 

[sofc]

@ChefBoyRG54 seems to like them (especially the beast,) it might be an idea to ask him.

 

[ChefBoyRG54]

I'll take it from here @sofc

Using only the finest tobaccos sought from the world over, Gurkha has been able to put together not only some of the best cigars available, but quite literally some of the most highly sought after, artistic creations known to mankind.

You think Mona Lisa, I say Gurkha war pig. You think Mozart, I say Gurkha widow maker. You think Tarrentino, I say Gurkha beast. As if I need remind you...

#witness

 

[pbibby]

I'll take it from here @sofc

Using only the finest tobaccos sought from the world over, Gurkha has been able to put together not only some of the best cigars available, but quite literally some of the most highly sought after, artistic creations known to mankind.

You think Mona Lisa, I say Gurkha war pig. You think Mozart, I say Gurkha widow maker. You think Tarrentino, I say Gurkha beast. As if I need remind you...

#witness

I just spit out my drink.



Thank you.

 

[ChefBoyRG54]

I just spit out my drink.



Thank you.

Probably when you saw how cheap these could be had!

 

[THEMISCHMAN]

I didn't actually read any of the above posts but to answer your question; it's because of places like Cbid and the CI conglomerate. Add to that, consumers who are ill educated and just getting into cigars or people who think smoking that shit is some sort of status symbol. There are good cigars and there are crap cigars. I guess the good thing about the industry is there are buyers for both.

 

[Shlippy]

it's because of places like Cbid and the CI conglomerate.

That's fair, BUT many brands have a minimum advertised price which they enforce even against major sellers like CI. Often on cbid you'll see cigars that start at a weird dollar amount (well above the standard $1). That's their MAP and they can't be sold for less.

One would think Gurkha, especially, would strictly enforce a MAP to keep value perception high.

Many, many manufacturers sell lower-end products but I can't think of one that uses the same brand name for its high-end stuff as its low-end stuff.

For example, Rolex makes Tudor watches. They're good quality and only slightly lower than Rolex, but you don't see the Rolex name on them.

What's the point of Gurkha pretending to be high-end if it doesn't cash in on that perception by actually enforcing its MSRP (or something reasonably close)? I could be completely wrong but it would seem that the long term well-being of these companies lies in the hands of knowledgeable consumers who smoke regularly and become loyal to one or a few brands, not the one-off guy who smokes three cigars a year on the golf course and who knows nothing about what he's smoking.

And I can't imagine, either, that they would base their entire business on consumer stupidity. If you walked onto a car lot and saw new cars marked down from $50,000 to $2500, would you think "What a great deal!" or would you think "What the f*ck is wrong with these cars?"

 

[ChefBoyRG54]

That's fair, BUT many brands have a minimum advertised price which they enforce even against major sellers like CI. Often on cbid you'll see cigars that start at a weird dollar amount (well above the standard $1). That's their MAP and they can't be sold for less.

One would think Gurkha, especially, would strictly enforce a MAP to keep value perception high.

Many, many manufacturers sell lower-end products but I can't think of one that uses the same brand name for its high-end stuff as its low-end stuff.

For example, Rolex makes Tudor watches. They're good quality and only slightly lower than Rolex, but you don't see the Rolex name on them.

What's the point of Gurkha pretending to be high-end if it doesn't cash in on that perception by actually enforcing its MSRP (or something reasonably close)? I could be completely wrong but it would seem that the long term well-being of these companies lies in the hands of knowledgeable consumers who smoke regularly and become loyal to one or a few brands, not the one-off guy who smokes three cigars a year on the golf course and who knows nothing about what he's smoking.

And I can't imagine, either, that they would base their entire business on consumer stupidity. If you walked onto a car lot and saw new cars marked down from $50,000 to $2500, would you think "What a great deal!" or would you think "What the f*ck is wrong with these cars?"

I believe they sell some old lines to CI and/or others and let them use their own blends and sell cheap based on name etc

I for one have a local BM with a ridiculously large humidor that has a full aisle of Gurkha products at "normal" prices. My feeling is their marketing appeals to the #murica style guy who likes "bad ass boys drive bad ass toys" bumper stickers (if anyone has one of these I'm not judging, just trying to describe a demographic).

I think the "tough" names of these cigars draws these guys in and they think smoking a murder death kill cigar from Gurkha is awesome because that's what tough guys smoke.

Maybe I'm way off but with their skull and bones marketing with the dark ambience, it would seem that their target market with the bulk of their goods are middle aged guys trying to be cool cigar smokers.

Guy #1 "What are you smoking Larry?"

Larry "A gosh damn Gurkha Skeleton Mother Fucking Pig Raper. What the Fuck else would I smoke?"

Guy #1 "Wow, what size is that?"

Larry "You see this thing? 8 by Sum Bitch 80! The guy at the shop said it was the biggest stick he had."

Guy #1 "Whoa, that thing should burn for awhile, huh?"

Larry "I'm going to smoke until I can't breathe because I'm from #murica, the only place in the world where freedom exists and I can drive a semi truck to pick my kids up from school, Mother fucker!"

 

[ChefBoyRG54]

 

[StogieFisher]

Is that you on the left?

 

[ChefBoyRG54]

Is that you on the left?

On your left bro

 

[StogieFisher]

On your left bro

You aint passin me bro!

 

[Mr.Draned]

Guy #1 "What are you smoking Larry?"

Larry "A gosh damn Gurkha Skeleton Mother Fucking Pig Raper. What the Fuck else would I smoke?"

Guy #1 "Wow, what size is that?"

Larry "You see this thing? 8 by Sum Bitch 80! The guy at the shop said it was the biggest stick he had."

Guy #1 "Whoa, that thing should burn for awhile, huh?"

Larry "I'm going to smoke until I can't breathe because I'm from #murica, the only place in the world where freedom exists and I can drive a semi truck to pick my kids up from school, Mother fucker!"

Hilarious, thank you for making me laugh after a long sleepless night!
I think the only thing I've heard spoken more beautifully was that song Olaf sang in Clerks.

 

[quazy50]

That's fair, BUT many brands have a minimum advertised price which they enforce even against major sellers like CI. Often on cbid you'll see cigars that start at a weird dollar amount (well above the standard $1). That's their MAP and they can't be sold for less.

One would think Gurkha, especially, would strictly enforce a MAP to keep value perception high.

Many, many manufacturers sell lower-end products but I can't think of one that uses the same brand name for its high-end stuff as its low-end stuff.

For example, Rolex makes Tudor watches. They're good quality and only slightly lower than Rolex, but you don't see the Rolex name on them.

What's the point of Gurkha pretending to be high-end if it doesn't cash in on that perception by actually enforcing its MSRP (or something reasonably close)? I could be completely wrong but it would seem that the long term well-being of these companies lies in the hands of knowledgeable consumers who smoke regularly and become loyal to one or a few brands, not the one-off guy who smokes three cigars a year on the golf course and who knows nothing about what he's smoking.

And I can't imagine, either, that they would base their entire business on consumer stupidity. If you walked onto a car lot and saw new cars marked down from $50,000 to $2500, would you think "What a great deal!" or would you think "What the f*ck is wrong with these cars?"

I think they are going for the "look were expensive! But we'll make you a deal". I fell for it when first getting into cigars, and I feel like a lot of noobs do. One thing you have to remember is there are A LOT more smokers out there that don't sit and geek out on forums like we do. Those generally are the guys who might maintain a small humi with the gel they get from the B&M or they don't even maintain a humi, and just smoke right out of their B&M.

I was at one of those TOBACCO shops once and I was looking over their stock to see if they actually kept the cigars correctly, they didn't. Everything was dried out. Another guy walked in and shoved his hand into a box of idk what and grabbed like 8 sticks without looking at them, paid and left. That guy, is a Gurkha target IMO.


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[sean]

That's fair, BUT many brands have a minimum advertised price which they enforce even against major sellers like CI. Often on cbid you'll see cigars that start at a weird dollar amount (well above the standard $1). That's their MAP and they can't be sold for less.

One would think Gurkha, especially, would strictly enforce a MAP to keep value perception high.

Many, many manufacturers sell lower-end products but I can't think of one that uses the same brand name for its high-end stuff as its low-end stuff.

For example, Rolex makes Tudor watches. They're good quality and only slightly lower than Rolex, but you don't see the Rolex name on them.

What's the point of Gurkha pretending to be high-end if it doesn't cash in on that perception by actually enforcing its MSRP (or something reasonably close)? I could be completely wrong but it would seem that the long term well-being of these companies lies in the hands of knowledgeable consumers who smoke regularly and become loyal to one or a few brands, not the one-off guy who smokes three cigars a year on the golf course and who knows nothing about what he's smoking.

And I can't imagine, either, that they would base their entire business on consumer stupidity. If you walked onto a car lot and saw new cars marked down from $50,000 to $2500, would you think "What a great deal!" or would you think "What the f*ck is wrong with these cars?"

Dude... you keep raising logic points, but seem to miss the ideas everyone is restating.

Your points assume everyone does their homework before buying, and I don't think that's the case with the demographic segment Gurkha and Rocky target.

Case in point: I went to cigar aficionado's big smoke in Las Vegas once. Who had the biggest booths on the floor? Tatuaje? My Father? Oliva? Nope... it was Gurkha, and they were right in the middle, across from Fuente, down the way from Rocky. That end of the floor was a shit-show, filled with dudes in Tommy Bahama shirts and golf hats - not your average BOTL (maybe except for @jwintosh), but your archetypal CA reader... or guys that just showed up because it was " guys weekend." And these were the dudes that read CA and could spring for the trip. Imagine how many other knuckleheads out there buy with the same mentality, that couldn't make it to Las Vegas.

Gurkha plays the numbers game, and not too many people who are buying do their homework - there is a sucker born every minute.

 

[Shlippy]

Daahhaahaah just got out of a meeting with a new client. Guy noticed a couple of cigar boxes on a shelf in my conference room and asked me if I liked cigars. I said yes and we started talking about them. I asked him what he enjoyed and he said "Gurkha Ghost." I nearly sh*t myself.

Guy is definitely a "100 IQer" as I call em.. That is, the most average of the average kind of guy. Not the kind who would research stuff online or talk in- depth about hobbies on the 'net.

I see some reviews saying that's a pretty good cigar but the fact that he brought it up as his favorite, especially after I was just thinking about this discussion, just made me laugh.

 

[sean]

Daahhaahaah just got out of a meeting with a new client. Guy noticed a couple of cigar boxes on a shelf in my conference room and asked me if I liked cigars. I said yes and we started talking about them. I asked him what he enjoyed and he said "Gurkha Ghost." I nearly sh*t myself.

Guy is definitely a "100 IQer" as I call em.. That is, the most average of the average kind of guy. Not the kind who would research stuff online or talk in- depth about hobbies on the 'net.

I see some reviews saying that's a pretty good cigar but the fact that he brought it up as his favorite, especially after I was just thinking about this discussion, just made me laugh.

See man, they're everwhere! Just like the black helicopters and the... oh shoot, I said too much.