Sony Research

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Conducted a brief research report on Sony\'s pricing strategy for the Sony Bravia NX800 television

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Sony Research

  1. 1. Adam Benson<br />BUS 389: Pricing and Financial Management<br />Professor Kudek<br />February 22, 2010<br />Research Report I<br />Sony Bravia NX800 series<br />In the world of televisions there is one brand that is at the top of everyone’s mind: Sony. Sony started its rise to the top of electronics in 1946. Beginning with the name Tokyo Tsushin Kogyo Kabushiki Kaisha it wasn’t until 1958 that the Japanese company changed its name to Sony (finance.yahoo.com). Since then Sony has been a leader in the electronics industry making audio devices, gaming systems, and most importantly televisions. The Sony Bravia high definition televisions are the new creation of Sony that hopes to keep Sony at the top of everyone’s mind. <br />The Sony Bravia NX800 series is loaded with attributes, messages, and reviews that increase its value proposition. “…the BRAVIA® NX800 Series HDTV features a stunning monolithic design and innovative six-degree tilt, so you can position your TV at lower levels for a more comfortable and enjoyable viewing experience. An Edge LED backlight and BRAVIA Engine™ 3 video processor delivers superior, life-like image with amazing contrast and color, while Motionflow™ 240Hz produces unbelievably smooth, crisp and fluid images in fast-paced scenes. Integrated BRAVIA Internet, built-in Wi-Fi, a USB input, LightSensor™ technology and Energy Saving Switch round out the feature set” (sonystyle.com). Of these features there are some that seem to differentiate Sony from the competitors. The Sony Bravia NX800 is the first and only HDTV that allows its users to correct directly to “Netflix, YouTube, Slackers Radio, Sony Pictures, Sony Music, Epicurious.com, and more” (sonystyle.com). The Bravia NX800 series also has the capability of browsing the web on the TV set without a computer attached. With a copious amount of features it is of most importance to have these features and attributes known to potential customers. To do this the Sony Bravia product line took an integrated marketing approach, to more efficiently communicate this message. The main message in their promotion ads is to differentiate themselves from other television brands in one major area: quality. Continuing to use their creative HDNA campaign they are now also incorporating celebrities, such as Peyton Manning and Justin Timberlake, to help communicate this message (news.sel.sony.com). Furthering Sony’s high value proposition is the reviews of Sony Bravia NX800 series by an impartial source. This product is new to the market and hasn’t faced to many critics yet, but bloggers are happy about the product. Ian Bell of Digital Trends said, “The Sony Bravia NX800 looks to be the company's best TV yet in terms of design and features” (digitaltrends.com). The Sony Bravia NX800 series seems to have a high value proposition but for good measures let’s see how it ranks against its competition. <br />Compared to similar 60” 1080p LCD HDTV’s Sony has a relative high price. A new Sony Bravia NX800 series 60” is priced at $3,499.99 (sony.com) while Vizio prices theirs at $2,999.99, and Sharp prices theirs at $2,999.98 (bestbuy.com). Even the comparable HDTV of Sony’s oldest rival, Panasonic, was priced lower at $3,200. This pricing strategy of Sony looks to add value to the product by pricing it higher than their competitors. The higher price makes Sony seem more prestigious and better engineered. Like how Rolex is priced higher than Tag Heuer when they have similar attributes. Because of the newness of this product few ads are available, but there are ads on their website www.discover.sonystlye.com, where price is never mention, instead quality and cutting edge technology is stressed. <br />There are many product life cycle cost components associated with the Sony Braiva NX800 series. The first of these is the price paid, which is the perceived value that was acquired through attributes, messages, and product reviews. The second of these components is the acquisition cost. Acquisition costs are the cost of executing the purchase, so the money spent on getting the consumer to buy the product, such as promotion, website design, etc. A third life cycle cost of the Sony Bravia is the ownership costs; this would include any financing for the TV or insurance bought for the TV. Another life cycle cost of this product is maintenance costs or costs that keep the TV in working order. A final life cycle cost of this product is the disposal cost of getting rid of the TV. All these life cycle costs seem to be the same for the competition with the only exception being the ownership costs. Each company differs in the warranties and financing options. Currently Sony is running a no interest financing for 24 months on this HDTV which is a great deal compared to the competition. <br />Overall the television market it a pretty mature industry; however recent technology has created a new type of television that is in mid growth stages: LCD HDTV. The liquid crystal display high definition television (LCD HDTV) has become more available in recent years as technology is becoming more and more efficient. This efficiency is leading to a more affordable LCD HDTV’s. The market is in the mid growth stage as we see the prices are still high but are expected to and have been falling for the past couple of years to capture more of the market (msnbc.nbc.com). With such great leaps in technology everyday it is imminent that this market will have a relative short life cycle and will be replaced by the next breakthrough in technology.<br />The market segmentation of Sony has been hard hit in the recent recession. Sony prided themselves on making high-end electronics and segmented a market with a large amount of disposable income and those who wanted a “real life” picture quality. This segmentation strategy has been horrible for Sony in recent years. In a report that came out on February 20, 2010, Sony has lost the number two spot for LCD televisions. It was noted that Sony was hit with a “double-whammy: First, consumers are scaling back discretionary purchases of gadgets. Secondly, when they are buying gadgets, they're snubbing Sony for cheaper models that offer largely the same experience” (Businessinsider.com). The challenges Sony is facing are serious in this troubled economy, but as the economy turns around hopefully Sony can regain the position they were once renowned for. <br />The current customer relationship marketing strategy for Sony is brilliant for a strong economy, but for current economic times this is not the case. Sony stress’s quality and the branded consumer experience the consumer gets by “discovering” the possibilities with their product they also offers a 24/7 customer hotline, and how to manuals on their website to aide customers. This strategy is effective when consumers have the ability to make discretionary purchases, but in the troubled economy they can’t make these purchases and when they do they are more price conscious. Because of this situation Sony faces a dilemma: either sacrifice their value proposition by cutting prices to increase sales, or keep prices the same to keep the value proposition from slipping and see a decline in market share. This dilemma is a major obstacle in Sony’s management. I feel that they made the right decision to keep the value proposition intact because if Sony cuts prices they will be in trouble when the economy turns around. Sony would be unable to raise prices back to pre-recession levels and they would lose out on the high profit margin that they operate under. <br />Works Cited<br />http://www.digitaltrends.com/product-reviews/home-theater-reviews/sony-bravia-nx800-hdtv/<br />http://discover.sonystyle.com/bravia/#/products/bravia<br />http://finance.yahoo.com/q/pr?s=SNE<br />http://www.msnbc.msn.com/id/15916808/<br />http://news.sel.sony.com/en/press_room/corporate_news/release/41385.html<br />http://www.sonystyle.com/webapp/wcs/stores/servlet/ProductDisplay<br />AD<br />http://www.sonystyle.com/webapp/wcs/stores/servlet/ProductDisplay?catalogId=10551&storeId=10151&langId=-1&productId=8198552921666077682<br />

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