June 15, 2007
Sony Explores Value End of CE Market
Sony has always been known for top quality components in its consumer electronics products but now the company is looking to broaden its appeal to a greater number of consumers by manufacturing and marketing televisions created for discounters, including Wal-Mart and Target.
Randy Waynick, senior vice president of marketing for Sony Electronics, told News.com that the company has developed a “unique series of models” of liquid-crystal display (LCD) televisions that would be available only for sale in the big boxes. Sony intends to continue offering its more upscale items in specialty electronics dealer stores.
Sony, according to the article, appears to be taking this value price approach to help it deal with low-price competitors that have made some noise in the big screen television market. Prices have been dropping in the category (down around 3 percent), but Sony has continued to drive sales while raising its retail (up 10 percent).
Discussion Question: Are televisions becoming a commodity category? Will Sony’s targeting of discount store shoppers hurt its image for design sophistication and product performance with more well-heeled consumers?
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I think this is a good move for Sony because it significantly increases their customer acquisition opportunities, and acquiring customers is what business is all about. I also think it will be very interesting to see how they handle it.
In the past they have always been successful in expanding their distribution by either owning the market (in the pre-iPod days of the Walkman) or by distinctly differentiating between classes of product (first with Trinitron and currently with Bravia). Unfortunately, or fortunately depending on your point of view,they are not going to be able to skimp on their offerings to premier retailers like Wal-Mart and Target because if they do their sets will remain stuck while more attractive and better featured models are flying off the shelves.
It’s no secret that consumers today are more educated than ever before and this trend will only continue. For Sony’s expansion to be successful, they are going to have to provide the educated consumers of Wal-Mart and Target with a compelling offer supported by outstanding customer service. If they do that, and there’s no reason to think they won’t, the Sony name will serve them well and this should turn out to be a good move. It will be interesting to see how they fare.
Based on my experience and the number of average to negative reviews you can find on many Sony products at Amazon, I would say they have been exploring the value end for several years now, at least in certain areas of CE. I believe they still have ‘some’ quality products – TVs being the first that comes to mind–but my perception is that their once very good name can now be associated with average and disposable products (electronics that you can expect to replace within one to two years due to breakage and/or component failure).
I had to chuckle when the article mentioned a “value price approach.” What??? Since I was in the CE industry for over 20 years, it has always been a “price de jour” industry and “who can be the first on the block with the lowest price” is still the model for most retailers, many of which are no longer with us, such as Highland, Fretter, Pacific Stereo, Silo, Crazy Eddie, etc., etc. That’s why I am out of that crazy industry and have the scars to prove it.
Sony has the name and reputation going in the market place (and always has) and I do not see this move having any significant impact. I wish them well. As far as CE retailers still around in the future….????
This certainly confirms how the CE market is in a race to the bottom. When Sony begins to address the big-box market it’s a clear indication of where the market is going. Sony is naturally going to try and play both ends of the market until they know for sure their big-box strategy can work. In the meantime the real loser could be Circuit City which is already having a tough time trying to define their niche in a market that has already seen a number of casualties.
Are televisions becoming a commodity category? Yes. That’s why Tweeter declared bankruptcy. According to NPD, sales of plasma TVs increased 18% in April, but revenue was down 20% from the previous year due to a 33% decline in the average price. It’s called Moore’s Law: microchips (and hence, electronics) get continually better and cheaper.
Will Sony’s targeting of discount store shoppers hurt its image for design sophistication and product performance with more well-heeled consumers? Not necessarily. There are still many points of differentiation to exploit. But it is different and more challenging to sell at multiple price points. That’s where professional retailing comes in. Sony should partner up if it want to succeed in this effort.
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I think this is a good move for Sony because it significantly increases their customer acquisition opportunities, and acquiring customers is what business is all about. I also think it will be very interesting to see how they handle it.
In the past they have always been successful in expanding their distribution by either owning the market (in the pre-iPod days of the Walkman) or by distinctly differentiating between classes of product (first with Trinitron and currently with Bravia). Unfortunately, or fortunately depending on your point of view,they are not going to be able to skimp on their offerings to premier retailers like Wal-Mart and Target because if they do their sets will remain stuck while more attractive and better featured models are flying off the shelves.
It’s no secret that consumers today are more educated than ever before and this trend will only continue. For Sony’s expansion to be successful, they are going to have to provide the educated consumers of Wal-Mart and Target with a compelling offer supported by outstanding customer service. If they do that, and there’s no reason to think they won’t, the Sony name will serve them well and this should turn out to be a good move. It will be interesting to see how they fare.
Based on my experience and the number of average to negative reviews you can find on many Sony products at Amazon, I would say they have been exploring the value end for several years now, at least in certain areas of CE. I believe they still have ‘some’ quality products – TVs being the first that comes to mind–but my perception is that their once very good name can now be associated with average and disposable products (electronics that you can expect to replace within one to two years due to breakage and/or component failure).
I had to chuckle when the article mentioned a “value price approach.” What??? Since I was in the CE industry for over 20 years, it has always been a “price de jour” industry and “who can be the first on the block with the lowest price” is still the model for most retailers, many of which are no longer with us, such as Highland, Fretter, Pacific Stereo, Silo, Crazy Eddie, etc., etc. That’s why I am out of that crazy industry and have the scars to prove it.
Sony has the name and reputation going in the market place (and always has) and I do not see this move having any significant impact. I wish them well. As far as CE retailers still around in the future….????
This certainly confirms how the CE market is in a race to the bottom. When Sony begins to address the big-box market it’s a clear indication of where the market is going. Sony is naturally going to try and play both ends of the market until they know for sure their big-box strategy can work. In the meantime the real loser could be Circuit City which is already having a tough time trying to define their niche in a market that has already seen a number of casualties.
Are televisions becoming a commodity category? Yes. That’s why Tweeter declared bankruptcy. According to NPD, sales of plasma TVs increased 18% in April, but revenue was down 20% from the previous year due to a 33% decline in the average price. It’s called Moore’s Law: microchips (and hence, electronics) get continually better and cheaper.
Will Sony’s targeting of discount store shoppers hurt its image for design sophistication and product performance with more well-heeled consumers? Not necessarily. There are still many points of differentiation to exploit. But it is different and more challenging to sell at multiple price points. That’s where professional retailing comes in. Sony should partner up if it want to succeed in this effort.