Pricing Strategy Essay

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Sony experiments with minimum pricing strategy1

Sony has indicated that it plans to introduce a lower price limit for its consumer electronics goods, below which retailers will not be able to sell the items.
Announced by Sony Electronics president and chief operating officer Phil Molyneux and reported by The Verge, the new strategy will initially only affect retail outlets in the US but is expected to spread to other countries, including potentially the UK.
Under the new strategy, Sony will use a base pricing level to push premium sales rather than volume sales - helping to cement its reputation as a maker of high-end consumer products, rather than fighting it out with high-volume companies in the discount section.
Sony's minimum pricing level will introduce a parity of pricing across Sony's own stores, web retailers and third-party high-street stores, the company claims. That's a key point: items sold through Sony's own retail outlets are rarely discounted, and the company earns a much bigger margin. By ensuring that it can't be undercut by third party retailers, Sony will help boost sales in its own outlets.
As part of the move, Sony will also be reducing the number of product lines it has on the go in order to better concentrate on the profitable areas. The company's HDTV range will be reduced from 40 models to just 22 in the US, while the range of headphones will also be dramatically reduced.
Sony will likely be treating its US strategy shift as an experiment.

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