Samsung Electronics and Sony Corporation have started to enforce minimum advertised prices on televisions sold by American retailers, according to a recent report in the Wall Street Journal. The new policies, which prohibit brick-and-mortar as well as internet-based stores in the USA from selling or advertising Sony and Samsung HDTV models below the set minimum prices, came into effect last month.
|Samsung & Sony impose minimum advertised price on US TVs|
The two TV manufacturers decided to adopt this strategy not only to arrest the continual drop in flat-screen television prices so that their profit margins are preserved, but also to help chain stores such as Target and Best Buy ward off ecommerce websites which often offer steep discounts to entice customers. In addition, enforcing a universal price floor both online and offline may deter “showrooming” behaviour – i.e. demoing HDTVs in physical stores before buying from web merchants at cheaper prices – among buyers.
However, it is unknown what punishment will befall retailers who refuse to adhere to the controlled pricing policies stipulated by Samsung and Sony. Among the options available to the pair of television makers are termination of financing (normally offered as an incentive to high-performing retailers for marketing purposes), or inventory supply cutoff. That said, some industry analysts questioned if Sony and Samsung really have the courage and determination to shun high-volume e-commerce sites (take for example Amazon) who break their new pricing policies.
Perhaps even more unclear is the course Sony and Samsung would take should they suffer a decline in US sales of flat-panel TVs as a result of the price control enforcement. Imposing a minimum selling/ advertised price may well open the door for rival TV brands like LG and Panasonic who are not averse to deep retailer discounts to boost their volume and market share in the United States.
Source: Wall Street Journal