Friday, April 18, 2008

DVD Player Free with Cable Purchase?

I just received an e-mail from a CE industry member with the following subject line: the state of the consumer electronics business. The message read as follows:

Our business has certainly changed. “free hardware” if you buy a “hook up cable”?
I am reading an ad from [retailer name withheld]
FREE- [brand name withheld] 1080p upconverting DVD player when you purchase a [brand name withheld] HDMI Cable 1080p cable for $149.
I am wondering how long it will be before the ads read “FREE 46” LCD’s” just to sell a hookup cable

Wow. There's a powerful message! I am absolutely stunned if this really is a valid promotion. It's no secret that retailers make more money on accessories than they do on big-ticket items, like computers or flat-panel TVs. Regardless, the PC and flat-panel TV still remain the central piece of hardware within a home theatre or computing system. To offer something like a DVD player for free when you buy the cable that connects it is just crazy! Sure, DVD players are available for $50 these days. But that still doesn't explain how we've come to a point where retailers are pushing the sale of the cables more so than the major hardware. Aren't we supposed to be working on upselling the customer to the cable with his big-ticket purchase?

What does this all mean? Has the focus completely shifted to making a sale (and profit) in-the-moment rather than building a relationship with the customer, meeting his needs, and providing an experience that will make him want to return? I'd be lying if I didn't say that I love a good deal whenever I can get my hands on one. But such a promotion simply makes the DVD player look like an unimportant part of the home theatre equation when, in fact, it's an integral part. Maybe there's more to this than meets the eye. Perhaps this is a sign that Blu-ray has already taken over. It must have if "regular" upconverting players are now practically being given away.

Note: I purposely removed the retailer and brand names from the original e-mail copy simply because I didn't think they were needed in order to illustrate the point.

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