Thursday, December 11, 2008

Pricing Wars Could Lead Discount TV Brands in the Dust

As the price of flat-panel TVs continues to come down to jaw-dropping levels, we're seeing signs that the value brands, which often managed to take a significant chunk of the pie because of their cost advantage, are now feeling the heat. Why? Because the name brands have reduced pricing to a point where they're often times actually in line with the value brands!

Research firm iSuppli reports that, during Black Friday weekend in the U.S., premium TV brands like Sony, Samsung, and LG, advertised pricing that was 23% lower than their average, while value brands like Vizio and Westinghouse reduced pricing by only 19%. Continuing on to today, Tina Tseng, an Analyst for the consumer electronics channels at iSuppli, says that the price differential between a 32" premium and value-branded LCD is just US$61. For an extra $60, would you opt for the brand name model over a lesser-known brand? Things probably won't be changing much any time soon either, as retailers scramble to move product during these difficult times.

So what does this mean? Will the value brands be obliterated by the premium models? On the flip side, however, how much money are the premium brands losing by selling products for prices that are essentially almost at cost? While the consumer comes out on the winning end of this stick, the business situation surely can't sustain itself like this for any great length of time.

It will be interesting to see how things pan out once the crazy pricing wars, not to mention the recession, come to an end. Stay tuned.

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