Samsung and Sony Strong-Arm Stores

Remember when flat screen TVs were really expensive? Not any more. The average price is around $545. And while the prices get smaller, the sets get larger – 38 inches today, up from 33 inches five years ago. Ain’t technology grand!
 

The TV manufacturers don’t think so. Providers like Samsung and Sony are strong-arming retailers to pull back on discounting policies for TVs, and have come up with a new plan that would prevent retailers from advertising or selling TVs for less than a price the manufacturers set. It’s a move aimed at increasing profit margins, decreasing on-line competition, and something the manufacturers hope will eradicate “showrooming,” a consumer tactic where shoppers check out models in bricks-and-mortar stores, and then buy them for dramatically reduced prices online.

“Price-fixing,’ you say?  “No, No,” says the Supreme Court. They’ve ruled manufacturers can set minimum prices at which retailers can advertise a product. Dictating policy about retailer/customer transactions? Maybe. It ends up that the law may be with the manufacturers, but ultimately not the marketplace.

All this is compounded by the fact that brands – particularly tech products like TVs – have been tough to differentiate in terms of rational equipment characteristics, which is why supporting emotional brand values is so very important, whichever category you’re watching. If you can differentiate your offering, you don’t have to play the price game, and you probably won’t lay awake at night worrying about losing sales to competitors unless you provide low, lower, lowest prices.

When it comes to TVs it doesn’t help there haven’t been all that many category innovations. We used to look at different types of TVs in our Customer Loyalty Engagement Index, but TVs became so similar we decided to just look at “Flat Screen TVs” as a single category. Here’s how the brands rank when it comes to loyalty and engagement:

1. Samsung
2. Vizio
3. Sony
4. Insignia
5. LG
6. Panasonic
7. Toshiba
8. Hitachi
9. Phillips

There may be plenty to watch on TV these days, but the outlook for the category isn’t pretty. The number of TVs sold to retailers is down, as are retail chain earnings. And it turns out not all TV manufacturers are up to enforcing price controls. But until providers learn how to create real emotional engagement, or until retailers can offer consumers products they can’t get on-line, comparison-shopping via bricks, clicks, or a mix will continue.

As they say in the business, “stay tuned.”

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