Sony and Samsung have announced that they are going to be setting a minimum price floor for their televisions, which retailers will have to follow. Apparently, the competition offering lower prices pisses them off. Go figure.
In a report by the Wall Street Journal, Sony and Samsung appear to be trying to force retailers to rein in discounts on televisions. The purpose, of course, is to keep a hold on profit margins, and possibly even help chains like Best Buy from the cheap prices of online competition:
“Sony and Samsung confirmed that they began enforcing the new policy last month, but declined to say what they would do to merchants that didn’t follow their rules. People close to the industry predicted the TV makers would cut off financing they typically provide retailers to help market new products, and possibly even stop shipping TVs to offending retailers.”
This is easily considered a practice known as “price-fixing”, in which Sony and Samsung claim more control over the prices of their products on the retail shelves of third parties.
The new policy that Sony and Samsung have put in place on retailers prevents any stores from advertising or selling televisions for less than the prices set by the manufacturers. That means, the days of seeing them included in a sale, are over. It’s a pretty big gamble, considering consumers control the market in the end, and if they aren’t willing to play ball with their higher prices, they’ll be in for a big surprise when it comes time to check their sales quotas.
If this backfires, I see some people getting fired pretty quick. Personally, I hate price-fixing. In some situations, companies can get away with it because of the high-demand for their innovations, or when they’re an exclusive developer of a product. Those brands who employ price-fixing for retailers almost always cost more than their competition, so in order to be successful with such a policy, you must have something everyone still wants anyways.
For Sony, this could hurt them. They haven’t been doing very well lately. Samsung, on the other hand, may get off fine with such a policy, despite the drop in sales they’ll be looking at. Regardless of the reason, or the numbers that these companies are looking at, it’ll be really easy to tell whether their own greed backfires on them… because they’ll simply stop doing it. The consumers own the market. If you don’t like the price, or you don’t believe the value is there for that higher price, don’t buy it.
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