Sony, Samsung set minimum pricing on TVs; no more heavy discounts

Two of the world’s biggest television manufacturers, Sony and Samsung have decided to set price minimums on their televisions - in fact they have been doing so for a month now. Result? You can now kiss all those chunky discounts on TVs goodbye, reports The Wall Street Journal. This decision is essentially an attempt by the two companies to put a stop to the  falling prices, while protecting their profit margins. What this essentially means is that now retailers in the U.S will not be able to offer (advertise or sell) consumers TVs at a price less than what has been requested for by the manufacturers. The average selling prices for flat-screen TVs has been seeing a drop in prices, that has been steady for 3 straight years - to $545 last year from $644 in 2009, i.e. a 15 percent decline, according to the Consumer Electronics Association. Strangely, prices of the televisions are seeing a decline, despite average consumer TV sizes increasing - it was 38 inches in the first quarter of 2012, from 33 inches in 2007.

Minimum pricing on TVs

Reports further add that although the new practice is very much existent, the companies haven’t come out on what they would do to those retailers who did not follow it. “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,” it added. Understandably, at the moment it is only Sony and Samsung who are practising the minimum pricing policy. This leaves out other manufacturers (read rivals), like LG Electronics Inc., Panasonic Corp., Sharp Corp and these manufacturers, reportedly, still want to let retailers offer steep discounts. It wouldn’t take a rocket scientist here to understand that both Sony and Samsung, in this scenario stand to lose sales to these manufacturers. To this, Jay Vandenbree, U.S. head of the LG Home Entertainment business was quoted as saying, “We don’t think we should dictate policy between a retailer and a customer transaction.”

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Reportedly, manufacturers like Sony, Panasonic and Sharp have been registering record quarterly losses, a large part of which stemmed from their rather weak TV divisions. The report quoted Paul Gagnon, director of North American TV market research for NPD DisplaySearch, as quoting on the scenario saying, “The set makers have been losing money for years and now they’re desperate.”