When analyzing the pricing strategies Sony has relied on since the introduction of the PSP3 globally, the observations of Porter (1999) on the implications of price as competitive advantage within his Determinants of National Competitive Advantage (sometimes called the Porter Diamond) illustrates how Sony is using price to attempt to create equilibrium across Factor Conditions and Demand Conditions (pg. 78). The approach Sony takes to first ascertain the demand curve by geography first, and second, to create unique and differentiated market positions second, align with the approach Porter (1999) advocates in using as he calls it, the Diamond of National Advantage" to attain demand equilibrium and in balance. Porter advocates innovation and human productivity as the two most potent differentiation strategies for entire industries and their strongest industries, hence the title of his article and the book it is based on.
Pricing, in the context of the Porter Diamond, is both a tactic and an indicator of greater process efficiencies, as is shown in the Italian Tile example Porter cites. The implications for Sony of these two points are that first, innovation does create a price advantage and in the shortened product lifecycles of advanced gaming systems, the pricing advantage quickly becomes inelastic however as new competitors enter the market.
The role of innovation is to continually fuel the development of new products and therefore bring companies, like Sony, into new markets where competitive advantage is more attained through process execution and less purely on price. Sony's pricing strategies have had to be mercurial...
This represents a risky move in this oligopolistic industry. The price of the PS3 was set at $499 for the 20 GB model and $599 for the 60 GB model. The Xbox360 is $200 less and the Wii was priced at $250 (Ono, 2006). Sony's goal with the pricing strategy was twofold -- to connote the premium nature of the product and to cover the costs. The cost structure
Both firms use an array of distribution channels, focusing on large retail stores. There is an Internet strategy for both, focused on the presentation of information. Xbox also allows users to plug their system into the Internet and play games online. Sony runs a similar program called PlayStation Network. Both of these networks feed into the customer service strategy through the use of memberships. Beyond this, there is little
Apple Computer is one of the great corporate success stories of the past decade. On the back of a successive string of hit products, the company has experience rapid growth over the past several years. In its last fiscal year, ended 9/25/2010, Apple earned $14 billion on revenues of $65.2 billion (Apple Inc. Fiscal 2010 Form 10-K). These figures increased 70% and 52% respectively in fiscal 2010. Apple has a
There is a risk, however, that the company begins to lag the pace of technological change, and in such a situation would see reduced relevance in its industries. What the PEST analysis shows is that in general the external environmental forces have either a favorable or neutral impact on Apple's operations. Traditional sources of external risk (political/legal) are minimal and the other key risk source (technological change) has traditionally
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