Sony PSP Pricing

Paper Summary:

The paper discusses Sony's initial pricing strategies, which looked to capitalize on the relatively high level of price elasticity that existed in the high end of the gaming market. The paper notes that Sony launched the PSP3 using price to ascertain the relative shape of the demand curves in each of the geographies in which they launched the PSP3. The paper discusses Sony's product and pricing advantage, premium market positioning and strategic planning. The paper concludes that Sony's pricing strategy shows that the company is very aware of how significantly their product life cycles are maturing and the difficulty experienced in keeping a uniform pricing strategy globally. Instead, the company has had to take a much regionalized approach to pricing in order to attain its objectives.



Outline:
Introduction
Analysis of Sony's Pricing Strategies
Conclusion

From the Paper:

"Sony's initial pricing, while above the closest competitors by $50, was primarily used as a means for communicating premium market positioning over purely being a price penetration strategy. Sony's initial launch of the PSP3 was aimed at the adult gamers who would see the initial price point as an indicator of the devices' superior functionality and value. Making a Blu-Ray/DVD/CD drive standard across all models was a deliberate product strategy to attract adult gamers who also are high-definition video enthusiasts. Sony's pricing strategy then was to use the combination of enhanced functionality (Blu-Ray) in conjunction with a higher-than-average price for this segment of products to attempt to create an entirely new market. Whether this strategy constituted ones that is a "blue ocean" or "red ocean" strategy as defined in the book, Blue Ocean Strategies and discussed in by Columbus, the fact is that Sony was successful in achieving its market positioning. Adults purchased the PSP3 specifically for its high resolution gaming capability, in addition to Blu-Ray functionality as well."

Sample of Sources Used:

• CRM Buyer (2005) - Searching for Blue Ocean Strategies. Louis Columbus. CRMBuyer.com. September 23, 2005. Accessed from the Internet on October 29, 2007 from location: http://www.crmbuyer.com/story/46292.html
• Kotler, P, & Keller, K (2006). A Framework for Marketing Management .Upper Saddle River: Pearson Prentice Hall . Pages 217 - 236.
• McKinsey (2003) - Marn, Michael; Roegner, Eric; Zawada, Craig. "The Power of Pricing", 2003 Number 1. Boston, MA McKinsey Quarterly. Pages 27 - 36.
• Porter, Michael (1999) "The Competitive Advantage of Nations" March - April, 1999. Boston, MA. Harvard Business Review. Page 73 - 91.

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