Sony Psp Pricing the Strategy Term Paper

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From this standpoint, Sony was successful in using pricing as a significant messaging part of their product mix.

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.

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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 just as their product strategies have been in order to capitalize on the growth in the gaming market they helped create.

Conclusion

Pricing's role in the launch and continued positioning of the Sony PlayStation 3 shows how Sony is using price as both a means of communicating value and market position to specific customer segments, while at the same time looking to take advantage of elasticity of demand when it is available. Sony's approach since the PSP3 launch is to announce enhanced versions of the PSP3 for geographies that have exhibited strong demand, and work to reduce costs and pricing in global markets that have much competition. Sony's pricing strategy shows that the company is very aware of how significantly their product lifecycles are maturing in each nation, and how difficult it is to keep a uniform pricing strategy globally. Instead, the company has had to take a much regionalized approach to pricing in order to attain its objectives......

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