Wednesday, November 16, 2005

Pricing on the internet and destroying your brand

Things are cheaper on the internet right? We all know this, no stores to rent, no shop windows to make up, no sales staff - and customers pay for delivery.

Well it seems not. According to a report in today's FT Sony has lead a group of electronics firms (including Philips, Panasonic, Hitachi and Sharp) who have been charging internet retailers more for goods then high street retailers. Their rational is that high street firms help build “the brand proposition and purchasing experience.”

Purchasing experience? Have any of these people ever shopped at the likes of Dixon's or Currys? Its a ghastly experience. And I don’t recall Best Buys being much better. There are shops I go to for a positive purchasing experience but I know I’m going to pay more.

If Sony and co want to reward retailers they should pay them a separate fee, one that is open and clear to all - the same way Intel do with their “Intel inside” promotion. What they are currently doing is just keeping prices high.

For Sony this comes on top of last weeks Rootkits revelation (see SysInternals for all the details) which resulted in them being branded SpyWare by non-other than Microsoft - full story on the BBC

Sony has enough problems at the moment - declining market share, declining profits, restructuring and redundancies. The new CEO Howard Stringer has enough to sort out without the company getting a bad name.

And that is it really, Sony used to be known for quality (e.g. Trinitron televisions), innovation (think Walkman), reliability - maybe a little more expensive than Sanyo or Sharp but worth the money. Now it isn’t the leader - in TV (that’s Samsung in flat panels) and Apple’s iPod has displaced the Walkman, its not the competitor it was.

The firm has tried moving into software - hence Sony Picture Entertainment and PlayStation Games - but that bet hasn’t yet paid off - so its still dependent on hardware where it has problems competing.

So, is there a connection between a declining market share and attempts to increases prices by the back door? Or putting their neo-virus software on our computers? One thing is for sure, customers certainly don’t want higher prices and don’t like their SpyWare.

Maybe there is a link, maybe as Sony struggles managers are trying covert tactics.

Will it work? Probably not but as these stories emerge it isn’t going to help the brand, in fact, the more Sony carry on like this the more damage they will do to their brand and reputation.

And I don’t think Howard Stringer really wants that. I'd guess the first he knew about these activities was when he read his morning paper. And I’d hazard a guess that he doesn’t like the idea. Trouble is, someone further down the tree is trying to optimise their little bit of it: prices up, piracy down - may it will work for a little while but it could damage the whole company.