Will Samsung’s New Pricing Plan End HDTV Price Shopping? HD GURU Exclusive
Updated 4:15 pm 2/13/12
The days of price shopping for HDTVs may soon come to an expensive end, according to industry sources, when Samsung rolls out its new 2012 mid-to-high end HDTV line in the coming weeks.
Along with the new sets, Samsung will introduce a new “fixed price” sales model that forces consumers to pay the same price whether they buy a new HDTV online or in a brick-and-mortar store.
We expect the plan to result in a cost premium for Samsung HDTVs of up to 15% when priced against discountable comparable models from other leading TV makers such as LG and Panasonic.
Samsung calls its new plan UPP for “unilateral pricing policy.” Speaker/headphone maker Bose, watchmaker Rolex and jewelry seller Pandora have used this legal type of fixed-price strategy successfully for years. The plan will prohibit any authorized Samsung dealer from advertising or selling its products under a predetermined price, called the Minimum Advertised Price (MAP). If violated Samsung can void the dealer’s franchise and stop supplying product.
Click here for our exclusive leaked list of 2012 Samsung MAP prices .
Continue past the break for all the details and a list of affected new model series.
By enacting this policy, Samsung hopes to slow the HDTV price erosion that contributed to recent record losses by Panasonic and Sharp and lower profits of TV retailers like Best Buy. Samsung is currently the number one volume seller of HDTVs in the US. Samsung is risking its dominant market position by gambling consumers will be willing to pay this new price premium.
Brick and mortar retailer Best Buy reduced its TV margins in recent years in a futile attempt to compete against Amazon and other online retailer’s lower prices. In the end, brick and mortar stores can’t afford to go head-to-head against etailers due to the former’s inherent higher operating costs. By selling price protected HDTVs , the only price advantage an online etailer retains is when it sells to customers residing in states that don’t require the collection of sales tax on Internet purchases.
The Samsung models with UPP pricing have Internet content streaming (called Smart TVs) and are 3D capable. According to our sources at press time, the series under UPP program will include the 2012 UNES6500 LED LCD with a starting UPP price of $1599. Other UPP priced 2012 series include its UNES7100, UNES7500 and UNES8000 LED LCDs. The PNE6500 plasma series will start at a UPP price of $1619. The PNE7000 and PNE8000 plasma series are also expected to fall under the UPP program as well as Samsung’s upcoming 55-Inch OLED HDTV.
We asked a representative from LG if they were planning to incorporate a unilateral pricing policy. Below is LG’s response received via email from Jay Vandenbree, Senior VP Home Entertainment, LG Electronics USA:
“LG’s first priority is to continue to assure that consumers understand the value that LG brings to their lives through our products. We worked hard last year to revitalize our MAP program to assist our retail partners in doing that. We’re very happy with what we’ve accomplished on that front, and we’ll continue our focus on our primary goal. We’ll also continue to monitor the marketplace, but at this time, we just don’t think it’s the right approach to insert ourselves in between our retail partners and their customers in terms of selling prices, which is what a UPP program does. LG doesn’t have any plans to put out such a policy.”
We asked for comments from Samsung and other competitors. We will add all responses, if and when they become available.
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