Originally Posted by specuvestor
That depends on where you live. Gasoline is politically charged. Commodity usually means goods is mobile and pricing generally uniform across the globe, factoring friction. Gasoline cost $6.40 per gallon where I live. The country next door sells at half the price.
My comments on gasoline were intended to reference solely the U.S.
We have been conditioned to think that "price fixing" is bad... but it is bad only to the extent of hurting consumers in the LONG RUN.
Price fixing is bad. Competitive markets are better. A given manufacturer price fixing, however, is less clearly bad because other companies can compete with them. If I complain about UPP, it's not that I worry broadly because consumers can absolutely vote not
to buy Samsung. That I think it's the wrong strategy for Samsung is another matter. But in that case, I'm not rendering an opinion on its "badness" or evil.
Many complain electronics has become disposable... so it depends whether one thinks that is bad for consumers in the long run. People are taught to assume demand/supply is relatively static, controlled overwhelmingly by an "invisible hand", but they can actually be manipulated for eg marketing. And if you are long enough in a business where value is difficult to determine for eg service, pricing a product "too cheap" diminishes "perceived value".. .for eg a same product priced at $X and $2X have different perceived value (read branded handbags for eg) Ironically same product at $X and $X+10% will almost always have the former creaming the latter.
The thing is, too many products are fungible. No one can actually manipulate supply in most markets. People who try generally fail. If all the high end TVs go on UPP and become expensive, someone new is going to make high-end TVs for less money and eat their lunch. There are enough good parts in the global supply chain to allow someone to emerge and do this and you can't shut off that flow.
This is why things like new airlines emerge, new financial services companies emerge, etc. There are few industries that actually can deter new entrants and control pricing at the high end. And the longer they succeed in doing so, the surer they will ultimately fail.
There is a lesson there for auto companies (don't look now, but Hyundai is gaining on you) and even Apple and Samsung.
Like rogo says, volume will drop but that hardly impacts profit. That pretty much sums up why UPP at this point of time.
I do think it's hard to put the distribution genie back in the bottle. The high-end audio companies have succeeded to an extent and that has also been occurring over a period where their market has evaporated. While I'm not claiming cause and effect, it's impossible to argue that their strategy has actually helped their businesses. See the financials of Denon/Marantz and many others for evidence.
But in a highly competitive market, it can be difficult to establish branding but companies like B&O, Apple and Bose have done pretty successfully. The question as usual is always the execution to deliver "perceived value".. .and it can be position as "snob value" as well
Sony for example did it well in the past.
Right, and Bose arguably has done this longer than Apple, which is good news for Apple. Samsung is over assorted to do this well. You can't slap your name on cheap stuff and also claim, "Hey, this high-end stuff is premium." It's why BMW goes down to a 1 series, but the Mini Cooper is not BMW branded. And the Samsung name is on some cheap stuff.
If they really want to pull this off, I'd argue they need to segment their market and branding. Sony got away with it for awhile with things like Trinitron and XBR largely because people credited them for inventing high-end TV. Once that perception had faded, there was no magic to the Sony brand in TV and the sales went with it.