Originally Posted by irkuck
Not entirely so. You forget there are people for which 300 000 is like 300 for you. It is quite reasonable strategy for a company which produces exclusive product to charge exclusivity price for it. After they reach initial sales target of e.g. 10 and saturate this market segment they can move down.
I don't forget that there are people like that. They live quite literally within 1 mile of my house. No, really, they do. A strategy of saturating a market of 10 and then moving down is actually stupid. On so many levels. And just to be clear, those 10 people have no idea the product even exists (well, maybe 1 does).
Originally Posted by tgm1024
What constitutes a "market"? Is it 10% of the number of TVs, or of total revenue, or of total profits?
If it's the number of TVs, then that 10% number is being swayed dramatically downward by a large number of people buying budget TVs of which both 1. the profit margin and 2. the total impact on the manufacturers, are maybe questionable.
I tend to think of where the dollars are (gross and net) with regard to market share
, not with where the people or items themselves are.
When I refer to the market, I am talking units TGM. The "value share" of 50" TVs is much higher, but globally, they constitute 10% of all the TVs sold, so about 25 million per year. In the U.S., it's somewhat higher, but it's not >25%.
Yes, it could be cheaper. And the part where your model fails is that by slowly trying to price discriminate down the curve and gouge everyone, you allow entrant after entrant after entrant to join the party. The actual profit maximizing strategy, therefore, is to never charge $300,000, but instead to sell it for something much less, actually market it, and own the category. If it were $30,000 and, say, TCL only, and good and they sold 15,000 of them worlwide this year and 25,000 next year, who would be "the 110-inch company"? Hint: The current answer is, "No one is."