Sony's market perspective

Which of Sony's latest product propositions were most significant for the company?

"The 200Hz processing represents a major commercial opportunity for us, and the price points its touches makes it more of a mass-market proposition. From the brand perspective, the BRAVIA ZX series demonstrates that Sony has leading technology and reflects what consumers want. The OLED television will not be delivering significant financial returns for the next 12 months, however, we will bring it to the market next year to demonstrate to the right consumer that Sony has the technology for them. We have recently launched a number of genuinely innovative products, such as the Reader. Together with the content provider, Waterstones, which will have approximately ten thousand e-books by the end of 2008, we will develop a new market sector."

Andy believes that the flat panel bonanza is going to end soon, and it's time for both manufacturers and retailers to change market focus.

"The dynamic growth we've got used to in the LCD sector will level off and we have to start maintaining and adding value to everything around the core LCD product. It's a challenge for all of us, and we have to make sure that we sell DVD/hard drive products, PVRs and surround sound systems together with cables which go with them. If we don't do this we will struggle with the volume/value market equation since the prices will inevitably continue to erode."

To maintain its leadership position Sony will continue innovating and investing in the brand through various sponsorship activities, such as the World Cup or Formula One, "so consumers see our brands consistently in the course of the year. In the past, we had one or two product launches a year now we run several campaigns throughout the year."

Copying in recession

Many people now want to know how the current financial crisis is likely to affect the CE industry.

"Perhaps the single most important factor for us now is consumer confidence and household deflation. According to the government figures, consumer confidence has improved, although it is still -32, but it was at      -38. We need to be clear what we are communicating to consumers. People will still be spending money on improving their home environment, and this is an opportunity for the industry to show them how we can help them do this, for example by storing and sharing their holiday memories or music."

The market dilemma

Independents stocking Sony products want the company to maintain its leadership position, also in terms of prices. They asked me to question Andy as to why Sony keeps cutting prices of its best products shortly after introducing them into the market.

"We continue to be a mass market but an aspirational brand holding market premium over virtually every other brand. We are a follower not a leader in terms of cutting prices. The GfK market data shows clearly who leads and who follows on this. Our strategic raison d'être is to maximise the price premium of every product. We have to ensure that this price premium is challenging to us and our retailers to maximize the value of every sale, and that it is compelling enough for the customer not to go for the second best. We have to ensure that we protect our market share but not at all costs.  This year we lost market share in some areas but we have done this through a conscious decision recognising that it is uneconomical for us to chase certain products with certain price propositions from another brand."

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