Pioneer Rebate Causes Stir
By Amy Gilroy -- TWICE, 7/11/2005
Pioneer's recent $20 rebate promotion on a $99 CD player is causing some heated reactions among suppliers.
Many called the promotion a “bold” move by Pioneer as it effectively set a new entry-level street price in name-brand single CD players at $79. But some said such discounts usually hurt the industry overall.
Pioneer last month launched a mail-in rebate on its low-end DEH-1700 and DEH-2700 CD players of $20 and $10, respectively. The promotion runs through Sept. 5.
Pioneer's marketing VP Michael Townsen said the move was in response to dealer observations. “We'd been hearing from our retailers that traffic and sales for entry-level CD was slow, so we wanted to do something that would really stimulate the market and drive consumers into retailers.” He added that Pioneer was able to “see a substantial lift in weekly sales already.”
At least one supplier, Dual, said it would react to Pioneer's price break with a promotion of its own. “A 20 percent refund is a pretty big deal,” said Dual director of product development Robb Groner, adding that Dual is working on “a similar type of offering.”
Clarion, Jensen and Alpine said they would not lower CD player prices in response. “The bottom line is it further compresses the entry-level segment. While it might drive volume, it ultimately limits profit potential and has a tendency to defocus the retail sales floor from selling more profitable step up products,” said Alpine's marketing VP Steve Witt.
Tom Malone, mobile electronics senior VP for Audiovox, which owns the Jensen brand, noted that since the head unit business is not a growing category, there is a natural pressure on every brand to try to increase market share.
The Pioneer DEH-1700 single CD player has a detachable face and offers CD-R and CD-RWs compatibility. It also provides rear preamp outputs.
