Despite a holiday price-slashing atmosphere that was more aggressive than expected, top Sony Electronics sales and marketing executives used a press conference here to report sales gains for the two weekends following Thanksgiving.
Stan Glasgow, Sony Electronics president, said price and profitability declines reached 25-30 percent on LCD TVs during the Black Friday sales period. The level exceeded Sony’s early forecasts for 20 to 25 percent declines in pricing/profitability for the category.
But Glasgow said manufacturing efficiencies have allowed Sony the flexibility to compete successfully during the period known in the industry for dumping loss-leader items.
Glasgow said that through a variety of initiatives Sony has been able to grow its business “considerably” in the United States, in key categories, including LCD TV.
“That’s something we hadn’t done in a while. We’re making good progress in terms of growing,” he said.
Despite the aggressive retail atmosphere this year, Glasgow said he expects price compression to lessen somewhat during the 2007 holidays.
“Next year, we think it is going to slowdown. Maybe instead of 25 percent it will be somewhere between 20 and 15 percent, but I don’t know. I’m not a soothsayer,” Glasgow said. “I still think there is more to come in LCD, especially because of all of the eighth-generation fabs coming online. I think you’ll see some real reductions in pricing, but not as great as this year.”
Sony, he said, is adjusting for category commoditization by coming up with new revenue generators, including optional multi-colored bezels for some LCD TV models, and “putting wireless modules inside our Vaios and getting bounties from the wireless companies for it.”
Glasgow said Sony has been able to stay ahead of the industry price compression “with new fabs in LCD, and designing our line of products to keep up with erosion. But at some point it starts really tightening up profit margins for everybody, and the question is how do we keep our premium pricing and premium brand and find alternative ways of generating that extra income for the company.”
He said one way Sony is exploring is to bundle products from Sony’s various businesses.
“There are going to be real challenges in commoditization and we see a lot of opportunities in bundling Sony’s many products together to combat that,” he said.
Glasgow called balancing Sony’s 37 retail stores, online sales program and diverse retail distribution partners “a key thing going forward.” He called handling the various channels one of the most difficult challenges Sony has faced as a company in the United States.
“I believe in the end it puts the consumer first, which is where the consumer has to be,” said Glasgow. “We are not dictating where to buy the product, but we are making sure we have the right product available, where ever that is.”
Jay Vandenbree, Sony Electronics consumer sales president, reported very strong sales during Black Friday and the two weekends following it for Sony.
“We positioned inventory throughout the organization to capitalize on what we believed was going to be a great selling season this year,” Vandenbree said.
One of Sony’s goals this year was “to make sure that we stayed competitive without dropping the value of the product. We know what we have to do against the competition but we wanted to make sure we didn’t contribute to that slide of price-downs in the industry,” Vandenbree continued.
In addition to LCD TV, home theater audio has been very strong, Vandenbree said.
“It has raised itself from the ashes to be a good solid category for us this year,” said Vandenbree. “It has a lot to do with education, and putting surround sound with that high-definition signal.”
Satisfied that past ad campaigns have generated significant retail foot traffic, Mike Fasulo, Sony’s chief marketing officer, said the company’s advertising efforts have been focused on “closing the sale” for Sony.
Sony has augmented its BRAVIA integrated marketing campaign for men and women to include a TV commercial with an interactive hook delivered to TiVo users.
When the spot comes up, users can click on an ending for men or an ending for women, Fasulo said. The alternate endings are automatically downloaded and stored on TiVo hard drives. So far, the ad has generated 107,000 visits to the TiVo Showcase to view the different spots, he said.
Sony has also used viral advertising on YouTube.com this year for its Milo two-way messaging product. That effort tallied an average of 40,000 downloads a week, he said.
A Sunday newspaper supplement delivered four times before and after the holidays will put 50 million inserts featuring professional golfer Michelle Wie in front of readers, he said.
Meanwhile, Sony is looking to build awareness for high-definition TV among salespeople and mainstream consumers using an “HD Test Drive” program, in which Sony trainers visit retail stores to educate sales people.
The program has reached over 15,000 salespeople to date, using 4,500 events and 90,000 demos.
Meanwhile, Vandenbree reported that Sony has put over a thousand product detailers and trainers “on the retail floor to work with the selling process, getting floor sales people up to speed and staying and working with customers as they come through.”