Monday, February 12, 2007

A thorn in the big brand tv producers side

Little known electronics producer "Syntax" may be causing major electronic companies headaches. During the holiday rush, what is commonly known as "Black Friday", electronics stores sold millions and millions of high-end televisions at what would seem low prices. However, Syntax has taken the term "low prices" to... well an all time low. During Black Friday, when families were rushing to get their very own thirty, forty, or even fifty inch LCD (Liquid Crystal Display) TV from their favorite companies: Sony, Phillips, Toshiba, etc..., Syntax put their very own LCD TV on the market. This may not seem out of the ordinary, however, Syntax was selling their thirty-two inch LCD TV's at $475. This may not seem cheap to anyone else, but when other companies are selling their TV's at $1,000-$1,500, Syntax seems like the obvious choice. But why are they doing this? The company is obviously losing money on every television that they sell, and to top it all off, they aren't even a big-name brand. But that is just it. In selling their Televisions at an insanely low price, Syntax hopes to become a household name. However, in doing so, Syntax may be directing consumers away from the LCD market. When consumers start to see extremely low prices on normally high-priced TV's, they are going to expect that all companies do the same, which they are certainly not going to do. Thus, by selling televisions at an abnormally low price, the market for LCD TV's will shrink, and in this case, opens up the floor for the HDTV (High Definition TV) and its producers. In a certain aspect, it seems like a lose-lose situation for Syntax: If they sell their TV's at normal price, no one will buy them, and they will continue to have little share in the TV market, however, if they do sell their TV's at a low price, their recognition will go up, but future sales of all LCD TV's will go down, because consumers will start to expect low prices from every company. It is quite the debacle indeed.

1 comment:

Greg Delemeester said...

Cody, I'm not sure I understand why Syntax's low price strategy will direct consumers away from the LCD market and cause the market to shrink. If anything, won't Syntax's low prices generate more interest in LCDs and, quite possibly, put competitive pressure on the established brands to lower their prices?