Marketing Strategy
When Sony was developing the Walkman in the late 1970s, it called for a retail price of ¥40,000 to achieve breakeven. However, Chairman Akio Morita pushed a retail price of ¥33,000 to attract the all-important youth market segment. At that price, even if the initial product run of 60,000 units sold out, the company would lose $35 per unit. Sony used similar pricing strategies with numerous other product introductions. For example, when the portable CD player was in development in the mid-1980s, the cost per unit at initial sales volumes was estimated to exceed $600, but the initial price was set in the $300 range.
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- What are Sony’s pricing strategy and pricing objective in this case (3 pts)?
- What factors enable Sony to make effective use of this strategy and achieve success? Explain why (4 pts).
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