Samsung and Sony no longer want to be part of the race to the bottom. The two consumer electronics manufacturers, according to a Wall Street Journal report, have set policies to keep retailers from going below a minimum price point on televisions.
Manufacturers have received favorable court rulings in recent years (U.S. Supreme Court 2007 – Leegin Creative Leather Products v. PSKS) giving them the ability to control prices in ads and online sites. By preventing retailers from going below a minimum price point, Samsung and Sony protect brand equity and also provide cover for big brick and mortar customers such as Best Buy that have seen sales literally walking out the door in the showroom effect.
“This allows us to make a reasonable profit,” Billy Abt, co-president of Abt Electronics, told the Journal. “It got to the point where we were selling $2,000 TVs and making $10.”
Of course, forcing retailers to stick to a minimum price could have negative effects for Samsung and Sony if other television manufacturers do not follow suit. Count LG as one not likely to do so.
“We don’t think we should dictate policy between a retailer and a customer transaction,” Jay Vandenbree, former Sony executive and current senior vice president of the Home Entertainment Division for LG Electronics USA, told the Journal.