Price erosion a daily problem for Panasonic

By Patrick Avenell

SYDNEY: Panasonic managing director Steve Rust has revealed his concern at the level of price erosion in the Australian market. This comes less than a week after Panasonic globally reported that “price competition” was a key factor in the group’s multi-billion dollar losses.

In an interview with Current.com.au, Rust said that monitoring Panasonic prices in the marketplace was a daily job, and that he has devised strategies in the hope of holding up prices at retail.

“It’s probably one of the most difficult things for us to manage because price erosion is very dramatic and continuous, and that stimulates a competitive marketplace,” said Rust. “We have to pay particular attention to the competitiveness in the market place all the time.

“We can’t allow ourselves to be priced out of the market and because of the volume of price erosion, it’s something that is really part of our day-to-day monitoring of what’s going on in the market, so it’s challenging.

“It’s much easier to have product that doesn’t change its price for 12 months or 18 months.”

In order to combat price erosion at the supplier end, Rust has devised strategies that he hopes will minimise the retailers’ need to lower prices.

“One of the key things we do is try to avoid being a price leader, that’s the main thing really, you see us more as a follower rather than a leader on price.

“Secondly, we talk with each of the retailers, try to understand the profit situation from their point of view and look at the ways we can support them.”

The main way Rust supports the retailer is through cooperative marketing initiatives, which are designed to generate excitement around certain technology and then drive consumers into stores.

“For example,” Rust explained. “We’ll be launching a number of television commercials this year focused on some of our new technologies, including the NeoPDP, and also on our new Lumix products as well. The new ruggedized LUMIX camera that’s now in store, we’ll be driving consumers into stores getting them excited.”

How is price erosion affecting you? If you’re a retailer, why do keep lowering prices? Send me an email.

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