PS3 Plays the Price Card

While Nintendo is basking in the glory of being named Marketer of the Year by Advertising Age magazine (see 10/17 post), former video game category king Sony is looking to gain market share during the Christmas selling season. Sony is cutting the price on its 80 GB PlayStation 3 model by $100 to $499 and introducing a 40 GB model for $399. These pricing moves make Sony more competitive with Nintendo Wii ($249) and Microsoft Xbox 360 ($280-$350).

Sony's price cut illustrates the flexibility pricing has in the marketing mix. It is the easiest variable to change on short notice. Product features and specs are set in stone compared to prices, and distribution and promotion decisions cannot be implemented as quickly as price changes. The price cut also signals an admission by Sony that the PlayStation 3 was overpriced. The product contains cutting-edge technology such as Blu-Ray DVD, but loading a product with features that drives up the price put PlayStation 3 out of reach for many consumers.
Sales in the video game console category in the past year speak volumes; customers prefer benefits offered by video games such as the highly interactive experience of Wii. Also, price does matter as evidenced by Wii's strong sales and the fact that the "antiquated" Sony PS2 outsells PlayStation 3. Link

P.S. Since the last two posts are about video games, I don't want to create the impression I'm a video game junkie... although I would love to have back all of the quarters I spent at arcades on Pac-Man and Galaga in my youth!