Vendors typically use the promotions to respond to a competitive offer, generate quick sales or to test new price points on a regional or market basis. In the hyper-competitive flat-panel TV market, the promotions have become ubiquitous because they offer benchmarking vendors a quick, cost-efficient and flexible alternative to formal pricing moves that typically include some price protection for a dealer’s inventory.
Jay Vandenbree, president of Sony Electronics Consumer Sales Division, said the promotions have “morphed into kind of a crutch that’s used by numerous manufacturers throughout the lifecycle of a product to the very end.”
Bob Perry, senior vice president of Panasonic’s Display Group, said long-term use of scan-down promotions “are not a good replacement for a price move,” which are more efficient and require fewer administrative resources.
GETTING MORE AGGRESSIVE
During the last six months, amid intense benchmarking, TV vendors have increasingly used scan-down and instant-rebate promotions instead of pricing moves. As a result, retailers found themselves jumping to respond to vendors that are churning out scan-down promotions on multiple SKUs for different time periods. Sometimes the promotions are announced in advance as part of a product road map, other times they are launched at the last minute in response to inventory build-up or a competitor’s price move. Durations range from a week to 30 days.