If Consumers Won't 'Pay Up' For Quality, Whose Fault Is It?
from the concept-of-value dept
A post over at News.com is decrying the news that Pioneer is pulling out of the TV market as “sad news”, because it means “TV buyers won’t pay a premium price for a better display.” The post comes from a blog about high-end audio, so presumably, the author is a person who sees the value in paying high prices for certain pieces of electronic gear. But if a firm can’t profitably serve a small slice of the market — people for whom normal audio and video gear isn’t good enough — and decides to stop trying, why is that necessarily a problem for the firm or the market? “The market’s demands for lower and lower prices eventually take high-quality manufacturers out of the game.” That’s simply not true: it will eventually take high-quality manufacturers who can’t compete out of the game. The assumption here seems to be that high quality has to come with a high price tag, but the “race to the bottom” the writer decries helps, or at least should help, at the high end of the market as well as the low end. Companies that make gear for any segment of the market have to offer value. If Pioneer’s high-end, high-priced TVs couldn’t offer sufficient value to attract enough high- or low-end buyers to succeed, that’s not an issue with the market, it’s a problem with the company and its products.
Filed Under: quality
Comments on “If Consumers Won't 'Pay Up' For Quality, Whose Fault Is It?”
What?
I’m sorry, but this has got to be the looniest
post I’ve seen on TechDirt.
Let’s put this into other terms that might make
you realize how looney you have been.
If I make a hotdog from true, from-Japan, Kobe Beef and
sell them for $175 for a half-pound pack of 8,
I’m going to go out of business.
Why? Because a hot dog is a hot dog, and no amount
of premium Kobe beef is going to make it taste any
better than Oscar Meyer, or Ball Park.
The same can be said for high-end TVs. Given that there
are only 2 or 3 manufacturers of LCD displays, I
can’t imagine that the actual quality of a Pioneer TV
is going to better to the same mangitude that the cost
is increased.
Pioneer does make some good audio equipment, but I just
cannot imagine that their TVs are so much better.
I doubt that the majority of people who are buying TVs
are going to be getting a whole Pioneer kit so that they
can take advantage of the special features available
only when using Pioneer stuff.
But, rather than taking potshots at my comments, or
taking potshots at what you believe to be a deficiency
in Pioneer’s business model, maybe you could spend some
time being more positive and give some concrete ideas
about how they could salvage their market share with
high-end TVs?
Re: What?
Pioneer does make some good audio equipment, but I just
cannot imagine that their TVs are so much better.
I doubt that the majority of people who are buying TVs
are going to be getting a whole Pioneer kit so that they
can take advantage of the special features available
only when using Pioneer stuff.
Which, um, is the entire point that Carlo was making… and yet you trash him for it.
Odd.
But, rather than taking potshots at my comments, or
taking potshots at what you believe to be a deficiency
in Pioneer’s business model, maybe you could spend some
time being more positive and give some concrete ideas
about how they could salvage their market share with
high-end TVs?
If Pioneer wants to pay us to help them rescue their business, that’s fine.
But the point was that this guy is blaming *customers* for the failure, rather than poor business choices.
What?
I’m not sure that they can salvage their market share with high-end TVs. My guess (unsubstantiated) is that because of the economy being in the toilet, people don’t want to drop thousands of dollars for a new TV. If I were deciding how to manage Pioneer’s market shift, I’d try using their established name to start selling mid-range TVs with the Pioneer brand – since they already have brand recognition, they may be able to pull it off well. Admittedly, some might feel that this ‘cheapens’ their brand name, and Pioneer may wish to return to selling high-end TVs if demand goes up. It seems like a waste, though, to shut down production on nice TVs without trying to reciprocate that loss in sales (though they may be ramping up their other electronics).
Pioneer TVs
Pioneers primarily made plasma televisions. They have a joint venture with Sharp for some LCDs recently, but that’s not really important here.
Pioneer Elite plasmas were the Mercedes of TVs. Pioneer is responsible for most of the significant R&D in plasma over the years, and massively advanced the technology. Plasma, by the very nature is a far superior picture to LCD. The LCD panels are largely similar as CmdrOberon said. Plasma has more variation between manufacturers. Pioneer did their own R&D, and manufactured their own glass (they were about to outsource the manufacturing to Panasonic, built to their R&D specs to save money, but it hadn’t happened yet).
Pioneer pictures were far superior if you cared about that last 20% of quality. Not a lot of people did – HD was a big enough jump. Unfortunately the overhear of making superior glass was outrageous – it required a volume business to justify, but it was a specialty business. Volume couldn’t support it, and failure of retail channels to support sale of a specialty premium brand, like Tweeter, hurt. Discount and big box shops can’t make the upsell. It’s just reality.
All that said, buy a Pioneer Elite plasma while you can find them. It’s a 20% almost anybody can see. Pioneer audio, on the other hand is above average for most people, but it’s nothing special.
Microsoft wants to open stores to show low quality goods now?
I was just reading a Wall Street Journal article about Microsoft opening retail stores in an attempt to catch up with Apple. But Apple *has* several fantastic products, which people are willing to pay a good premium for. They THEN got into the retail business.
This comes a “duh” philosophy of “Let’s create a good product first”. From Apple’s good execution, they then were able to get into stores such as BestBuy.
But the Outside-in approach makes no sense. When it comes to the possibility of seeing Microsoft Stores, I shake my head… Violently. It reminds me of “Nokia Experience kiosks”. What an asinine idea. It makes me want to kick puppies, seriously. You need to have a good product first before you open stores.
I hope they don’t invest too much into this.
Even the bad stuff is pretty good
I think part of the problem is that the overall quality audio/gear has gone up. Today’s cheap stuff is better than the best gear from a few years ago. As the margin between the cheap and premium equipment diminishes it’s not too surprising to see more people unwilling to pay the premium price. Features used to matter, but once you put a microprocessor in something it is easy to make it feature-rich.
Years ago I would have insisted on the best just because I wanted the best. Now my attitude is that I’ll be quite happy with second tier equipment knowing that something will be on the market next year with a new must-have feature.
Thinking about my last few tech purchases, my main deciding factor was the design of the interface. The premium products often look like they have had a team of artists and programmers who went wild with effects, but I find myself opting for the less fancy but intuitive interfaces.
Ack. I’m getting old.
Re: Even the bad stuff is pretty good
“Today’s cheap stuff is better than the best gear from a few years ago.”
– Not –
Remember the McIntosh amplifiers?
How bout Phase Linear (bought by Pioneer)
And Crown is still in business
You can not actually believe that the cheap electronics available at Walmart is better than eqmt made by the above companies. If so – you must be tone deaf, that’s the third thing to go when getting old ?
Re: Re: Even the bad stuff is pretty good
This is about TVs.
Re: Re: Re: Even the bad stuff is pretty good
Helter -> “This is about TVs.”
— guess you missed the first sentence of the post that was being responded to. Here it is for your review.
“I think part of the problem is that the overall quality audio/gear has gone up.
Re: Re: Even the bad stuff is pretty good
Audio gear is a pretty mature technology, so the “average” stuff from today isn’t necessarily better than the “top-of-the-line” stuff from yesteryear, but the same is NOT true when you’re talking about rapidly-changing technology.
As an example, compare a modern Nikon D80 digital camera ($600) to the Nikon D1X from 2001 ($5350). The D80 kicks the D1X’s butt in almost every possible way except for brute heft and ruggedness, and it’s less than one-tenth the price of the D1X (after adjusting for inflation).
Likewise, I remember as recently as 2003, when a 42-inch plasma set was $15,000. Do you really think that even a high-end plasma set from 2003 is better than any of the current crop of plasmas that cost one-tenth the price?
LCD price fixing
Lets just ignore the whole LCD price fixing thing, I guess?
The other problem with their logic is that technology enables getting quality for cheaper cost, but they just want to kept adding to the price tag.
They don’t want to make quality because if the quality is too good, they don’t generate sales.
There is very little quality in today’s marketplace, maliciously overpriced stuff perhaps, quality not so much.
Re: LCD price fixing
LCD price fixing would only help Pioneer who manufactured mainly plasma TVs. Fixing the LCD prices higher would keep plasma in the running if not the lower-priced option.
I don’t understand your cost argument. If their costs are dropping, then that means they are making a larger profit without having to raise the price.
Your “too much quality” statement is likely the driver behind this article. They built high-end quality stuff, but didn’t find a large enough market to support their costs. So they aimed incorrectly, didn’t adjust effectively, and now are having to pull the plug before the losses stack up.
And I don’t buy the “very little quality” argument. If there is a market for more quality, manufacturers will cater to it (as Pioneer hoped to). But if the market really only wants to support cheaper things, they’ll get lower quality. For you to say that things are of “very little quality” and yet “maliciously overpriced” means that the consumer base is seriously misaligned. People are purposefully overpaying for cheap stuff?? If that’s true, then explain the success of Wal-mart to me…
Off Topic
Man…this conversation got off-topic really fast.
I think that Mike’s whole point was that Pioneer was blaming the customers for not buying enough stuff rather than realizing that they just weren’t providing the product that people wanted to buy. That’s called a mistake – something that happens in real life. It’s not a failure on the part of the consumer. Neither you, nor I have the “responsibility” to buy anything from anyone…it’s Pioneer’s responsibility and job (their livelihood depends on it) to make me WANT to buy their stuff so that I am willing to give them my money in exchange for their goods.
Doesn’t anyone actually understand economics??!?!? Supply and Demand and all that is derived from them don’t mean anything if the original premises aren’t followed – Goods are scarce. People want goods. People are willing to pay for goods only if they want them AND HAVE AVAILABLE INCOME!!
My guess is that Pioneers execs needed something to tell their stockholders that didn’t paint them in their true colors. Rather, they were trying to paint the “victim” picture. That is just a sad, sad situation.
Re: Off Topic
>>I think that Mike’s whole point…
Hey Mr. Smartypants, you may want to re-evaluate the author’s name.
>>Man…this conversation got off-topic really fast.
I invoke rule #41: when you are just plain awesome, you win even when you lose.
To a customer, low quality is often viewed as a commodity with little value-add.
Additionally, high quality is often viewed as a commodity with a large amount of value-add.
What seems to have happened is that companies such as Sharp, Toshiba, Hitachi, and Samsung, with LCD production facilities (commodity in comparison to Plasma by Pioneer) started adding value to their LCD product, thusly moving their commodity product into a value-added product quadrant.
They were able to execute on this because it’s production facilities are co-located within the same physical vicinity of the sales and marketing facilities.
Pioneer has a history of creating products and letting them sit, opting not to extend them. Take LaserDisc as an example. The expectation of commoditization and licensing of technology isn’t an end point, as there will always be another company or companies on the sidelines looking to offer a better, more inexpensive solution.
To add to an earlier commenter’s point, this is something a commodity production company can’t easily execute upon adding value without comparison to their own previous release. But in doing so, the additional features or a value-add is generally included with an upgrade to a product.
Thusly, midstream through the product cycle, it becomes a commodity. You really have to be looking 10 to 15 years out for this type of idea to work. Unfortunately, most companies even have succession plans that look past 3 years!
Get it?
Re: Re:
I think anyone who says “value-add” as though it’s a real word should be taken out back and shot. OK, maybe I’m exaggerating a bit, but I hate that.
Lets hit the problem on the head..
1. WHO has the money for a $15,000 TV
2. TECH is confusing enough, then add anyone over 55. Its interesting that my VCR,DVD, CABLE/sat and TV can all plug together.. NOW you add HDMI, RGB, DB15, and generally only 1 of EACH, and people are going NUTS trying to get things plugged in.
3. as to AUDIO, take me back to positional QUAD stereo.
4. audio TECH IS STRANGE also..for allot of people. Its as bad as the TV tech. Think I would rather install a 15 zone 3 tier MEGA alarm system. 3.1, 5.1, 7.1 Surround sound, dolby, “DIGITAL”, “ANALOG”, and so on..
Then comes the thought that over 1/2 the people in the USA make LESS THAN $10 per hour, Get less then 40 hours per week, pay over $600 per month in rent, pay $200+ per month for food, and $300-400 in BILLS, anD BEFORE any of that you loose 1/3 to TAXES..and I havnt even ADDED Cable/sat TV, cellphone, computer, HS Internet, Car insurance, Car maintenance or GAS..which is OVEr $200 MORE..
And you think I want to buy a 52″, $15,000 TV, that costs as much as my CAR, and will probably DIE in 5 years..
Re: Lets hit the problem on the head..
Very good post.. up until you said “anyone over 55”.
If I had a dime for each time some kid “under 55” tried to
explain a piece or feature of some tech gear to me and got it wrong, I could buy a $15,000 plasma.
Repeat after me… OLD People INVENTED this stuff…. and my home theater has the satelitte connected with a 5 disc progressive DVD changer, an additional VCR to DVD burner,on componet out, 7.1 surround and projector, plus redundant back up and a game system.
Now get off my lawn, it’s time for my nap
Gasp!! I agree! :O
“The market’s demands for lower and lower prices eventually take high-quality manufacturers out of the game.” That’s simply not true: it will eventually take high-quality manufacturers who can’t compete out of the game.
I can finally relate to a Techdirt story! Hurrah!
Okay, enough of the sarcasm. >:)
I’ve been watching the HDTV market very closely for a couple of reasons:
1) It’s a “new” television technology, which many are unfamiliar with.
2) The transition to DTV.
What I’ve been seeing isn’t a “cost war”, but a market which refuses to lower prices to capitalize as much as they can from consumers.
I wouldn’t call a Pioneer HDTV a “quality” television to begin with. That distinct honor goes to Mitsubishi, who seems to capture the corner market on “expensive” high quality televisions while giving the same features of lower cost TVs.
Before buying my Samsung plasma, I did plenty of research on TV specs, customer satisfaction, and of course, price.
Pioneer was a company that pretended to be high quality but lacked many features lower cost TVs had. That’s a warning sign for me, so I stayed away.
I don’t believe Pioneer couldn’t compete.
They just couldn’t capitalize on consumer stupidity and decided to cut their losses ahead of time.
Passing the buck
Wall street journal recently reported that Pioneer shares just fell like 20% on restructuring. The news is that they are planning to get out of the TV business and get into the ‘lucrative’ auto electronics business.
Strange, they just shut down TV’s to get into a market wher people are becoming conscious day by day of saving fuel and going green. In India, they are already advertising big time, and seem to be making no headway.
Moreover, when did the customer stop liking quality? As commented earlier, we need to see value in the product to purchase. So if the “low end” TV ave the same resolution as a Pioneer, why should I spend more. Seems to me like the ought to be thinking, a bit at least!
A good example of what's wrong with the TV industry
Pioneer’s thinking about the TV market is symptomatic of what’s wrong with the entire industry. They don’t want to even acknowledge a low-end market exists, meaning everybody is competing to sell big ticket TVs. Even so-called “budget” models are priced higher than what some people can or will pay. That hasn’t been a smart business model for a couple of years now. The more ubiquitous the technology becomes, the harder it is to operate on a single tier like that. Most of the industry is moving away from that thinking. Pioneer decided they didn’t need to and paid the price.
Instead of only selling the latest and greatest they need to develop a market for yesterday’s tech that people who can’t afford what’s on the market now or don’t consider the tech worth the current market price.
quality
Very interesting discussion. Consumers are increasingly accustomed to everything becoming less expensive, and this fuels the value-engineering frenzy at all companies which make their products cheaper over time in order to compete in the marketplace. The end result are porducts that really don’t work well. Proof is all around us; our homes are filled with products that are rubbish. Products that abide by the prophesy of planned obsolescence.
Mercifully, there are many of us who would rather invest in beautiful objects made of premium materials that have indefinite lifespans. I respectfully say, that THAT is where real value lives.
Fear the High Quality...
Yes… no one pays for high quality anymore!
That’s why BMW, Jagaur, Lexus, Porsche, Prada, Armani, Hugo Boss, Rolex and so many other companies went out of business long ago…
Oh wait… they didn’t.
Re: Fear the High Quality...
The Strawman cometh…
Re: Fear the High Quality...
These products are purchased at least as much for the status they confer as for their quality. A Rolex does not tell time particularly well.
Re: Fear the High Quality...
hugo boss lmfao!!!!