Sony "revisiting" PS3 pricing/volume strategy
- Thread starter Titanio
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There are so many studies that will disagree with this. And the conclusion is that many times due to incomplete rationality formed on short term expectations or short term observations they might form future events that do not maximize their utility as much as if they were completely rational and had a broader view
archangelmorph
Veteran
But [the vast majority of] people in general are irrational..
So in that case, unless you've learned the art of brainwashi... erm.. I mean "marketing" then your screwed...
But economically, the point at which a console reaches its full market (i.e. is released globally) and stops being supply constrained are both important milestones relevant to its pricing development. As well as, of course, its manufacturing cost.
The Japanese launches really had a different status. There were even some considerable hardware changes for the other markets.There's a positive feedback cycle here for sure (positive as in self-amplifying, not positive as in a good thing).
More important than consumer perception, IMO, is the fact than when publishers and independent studios have to make a decision as to what platform to support they are more likely to go with the platform with the biggest marketshare, and in the event of a multi-platform title, which platform to lead.
Consumers will go where the games are.
PS3 having < half the installed base of 360 (and Wii) for up to a year as things look right now is likely to have a serious effect on 3rd party game developer support.
The problem for Sony is compounded by the fact that 360 buyers have higher tie-in ratios for games.
Sony needs to cut costs fast so they can lower the price and gain marketshare. Lowering the price by a substantial amount without lowering cost would be financial suicide.
Cheers
Gas Powered Games have said just as much in a GI. biz article. They're releasing 5 titles across console platforms, with PS3 the only exception because they don't consider the market viable. That's not a position Sony want to be in.
But economically, the point at which a console reaches its full market (i.e. is released globally) and stops being supply constrained are both important milestones relevant to its pricing development. As well as, of course, its manufacturing cost.
Well the PS3 has never been supply constrained
, so they should be able to cut the price really soon then. The reason that I don't really care about when and where a console has launced is that I don't really think it matters that much. You can either launch a console in one region or dilute your numbers and launch over several regions like the 360, I don't think that one strategy makes a console cheaper faster than the other. What is important is how long you have been manufacturing your console, how fast you can ramp up production and how fast you can start applying cost saving meassures, like smaller chips etc, and of course be able to sell what you produce...But [the vast majority of] people in general are irrational..
So in that case, unless you've learned the art of brainwashi... erm.. I mean "marketing" then your screwed...
Well in both cases people can be irrational. I mean....marketing sometimes is used to make people irrational and buy the product or not to buy a competitive product. It depends really.
A couple examples may help understand although in these situations as time passes people gain experience thus become more rational. Unless ofcourse something occures for the first time and people feel more uncertainty.
Politicians may use tactics to form short term expectations. In such occasions people may 'vote" for the candidate that promises things such as tax reductions etc, and ignore the fact that that policy may result to higher taxes in the future or lower government expenditures on health care and education.
Other times an enviroment of pessimism may make people overestimate the situation and overeact.
For example you could be an investor, suddenly something negative occures like low sales or that an important deal was canceled and find in the media that it will reduce the value of your shares, you overestimate the sitiuation even farther. As a result you sell the shares causing them to decrease in value even more than they would have been.
Sometimes another phenomenon could occure. Rational people may follow the same route because they know that other people's irrationality could create more damage than natural so they will also sell their shares farther increasing the damage. See DC.
But ofcourse someone may be promising things will go better in the future, people listen to him and at the end nothing better may happen. See Saturn
Both those examples are rational behaviour. They are considered and logical choices, although founded on misinformation or wrong ideas. People on the whole are rational, but their knowledge on which they derive their choices is often lacking, and more often than not they don't challenge their own knowledge and seek to learn more.
I agree they are logical choices. Although I understand that rational and logical are somewhat synonims in literature. they are used as different definitions from a research perspective.
What you described is exactly what I was trying to describe as well though and "irrationality" is the definition that is used when describing such behaviours. Atleast all the bibliography, case studies I ve seen and read they all refer to such behaviours as "irrational" trying to describe behaviours that are a result of lack of information, misinformation or of underestimation/overestimation of situations.
They are natural/logical reactions based on perception and available information yet they dont align with the behaviour of people who have complete information, are more knowledgable and have a supposed clearer picture of certain situations.
For example if some people find individuals who are ignorant about the stock market and they tell them they will make a backetload of money (which is partially true under some very specific circumstances) if they invest, by showing them a graph with a short term period of increasing returns, and the latter does follow their advice, although it is a logical choice, it is considered irrational and wrong based on the standards that an informed, knowledgable investor would have reacted, because he knows that such an action almost quarantees you will lose rather than gain
There nothing irrational about people flocking to more popular products based on sales trend and marketing.
Most people don't want to do a bunch of research on everything they buy to make sure they getting a quality product. Products that are highly marketed or popular for the most part can be considered safer purchases. Marketing and popularity can be deceiving especially with tech products but for the most part the more popular products will at least provide the more basic features that encompasses the needs of the typical mainstream consumer anyway.
Whats irrational is gathering detailed infomation and doing time consuming research on a product that you going to barely make use of and only utilize the most basic of features.
Most people don't want to do a bunch of research on everything they buy to make sure they getting a quality product. Products that are highly marketed or popular for the most part can be considered safer purchases. Marketing and popularity can be deceiving especially with tech products but for the most part the more popular products will at least provide the more basic features that encompasses the needs of the typical mainstream consumer anyway.
Whats irrational is gathering detailed infomation and doing time consuming research on a product that you going to barely make use of and only utilize the most basic of features.
Nobody said that for consoles you need to make super detailed gathering of information. As a rational consumer I might let all the others set the market and the information I need for me
Yes you would, if you were a casual gamer and had let the market decide your purchases for the last 10 years. You would of owned a PS1 and PS2 and all the GTA games, all the GT games, Final Fantasy 7,8 and 10, Crash Bandicoot 1-3 and a few other top selling games.
Thats probably tens time better than if you had chose platforms and games at random. A lot of research might have provided platforms and games that better suited your taste. But the general casual gamer doesn't want to put in that time so looking at the popularity of a product is the next best metric.
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I dont know where casuals stick
But as you might have noticed a bit earlier in my post a rational person's purchase/investment could be highly affected by what others do so he may be forced to follow the same route to reduce risk. The next great game is uncertain were it will be released on and usually as it has been stated so many times in these boards its the userbase that sets where it will be released on. There could be concentration of games that may suit my taste (whether they are hardcore or casual games) on certain paltforms that may also have a ton of other games I dont give a damn about. And because this is uncertain all I have to do is wait than harry and purchase something that may not satisfy me (because for example it doesnt get enough support). In case they all have a fair amount of games I care about I might buy them all (consoles).
I am not left with many choices am I?
edit:besides how much information is available for each console especially when there are still newly launched consoles?
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Who priced their console at $600?
High prices = low sales once the launch frenzy dies down. Low sales = less third party support + perception of failure among the consumers = future library quality deterioration + lower sales.
That goes back to my initial point in this thread: Sony need to find the way to cut the prices ASAP before low sales paint PS3 as a failure, which might happen in a matter of months as this rate.
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Well I agree they need a price cut. But that's just a part of the whole picture
quest55720
Regular
In NA right now price is the whole picture. I don't care what games or gimicks like home come out buyers in NA won't pay 599 for a gaming machine.
Regardless, its not irrational when faced with limited infomation to use the sales of a product to determine whether or not to purchase that product. It may not be a well thought out purchase but the reasoning behind the purchase is sound, that more often than not, people flock to good quality products.
Read all my posts about the definition