Objective
• Analyze & segment the Internet TV set-top
box market
• Determine the important feature preferences
per segment...
Pricing Strategy, Fall 2010 3
Internet TV Set Top Box Market
• We project 2.935 M Unit sales in
2011Market Size
• Sony Google TV
• Logitech Google TV
• ...
Five Forces Internet TV Set Top Box
Internal Rivalry – HIGH
Aggressive Price Cuts
Large key players
Limited product
differ...
Pricing Strategy, Fall 2010 6
Our Approach
Conduct market survey for
Conjoint Analysis
Identify customer segments by
Cluster Analysis
Identify attribute...
Attributes for conjoint analysis
Pricing Strategy, Fall 2010 8
Attribute Choices
Download-
able Apps
Yes
No
Seamless
Search
Yes
No
DVR
Yes
No
Brand
Logitech
Google
TV
Sony
Google
TV
App...
Current Product Comparison
DVR Search
App
Market
Browser
1080P
Support
HD
Video
Calling
Price
$299
$199*
$99
Pricing Strat...
Survey Card
Pricing Strategy, Fall 2010 11
Survey Respondent Profile
Income Profile
54%
20%
2%
18%
6%
Cable DISH Direct Free Antenna Others
TV Service Subscription P...
Segment 1 – Price and Feature
0
1
2
3
4
5
6
7
Apple ($99) Sony $(199) Logitech ($299)
4.04
5.69
6.61
Comparative Utilities...
Segment 2 – Low Price or Bust
Utility FunctionObservations
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Apple ($99) Sony $(199) Logitech ...
Segment 3 – Feature Hungry
Utility FunctionObservations
-4
-2
0
2
4
6
8
10
Apple ($99) Sony $(199) Logitech ($299)
-2.91
7...
Market Share Calculation
Set rho=0.5, 1, 1.5
• ↑ rho ↑ leader’s Market share
Set Sony=$199 & $299
• $199 accounts for Blue...
Logitech Profitability Analysis
2011 Total Internet TV Set Top Box Market
• Logitech 2010Q4 sales est. = 325K
• We est. 45...
All Segments Market Share & Profit
48.05%
46.41%
42.81%
40%
41%
42%
43%
44%
45%
46%
47%
48%
49%
$0
$50,000,000
$100,000,00...
Segment 1 Market Share & Profit
42.40%
40.45%
37.53%
37%
38%
39%
40%
41%
42%
43%
$0
$20,000,000
$40,000,000
$60,000,000
$8...
44.00%
42.46%
35.06%
34%
35%
36%
37%
38%
39%
40%
41%
42%
43%
44%
45%
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$5...
55.95%
54.64%
52.90%
51%
52%
52%
53%
53%
54%
54%
55%
55%
56%
56%
57%
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$5...
Great Analysis !!!
So what should Logitech do ???
Pricing Strategy, Fall 2010 22
Segment Recommendations
• Since Logitech is most feature rich it should strongly
target Segment 3 w/current product at $29...
Competitive Strategy
• Sony includes Blu-Ray and has ↓price from
$399->299
• Logitech should not reduce $299 price
– Logit...
Pricing Strategy, Fall 2010 25
Pricing Strategy, Fall 2010 26
Google Business Model
Pricing Strategy, Fall 2010 27
Google Revenue Model
∑ Ai * CPCi (1 – Si) +
∑ Ai / 1000 * CPMi (1 – Si)
A = Ad Impressions
CPC = Cost per Click
CPM = Cost...
Google TV Pricing Stategy
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Google TV Pricing Stategy

Pricing Strategy and Sales Forecasting using Conjoined Analysis
Published on: Mar 4, 2016
Published in: Business      Entertainment & Humor      Technology      
Source: www.slideshare.net


Transcripts - Google TV Pricing Stategy

  • 1. Objective • Analyze & segment the Internet TV set-top box market • Determine the important feature preferences per segment • Project market share and profitability • Recommend pricing strategies Pricing Strategy, Fall 2010 2
  • 2. Pricing Strategy, Fall 2010 3
  • 3. Internet TV Set Top Box Market • We project 2.935 M Unit sales in 2011Market Size • Sony Google TV • Logitech Google TV • Apple TV Key Players • Web Enabled TV / Blu-ray players • Media PCs • Gaming Consoles Substitutes Pricing Strategy, Fall 2010 4
  • 4. Five Forces Internet TV Set Top Box Internal Rivalry – HIGH Aggressive Price Cuts Large key players Limited product differentiation Entry - HIGH Low barriers to entry for existing TV/ DVD / game console manufacturers Substitutes & Complements - HIGH TV Manufacturers expanded into space High availability of substitutes Supplier - HIGH Software and App programmers Hardware components Vertical Integration Buyer – MEDIUM HIGH Direct - MEDIUM Via Resellers/ Service Providers - HIGH Pricing Strategy, Fall 2010 5
  • 5. Pricing Strategy, Fall 2010 6
  • 6. Our Approach Conduct market survey for Conjoint Analysis Identify customer segments by Cluster Analysis Identify attribute utility for each segment Recommend features and pricing by customer segment Pricing Strategy, Fall 2010 7
  • 7. Attributes for conjoint analysis Pricing Strategy, Fall 2010 8
  • 8. Attribute Choices Download- able Apps Yes No Seamless Search Yes No DVR Yes No Brand Logitech Google TV Sony Google TV Apple TV Price $99 $199 $299 $399 Picture Quality 720p 1080p HD Video Calling Yes No Full Web Browser Yes No Pricing Strategy, Fall 2010 9
  • 9. Current Product Comparison DVR Search App Market Browser 1080P Support HD Video Calling Price $299 $199* $99 Pricing Strategy, Fall 2010 10
  • 10. Survey Card Pricing Strategy, Fall 2010 11
  • 11. Survey Respondent Profile Income Profile 54% 20% 2% 18% 6% Cable DISH Direct Free Antenna Others TV Service Subscription Profile 6% 12% 28% 36% 18% < 50K 50 - 100K 100 - 150K 150 - 250K > 250K • 54 completed responses • 80% between ages 30 to 39 • 58% have kids •Avg expenditure on TV per month - $56 •Avg hrs spent watching TV/DVD per week – 10.5 Pricing Strategy, Fall 2010 12
  • 12. Segment 1 – Price and Feature 0 1 2 3 4 5 6 7 Apple ($99) Sony $(199) Logitech ($299) 4.04 5.69 6.61 Comparative Utilities Utility FunctionObservations In… S… L… 7… H… B… A… S… D… $… $… $… 2.15 -0.99 -0.15 -0.32 0.63 0.96 0.66 0.99 0.61 2.21 1.32 0.76 • Price and Feature conscious • 19 Respondents – 39% • Lower end of household income (~140K) • > 40% don’t have kids • Watch TV 9.8 Hrs / Wk • Pay most for TV - $64 Pricing Strategy, Fall 2010 13
  • 13. Segment 2 – Low Price or Bust Utility FunctionObservations 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 Apple ($99) Sony $(199) Logitech ($299) 1.95 3.87 4.3 Comparative Utilities Intercept Sony Logitech 720P HD Video Call Browser App Store Search DVR $99 Price $199 Price $299 Price -0.81 -0.11 0.1 -0.37 0.49 1.47 0.42 0.95 0.52 3.13 1.43 1.15 • Most price sensitive • 18 Respondents – 38% • Logitech still has highest utility • Middle range household income (~170K) • > 60% don’t have kids • Watch TV 12 Hrs / Wk • Pay least for TV - $45 Pricing Strategy, Fall 2010 14
  • 14. Segment 3 – Feature Hungry Utility FunctionObservations -4 -2 0 2 4 6 8 10 Apple ($99) Sony $(199) Logitech ($299) -2.91 7.95 9.57 Comparative Utilities Intercept Sony Logitech 720P HD Video Call Browser App Store Search DVR $99 Price $199 Price $299 Price -1.01 -0.13 0.42 -2.75 1.6 2.73 1.73 1.98 1.48 0.85 1.17 0.65 • Least price sensitive • 12 Respondents – 23% • Want more features – see Apple TV utility • Highest household income (~250K) • 85% have kids • Pay high for TV - $60 Pricing Strategy, Fall 2010 15
  • 15. Market Share Calculation Set rho=0.5, 1, 1.5 • ↑ rho ↑ leader’s Market share Set Sony=$199 & $299 • $199 accounts for Blue Ray player Set market share = 0 for negative utility • Apple in Segment 3 Logitech leads all cases except most price sensitive Segment 2 Pricing Strategy, Fall 2010 16
  • 16. Logitech Profitability Analysis 2011 Total Internet TV Set Top Box Market • Logitech 2010Q4 sales est. = 325K • We est. 450K 2011Q4 sales * 3 = 1.35M total year Logitech sales • 1.35M* (1/46% Logitech share) = 2.93M Total Market Unit Costs • AppleTV iSuppli est.= $64 • Can make up profit w/video sales • Logitech & Sony we est. $150, 50% margin • Assume COGS ↑ linearly. Pricing Strategy, Fall 2010 17
  • 17. All Segments Market Share & Profit 48.05% 46.41% 42.81% 40% 41% 42% 43% 44% 45% 46% 47% 48% 49% $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $199 $299 $399 Logitech Profit & Mkt Share Increasing price elasticity from $199->399, bigger profit ↑ from $199->299 Apple, 1 1.25% Sony, 45 .18% Logitech , 46.41% Mkt Share - Logitech $299 Pricing Strategy, Fall 2010 18
  • 18. Segment 1 Market Share & Profit 42.40% 40.45% 37.53% 37% 38% 39% 40% 41% 42% 43% $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $199 $299 $399 Logitech Profits& Mkt Share Consistent med. price elasticity from $199->399, but profits ↑ steadily Apple, 2 4.74% Sony, 36. 52% Logitech, 40.45% Mkt Share – Logitech $299 Pricing Strategy, Fall 2010 19
  • 19. 44.00% 42.46% 35.06% 34% 35% 36% 37% 38% 39% 40% 41% 42% 43% 44% 45% $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 $100,000,000 $199 $299 $399 Logitech Profits& Mkt Share Segment 2 Market Share & Profit Very high price elasticity from $299->399, profits still ↑ Apple, 1 9.26% Sony, 43. 20% Logitech, 42.46% Mkt Share - Logitech $299 Pricing Strategy, Fall 2010 20
  • 20. 55.95% 54.64% 52.90% 51% 52% 52% 53% 53% 54% 54% 55% 55% 56% 56% 57% $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 $100,000,000 $199 $299 $399 Logitech Profits& Mkt Share Segment 3 Market Share & Profit Apple 0% share. Low price elasticity from $199->399, strong ↑ profit Sony, 47. 10% Logitech, 54.64% Mkt Share - Logitech $299 Pricing Strategy, Fall 2010 21
  • 21. Great Analysis !!! So what should Logitech do ??? Pricing Strategy, Fall 2010 22
  • 22. Segment Recommendations • Since Logitech is most feature rich it should strongly target Segment 3 w/current product at $299 • If ↑ mkt share will ↓ unit costs & ↑ LT profitability, Logitech should offer cheaper versions for Segments 1 & 2 – Reduce features highly valued by Segment 3 but less important for 1 & 2 • Lower app storage – ↓ RAM cost • Offer only 720p – ↓ processor & RAM costs • Remove video call option – minimal ↓ costs, ↓ sales of video cameras • Need to maintain other features for Google TV compatibility Pricing Strategy, Fall 2010 23
  • 23. Competitive Strategy • Sony includes Blu-Ray and has ↓price from $399->299 • Logitech should not reduce $299 price – Logitech can’t compete directly w/Blu-Ray • Instead offer ↑ functionality & EVC – Bundle video camera for $50 discount – Subsidize $120 discount w/DISH TV subscription Pricing Strategy, Fall 2010 24
  • 24. Pricing Strategy, Fall 2010 25
  • 25. Pricing Strategy, Fall 2010 26
  • 26. Google Business Model Pricing Strategy, Fall 2010 27
  • 27. Google Revenue Model ∑ Ai * CPCi (1 – Si) + ∑ Ai / 1000 * CPMi (1 – Si) A = Ad Impressions CPC = Cost per Click CPM = Cost per 1000 Impressions S = % Partner Revenue Share Pricing Strategy, Fall 2010 28

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