Saturday, December 15, 2007

Wii shortage: poor forecasting or marketing ploy?

In the past, we have talked about deliberately under-priced products. Business Week has a story on the Wii:

The growing popularity of online shopping has created a booming secondary market in which individuals profit from shortages by snapping up supply and reselling at a premium. A search of eBay's (EBAY) U.S. site pulls up thousands of listings for new Wii consoles, with bidding well above the suggested retail price. Nintendo isn't pocketing any of that extra cash, but it's collecting a dividend in the form of free hype. That has allowed the company to hold fast on the price even as Sony (SNE) and Microsoft (MSFT), maker of the Xbox, have started discounting their newest machines to spur demand.

So it looks as if there's little incentive for Nintendo to crank up production. "You can extend the technology cycle of the product by sitting just below the demand curve and creating a sense of excitement. It's something they've done very cleverly in the past year," says Laurence Knight, a partner at marketing innovation consultant Fletcher Knight. The risk is that consumers may be turned off if they begin to feel manipulated.

1 comment:

  1. An article in the Dec. 14 NYT includes a quote from an analyst who estimates that Nintendo's underproduction is likely to "cost" $1.3 billion this holiday season - money left on the table due to unconsummated sales (and that figure does not include the potential revenue from additional games that would have been purchased for those systems).

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