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Demand and Supply Trends Affecting the Price
Although the initial cost of the equipment necessary for HDTV was rather prohibiting, HDNet has chosen to wait for its decrease. As the equipment became affordable for the average customer, the industry received the opportunity to flourish.
HDNet is one of the pioneers in the market, which means that the competition at the moment described is not particularly high, even though it may increase in the future. The fact that more than 60 million TV sets in the US may be used for HDTV proves that the business has all the chances of expanding. At the same time, taking into account the fact that new technology may result in customers’ confusion, HDNet and the resellers carry out careful distribution strategies, offer equipment and its installation as they do everything to facilitate the introduction of HDTV.
Having made deals with numerous cable and satellite television providers, HDNet has secured its position and made it obvious that it is not planning to leave the market. By offering unique programming along with the popular content (movies, live sporting events), HDNet ensures that it will stay in demand. The fact that TV is among the favorite leisure-time activities in the US suggests the same (Kotler and Keller 79).
Evaluation
From the information given in the case study, it may be concluded that HDNet intends to carry out a market skimming pricing strategy. All the conditions for such a strategy exist in the described situation: the demand for high-quality, high-dimension TV is sufficient, the costs of the corresponding equipment have dropped, but at the moment the market is not flooded with competitors, and the high-quality, high-end product, which appears to be the image that HDNet is endeavoring to maintain, is associated with the current costs (Kotler and Keller 390).
Price Projections
HDNet plays a crucial part in the product lifecycle since, as it has been pointed out, the original, unique content provided by HDNet is complemented by other types of popular programming. The resellers’ sales promotion strategies are well-thought-out. Different resellers offer the necessary equipment (DISHNET includes the TV set), professional installation, and packages of services; cable operators recommend HDNet as a premium service, which means maintaining the image of a high-quality product. Apart from that, resellers offer their customers free trial periods. All of these factors are bound to attract potential customers, the number of which, as it has been mentioned, is quite enormous.
The competition in the market described in the case study is not too high, as HD television is only beginning to flourish with the decrease of the equipment costs. The demand, on the other hand, is expected to skyrocket, given the high appeal of the product and its growing accessibility. The quality perception is not only positive; it is also one of the main advantages HDNet has over the not-HD television. Given all these factors, one may conclude that the price demanded by HDNet may be above the average one as the company intends to create an image of a high-end product.
Positioning the original content as a unique and valuable asset can be an effective strategy that has been illustrated by the success of Discovery Communications. The popularity of its products at least partially owes to promoting the image of the channels that are “satisfying curiosity,” “enlightening,” and “encouraging to explore” (Kotler and Keller 259).
Skimming strategy presupposes high initial prices and their subsequent lowering (Kotler and Keller 390). It is obvious that the situation in the market described by the case study allows HDNet to demand a high initial price and gain the most from being one of the pioneers of the industry. It is possible that the price will have to be lowered as it is going to adjust the changes in the market, but the uniqueness of the content suggests its competitiveness in the future.
Works Cited
Kotler, Philip, and Kevin Lane Keller. Marketing Management. 14th ed. Upper Saddle River, N.J.: Prentice Hall, 2012. Print.
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