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Medium Pricing Profitability Discounting Policy Supply Chain

TV Screens

#Consumer Electronics #Manufacturing #Supply Chain
ProHub Comment

This case effectively integrates pricing strategy with supply chain considerations and sales force incentive misalignment. The analysis proceeds logically from understanding cost trends and market dynamics to identifying specific issues in discounting practices and finally proposing a value-chain-based solution for price optimization.

Estimated Time 15 minutes
Difficulty Medium
Source Wharton
50 / 100
SKP has been retained by a consumer electronics screen manufacturer, Vivid, to perform a pricing optimization project. Vivid’s main product is HDTV (high definition TV) screens. Its main customers are well-known TV manufacturers in Asia and the US, who buy other components, build the finished TVs and sell them to retailers who use global distribution channels to reach the end-users. You have been assigned to this team and today is your first meeting with the project manager to review the information collected and brainstorm about key hypotheses.

Clarifying Information

  1. Is Vivid concerned about profitability, or just revenue? The client is looking at pricing in search of opportunities to grow revenue.
  2. Are there patents in place? Vivid technology is patent-protected, and for manufacturers to switch suppliers would require costly plant reconfiguration.
  3. Has revenue been declining year-over-year? While sales volumes have been increasing, revenue has remained flat.
  4. Are competitors’ experiencing the same revenue decline? Unfortunately, we don’t have financials for any of the competitors.