Recently one of the nation’s largest consumer electronics retailers began a nationwide television advertising campaign kicking off its “Take It Home Today” program, which is designed to encourage electronics consumers to buy today rather than continue postponing a purchase hoping for a lower price. For example, the “Take It Home Today” promotion guarantees buyers of new plasma TVs that they are entitled to get any sale price the company might offer for the next 30 days.
a. Do you think such a policy will increase demand for electronic appliances? Explain.
b. What other reason could explain why this program is offered? Would you expect the other large electronics stores to match this program with one of their own? Why or why not?
a. Such a policy is likely to increase demand for electronic appliances. By guaranteeing buyers that they will receive any sale price offered within the next 30 days, the retailer is addressing the common consumer behavior of postponing purchases in hopes of finding a lower price in the future. This guarantee reduces the risk and uncertainty associated with buying an expensive item like a plasma TV. It creates a sense of urgency and a fear of missing out (FOMO), as customers are now motivated to buy immediately in order to take advantage of potential future price reductions. This policy eliminates the incentive for customers to wait and encourages them to make a purchase, ultimately driving up demand for electronic appliances.
b. One possible reason for offering this program is to gain a competitive edge and differentiate themselves from other electronics retailers. By providing such a guarantee, the retailer is positioning themselves as being customer-centric, offering additional benefits and value to consumers. This can help attract more customers to their stores and increase brand loyalty.
As for whether other large electronics stores would match this program with one of their own, it would depend on various factors. Some stores might see this program as a threat and feel compelled to respond by offering something similar in order to stay competitive. However, other stores might choose not to match the program due to different business strategies, pricing structures, or financial capabilities. Additionally, it's possible that other stores might develop their own unique programs or promotions to differentiate themselves from their competitors rather than copying this specific program. Market dynamics and competitive landscape play a significant role in determining whether other stores would adopt a similar program.