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. Yes, it is likely that such a policy will increase demand for electronic appliances. Offering a guarantee to customers that they will receive any sale price within the next 30 days creates a sense of security and eliminates the fear of missing out on a better deal. This can incentivize customers to make the purchase immediately, resulting in increased demand for electronic appliances.
b. One reason for offering this program could be to create a competitive advantage in the market. By providing a guarantee on sale prices, the retailer is positioning itself as a customer-friendly and trustworthy option for purchasing electronic appliances. This could attract more customers to choose this retailer over others.
Whether other large electronics stores would match this program with one of their own would depend on various factors. If the program proves to be successful in increasing sales for the retailer, it is possible that competitors would try to replicate or come up with their own similar schemes to stay competitive. However, other factors, such as the financial viability of matching such a program and the market dynamics, would also play a role in the decision-making process of other retailers.