Annexure-V- Cover Page for Academic Tasks

Course Code: ECO531 Course Title: Managerial Economics

Course Instructor: Dr. Mohd Imran Khan
Academic Task No.: 2 Academic Task Title: Assignment – Case based
th
Date of Allotment: 25 November 2019 Date of submission: 17th December 2019
Student’s Roll no: B37, B38, B41, B42 Student’s Reg. no: 11911531, 11910540, 11910316, 11910438
Evaluation Parameters:

Learning Outcomes: We learned about the various pricing strategies followed by the
players in the Indian Audio Market.

Declaration:

I declare that this Assignment is my individual work. I have not copied it from any other
student’s work or from any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written for me by any other person.
Student’s Signature: Sahib, Jyoti, Deepanshu, Prashant

Evaluator’scomments (For Instructor’s use only)

General Observations Suggestions for Improvement Best part of assignment

Marks Obtained: Max. Marks:

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INTRODUCTION

Indian Audio Market is comprised of five distinctive segments which includes traditional radios,
mono recorders, stereo recorders, midi systems and hi-fis. The audio player market in India is
highly competitive with various market players focusing on introducing new products in order to
outwit its competition remain relevant in the market. Over the years various novel audio products
has been launched such as CD sound, digital tuners, full logic tape desk etc.

There are three major players in the Indian audio market namely Philips, BPL and Videocon of
which Philips is considered as a market leader and the oldest brand. To remain ahead of the
competition Philips introduced a wide variety of International products in the market such as CD
radio cassette recorder, standalone CD players and CD mini hi-fi systems.

For a good period of time Philips enjoyed a dominant position in the market but the lowering down
of entry barriers in the Indian audio market allowed other International players to enter the market
such as Akai, Sansui, Sony, Sharp, Goldstar and Aiwa. This development has resulted into the
market becoming more competitive with customers being benefitted the most since they now have
wider choices at competitive prices.

Factors such as change in taste and preferences and rise in the disposable income of the customers
especially the upper class has opened up new opportunities for the audio player companies in the
market. The companies are now able to provide premium products at premium prices to its
customers, with the price of new audio systems going as high as Rs. 50,000 and beyond.

This case has touched the concept of ‘Product Pricing’ and how various audio player companies
are employing different pricing strategies to remain ahead in the market and beat the competition.
The companies have realized that though the disposable incomes of the customers are on the rise,
the majority of the market is still price sensitive for which they are using a mix of pricing strategies
to maintain the market share in various segments.

The case has also thrown light on how several companies have used both product differentiation
along with price differentiation to communicate to the customers why their product is better and
to persuade them to buy.
MARKET STRATEGIES

Companies often use various pricing strategies to spur up the demand of its products in the market
or to position itself in a particular segment of the market. Let’s discuss various pricing strategies
adopted by the players in Indian Audio Market to stay relevant.

 Premium Pricing: Under Premium Pricing policy, companies set a higher price for some
products usually more than the market price in expectation that a high price will signal a higher
quality of product to the customers. Premium pricing works when there is a perception among
the consumers that the product is highly differentiated or when there are high barriers to entry
in the market. The consumers in the premium segment are price-insensitive. Sonodyne is one
such company in the Audio market which has positioned itself in this segment by focusing on
the products that large players cannot provide profitably. Sonodyne provides a range of audio
systems available between Rs. 30,000 and Rs. 60,000.
 Competitive Pricing: Under Competitive Pricing strategy companies select a strategic price
point in relation to their competition. When a product is priced as per what the competitors are
charging it is known a competitive pricing. Competitive pricing also includes making price
more attractive by adding extra features to the product. Philips is one such player in the Indian
Audio Market which provides high quality products to its customers at medium prices to
remain competitive in the market. Philips also introduced a midi audio system having radio,
amplifiers and tape deck in one product at competitive prices. Through its pricing strategy
Philips established itself as a technology leader by providing newer technologies like CD
players at competitive prices.
 Skimming Pricing: Under Skimming Pricing strategy companies place their products on the
top end of the market by charging higher prices to those customers first who are willing to pay
and then lowering it over time. As the demand of the initial customers is satisfied the
companies lower their prices to attract more price sensitive segment. BPL has adopted this
kind of pricing strategy where it places its products at the premium end of the market. BPL has
adopted this strategy because it focuses on high end technology which can only be paid for by
customers having high incomes. BPL has established itself as a product-quality leader using
this strategy.
 Penetration Pricing: Under this pricing strategy the companies set the price of their products
lower than those of competitors in order to poach away their customers. One main objective of
the penetration pricing strategy is to gain a greater market share. In the Indian Audio Market
Videocon has adopted this kind of strategy by keeping its products prices lower than the
completion even in the premium segment market. Videocon launched Select Sound Range of
midi stereo system at slightly lower price than its competitors. National Panasonic has adopted
this strategy in monos and stereos segment of the market by reducing the price of its two-in-
ones stereos.
 Perceived-Value Pricing: Under this strategy the products are priced according to the
perception customers hold about company’s product and how much they are willing to pay for
it. Perceived value pricing is not premised on the cost of the product rather it is the value which
customers think they are deriving from consumption of the product. Sony is following this
strategy by positioning itself in the premium segment and charging higher prices for the
superior sound quality its products offer, rather than indulging in price wars it focuses on the
quality of its products. National Panasonic also follows this strategy by placing its product at
the higher end of the market. Philips has also adopted this strategy but only for monos and
stereos segment of the market.

CURRENT SCENARIO AND CHALLENGES

The multinational consumer electronics makers with bigger advertising budgets and investments
have started to flood Indian audio players market with a wide range of products due to which the
Indian brands such as BPL and Sonodyne are finding it hard to keep up with the competition. The
Indian audio market’s dynamics has changed vastly due to which the value proposition of the
Indian Brands was lost in the minds of the customers. The foreign companies like JBL and BOSE
have taken over the minds of the Indian customers.

Another challenge which is Indian Audio Player Market Faces today is the digitization on almost
everything including the music. Due to the advent of music streaming Apps and Websites people
now prefer to listen to music on their laptops and mobile phones which has negated the need of
CD players and tradition audio systems to some extent. The audio is stored digitally in today’s ear
due to which audio players are becoming irrelevant.
CONCLUSION

 The case study provides a detailed overview about the Indian Audio Market. The audio
industry in India has seen tremendous growth over the last few decades but currently it is
declining. This market involves the various brands with their different customer impact
strategies.

 As Philips presents the goods as high quality at moderate prices. BPL, Videocon, Sony are
another major brands that have placed themselves on the market by targeting the higher, middle
and lower income classes.

 The perfect blend of audio-technology has the potential and power to create a piece of art that
will be a memorable experience for all in the coming years, so the Indian audio companies
should look to upgrade their technologies such as moving toward wireless audio systems.

 Wireless audio expected to be is the next big thing which is arriving in India, Indian companies
should capitalize in this development.

 The inception of Alexa or Google Home smart speakers are the best examples of usage of
Artificial Intelligence in the field of audio industry, Indian audio companies should explore the
opportunities relating to the incorporation of Artificial Intelligence in audio players.

 Indian companies like BPL and Sonodyne should use product bundling price strategy to fight
off the competition in the market, further they could also look towards offering their products
at discounts.

 Indian Audio companies should make their products more premium yet affordable by
especially in the home audio segment or they could also collaborate with TV manufacturers
and offer their audio systems ad add-ons with the Smart TVs.
REFERENCES

https://www.livemint.com/Sundayapp/1zDvriysaltzAkW2L4oWNI/Can-Sonodyne-get-its-groove-
back.html

https://www.varjan.com/articles/1205-may-eight-advantages-of-premium-pricing-strategy-and-eight-
disadvantages-of-economy-pricing.shtml

https://businessjargons.com/perceived-value-pricing.html

https://www.investopedia.com/terms/p/priceskimming.asp

https://marketresearchfeed.com/2019/12/17/wireless-audio-market-2019-latest-trends-
technology-advancement-and-demand-sony-shure-voxx-philips-yamaha-jabra-amazon-google/