Sony cuts price of PS3 in Japan because Japanese consumers are stupid?
I’m not a gamer or particular interested in games or the Tokyo Game Show, but I did find this post over at Digital World Tokyo somewhat interesting (bold added for emphasis):
Sony Computer Entertainment Inc. (SCEI) kicked off the Tokyo Game Show with a surprise for Japanese consumers: a price cut for the yet-to-be-launched PlayStation 3 console.
The cheapest of two versions of the console will cost ¥49,980 (US$427) ın Japan, said Ken Kutaragi, president of SCEI in a speech at the show on Friday morning. That’s a ¥10,000 drop from the previous announced price.
“In Japan there is a perception that one yen is the same as one dollar and one euro so Japanese people feel it’s a little expensive,” said Nanako Kato, a spokeswoman for SCEI in Tokyo. The U.S. launch price is US$499 and the cut would bring the Japanese price in line with that of the U.S. in the minds of consumers, she said.
Do Japanese consumers really think like this? Do they have such a flawed view of foreign currency conversion?
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Of course he meant that Japanese have perception that US$1 = ¥100 (or $100 = 1 man). And the point is that ¥49,980 matches US$499, while ~¥59,980 sounds like ripoff.
Yes, I know he meant that $1 = 100 yen, but that’s not the point. When I see this article, I don’t see 49,980 yen and think that both countries will be paying equal price. The author put “($425)” in brackets, so it is clear to anybody reading that currency conversion is not so simple. If anything, this should make non-Japanese customers, who are smart enough not to equate their currency to yen, to see the $425 figure and realize that they’re being ripped off.
Why can’t the Japanese media and Sony clearly demonstate the fact that 59980 yen is almost the same as $499 (it’s actually $511)?
Obviously the consumers are smart since they are now getting a better price.
As the reason for the price drop is an ignorance-fueled perception that 59980 yen is much more expensive than 499 dollars, I would see it as a company taking a desperate measure to respond to consumer ignorance. If we are to take the reporter’s word that Sony dropped the price because of that misconception, it has nothing to do with consumers being smart. I really doubt that Japanese consumers got together and decided that they would start believing 100 yen = 1.00 dollar for the sake of getting better prices.
There is a difference between BELIEF and PERCEPTION. Consumers are well aware of the fact that 100 yen isn’t equivalent to 1$, but AT FIRST GLANCE the price gives them that feeling of being ripped off! And I totally understand that feeling, since me too I had it many times with the yen, and the Canadian dollar!
Just to give a close example, the “??,99″ pricing thechnique that leads the consumer to have a WRONG PERCEPTION about the price, focusing more on the integer part and ignoring the digital. Those pricing tachniques are called PSYCHOLOGICAL PRICING, which is a “theory in marketing that these prices have a psychological impact that drives demand greater than would be expected if consumers were perfectly rational.” from Wikipedia. This said Nintendo marketing decision is PERFECTLY RATIONAL AND JUSTIFIED!!! MARKETINGLY SPEAKING!
“If we are to take the reporter’s word that Sony dropped the price because of that misconception”
Well, that’s the point of contention, isn’t it? Folks balked at the PS3 price because it was so goddamn high. Sony could say “We lowered the price because people thought it was high”, but the immediate counter would be “and they were right!”. However, phrase it “we lowered the price because people thought it was more expensive than the overseas units, because they’re bad at currency conversion”, and the obvious comeback “and they were right!” isn’t possible.
In the end, it really comes down to: are you prepared to make a judgement about the intelligence of a large group of people based on what a marketing person tells you? I’m barely prepared to make a judgement about a product based on what a marketing guy says, let alone make a judgement about a nation.
I agree with randomcommenter. The source you quoted only gives the point of view of Sony’s spin doctors. Did the reporter check facts, such as the assumption that Japanese would know how much the machine is in America? How about interviewing potential buyers? Besides, I’m SURE that what they balked at was Japanese price vs. US price, not the fact that this thing is freaking $500.
You missed it? There was that special 1 yen gets you $1 day at Mizuho last week. Good stuff!
Heres another view: The PR statement was just that, no basis in fact. My bet is Sony desperately wants to build up as much of a customer base as possible as fast as possible to counter the image that they are slipping and no longer “cool”. They are severely threatened by Nintendo at this point and are willing to take an even bigger loss on the hardware and abandon the traditional strategy of charging domestic consumers much more than overseas consumers for the same exact consumer product.
Check this out for a more thourough explanation. It seems like there much more behind the price drop in Japan, rather that what I was and you were talking about.