16 September 2008

Social Psych To The Rescue

My social psych professor suggests a possible solution to the underpricing conundrum. She suggests that putting out a new hot system, especially around Christmas time, gets us to psychologically commit to buying one, either for ourselves or for our kids. When we discover we can't get one, we (a) decide to get one when they are available and (b) buy something else for Christmas. As a result, instead of making just one Christmas sale, the toy/video game companies make Christmas sales and, after the supply opens up, January sales.

There's at least one problem with this explanation: why would the companies assume that they'll reap the benefit of the double sale. Maybe whatever substitute we buy for Christmas will come from some other company. But, other than that, this does seem to make psychological sense.

PS: As I think about it, this doesn't help with iPhone pricing at all.


joe shropshire said...

What the hell are you doing with a social psych professor?

Peter Burnet said...

David is waiting for AOG to weigh in and solve the problem for him with lots of big words. Hey, Cohen, write your own term papers.

aog said...

I still hold that Mr. Cohen is misunderestimating* how hard it is to get both pricing and production volume right. And one need merely look at the flack Apple took for their $100 price reduction after the initial iPhone surge to see the "gouging" issue at work.

I don't buy the "hooked" argument at all. Plenty of people get hooked but it has little to do with the details of releasing the product. Keep in mind that the inital purchase run of the XBox was driven by people wanting to play Halo, not the XBox per se.

* Big enough for you, Mr. Burnet?

Peter Burnet said...


Do you know who you are talking to? "Halo" and "iPhone surge" are big enough for me.