Is the Nikon 1 price crash a good marketing strategy?

Started May 29, 2012 | Discussions thread
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Richard Murdey
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Is the Nikon 1 price crash a good marketing strategy?
May 29, 2012

Camera prices on the Japanese site "kakaku.com" for the J1 lens kit (grey) and Nikon D3100 lens kit (black) since their release last fall.

There is some interesting conclusions to be mined from these two charts.

The D3100 follows the typical price trend for digital cameras in Japan, what I have learned to call the "30% drop in 3 month" rule. Camera is released at X, pre-order price is fixed at this price, then, on release, the price drops sharply, falling to 60% of the release price, or -30%, within about 3 months, after which it stabilizes for the next year or so until the replacement model comes along

Nikon, Canon, Pentax, dSLR or mirrorless. Just about all cameras listed on this site do this.

The Nikon J1 (and V1) are different. The price remained near release for about 6 weeks, then started to slide at an every increasing rate, stabilizing once at about 50% of release before slipping again to finally (?) stabilize at just 30% of the release price. J1 65,000 yen -> 27,000 yen, V1 95,000 yen -> 36,000 yen.

Now, no retailer is going to sell these at a loss for any length of time, so the fact that they continue to be available at this price means Nikon is providing them to retailers for a reasonable margin, say 0.7 or 0.8. It's also highly unlikely Nikon is selling at a loss just to save face either. Cursory look at the hardware suggests the manufacturing costs are simply not that high.

Which means that Nikon as a company took a conscious decision to massively overprice the Nikon 1 cameras at launch, 50% over and above what the usual markup is in Japan.

Although they took some flack in the reviews for being overpriced, the strategy might well have paid off: after they milked the early adopters for hundreds of dollars in profit for every camera sold, Nikon can continue to sell the Nikon 1 system at what appears to be a very "attractive" discounted price 6 months down the line picking up a lot of sales along the way as the camera falls into the price range each person is willing to pay. Rather than offering a range of models at different prices, Nikon offsets just two, but sell each at a price that varies with how long you are prepared to wait to buy the camera.

It's smart marketing, rather like airline tickets but in reverse...

All I can say, though, is that those who ran out to buy this camera on release got burned... scorched... fleeced... ripped off ... well above and beyond what they might have reasonably be expected to have been when buying a new camera on release day.

It's something to watch out for, if the experiment was deemed successful its likely this pricing policy will spread to other models.

 Richard Murdey's gear list:Richard Murdey's gear list
Nikon D40 Pentax K10D Nikon 1 V1 Nikon D600 Pentax smc FA 31mm F1.8 AL Limited +6 more
Nikon 1 J1 Nikon 1 V1 Nikon D3100
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