Sunday, September 27, 2009

Creative Imagination at Work: Pricing Strategy for SHOWwx

Here’s an example of creative imagination at work. However, the solution we seek is not product or service related. Here, the creative imagination is applied to profitability issue in marketing and could be called “creative marketing”… or “gorilla marketing”… or plain old making “lemonade from lemons”.

Here we go…

Currently, the competition in the Pico projector space comes from two major players, TI with its DLP technology and 3M with its LcoS technology. The competition sells its second generation Pico projector for about $395 and the quality of the image from their projectors looks like the picture on the left side below. Microvision’s PicoP projector SWOWwx, on the other hand, projects its image better than the one on the right side.

If $395 was assumed as the average price for the baseline model and functionality [in-line with what the competition is asking], then Microvision could [and should] charge $599 for not only the better quality and vivid images but also some very interesting and differentiating features…

• Always-in-focus on any projected surface [projecting on curved surfaces or from an angel on flat surfaces]

• Short throw ratio 1:1 [bigger picture from short distance]

• Stunningly colorful, bright, vivid and detailed images [200% NTSC]

• Large images size [from 20” to 150” diagonal ]

• Higher image resolution (848×480) with HD pathway in future models

• Unmatched small font readability [size 8 font]

• Wide aspect ratio 16:9 [for wide screen experience]

• Fast refresh [60 Hz] to prevent motion blur when watching sports or action videos and movies

• High contrast ratio 5000:1

• Easy and simple plug and play. Single connector for TV-out [composite], VGA [RGB] and 3.5mm stereo jack─ audio pass through

• Longer battery life. Movie capable battery life when fully charged. Charges via Micro-USB

• 3 year warranty service… why not with all that MEMS reliability and exceeding drop test performance

• Headboard clamp for in-bed watching videos and movies on the ceiling

• All cables and leather case included

• Trade-in offer [worth $200 in exchange value] for any future PicoP projector.

All these features are inherent in the laser based PicoP display engine and they don’t really cost anything extra but they allow you to monetize the superior product functionality that Microvision offers. There is no reason to give it away for free…

Since Microvision has more demand than they can supply [5:1 ratio], it only makes sense to monetize [profitably] whatever they are able to supply. It positions SHOWwx as the premium high quality PicoP Projector in the market. Interestingly, it gives you a payout even greater than the “Trifecta” on the racetracks…

• Brings superior product to the market sooner

• Creates “premium high quality” image perception from the start

• Generates profitable revenues in spite of the limited green laser delivery

• Prevents negative connotations associated with “out-of-stock” scenarios when there is more demand than supply

• Immediately engages the first movers─ that are also the center of future influence on others─ into purchasing a premium high quality product

• Keeps your potential customers engaged, interested and willing to wait for the superior product when more supply becomes available and the price has come down to with-in their affordability or price/value perception range.
[The Trifecta or triple is a bet made in horse racing to pick the first, second, and third place horses in a race. The payouts for hitting the Trifecta can be astronomical.]

This premium price strategy is what’s called “gorilla” marketing… where you choke the demand to bring it in-line with supply… all at the same time increasing your overall profitability… and keeping the competition trapped in their comfort zone of lower prices and at bay.

Apple uses this strategy all the time, why not Microvision?

Microvision can always drop the prices in the future, as the supply catches-up with demand. In the meantime, this strategy allows Microvision to convert a bad situation into profitably good strategy… like making lemonade from lemons.

This is another example of creative imagination at work… that just happened to be so appropriate and timely.

Anant Goel