Xbox One Price Drop

Week Beginning: 02.02.2015

Microsoft lowered the price for their latest console, the Xbox One. The original price was $399 and was reduced to $349, which is a $50 discount. The company explained that it was thrilled to have a “record-setting holiday”. On Xbox Wire, Microsoft announced that their most popular console is now available for the special price of $349. Adding to that they wanted to thank their customers for the excitement over their products and are happy to offer their fans the amazing games line-up, Xbox Live gaming community, and the continuing innovated products by the company which many customers seem to enjoy. Furthermore many people argue if the discount is for a limited time frame or if the prices will stay so. It was announced that the prices will be lowered from the 16^th of January 2015, but there was no final ending date announced. On the other hand people discuss that the temporary price drop was done to give momentum to their sales picked up from the holiday season. Although Microsoft has received a huge amount of publicity through this decision, the Xbox One sold with Kinect bundle remains at the same price for $499. Microsoft has had a better sale performance during the critical season for retailers. Figures show that the company has sold more games in November and December in the US than others. Further on fans logged in more hours playing the Xbox during this holiday than before, due to the strong game line up. Lastly Microsoft focused very much on the customers’ feedback they received since last year, which was very helpful for product development. All in all 2015 will be a great year for gamers, Microsoft and their Xbox.

Last week in Business Management we discussed Price of the Marketing Mix. This article refers very well to this topic as they are different Pricing Strategies to increase the sales of a company/product and make more profit. Microsoft is definitely using pricing strategies, because as they stated they need to have a “record-setting holiday”. One strategy that is used would be Skimming pricing, as the company set a high price at first and only  gradually reduced the price for this product. Looking at competitors this pricing strategy works, because the organization always seems to lower the prices for the Xbox One during the holiday season, from which they also benefitted in November and December (Black Friday/ Christmas). Adding to that Psychological Pricing is also done to some extend as the price for the console is always a 0.9 to make the customer think it is sold at a lower/cheaper price.

Furthermore this links to Strategy of the CUEGIS, because Microsoft is using a strategy (pricing strategy) to increase their sales and maybe even to become the market leader for gaming consoles. Although they are not yet the market leader their stategy resulted in great sucess for the company and made the sales increase immensly ever since. It also links to Change of the CUEGIS as it is change of price and therefore also a change for the company. By changing the price they are hoping that more gamers buy the Xbox One. Also now as Valentine’s day is coming up some people might think about buying their loved ones presents, which explains why they want to achieve a “record-setting holiday”.