MD Sales Increase 10-Fold in Test Markets

An article from the November 11 issue of TWICE (This Week In Consumer Electronics)

Sony cites 10-fold increase in MD sales under program

Sony MiniDisc sales have jumped 10-fold in markets where the company is conducting its experimental MD advertising and promotion program, said senior marketing VP Mark Viken.

The program focuses on the format's digital recordability. In previous campaigns, "recordability wasn't coming through," Viken said. "When you probed, consumers didn't get the point. They assumed we were trying to replace their CD collection."

In Sony's first two test markets -- Austin, Texas, and Rochester, N.Y. -- sales rose 10-fold compared to the previous 12 months' average selling rate, said Viken. In the first three weeks of the program's October 7 expansion to the Atlanta, Chicago and San Francisco markets, he added, "sales are running above the 10-times rate." The New York City campaign kicked off October 15.

In those four markets, Sony altered the media mix based on results in the first two markets, Viken noted. The changes include the placement of ads in the regional editions of national magazines rather than in newspapers. The magazines include Rolling Stone, Entertainment Weekly and Sports Illustrated.

Sony also added a second radio spot to create "a bigger feel," the marketing VP said. Dealers also support the campaign in their own advertising.

The campaign promotes bundles of MD product available nationwide, including a $599 bundle that offers a home recorder, play-only portable, and two blank MD's. An $899 bundle consists of a home recorder, in-dash MD-receiver/changer controller, and two blank discs.

Also to stimulate sales, Sony reduced the price of blank software for the second time this year. A 74-minute disc went to a suggested $8.99 from $9.99, and a 60-minute disc went to $7.49 from $8.49. Earlier this year, the prices had been $16.99 and $13.99, respectively.

The Austin program is continuing "to see if sales go to a new level," and although the program in Rochester has concluded, "sell-through has held up pretty well," Viken said. Later this year, Sony will evaluate a nationwide launch of the program, but whatever the decision, the program "will be much bigger in 1997."

Viken cited "production efficiencies" for declining hardware and software prices. About 3.5 million hardware units will be sold worldwide in 1996 compared to 1995's 1.2 million, he said, and blank disc sales rates are 10-to-1 compared to hardware sales. >>

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