“Discounting during this time was used much more strategically to target specific products and categories, where there was an opportunity to create incremental demand or gain market share versus the normal focus of using promotions to create demand.”
PORT WASHINGTON, N.Y. (PRWEB) March 11, 2021
In a year during which many Americans relied on technology products to keep entertained and connected – to family, friends, work, and school – the U.S. consumer technology industry saw a historic 17% uptick in sales vs. 2019, according to The NPD Group Retail Tracking Service. High consumer demand, supply constraints, and cost increases led the industry to downshift the level of consumer electronics promotional activity from April- December 2020 compared to the same time period in 2019. This resulted in a four-point decline in the number of CE units sold on promotion from 39% of total units sold in 2019 to 35% of total units sold in 2020. [1]
While that decline might seem small, a recent NPD Price and Discount analysis reveals that the biggest shift was in the level of discounting that occurred. High demand categories, such as TVs and PCs, where promotion is often a driver of marketing and demand, not only saw a decline in the number of products sold on promotion, but a significant shift to lower discount levels than in the previous year.
For TVs the total share of sales on promotion dropped from 60% of volume in 2019 to 29% in 2020. But even more crucially in the largest screens we also saw a decline in the depth of the promotion. In 2019, 81% of TVs 60-inches and above sold on promotion saw a discount of at least 10%, but that percentage dropped to 67% in 2020. Similar trends were observed in notebooks where the $500+ class saw a decline in promotional depth, with the total number of items sold with at least a 10% discount declining from 78% of promotional sales to 70%. The shift away from more aggressive promotions, combined with a sales mix favoring premium products, resulted in a 3% increase in the average selling price (ASP). In the under $500 notebook segment, where promotional volume share fell from 60% to 32%, the ASP for a promoted product increased more than 10%.
“Interestingly, products that were promoted saw ASPs rise as the level of discounts declined and consumers chose to trade-up to more premium products,” said Stephen Baker, vice president, industry advisor for The NPD Group. “Discounting during this time was used much more strategically to target specific products and categories, where there was an opportunity to create incremental demand or gain market share versus the normal focus of using promotions to create demand.”
[1] Source: The NPD Group, Inc., Price and Discount Trends, April- Dec. 2020 vs. April- Dec. 2019. Promotion defined as having sold for >5% below full price. Consumer Technology categories included: home theater audio systems, LCD TVs, monitors, notebook computers, shelf systems, solid state drives, sound bars, stereo headphones, streaming audio speakers, and tablets.
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