Global Marketing

Price Skimming: JBL

Prices are almost never the same in international markets and vary due to taxes, cost structures, local market needs, currency exchange rates, tariffs, and differences an abundance of situations. Even more so, prices are historically, vastly different in international markets, and the long standing trend will keep it this way. Across different industries, consumer products will most likely always have differences in prices, with even regional and local differences. Some of the common industries known for their differences in international prices are: automotive/cars manufacturers, software, phones, flights etc. Consumers notice these changes in prices and trust the companies market information regarding fluctuations, when notable changes exist. But international price differences are more good than bad. 

Changes in wealth, culture, age and almost all demographics prove that there is no consistency in willingness-to-pay. Rather, significant research and launch trials can conclude the appropriate price for your product. Some people are willing to pay more than $500 for a Bluetooth speaker; others only want to pay $50. The same really applies across nearly every product or service category. Therefore, JBL strategic market segmentation and product differentiation has met their different levels of customer needs and levels of customer willingness-to-pay. Even with minimal product or service differentiation, the price varies considerably, (JBL Flip 5, JBL Charge 5, JBL Clip 4, JBL Go 2). Consumers are willing to pay different prices in a single market, and the sound pricing strategy to address this is to have multiple price points for the same or slightly varied product/service.

JBL’s target market, both middle-class and rich class, are successfully served through its diversified product portfolio. The company strives to extend its customer range, making their speakers available and affordable for everyone. JBL has been able to provide the marketplace with numerous models and improvements since its original design with continuous innovation. In order to stay ahead of their competitors (Bose, Sony, Sonos, Beats), JBL has adopted a skimming pricing strategy for new products that it can generate revenues as early as possible. A skimming pricing strategy initially targets the highest paying customer, but lowers the prices over time with new models, discounts, and differentiation. most expensive speaker “Segment 1” costs about the same to make as their cheapest “Segment 4”. However, this graph shows that they can sell the product in a high WtP market and continually reach lower WtP consumers as they drop the price with new product launches. JBL uses this strategy to reach customers that value the product but have low WtP and will believe that the discount is a good opportunity to purchase. When the company slashes prices, or releases a new model, the marketing team must communicate this immediately to preserve revenue.

Not only does JBL offer price differentiation in local markets but internationally as well. The speakers are priced less in Singapore than in the U.S. For the JBL Flip 5, its currently prices at $119.95 USD and $119 SGD. Although the prices look the same, consumers in Singapore actually pay more for the JBL Flip 5 because they have one of the most expensive currencies.