After price competition

Abstract

When a market grows and matures so that its product becomes commoditized, we can usually expect product prices to decline due to price competition. However, in the digital camera market, although prices started to decline after they first went on sale, camera prices then began to rise. This was not because mass consumers shifted from the low-priced segment to the high-priced segment. Prices went up across all segments of the market. (A) In the low-priced segment, companies making low-priced products exited the market, and the remaining companies raised their prices by focusing on higher-quality products. (B) In the higher-priced segment, the number of major makers started declining, and prices steadily rose because products priced close to the highest-class products were released into the market. (C) In the mid-priced segment, two types of companies entered the market: companies in the low-priced segment that had developed higher-quality products and companies in the high-priced segment that added mid-priced products as alternatives.