17-Low-End Competitor Exposes Fundamental Strategic Errors of the Leaders

A low-end competitor rarely stays at the low end. In 2008 Vizio exposed the leaders’ errors by working under their Price Umbrella. Eighteen years later the story has new endings. Walmart, Vizio’s biggest retailer, now owns it. Sony, once a leader, has signed binding agreements to hand its television business to a company 51% owned by TCL. Samsung is still the largest brand in the US. All of this plays out in a Hostile Market. Read the 2026 Update with that in mind.

Posted 5/1/08

Low-end competitors don’t think like industry Standard Leaders. As a result, they often blow big holes in the leader’s plans.

For twenty-five years, from the early 70s until the late 90s, the color television manufacturing market was one of the worst places on Earth to compete. Those companies who did survive, and there weren’t many, became hard-bitten competitors with no illusions about the inevitability of success of even the largest companies. The two largest U.S. competitors, RCA and Zenith, are now nearly-forgotten names. GE was another titan victim of the inexorable pressure of intense price-based competition.

But then something magic happened to the industry, the advent of flat panel television. The prices for these televisions were ten to twenty times that of the average consumer television before the introduction of flat panels. The industry survivors got well in a hurry. They went from poorly performing companies to stock market stars. They could sell more than they could produce. Profits were high and the future seemed bright.

The best of the industry Standard Leaders in the flat panel business included Philips Electronics, Sony and Samsung. These companies built their business model in the world of a component parts shortage by creating their own proprietary technologies and by manufacturing many of their key components in their own factories.

But then, these leaders held on to the proprietary business model too long. The demand for these flat panel televisions and the components that go into them was so high that independent manufacturers entered the market. Soon these independents had created economies of scale that were actually better than those enjoyed by the current industry leaders.

Now, there emerges another threat to the leaders’ business model. This time it is a market threat in the name of Vizio. This company entered the market at the low end, producing basic products for prices often one-third or more below those of the industry leaders. In a very short period of time, Vizio went from barely existing to control of 12.4% of the LCD TVs shipped in the domestic market. Sony had 12.5% and Samsung had 14.2% at the same time.

Where did Vizio find its market? At the low end of the distribution channel. The company started with Costco, who gave it its real foot-hold in the market. On the basis of that success, Vizio expanded its distribution into other low-end retailers, such as Wal-Mart’s Sam’s Club and BJ Wholesale Club.

The result has devastated the new-found wealth of the large TV manufacturers. Flat panel TV average prices fell 24% during 2007 and the large manufacturers are seeing trouble in their profit margins. But Vizio continues to grow.

What did the industry leaders do wrong? There are at least five lessons here. First, they let economies of scale get away from them by watching independent manufacturing companies gain better economies of scale. Second, the leaders then failed to use those lower cost component companies to source some or all of their needs. Third, they priced their products for the short term, rather than the long term. They provided an umbrella on pricing (a Leader’s Trap) that allowed low-end competitors to under-price them by more than 25%. They have sustained the umbrella over these fast-expanding competitors, who continue to use those profits to build even stronger businesses to compete with the leaders. Fourth was a Price Point problem. See the 4 Price Points HERE and HERE. The industry leaders paid little attention to the smaller versions of the LCD markets. Because the leaders short-changed the low-price points of the market, they also encouraged companies like Vizio. Fifth, the leaders served the low-end distribution channels poorly. Vizio has gotten its traction from channels of distribution who emphasized the low end of the market. Vizio and their ilk could never have succeeded to this extent were it not for the fact that the industry leaders served those channels of the market poorly.

Now the industry leaders are paying the price with falling margins. The battle to beat back Vizio will be much more difficult now that the company has become so large.

We have seen a leading company make these same five missteps before. Compaq trod this pathway in the very early 90s. They allowed the PC “clone” manufacturers to use the Vizio strategy to take share. Eventually, Compaq dropped its prices to those of the “clones” and revamped its management of costs. But too late. Dell was one of the “clones.”

For more information about the types of low-end competitors and how to combat them, see “Turmoil Below: Confronting Low-End Competitors” on StrategyStreet.com/Tools/Perspectives.

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2022 Update:

The intervening 14 years have seen the emergence of Samsung as the clear market leader. Surprisingly, two other aggressive price competitors have also emerged as industry leaders. There still seems to be opportunity at the lower end of the market. Sony is fading away. This market evolution is proving that an industry leader needs economies of scale and must use them aggressively to remain price competitive, even in a fast-growing market.

In 2021, Samsung was the market leader in the manufacture of TVs in terms of its share of global shipments. By then, Samsung had led the worldwide market share for TVs for 18 years. Samsung had the largest market share with about 21%, followed by LG with about 19%, and TCL with about 15%. Vizio was also a significant player in the market with around 12% market share. Other manufacturers such as Sony and Panasonic also had a presence in the market, but with smaller market shares.

TCL has built a reputation for making affordable TVs loaded with streaming smarts. The Chinese brand, despite budget prices, doesn’t scrimp on features

Vizio ranks fourth in market share at 12%. Both Samsung and Vizio offer great quality products. Samsung is almost unbeatable in terms of screen quality, audio, and usability. Vizio delivers good products with excellent screens at very competitive prices. By 2019, Sony’s market share had dropped to a dismal 4.2%.

Industry leaders who served big-box retailers, such as Costco, poorly made a strategic error. In 2022 these retailers were important customers. See HERE for perspective on segmenting customers by size.

When prices fall in a marketplace, the astute company adds more complexity to its pricing process. This involves some pricing segmentation and greater use of the four major components of a price. See more HERE. You can use our many pricing concepts and examples to brainstorm improvements for your own company.

Leader’s Trap Examples – StrategyStreet.com

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Posted 10/17/26

The color television market is in a period of radical change. We are in the middle of it now. The industry will look very different 10 years from now. Unfortunately, some of the leaders of today will not be around. What we are seeing is a replay of the color television market from the 1980s, where the Japanese gradually eliminated the major US manufacturers. This time the Chinese are the eliminators.

Take a look at the market share table below. It lists the top 10 competitors in 2025 and compares their market shares in 2015 and 2025. The table shows a de-consolidating market. In 2015 the top four competitors owned 76% of the market, the top ten held 93%. By 2025, the top four competitors held 66% of the market while the top 10 held 89%. The market has spread out. Except, it carries an important message. Leadership is shifting. The market also fits the test of a Hostile Market: unit shipments were roughly flat in 2025 (TrendForce estimates a decline of 0.8% worldwide) and price competition is intense.

There are three separate groups of strategic competitors in this market. First, there are the premium priced, Function and Reliability leaders: Samsung, LG, and Sony. Their combined market share has fallen by 13 share points over the last 10 years. The biggest loser was Sony. On March 31, 2026 Sony and TCL signed binding agreements to move Sony’s television and home audio business into BRAVIA Inc., 51% owned by TCL, with operations expected to start in April 2027 subject to regulatory approvals. Message: new Functions and top brand names are losing their relative value for customers.

The second group are Predator companies whose strategy offers high Functionality for low prices. This group includes Hisense, TCL, and Vizio. Vizio is no longer independent. Walmart completed its $2.3 billion purchase in December 2024, so the largest big-box retailer now owns a Predator and sells it alongside its own onn brand. This group saw their share increased by 12 share points, though Vizio was a significant share loser. The other two (Chinese) companies were the big winners gaining a combined 19 share points. Message: the market thinks that low prices are more valuable than the very top of the Function and brand (Reliability) products. The price gap is unsustainable.

Reliability in the form of a solid brand name is still missing for most of this group. In a Tom’s Guide survey of brand preference, shoppers ranked Sony first at 32%, against TCL at 11%, Hisense at 6% and Vizio at 1%, and TCL’s own executives say they want to elevate their brand value. Until a Predator earns that trust it stays a Price Leader near the bottom of the Customer Buying Hierarchy. The risk runs both ways: if Sony’s quality or service slips during the transition, or buyers come to see BRAVIA as a TCL product with cost cutting, the Reliability that Sony brings will erode.

Is the combination a Next Leader? Not yet. A Next Leader offers much better than standard performance at a low price to a specific customer subset, made possible by a low cost structure. TCL has the cost structure and will have the brand in April 2027. What is missing is a unique Function the combination offers, for example Sony picture processing on TCL-group Mini LED panels in large screen sizes at a TCL price. No such product exists yet, and Samsung, LG and Hisense are launching RGB Mini LED sets of their own. For now TCL is a Price Leader adding Performance Leader products, the path described in Blog 15.

The third group includes a lot of cats and dogs offering fading brands, limited price discounts and minor Function or Convenience innovations. This group lost three share points over the last 10 years. Most of them had little share to begin with. Message: these companies are all fading away in the color television market. Their future is bleak.

Brand	2015 US Market Share (%)	2025 US Market Share (%)
Samsung	~32	~28
LG	~18	~16
Sony	~12	~5
TCL	~2	~12
Hisense	~1	~10
Vizio	~14	~7
Panasonic	~5	~4
Sharp	~4	~3
Insignia	~3	~2
Philips	~2	~2

 

Note: the table does not show onn, Walmart’s private label. In 2023 TrendForce put onn at 13.7% of the US market, second only to Samsung, and Vizio at 10.4%.

Cost Structure has a risk factor the table does not show. Omdia reported in April 2025 that about 65% of TVs sold in the US come from Mexico, which favors Samsung and LG over Asian-sourced brands such as Vizio. The US declined to renew the USMCA on July 1, 2026, and a 10% Section 301 tariff on non-USMCA Mexican goods began July 24, 2026, so Mexican sourcing is now a risk to the Cost Structure rather than a settled advantage. Swings in panel and memory prices add to the pressure.

We have watched this movie before. In the 80s and early 90s, Japanese producers gradually wiped out the top American color television manufacturers. These manufacturers followed the same strategies that mark Samsung and LG today. They were the Function and Reliability leaders of that era’s color television market. The Japanese came along with high Functioning products at low prices. As the market shifted to the challengers, it recognized the high product quality of the Japanese. Eventually the Japanese enjoyed the Function, Reliability and Price leadership in the market. It appears that the Chinese competitors are about to capture a growing share of the market by following the strategies of their earlier Japanese competitors.

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Quick Hits

Five patterns from the StrategyStreet system this story confirms.

1. The real strategic effect of price is to discourage competition. A price serves many purposes for management, including signaling value and managing margins, among others. However, its sole strategic effect is to discourage competition, because potential entrants cannot earn a good return by entering the market. In the 2020s and the 1980s, the industry leaders ignored that effect.
2. Sony shows that a Leader’s Trap can destroy a company over time. A Leader’s Trap is slow. Sony’s US share fell from about 12% to about 5% in ten years, and in March 2026 it signed binding agreements to put its TV business into a company 51% owned by TCL.
3. Brand trust is the gap Predators still have to close to become Standard Leaders. Reliability sits second in the Customer Buying Hierarchy. In one survey Sony led brand trust at 32%, while TCL had 11% and Vizio 1%. Low price alone has limits.
4. Better Function at a low price is not yet a Next Leader. A Next Leader needs something unique. TCL has the cost and will have Sony’s brand in April 2027. It still needs product features no one else offers. Furthermore, the unique Function benefit must have some staying power.
5. Shrinking leaders are a market signal, not just a share story. The top four brands fell from 76% to 66% while two Chinese Predators gained 19 points. Add flat unit sales and heavy price competition, and the market is a Hostile Market. Leaders in such markets cannot wait out the discounters. The industry leaders are choosing to fail by keeping their prices high and giving up share.

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