There is a wealth of information and expertise about branding in consumer markets, especially the packaged goods marketplace. However, significant emphasis on branding within the personal computer industry is a relatively new phenomenon. Although there are interesting comparisons that might be made, there are also significant differences between these markets, which need to be taken into consideration. The following figure, visually displays two dimensions which highlight some of those significant differences:
The Risk-Reference Concept
Consumer Purchase Differences
Inexpensive items do not require a complex decision process. If a consumer decides to try a new brand of soda, they don’t necessarily ask other people’s opinions about it, they simply buy it. If they don’t like it, they won’t buy it again and have wasted less than $1. On the other hand, if they need to have open-heart surgery they will find out everything they can about their surgeon (where they went to school, how long they have been practicing, how many successful surgeries, nurses opinions, any malpractice suits, etc.). The decision inherently involves much higher risk and they will seek a variety of references before making their decision.
High technology purchases most often are in between, involving much higher risk than a diet soda purchase, but much lower risk than open-heart surgery.
The key differences are:
- Value Received and Risk
- Segments and Sizes
- Specific Purpose versus General Purpose
- Repetition and Familiarity
- Technology Introduction and Adoption
- Obsolescence
Value Received and Risk
The significant differences in the levels of value received, and the decision risk, make references and reassurance much more important in high technology industries than in classic consumer markets.
Spending a few dollars on a new drink, or on most packaged goods, is simply not a very big deal. Awareness and trial are the most important elements involved in the decision process. As a result, any research or information collection should include not just direct consumer research, but also, other elements of the consumer’s information infrastructure such as trade and industry press, partners, distribution channels, and so on.
Segments and Sizes
As in consumer markets, high technology markets have a variety of segments. The difference is that the number of segments can be much higher and the segment populations that can be served by a product, product line, or brand are almost always lower.
The mobile computing segment is an example of a very highly segmented market, very diverse in each segments requirements, with relatively small populations in each segment.
The small segment sizes make it very difficult to target specific products to a single segment. Rather, groups of like segments need to be addressed by a single product, or line. Diverse requirements in these clusters make it very difficult to boil key elements of competitive differentiation (or silver bullets) down to two or three.
Specific Purpose versus General Purpose
Traditional consumer packaged goods have one dominant very specific purpose. Dishwashing detergent is rarely used to wash clothes in a washing machine. Bread, cakes and cookies are food, and rarely used to build houses. There are some creative consumer uses for packaged goods, not envisioned by product marketers, but they are the exception rather than the rule.
Computers produced in volume, especially personal computers, are general purpose rather than special purpose. As such their use and their purpose becomes determined by the solely by consumer. It also changes over time, from day-to-day, and during the day itself.
Depending upon the segment and this use mix, different key features/ themes (or “silver bullets”) are important. People who use notebook computers and travel frequently bifurcate along two basic types of use: those who want to be able to take their office with them (the road warriors), and those who want to stay in touch while on the road (the communicators). The features desired and the benefits received for these basic sets of use are significantly different.
Repetition and Familiarity
In the consumer packaged goods industry, consumption is repetitive and relatively frequent. Once a buyer is motivated to purchase, and likes the product, repeat purchases are very likely to follow. Such is not the case with personal computers, which are typically “retained” for five to seven years. Many things about the consumer, or user, change over this period of time. Travel changes, use changes, the company changes, and so on. As a result, their needs change significantly from one purchase to another in high technology markets. These same consumers, however, do influence other consumers who are considering the purchase of a product and become a potentially good, or bad, reference for the product or brand.
In those consumer markets like washing machines and automobiles, which have product lives similar to high technology products, there are still significant differences. In consumer markets, the use of the product still stays the same, as does its “form” (washing machines still look essentially the same as they did a decade ago) and its “controls” (what they do and where they are located. i.e. on a car, the gas pedal, brake, shift door handle, etc.)
In high technology products, the form and functionality change dramatically in a very short period of time. Personal computers can be used to tackle problems today, that weren’t even envisioned a few years ago.
Technology Introduction and Adoption
Another difference is that the pace of technology introduction is very rapid in our markets, often much faster than the consumers’ purchase cycle, as noted above. These enablers also modify how people use products. For example, multimedia is becoming pervasive although people are’t sure of what its long term best use will be, color flat panel displays have moved from luxury items to the mainstream market, and we are in the second generation of PDAs, even though the market segment is still in the innovation stage.
Obsolescence versus the Threshold of Utility
Another difference between high technology and consumer packaged goods is the risk of obsolescence. A high technology product is obsolete within months of purchase, if that long. Consumer goods have much longer lives of usefulness. Black, ABS rotary telephones purchased in the 1930s can still be used to communicate as effectively as modern touch-tone phones. Automobiles bought 50 or more years ago can still be driven at highway speeds and provide the same basic functionality today. Black and White TVs can still be used to receive today’s programs.
An original IBM PC purchased in August 1981 still performs today, at the same specifications it did then. The difference is that it cannot run the applications, and do the things people want it to today. Microsoft’s 1984 advertisements to the contrary, the 8088 processor will not run Windows.
High technology products eventually drop below a “threshold of utility”. They don’t really wear out, or break that often. The products simply, no longer let people stay as productive as they need to be or do the things they want.
There are certainly areas of similarity between consumer packaged goods and high technology markets (for example considerations of style, “look and feel”, image, prestige, etc.), but the differences summarized above are critical to understanding the right approaches to penetrating high technology markets.
