Weblog Consulting Register Login Subscribe to Free Influx Emails Join our Facebook Group Branding Street Cred Technology Lifestyle Style Entertainment Interviews Art InfluxTV Map Widgets RSS — All Subjects RSS — More Feeds

Search

Advanced Search

Contact Privacy Policy

Electronic technology innovators used to have a lead-time right after launching their new gadgets, when they could sell at a premium price to early adopters. These companies could rest comfortably knowing that, in a year or so, they could lower the price and sell that technology to the much more profitable market majority who would presumably be waiting. But things have changed.

A recent New York Times article discusses Gateway's popular 42-inch plasma TV screens that are selling for $2500, whereas other 42-inch plasmas cost over $6000. How do they do it? With inferior electronics: the Gateways aren't true HDTV sets, they have fewer pixels and are called 'Enhanced Definition' (EDTV.) But the catch is that to an untrained eye, they look just like the $6000 sets on a living room wall.

This is just one of many cases that demonstrates the way consumer electronics companies are all drawing upon the same sources (companies in Asia to whom they outsource R&D and production development) and so no-name companies can bring to market hugely discounted imitation versions of the latest technologies while the big brands are still skimming off the early adopters with premium prices. Thus Gateway (which threw their brand name onto a product developed by an overseas manufacturer) is taking a huge chunk out of the majority market, the people who want the prestige of owning a plasma screen, but wouldn't consider paying $6000.

What does this mean for consumer electronics brands? The initial launch lead time can't be taken for granted. There are two solutions we see to this dilemma. The first is that innovator brands must create a proprietary design the way Apple has done with ipod. Then they must link the brand and product with the design in the pre-launch marketing and make it stick. The second is that they must communicate the value of the guts of their devices in a preemptive move so that when knock-off products with inferior inner electronics come to market, the consumers go to the stores asking the precise questions that will bust the knock-offs. Make those distinctions among the core values of the product category in the pre-launch marketing communications all the way through to retail promotions.
NY Times article entitled, 'Prestige or Pixels?'
Forbes article entitled, 'ANALYSIS-Falling prices threaten digital electronics profits'
Plasmas to be sold at Walmart within the month