In what must come as no surprise to most consumers and manufacturers, brand loyalty isn't what it used to be. With the CE marketplace supersaturated with ever-cheaper products from unknown manufacturers, consumers face an overwhelming number of choices. Product life spans -- even from vendors that are household names -- have grown absurdly short; just take a look at home many digital cameras are introduced each year and how that has changed since the analog days. When SLR meant a state-of-the-art camera, product introductions were annual (or just slightly more often).
Today, when products break, the repair costs often exceed the cost of simply buying a new replacement product. In this type of marketplace, it's no surprise that both savvy and jaded consumers increasingly buy on price and features alone.
The net net for manufacturers: How to leverage brand recognition to retain customers when commodity goods are everywhere you look?
According to ABI Research in its recent “Residential Entertainment Technologies Research Service” (available by subscription), neither technology nor brand is a differentiator any more, and vendors treat long-time customers exactly the same as new ones. Locking customers in with proprietary formats may work in a new market, but it won't fly in an established market.
New Ideas for the New Dynamic
One way that CE vendors can increase loyalty is by creating what ABI is calling “trade-in channels,” which allow consumers to return their used goods for a discount on the purchase of a same-brand replacement – an idea that not only helps retain customers, but also serves the create the flow of recyclable parts for use in remanufactured or new lower-end products.
Another suggestion is to extend product life with upgradeable designs and updates to software, drivers and applications. Once consumers realize that if they stick to one set of brands, their products can have life-cycles longer than six months, they will become more like continuous subscribers to magazines or online services. The majority of low-end, new-brand vendors could not offer this concept because they don't have the R&D budget or the marketing clout necessary to make it happen.
It will be interesting to see if any manufacturers move either of these ideas into the marketplace anytime soon. Both ideas have merit; just look at how home video game trade-ins have gained traction recently, with stores like EBGames drawing flocks of gamers looking to trade in their old and tired games for newer ones (and the same with Blockbuster with movies). The subscription-based concept ties in nicely with an overall drive toward subscription services in many markets, whether for music downloads, DVD rentals, cable TV, TiVO, computer software, newspapers or magazines.