The Power of a Strong Brand Ecosystem
High-tech companies today are competing more and more aggressively with each other to grab a share of customers' wallets. These companies favor a "big bang" approach, where every product launch has to start off with a bang. If products like the HP TouchPad are any indication, anything less than iPad/iPhone-like sales figures are deemed a failure.
Take a look at the impact such a blockbuster product life cycle has on the different players in the high-tech space and how these players are changing to meet the needs of today's business environment.
When it comes to bringing a product to market, there are a host of players involved in the value chain. They can be put into the following categories:
- Brand Owner: Owns a recognized brand name easily identified by the masses; usually handles the marketing function of the end product
- OEM: The manufacturer, who actually produces the product for the brand owner; can also be a brand owner
- Component Suppliers: Provide any number of components to the OEMs
- Resellers/Partners: Handle the distribution of the end product in a specified geography; can also act as a go-between for the OEM and component suppliers
How Are These Players Adapting to the New World?
To stay ahead, you need to stay relevant to the customer. This becomes simpler if you are able to tie the customer to your products and ensure that users get everything they need from your ecosystem. Tying the customer to the product ecosystem is the product strategy being followed by the brand owners.
While Apple looks to tie the user to its ecosystem by controlling both the software and the hardware, Google has spread its reach by offering its Android software to hardware brand owners/OEMs for free, thus enabling the rise of a great alternative for Apple products.
The OEMs and the component suppliers look to ensure that the goods manufactured by them are consumed, and that they are left with as little inventory as possible. Toward this end, they are increasingly tying themselves closer with the brand owners in seeking direct feedback from customers and taking up joint product development along with the brand owners so that risk in case of failure is divided equitably.
Tying a consumer to your ecosystem also has a positive effect on the promotion of a new product. With an established brand, since the market at large is already familiar with the name, the effort required to develop familiarity with the user is minimal. Thus the emergence of Samsung's Galaxy and Wave products, Apple with its ‘i' prefixed offerings, and Sony with its Vaio, to name just a few. Since, in these examples, brand familiarity is not a concern for marketers, they concentrate on a single theme on which to promote the latest offering. Hence, the Galaxy S III or the iPhone 4S campaigns talked up what their products offer, and not what the products are.
While Apple has so far preferred to stay at the premium end of the market and hence has a premium pricing strategy in all its product segments, the other players have looked to position themselves at other price points while still having a premium product at the top. This helps in promoting aspirational buying. (Consumers impressed with a brand's lower-priced projects may eventually decide to opt for a higher-priced purchase.) Also, a lower price point helps cultivate a younger user community, and hence has more chance of developing a loyal and longer lasting relationship. Another benefit of being at a lower price point is the increased adoption of products in markets with lower disposable incomes.
When building to a low price point, the suppliers would typically look to cross-sell their products to ensure efficient utilization of the manufactured goods. Thus, suppliers who have built up scale find it easier to survive and remain profitable when looking to build to a price. The channel partners in a particular geographic area have a good knowledge of the local market and hence are in a better position to handle distribution than the brand owners. In a competitive market, a partner typically likes to ensure that the risk due to product failure is kept to a minimum. Hence, they look to negotiate with brand owners/OEMs to ensure that the upfront payments made to the OEM are as low as possible. This is a departure from the traditional practice of the channel partner buying in bulk at a lower price or receiving discounts based on the sales volumes generated. The brand owners themselves look toward launching products in "sure-shot" markets and then staggering the launches globally. This not only helps in early feedback, but also helps build up expectations amongst early adopters/new users in other markets.
All players in the value chain are increasingly becoming involved in the social marketing efforts of the brand owners, as no other medium offers direct feedback from the end user to these companies. These mediums also act as effective, inexpensive, knowledge management solutions due to the collaborative nature and huge diversity of the user base present. This is also a faster way of gauging the customer mood and is often more useful for a supplier than the feedback received via OEMs or brand owners.
After sales, service is where the game has changed completely. Market players are responding with alacrity to user issues, but more importantly are ensuring that they are seen by the users as doing so. The credit for this goes to the increased proliferation of social networks. The user today can avoid talking to the organization directly, while influencing a significant number of users for or against a product. Hence, an organization is willing to go the extra mile to ensure user satisfaction. Case in point was the way Samsung responded to a Galaxy SIII burning in a user's car. The company was proactive in getting a communication out early to ensure prospects/users were well informed while it worked with its partners to find out the root cause of the issue. When the cause was found, that, too, was well publicized, and it helped Samsung even more than if no product defects were found as a result of the investigation.
Now that we are seeing the older players getting ready to take on the market leaders and looking to adopt similar tactics, things can only get better for the end user. Who will succeed? Only time will tell. What we do know for sure is that the high-tech market is going to get more and more interesting for users as well as industry watchers.
Nawal Sharda is a CRM consultant with the consulting and systems integration unit at Infosys He has six years of experience and has worked on CRM transformation projects with customers in the telecom, banking, and manufacturing industries.
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