:::: MENU ::::

Product Portfolio and consumer behavior: Are product variants confusing the target customers?

I’ll directly come to the point in this post. I believe that companies who follow the strategy of viral reproduction of self-competing products are actually digging their own graves. Their move to reincarnated  a variant do two things in the market. First, it conveys a message “what you bought is inferior and outdated” to the newly engaged customer. Secondly, it drastically reduces the resale value of the product. And the end result is unhappy customer.

Limitations: Here the idea is only applied to consumer products for whom the demand is generated and may not be applicable to ‘survival products’ such as soaps, bread etc. Thus, the products we talking about are all lifestyle products—Smartphones, Cars, Clothing, High-end TVs, DSLR Cameras, etc.

What I meant when I said ‘self-competing’ products is introduction of products which are similar but with slightly advanced or improves features. Also, these products which have relatively very little difference in introduction age (or time).

Let’s start with smartphones. Apple announced that they’ll come out with an iPhone in 2007. From 2007 to 2011 (4 yrs) they came out with 4 variants in total–1st generation, 3G, 3Gs, and 4. So in total 4 models came out in about 5 yrs which means an average gap of 1.25 yrs between the variants. This 1.25 yrs age difference brings in amazing advantages. Few of them are as follows-

1) 1.25 yrs is a good period for a consumer to cause decent amount of physical and aesthetics damage to a phone. Interestingly, 4% of the customer broke their glasses within 4 months[1]. Thus by the time a new variant is released, consumer is ready and willing to buy the new one.

2) 1.25 yrs period closely matches with recontract eligibility of 1.5 yrs for many telecom operators. So you make a small upfront payment and you get a new phone! Isn’t it lucrative? And again Apple gets a share from the operators.

3) And the most important part, 1.25 yrs is a good period for an average individual to get well-versed with the exiting technology and can easily move on to the to newer technology.

On the other hand for Android OS, Samsung came out with 13 sets within 1.5 yrs, Motorola 18 in 1.5 yrs, LG 11 1.5 yrs. On average they were  launching a new set every 2 months!![2].

Hardware wise most of them are similar, and the only difference other than the OS is the screen size, button placement etc. Although it may sound a good move to cover the whole spectrum to meet people’s needs, if one looks at it from customer’s need perspective then there is more confusion than convenience in these many choices. For e.g., I could spot 4 models with the flagship ‘Galaxy’ brand when I visited a Samsung store yesterday here in Singapore. It was quite a mental exercise to figure out the difference between them. In Samsung’s case the average difference in time of launch can be easily be taken as 6 months. Considering Samsung and Apple as a competing hardware manufacturer and iOS and Android as equally good OS, the only factor which is contrasting is the mean-lifespan of 1.5 yrs vs 0.5 yrs.

Could this also be the main reason for such a huge difference in brand image of Apple and Samsung?

Leave a Reply

Your email address will not be published.