60% of consumers are more interested in products’ core benefits and attractive prices — exemplified by netbooks — than in often-unused bells and whistles.
While there will always be high-end buyers willing to pay premium prices, there is an attractive emerging market for easy-to-use consumer electronics products, with features that reflect user demand, priced 30 to 50 percent lower than standard offerings.
What’s driving the growth of the basics market?
First, consumers are overserved. This survey showed that less than a third of the respondents actually used all of the advanced features that manufacturers pile into their televisions, video cameras, mobile phones, and other products. What’s more, less than half of the respondents even knew these features existed (Exhibit 3).
Second, people value lifestyle benefits over technical capabilities. Among respondents who owned a Flip camera, for example, 90 percent liked it because it is lightweight, easy to carry and use, and “lets me share memories with family/friends,” while only 60 percent said that video quality was important.
Third, consumer-friendly products are gaining traction as new tools make it easier for people to compare products and provide feedback. Consumers seeking simplification rather than overspecification can read online reviews: current users are becoming powerful advocates for products via word-of-mouth.
Finally, the recession has accelerated the flight from expensive, high-end products. This mind-set shift seems unlikely to be reversed even when the global economy improves, and the underlying demographics in most developed economies point to thrift, not frivolity.
So, if I read this, this is key to have a consumer centric approach (strating from the consumer needs) and not a product / tehnology centric approach (strating from new features). Once the offer is there, I believe this is key to come with a story telling focusing on consumer needs as consumer friendly (easy to use, not complex), lifestyle benefit (“sexy” product, easy to carry, …) and other practical benefits ‘(durability of netbook seems to be more important that quality / performance of features)
So, this means that the manufacturers have some challenge :
First, they must rethink their approach to product development, moving away from efforts to push the limits of technology and focusing instead on features users really want. Our research found, for example, that durability was by far the most important aspect of quality for most consumer electronics customers.
Second, competing in the basics market also requires manufacturers to reduce their production costs significantly so they can offer products at prices as much as 50 percent lower than those of their regular lines.
Finally, companies should ensure that the value of existing brands isn’t diluted and that sales of higher-priced products aren’t cannibalized. New pricing and promotion strategies will be required to make value-oriented customers aware of these new offerings.
To read more on this Mckinsey survey, just click HERE