Is new always better?
As we get closer to the holidays consumer electronics companies step up advertising and promotional activity until consumers become inundated with buzzwords and jargon that extols the virtues of each and every electronic device that is about to hit store shelves. If, by the end of the year you haven’t heard about a CE product or new device, by the time the Consumer Electronics Show (January 7, 2020) rolls around, you will. We don’t fault CE companies for trying to sell their products, as they have to do so to stay in business, but the reasoning behind some of those products can sometimes be despoiled by ‘over-enthusiastic’ marketing. We come from a lifelong background that has been deeply entrenched in the CE business, so it is relatively easy for us to see how easily things can go off the rails and how, just by repeating it enough times, companies can convince themselves that consumers must have whatever it is they have developed, regardless of whether it is a good fit or benefits the consumer.
Our case in point is 8K TV. It sounds good to consumers as usually eight of whatever is better than four of whatever, but we see it a bit differently and believe that pushing new technology too quickly, despite the knowhow to do so, can be detrimental to sales. This is easy to see when you go into a CE store and watch a consumer approach the myriad of TV sets available in those settings. Typically they wander a bit, and if asked if they need help, they ask for a bit of time to peruse. Salespersons will then move to their computer, tablet, or smartphone to check commissions on a variety of sets in anticipation of a potential sale. The customer wanders for a few more minutes, becoming progressively more overwhelmed by multiple brands, multiple technologies, and the realization that they really don’t know that much about what they are about to buy. At this point they search for a salesperson and the dance begins.
A good salesperson will ask at least a few questions before diving in to the nuances between brands, technologies, screen size, and lastly price, and this is when buzzwords start flying. 4K, HDR, UHD, Dolby (DLB) Atmos, OLED, quantum dots, and maybe even ‘AI’ float quickly through the air as the salesperson walks the customer past one set after another, and the customer’s now overloaded brain slowly shuts down. There are a number of cards that the salesperson can play at this point, but unlike the old days of CRTs, when you kept a TV for ten years and replaced it with another similar CRT, TV technology moves infinitely faster and ‘fear of obsolescence’ is the easy way for a salesperson to upsell a generic customer. “You are right, things are moving fast in the TV space, so I recommend that you keep one step ahead of the game and buy this 8K TV. Yes it’s more expensive, but you won’t have to replace it for many years, while those buying a 4K TV will see it outmoded in a short time”.
Perhaps we have oversimplified things a bit (not really), but as we watch these scenarios play out in Best Buys (BBY), Wal-Marts (WMT), and other CE retailers, we see consumers walk away from purchases far more often than expected, more often because they are intimidated or overwhelmed by potential offerings than due to pricing. Few TV set buyers want to feel that they have just made a substantial cash purchase that will be superseded by new technology in less than six months, with some still hiding an old plasma or 75 lb. 26” CRT TV in their attic or garage.
There is certainly a case to be made for what amounts to ‘technology stability’ in the TV business, although few on the product side will agree and the temptation to push ‘our’ new technology to stimulate sales in mature markets allows marketing folks the ability to produce PowerPoint presentations with charts with steep up and to the right curves, rather than those with mundane but more predictable growth. We understand that business is business and rapid growth generates bonuses, but if new technology is pushed out too fast for the average consumer, the reaction is to hesitate, and given that many CE purchases are quasi-impulse purchases (“I want to buy a TV but I don’t know which one…”) hesitation means a lost sale.
With slowing TV sales affecting even the fastest growing CE markets, perhaps a rethink might be worthwhile, and while a balance between technology advances and market stability is certainly a difficult one to find, foisting new technology on consumers way before it is necessary or even viable can have the effect of slowing the pace of sales by those in the middle of the sales pyramid, who keep the lights on at most CE companies. We pick on 8K as it has all the earmarks of a TV technology that was not developed because of consumer demand, but as a way to generate premiums in a market where consumers expect almost every new feature to be ‘free’ and very few consumers can discern the differences in TV set quality without having been told what to look for first. We certainly hope that CE technology continues to improve, but if you have to be told that something is actually better than what it seems to be, it’s probably snake oil.
Our case in point is 8K TV. It sounds good to consumers as usually eight of whatever is better than four of whatever, but we see it a bit differently and believe that pushing new technology too quickly, despite the knowhow to do so, can be detrimental to sales. This is easy to see when you go into a CE store and watch a consumer approach the myriad of TV sets available in those settings. Typically they wander a bit, and if asked if they need help, they ask for a bit of time to peruse. Salespersons will then move to their computer, tablet, or smartphone to check commissions on a variety of sets in anticipation of a potential sale. The customer wanders for a few more minutes, becoming progressively more overwhelmed by multiple brands, multiple technologies, and the realization that they really don’t know that much about what they are about to buy. At this point they search for a salesperson and the dance begins.
A good salesperson will ask at least a few questions before diving in to the nuances between brands, technologies, screen size, and lastly price, and this is when buzzwords start flying. 4K, HDR, UHD, Dolby (DLB) Atmos, OLED, quantum dots, and maybe even ‘AI’ float quickly through the air as the salesperson walks the customer past one set after another, and the customer’s now overloaded brain slowly shuts down. There are a number of cards that the salesperson can play at this point, but unlike the old days of CRTs, when you kept a TV for ten years and replaced it with another similar CRT, TV technology moves infinitely faster and ‘fear of obsolescence’ is the easy way for a salesperson to upsell a generic customer. “You are right, things are moving fast in the TV space, so I recommend that you keep one step ahead of the game and buy this 8K TV. Yes it’s more expensive, but you won’t have to replace it for many years, while those buying a 4K TV will see it outmoded in a short time”.
Perhaps we have oversimplified things a bit (not really), but as we watch these scenarios play out in Best Buys (BBY), Wal-Marts (WMT), and other CE retailers, we see consumers walk away from purchases far more often than expected, more often because they are intimidated or overwhelmed by potential offerings than due to pricing. Few TV set buyers want to feel that they have just made a substantial cash purchase that will be superseded by new technology in less than six months, with some still hiding an old plasma or 75 lb. 26” CRT TV in their attic or garage.
There is certainly a case to be made for what amounts to ‘technology stability’ in the TV business, although few on the product side will agree and the temptation to push ‘our’ new technology to stimulate sales in mature markets allows marketing folks the ability to produce PowerPoint presentations with charts with steep up and to the right curves, rather than those with mundane but more predictable growth. We understand that business is business and rapid growth generates bonuses, but if new technology is pushed out too fast for the average consumer, the reaction is to hesitate, and given that many CE purchases are quasi-impulse purchases (“I want to buy a TV but I don’t know which one…”) hesitation means a lost sale.
With slowing TV sales affecting even the fastest growing CE markets, perhaps a rethink might be worthwhile, and while a balance between technology advances and market stability is certainly a difficult one to find, foisting new technology on consumers way before it is necessary or even viable can have the effect of slowing the pace of sales by those in the middle of the sales pyramid, who keep the lights on at most CE companies. We pick on 8K as it has all the earmarks of a TV technology that was not developed because of consumer demand, but as a way to generate premiums in a market where consumers expect almost every new feature to be ‘free’ and very few consumers can discern the differences in TV set quality without having been told what to look for first. We certainly hope that CE technology continues to improve, but if you have to be told that something is actually better than what it seems to be, it’s probably snake oil.
Figure 1 - Clark Stanley's Snake Oil Liniment - Source: True Life in the Far West – 1905
RSS Feed