The Fear of Buying Technology
Today’s technology consumer is faced with a no win situation. The planned obsolescence model of the 20th century, in which manufacturers made products that would wear out and need to be replaced, has been, well, replaced with a model in which products become obsolete long before they break. In the PC business the cycle is about 12 weeks! This rapid upgrade cycle frustrates customers and is stifling purchases in certain categories, especially among older customers. The NY Times has an interesting article about the fear of buying technology:
“There is a fundamental shift that is taking place,” says Samir Bhavnani, research director at Current Analysis, a market research firm. “People thought a product would last 10 years. They keep it three years. They upgrade their cellphone every year.”
The frustration and tendency to delay purchase is compounded by the rapid race to the bottom in terms of price. The TV you would have paid $3000 for last summer, dropped to below $2000 this past fall. If you bought it then, you probably felt good; that is until you saw the price this past Christmas.
“But this new form of obsolescence can stymie the consumer because it makes little sense to buy now if the product will be cheaper tomorrow. Knowing when to buy becomes as important as knowing what to buy… Mr. Axtle, who already has a 51-inch Sony flat-panel TV in his “entertainment room,” thinks of TV like he did PCs more than a decade ago. “You’d get the most money could buy,” he said, but it wasn’t enough because the technology changed so quickly, making the PC obsolete in only a few years. “You couldn’t hope to get ahead,” he said.”
This trend is expected to continue through 2007, frustrating both customers and CE retailers. CE retailers should look for strategies that either take advantage of the new model, like encouraging customers to use the lower prices to replace more than just the family room TV; or they should look for ways that provide alternative products and services that minimize the negative effects of the new model.