"Nobuyuki Idei, the former chief executive of Sony Corp., said that Japan's consumer electronics industry was dying and called for companies to adapt to new consumer demands."
— Los Angeles Times, Oct. 10, 2006
Wow, that's pretty heady stuff from the recent head of one of the premier CE companies. Idei made those remarks to over 500 technology executives and venture capitalists at ENTRE, a technology conference in Barcelona, Spain.
In fairness, Idei-san also said Japan's CE business can still be turned around, assuming the industry makes fundamental changes in the way it operates. In my opinion, these changes are not only required of Japanese companies but all CE enterprises including manufacturers and retailers.
Based on my extensive field-based research for clients, here is what I think should happen:
Focus on the message. The CE industry already has more technology than it knows what to do with. What we don't do well is explain the value of that technology to consumers. Most consumers ask themselves "Why do I need or want this product?" The industry must answer that question.
Sell integrated solutions. While the industry segments itself into vehicle, home, office and personal product "silos," consumers do not. They want their "digital lives" to be with them at all times, moving seamlessly as they move from home to vehicle to office. Sell them integrated solutions rather than individual products.
Merchandise as they live as opposed to how you want to sell. Most retailers organize their stores in departments with printers here and PCs there. Exactly the opposite of what the consumer will do if they decide to buy. Put it together as they will.
Address product complexity. Let's face it, CE products are not easy to use, and regardless of how good a product might actually be, consumers won't buy it if they think they won't be able to make it work.
Market benefits, not price. Lower prices are not always a good thing. If a consumer expects a certain level of performance from a product that he purchased, but that performance is only available in a higher-priced product, he will not be happy. The effect of having "saved" money on a purchase that does not perform as expected or needed is no different than had you sold your customer a cheap cigar.
A prime example of all this is Apple, and I believe Idei-san would agree. He was quoted in a recent edition of Red Herring as observing that "iPod was a beautiful genius marketing success."
Notice that he did not say genius product. Notice too that to my knowledge Apple has never said one word about the iPod's performance. Apple's message is very clear: You will get good music conveniently wherever you want it, and you will be fashionable by doing so.
Notice too that Apple organizes its retail stores in a digital lifestyle manner, selling highly functional products that, most agree, are actually easy to use, but never, ever for less than what they feel is the right price.
The CE industry is not "dying," but it could benefit from a transfusion of strategic and tactical business practices.