Used to be that when you wanted to buy a TV, you went down to your Sears or Wal-Mart or Tweeter and looked a few TV’s, asked a few questions of the salesperson, did a little comparison shopping (and if you were really into doing research, you’d look up the latest Consumer Reports) and spent $400-$500 on the TV. You could have it delivered and set up but most of the times, you’d just put it in the back seat and took it home yourself. Done!
Now, when you want to buy a Flat screen Plasma HDTV with Ambilight (if I hear another, techno-sounding, coined, meaningless marketing term…), its altogether a different story. First, you look up the TV’s you want. That means, if you are like me, you look at the latest stuff on sites such as www.engadget.com or (blogs such as) Gizmodo or Dynamism that have stuff that is not even available in this country. Then, you’ll go on to various technology forums and read. You’ll even make posts, ask questions, read user reviews and if you are really motivated, you’ll even email some of the reviewers and ask questions of them. You will also go to CNET or Epinions and read user and expert reviews on not only this specific TV and other TV’s but also specific TV technologies. Is Plasma better than LCD? Can this go on the wall? How much does it weigh? What is the ideal resolution, color quality, Black Quality? Do I need a separate HD tuner to get HDTV? What are the advantages of having a built-in HD Tuner? Do I need to change my cable service provider or upgrade my plan? How many channels does Comcast (my provider) have in HD? And what in the world is Ambilight anyway? Is it just a light behind the TV or is there an actual technological advantage? After a few hours you have decided on a specific TV you’d like.
Say it’s a Samsung TV. Next, you go on a site such as Slickdeals or Woot (As a matter of fact, I just checked the site, and they have a 50 inch DLP TV, that is ONLY 7 inches deep, for 1999.00, which means that if you weren’t considering a DLP TV 2 seconds ago, you are now. Are you changing your mind? Woot lists ONE product for an incredible price everyday, usually at midnight – and they have never listed the Ginsu Knife, I assure you) Anyway, I digress.
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As I was saying, after checking “discount” sites, you finally go to a Price Comparison Engine such as PriceGrabber, copy-paste the model number of the TV you want, and hit enter. Voila! There are 77 retailers online and offline that will get you this TV tomorrow. But what retailer is better? Should you buy online or offline? Should you order online and pick up at the store? “Let me look at the total price” you think. Then you enter your zip code, and there is a total, delivered-to-your-doorstep price. Then, say you choose to buy it online from say BestBuyPLasma because they have same day delivery in your area – like BN.com has for deliveries in Manhattan. And you want your TV today! There. You have it. And you haven’t paid taxes on it either. Now, a thought occurs to you. “I haven’t checked EBay!” Gosh! I am sure to get a better deal there! I mean, its EBay! And let me google “best price on Samsung PL4422 (made up model number), see what happens.
Ok! Enough of the stream of consciousness stuff…The point I am trying to illustrate here is that buying a product as complex as a TV or a Car (or simple as a book) or almost anything of significant value (I mean Cars and TV’s, what else is there? This is the American Customer- you know what I’m saying?) is really really really different from what it used to be- even just 5 years ago.
Look at what happened to car dealerships or bookstores or real estate, or airline tickets or electronics or computers or furniture or Ginsu Knives! As Buddha said “ Only impermanence is permanent”…But I digress again.
Car dealers used to have the opportunity to make a sustainable profit on the car sale itself. When a customer walked into a car dealership in the 1990’s, she would have to deal with loads of information from a source that is entirely untrustworthy. And then after you picked the car you liked, there was the “salesperson-to-sales manager” tango, which could go on till the wee hours of the morning as if you lived in Buenos Aires and not Saginaw, Michigan. Then, of course there were the “free all-weather mats” that they “threw in” just to make you feel oh! so special. Not anymore. Even a slightly educated customer with access to the Internet can obtain the invoice price on any car you are trying to sell.
Now, car dealerships are service centers that “specialize” in car and customer service. With their “customer lounges” equipped with flat-screen TV’s, free wireless Internet, free tea and coffee, bagels, muffins and bottled water, their free magazines and newspapers, free loaner cars, or shuttle vans, to take you to work and back, where the customer can be “serviced” to their hearts satisfaction (oh! Stop! Just because I put service in quotes…) I wonder why they don’t get one of those nice massage chairs from Brookstone’s and put them in there.
Car dealers, now make money off servicing their customers’ cars, from getting an oil change to selling accessories or warranties. Selling the product, although still important, is not pivotal to the New Model.
What is true for car dealerships is true for Electronics Retailers. Take Best Buy for example. Best Buy, realizes that you cannot make a sustainable profit simply by selling products. The Gross Margins are just not there. With Geek Squad, Best Buy which is among the smarter retailers, has taken the lead in moving its’ business emphasis to “customer” from “product”. In the end analysis, that is the key to success in the future business environment.
Now, Tweeter is trying to do something similar, hoping to make money off of customer education and service rather than simply pushing products. This raises a lot of questions especially related to channel relationships.
The ever- changing nature of these relationships lend to loosely coupled (to use an open source term) relationships that are flexible and executed on a standardized technology platform. Wal-Mart’s EDI effort comes to mind as a prime and perhaps the first example of this change. This fundamental shift is happening primarily for two reasons. One, is significantly increased product complexity and two, a well informed customer with access to all the information they need to make a smart purchasing decision, thanks to the Internet.
Now, it is becoming obvious that retailers that successfully make the transition from “product focus” to “customer focus” are on the right path – at least until things change again. Some manufacturers such as Sony and Apple have started selling to and servicing their customers, directly (using Sony Style and Apple Store respectively)- bypassing the channel altogether- much to the anger of their channel partners. By doing so Sony and Apple, increase their knowledge of customer preferences and habits, which in turn will help them build products to suit their customers preferences. They are also able to market to their customers across the many media or points of contact- such as Television, Internet, Website, Email and even guerilla marketing through music concerts among other things.
The real power of the iPod is not in that it’s a good-looking, convenient storage and access device for music, pictures and videos, but in the fact that it empowers the customer to get what they want, when they want, at a price they are willing to live with. iPod is nothing without iTunes (From an Apple Inc. standpoint) and well, iTunes would not be possible without the iPod. And the Apple Store would not be possible without both iPod and iTunes and those wonderful Macs.
This is a simple example of the beginning of integrated marketing across multiple channels and media. Furthermore, they are in a position to offer “customized solutions” to customers that are into making things their own, especially if they are intending to sell to the “generation C- C for Custom” which is my mental tag for late teenagers who will be the next generation of customers for all sorts of things, as soon as they start getting their first jobs (more on Generation –Y and C later).
This “customization” (not mass customization, which is a clear contradiction in terms) is well underway with Benz’s Smart Car and Toyota’s Scion , or even the ubiquitous iPod (where you can pick a size, color, accessories, and have a little message on the back like “life is a song” or something)
The fact remains though, that a Vast Majority of retailers are not ready for this. Many of them don’t even see it or get it. The smart one’s do and they are the one’s likely to survive and perhaps flourish.
As Tupac said…Well, hey, that’s the way it is…
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