Looking at Markets and the Pain of Change

I’m intrigued by marketplaces of all sorts- ranging from Farmer’s Markets, to Malls, to Online Niche markets.  Each has a culture associated with it, a sense of rules and norms, often unspoken.  Each also has speculators, spectators and active participants.  Whether it’s figuring out which vendor has the best produce, which store has the coolest and best deals on clothes, or what tech device is doing the best, each market has people looking to make the best deal or take advantage of opportunities.

In reading Fast Company’s newsletter this morning, I was intrigued by the story on whether Apple had a failed iPhone 5 marketing strategy.  It looked at social insights and tracking conversations, and whether the iPhone has lost its cool edge especially with younger people.  I think there may be other factors at play here including:

1. Software versus Hardware Improvements.  The great thing about the iPhone is that most improvements come through software upgrades, and it’s only every other model or so that requires a hardware upgrade to get the software improvements.

In our house, for example, my husband upgraded to an iPhone 5 mostly because he wanted to switch carriers, and that was driven by the fact Verizon has a tower close to his work, drastically increasing the performance of his phone.  I have not yet upgraded from the 4S, because frankly the phone works fine, and I got all the improvement I really needed from software versus hardware upgrades,.  There’s no sense in spending money before I have to- the new frugalness.  (Also there’s a question about whether I will lose my grandfathered unlimited data, which is a killer.)   One kid may get an upgrade for his birthday, but we have to figure out whether to stay on AT&T or move him to Verizon as well.  The other kid will get a smartphone when going to college, and we may stick to an iPhone since we also have iPads & Macs and no PC’s at home, making things like iTunes compatibility a major factor in our decision making.

In other words, there’s not a lot of additional marketing Apple can do to make us upgrade  any faster, without showing us dramatic hardware upgrades that really make a difference.  In fact, about the only thing I really need is a little more memory,  The change between models is currently incremental, and there’s little urgency to spend bug dollars on another contract and new handset without an urgent replacement need.  We have reached the point of “good enough” and the quality of the handsets is so high, it doesn’t have to be replaced each year like a leased car.  In my book, that’s a very good thing.

In fact, it’s so good, I don’t mind being locked into the iPhone infrastructure, ranging from apps to books and the like.  I’m sure I could change to an android phone, but with everything working like clockwork with Apple, I have brand loyalty and no incentive to “start all over again.”  While there are great tutorials like this one on how to use an Android Phone with your Mac, the whole process of converting stuff over looks like it will be just as much fun as it used to be installing Microsoft Office on PC’s in the old days- 23 discs and a whole Saturday wasted.

Since many of the Android phones look like and act like iPhones with slightly larger screens, I am not sure there’s yet a compelling reason to make this painful ecosystem switch- no one has been able to give me a “killer reason” to switch, so I am a happy consumer, right where I am.

2. How Often Should We Have To Switch/Upgrade?  I know companies make money every time someone switches a provider, or is forced to upgrade hardware or software.  But my needs as a consumer are just the opposite.  I would like to buy something of quality that doesn’t require the time. money and hassle of frequent replacement and upgrading.  The marketplace would love for me to be more unsatisfied, but I want to be happier and less inconvenienced.

Five years ago, we were kind of trained to get a new phone every year, whether we needed one or not, because of incentive deals or coolness or greatly increased capacity.  Now, I think we’ve reached a market where there’s more consensus about mobile data and functionality.  I want my data to be device agnostic as much as possible, and I get that with my current software set up.  I don’t have to feel like sending a text is like having an argument- long and tedious- like it was in the day of Motorola Razr flip phones.  I am happy with being able to keep a handset for a two year contract without needing an upgrade, and  I save money as well.  Where is the need for senseless upgrades and expense?  And because of this, I am much more likely to stay within this lovely and well tended garden than explore new territory that looks cool, but comes along with a learning curve and time commitment I just don’t feel compelled to invest in.

Take this into other marketplace issues.  When my husband and I got married, we had to make “Brand Decisions”- what products would we buy, when each of us had preferences based on the preferences of our own parents? A few examples:

  •  What peanut butter was best? (He came from a Jif household, I came from Peter pan- We are now a Jif Super Crunchy house and I’m happy.)
  • Mayo or Miracle Whip?  We settled on both, used for different purposes.
  • Toothpaste and Shampoo?  Here, the brands and choice factors are constantly in flux, so price and convenience make up more of the choice selection than any one brand.

Once we make our consumer decisions (read: brand loyalties) shopping and being a good consumer becomes easier and less time consuming.  I buy what I like and occasionally try new things, but there’s got to be a really good reason to make a permanent switch.  The opportunity, time and monetary choices involved with being fickle are expensive, just in terms of attention, let alone standing in a store trying to make a decision.  It’s much easier if you’ve made that decision long before you are at the shelf for what Google refers to as the Second (or third) Moment of Truth. After we have made that first “infrastructure” choice, all other decisions fall out from there.

3.Who Is The Customer?

One of the charts shown in the Fast Company article looks at tweets and posts about purchase intent for teens.  You can market to my kid all you want, but they are getting the device I spend the money on, and they are on my cell phone plan.  A better choice to drive switching of devices is really dependent more on my contract with my carrier than on the device itself.  If I could get much lower rates and higher data limits with Android devices, I might switch.  But manufacturers don’t have that sort of control, so when it gets right down to it, the purchase intent of my kid is nice but irrelevant in what actually happens until they pay the bill themselves.

4. What’s In It For You is not What’s In for Me.  I get that the news cycle and tech cycles demand news.  Apple bashing is taking on the Giant.  Google is no slouch or victim here, though.   Google and the Android system are becoming equal competitors, but that doesn’t mean Apple sucks.  (I also think Google is becoming my data overlord in many ways and privacy of my data and information is a concern- along with the fact that the last thing I need in my life is any more ads or promotions. )  Tech news stories make money by creating controversy and getting our attention.  But in the end, I am not sure the insights of this particular article reflect what I see on the ground, having two teenagers and their friends as a convenient sample.  The decisions made for their devices are in part made on their preferences, but much more dependent on parent issues ranging from contracts to discounts to text limits and data expenses.  The teens will get what we can afford and potentially control.  Period.

While the article was interesting in its look at consumer social data to try to predict the future, it fails to consider the primary purchase issue- Who has the money and Who makes the ultimate decision?  That’s where the conversion will occur, and that’s the audience that needs to be targeted.

A better analysis and strategy for marketing is to target people ready for brand conversion.  People getting engaged and married will need to consolidate bills and contracts, and often brands.    They are prime for making a switch and a long term brand commitment.  College students going out on their own and having to pay their own bills are also the perfect target for long term brand loyalty.

For the rest of us, brand decisions have been made, and it’s only when there’s a big leap in technology or product advantage or a huge price differential that switching becomes an option.  The trick for tech companies, overall, is to maintain customer loyalty for your infrastructure, and make the cost and pain of switching ecosystems high enough to discourage fickleness.

Customer happiness loyalty is a long term winning strategy over the short term churn strategy.  The product cycle may be longer, but the long term results are worth the patience.

 

 

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  • Mathieu Plourde

    Hi Whitney,

    “I am not sure there’s yet a compelling reason to make this painful ecosystem switch- no one has been able to give me a “killer reason” to switch, so I am a happy consumer, right where I am.”

    To me, the ecosystem switch is definitely the key reason. Unlike you, I am a Windows/Android guy, and the thought of using iTunes makes me cringe. But since you have made significant investments (in money and time) in this ecosystem, it makes sense to stay there until you feel the need to switch.

    “Five years ago, we were kind of trained to get a new phone every year, whether we needed one or not, because of incentive deals or coolness or greatly increased capacity. Now, I think we’ve reached a market where there’s more consensus about mobile data and functionality.”

    To echo this quote, I think we’re seeing two trends here: 1) consumers are getting smarter in defining what is good enough, and 2) carriers have normalized their offering.

    Great post!

  • whitneyhoffman

    Thanks Mathieu! I think people are just getting smarter and wiser about finances (finally) and with the innovations portion levelling out, the market prompts for switching becomes one of need, not fashion. Add in brand loyalty, enforced by ecosystem issues and prior investment in that ecosystem, and you have less drivers in the market for churn. much to the disappointment of companies who were used to consumers buying new phones every six months. Sorry guys!