Technology / Consumer Behavior Audit Of Sony Oled Technology
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Autor: anton 29 November 2010
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Table of Contents
Decision Process InfluencesÐ²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦..07
Decision Process InfluencesÐ²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦.09
Decision Process FactorsÐ²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦..12
Decision Process FactorsÐ²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦...16
Decision Process InfluencesÐ²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦..21
Decision Process InfluencesÐ²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦..24
Customer Satisfaction and CommitmentÐ²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦..25
Summary of RecommendationsÐ²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦Ð²Ð‚Â¦..25
Sony has launched the industryÐ²Ð‚â„¢s first OLED (Organic Light Emitting Diode) television, featuring an 11inch screen, 3mm thin panel, and high image contrast, brightness and color. This is slimmer than either a plasma or LCD panel, as OLED technology does not require a backlight. Currently, SonyÐ²Ð‚â„¢s XEL-1 priced at $2,500 does not have a large enough screen to make a large impact in the LCD and plasma market. Most of the worldÐ²Ð‚â„¢s key TV brands offer their high-end sets in the 30-inch to 60-inch sizes. Since the beginning of the year, Sony has toured international trade shows with a 27-inch OLED set, but that is still slightly smaller than the 30-inch offered by competitors. Sony has acknowledged the difficulties of mass producing bigger sets. The 27-inch OLEDs rely on a different manufacturing process from the 11-inch sets. Its promotions should include its eco-friendly nature and its high tech innovations. Its image should be enriched by the being the technology of the future. This consumer audit will determine potential target markets for Sony, and emphasize which should be addressed in the future. The expenditure and consumption behavior of the target audience will be studied and the decision process discussed. The product itself and its positioning, distribution, and purchase factors will be analyzed in the context of the selected target audience. Finally, a summary of recommendations will finish this CB audit.
Market segmentation is the process of dividing all possible users of a product into groups that have similar needs the products might satisfy. Market segmentation should be done prior to the final development of a new product. In addition, a complete market segmentaÐ’Â¬tion analysis should be performed periodically for existing products. The reason for conÐ’Â¬tinuing segmentation analyses is the dynamic nature of consumer needs.
According to Data Week, Ð²Ð‚ÑšOLEDs can carve out a market niche since LCDs have greater mass appeal due to their lower price, [and] with declining prices, OLEDs might compete strongly with LCD technology in the future.Ð²Ð‚Ñœ 1 Currently however, Ð²Ð‚ÑšLCDs have better market presence and penetration rate even though OLEDs offer superior technology.Ð²Ð‚Ñœ 1 For Sony to establish a significant market presence Ð²Ð‚ÑšOLED manufacturers should build on energy efficiency, improve resolutions and boost OLED life cycles [where] over time, OLED technology will make a major impact on the overall electronics industry.Ð²Ð‚Ñœ 1
Due to the size and price, SonyÐ²Ð‚â„¢s initial OLED display is not expected to be a part of the mainstream TV market. 2 Therefore, those with an acute interest in technology, the trendsetter and those higher up in the social hierarchy are likely to be its consumers. Because the size is not as big as the LCD and plasma competitors, which are more like 30Ð²Ð‚Ñœ to 60,Ð²Ð‚Ñœ the interest in having a TV that small would have to rely on the quality of the picture, in the new technology developed, and in its eco-friendly nature. The values and lifestyle of the purchaser affect their consumer behavior. The product is currently targeted to the early adopters and those with a high motivation, ability and opportunity (MAO).
Sony should look into the Ð²Ð‚Ñšenvironmentally friendly shopperÐ²Ð‚Ñœ as a market segment. The current competitor to Sony in this area is the Phillips Eco TV. 3 With so many environment problems right now and people becoming more aware of this, the choice of a more eco-friendly electronic is becoming more common even though these products may cost more. 3
The product is appropriate for male or female consumption. Traditionally, men are more technologically oriented; therefore, the Sony OLED may appeal to men more. Today however, women are beginning to become interested in the latest form of technology therefore Sony may also be able to tap into this market. Some individuals are information gatherers/holders, who seek out information about products of relevance. These individuals often have a great deal of power because they may selectively pass on information that favors their chosen alternatives. Traditionally, men were seen as the information gatherers and women the influencers who do not ultimately have the power to decide between alternative but can make their wishes known by asking for specific products. Today, women are making the decision more often and this change in trend will affect the way the product is consumed.
Ethnic influences are a major factor affecting consumer behavior. U.S. population trends have significant implications on consumption patterns. The three main U.S. subcultures control $1.5 trillion in buying power. According to the text, their buying power could exceed $4 trillion by the end of the decade. As a result many firms acknowledge the importance of targeting specific ethnic groups with strategies that appeal to them.
The consumption patterns of Asian consumers may appeal more to the Sony OLED because they are they are rapidly growing and their purchase power is approaching $450 billion in annual purchases. Also, the median income for Asian Americans is approximately $55,000. This is well above the U.S. median income of 43,000. The Sony OLED is a more expensive product therefore it is likely to attract more affluent consumers. 4 (p.323). Twenty-two percent of Asian American households have an annual income of 100,000 or more compared with 14% of the overall U.S. households therefore they may be more attracted to the product because the have the motivation, ability and opportunity. 4 (p.323).
Religion is another factor that may influence the consumption patterns of the Sony OLED. For example, consumers from certain religious backgrounds may be less likely to buy the Sony OLED because they may perceive buying such an expensive product to be to be materialistic.
The Sony OLED can be described as a prestige product. Consumers with higher levels of education generally acquire occupations that are viewed as higher in status than others. Education plays an important role because especially in the U.S., it is one of the key determinants of occupation and therefore social class. Educational attainment is considered the most reliable determinant of potential income and potential spending patterns. As a result, it is more likely that those with higher levels of education are more likely to have higher paying jobs, and these are the consumers that will be more likely to purchase the Sony OLED. These more affluent consumers may also acquire items that reflect their current social class. The Sony OLED may therefore become a status symbol to indicate its ownerÐ²Ð‚â„¢s place in the social hierarchy. Overall, consumers the more educated consumer from urban areas are more likely to purchase our product.
According to Michelle Kessler, USA today, if the 31 inch were commercially available, it will cost 15000 to 20000 dollars. The mainstream market will not be able to afford that. Therefore Sony is continuing to find ways that could cut costs and make the product more available to more people. Even with this being done, the product will particularly be appropriate for consumers with a high income level and those who see the product as a status symbol and a way of displaying wealth and status in the society.
The Sony OLED is not particularly appropriate for students because students generally do not have the means to afford such a product. High flying consumers who are concerned with their status and displaying their affluence are likely to be attracted to the product Ð²Ð‚â€œ i.e. business executives.
It would be useful for marketers of Sony OLED to focus on the innovators and the early adopters. Innovators are enthusiastic about the product and are motivated to the first to get the new technologically advanced product. As a first step to gaining entry into the mainstream market, manufacturers of the Sony OLED could initially focus on the innovators.4 (p.431). As mentioned previously, it is also useful to focus on early adopters who tend to try out new products or technology before their peers.
The early adopters will be involved in the purchase process. The early adopter is the more sophisticated consumer. They tend to be educated opinion and social leaders who have a significant knowledge about the product and are willing to do extensive research on the product before it is purchased. An example of where we have seen this is in the past is with the iPhone. The iPhone originally cost $400 to $500 depending on memory size. The early adopters bought it, even at the high price, however later Apple was forced to decrease the price to further penetrate the market and reach the masses. This forced them into giving rebates to the early adopters to allow for a fair price on previously purchased iPhones.
Internal Influences (Psychological Core)
A motive is an internal energizing force that directs a personÐ²Ð‚â„¢s activities towards reaching a goal. Consumers who are highly motivated are more likely to achieve their goals. Therefore highly motivated consumers are more likely to be attracted to our product. AN outcome of high motivation is felt involvement. Potential buyers of the Sony OLED are more likely to experience an enduring involvement for the product. This occurs when they show interest in the offering over a long period of time. Technological enthusiasts have followed the development of the Sony OLED over its years of development. They engage in activities that reveal their interests such as attending Computer Electronic shows and reading computer related magazines.
A need is Ð²Ð‚Ñšan internal state of tension caused by disequilibrium from an ideal or desired state.Ð²Ð‚Ñœ 4 (p.56). Types of needs include social, functional, symbolic and hedonic needs. The Sony OLED may appeal more to those consumers who seek to fulfill their social, hedonic and symbolic needs. Purchasing the Sony OLED HDTV might be looked upon as a status symbol because of the price and rarity. Because it is a luxury good, this new TV could fulfill the hedonic needs of a consumer.
Social needs require the presence or actions of other people. Since our product can be seen as a prestige product, those seeking to fulfill their social need for status may desire to purchase our product so that others may view them in high regard.
Symbolic needs affect how we perceive others and how we perceive ourselves. For example, consumers may buy the Sony OLED to reflect their social standing.
Hedonic needs include needs for sensory stimulation and cognitive stimulation. The Sony OLED may provide a sensory stimulation for those consumers seeking to satisfy their hedonic needs. These consumers may attend the Computer Electronic Shows to view the attractive new Sony OLEDs on display and as a result, fulfill their hedonic needs.
The Sony OLED TV is uniquely suited for particular personality types; self-concepts. This TV is perfectly suited for environmentalist companies (B2B) and (B2C) consumers. Also, it is suited for those seeking new innovations in the technology field. Consumers may have a favorable feeling to our product merely because it feels good or seems right. The emotion that comes with helping the environment is affected by the purchase and consumption of the new Sony OLED HDTV.
Life styles are consistent patterns people follow in their lives. The new Sony OLED HDTV is appropriate for one or more distinct lifestyles. Consumers buy products that are consistent with their self-concept. Therefore, the Sony OLED is appropriate for technologically savvy individuals who are constantly looking for the newest and most advanced technology to come into the market.
Their product is also suitable for the lifestyle of early adopters, the visionaries. These consumers admire technologically new products such as the Sony OLED more so because of the technological breakthrough it presents. These consumers prefer newer, faster and more advanced products that help make their lives more efficient. This segment tends to be younger and better educated.
Different groups seem to have different attitudes about an ideal version of the OLED TV. Some like it for its innovation, some picture quality, and some for the eco-friendliness. However, some who like the idea of the product dislike the price or size of the product. These consumers ideally would like a more competitive price and size for the product.
Consumers may experience situational involvement with the Sony OLED. 4 (p.52). Those consumers who have no enduring involvement to the product may only be interested in buying the T.V while they are in the purchasing process. After they buy it, their involvement will decline. Everyday situations cause an interaction between various factors which influences our consumer behavior. For example, a consumer who is has an avid interest in the latest revolutionary technology may not be as sensitive to the price of the Sony OLED compared to one who just wants to buy a new T.V.
Decision Process Influences
Problem recognition is the perceived difference between an ideal and an actual state.4 (p.195). This stage is crucial in the decision making process because it motivates the consumer to action. Different individuals use different evaluative criteria in their problem recognition search.
The ideal state, which is the way consumers would like a situation to be, may motivate certain individuals to purchase the Sony OLED because it may provide them with a social status or fulfill their need of having a revolutionary piece of technology. Consumers may engage in internal search where they search for information from memory. Recalling a particular set of brands whenever problem recognition is stimulated, greatly influences the decision making process. For example, a consumer who is loyal to the Sony brand may be more inclined to purchase the new Sony OLED than the Phillips Eco TV.
Other consumers may engage in recall of attributes as an evaluative criterion in their problem recognition information search. For example, potential consumers of the Sony OLED may remember the product for its incredible picture quality.
The post decision process is a feeling of anxiety or uncertainty after a purchase has been made. It is important for marketers to monitor customer satisfaction in order for them to retain their customers. Sony OLED manufacturers need to keep their consumers satisfied in order to keep them as customers in the long run.
Certain consumers may be resistant to adopting the Sony OLED while others will not. Consumers may resist the new Sony OLED technology because they are more familiar with the LCD and plasma technology for example, or they fear that such a new product will be too complicated to use. Others, especially those consumers who are aware of the innovation, have thought carefully about it and have gathered information on the new product is more likely to be adopters of the product.
Diffusion occurs when an increasing numbers of consumers adopt the product over time.4 (p.434). Diffusion of the Sony OLED may be slow initially because potential customers may be unwilling to adopt the product because of its high cost. However, after a certain period, the rate of adoption may increase dramatically.
A product position is the way the consumer thinks of a given product/brand relative to comÐ’Â¬peting products/brands. A manager must determine what a desirable product position would be for each market segment of interest. Product positioning is establishing a desired image that reflects what the product is and how it is different from the competition. Although the following are only features of the new television, Sony should use these features as key differentiators to current competition.
Ð²Ð‚ÑšThe 11-inch OLED TV Ð²Ð‚ÑšXEL-1Ð²Ð‚Ñœ proposes a groundbreaking new TV design, with its astonishing thinness measuring approximately 3mm (at its thinnest point).Ð²Ð‚ÑœXEL-1Ð²Ð‚Ñœ also incorporates SonyÐ²Ð‚â„¢s independently developed Ð²Ð‚ÑšOrganic Panel.Ð²Ð‚Ñœ 5
According to Data Week, Ð²Ð‚Ñšwhen comparing organic light emitting diodes (OLEDs) to liquid crystal display (LCD), OLEDs remain a relatively new technology in the flat panel display market.Ð²Ð‚Ñœ 1 Due to the advanced technology, improved energy efficiency and superior viewing angle, OLEDs have become the technology of the future. Ð²Ð‚ÑšThe gradual saturation of the LCD market will also positively affect the uptake of OLEDs.Ð²Ð‚Ñœ 1
Ð²Ð‚ÑšThinnest EverÐ²Ð‚Ñœ Position: OLED TVs are incredibly slim because organic material directly emits light so OLED display panels do not require a thick backlight or complex construction like other flat panel technologies. The SonyÐ’Â® XEL-1 is 0.3mm thin without its stand. The thinness of competing products pales in comparison to the OLED. The Sharp prototype LCD TV developed at the same time is designed with a thickness of 20 mm on the main display, still 17mm more than SonyÐ²Ð‚â„¢s OLED. 6
OLED Technology: The use of SonyÐ²Ð‚â„¢s Organic panel enables this television to deliver a more efficient means of utilizing light, which is generated by the organic material itself instead of an always-on backlight; also, when elements are in their Ð²Ð‚ÑšoffÐ²Ð‚Ñœ state, they consume no power whatsoever. According to Business Week, OLED technology is increasingly being used in cell phones and other very small screens because it is energy-efficient. Some see it as the next evolution of the LCD TV business, but it remains difficult to manufacture in larger screen sizes. 7 These organic light emitting diodes are stimulated directly by electric current and therefore produce rapid response time and higher brightness. The OLED elements individually emit light and are directly displayed on the screen, allowing higher brightness to be achieved. According to CNET.com, the average plasma utilizes 358 watts, the average rear-projection utilizes 212 watts, and the average LCD utilizes 220 watts of power. 8 power consumption of SonyÐ²Ð‚â„¢s OLED Ð²Ð‚ÑšXEL-1Ð²Ð‚Ñœ is as low as 45 watts, a much more energy efficient television. Eco-friendly positioning will help brand this product and innovative technology.
Although Sony is a household name, the product positioning of the OLED TV should increase consumersÐ²Ð‚â„¢ awareness of the brand name, product attribute, or brand benefit. Product positioning should ensure that SonyÐ²Ð‚â„¢s brand remains strong in the hearts and minds of consumers. In addition to focusing on differentiating features, the positioning of this product can stimulate aspects of memory and retrieval around the brand Sony.
Recognition and Prototypicality: Consumers may remember new Sony offerings from the past such as the Sony Walkman. Every five years since the Walkman personal stereo was born in 1979, Sony has celebrated by coming out with an anniversary cassette model with unprecedented breakthroughs in technology and features. Consumers may remember when the new technology from Sony arrived and how quickly it was adopted by society. The Walkman, with revolutionary force, made music portable and subject to personal selection and became the prototype of portable music players. Similarly, the OLED television allows Sony to be the epitome of innovation. Consumers have experience with new Sony products becoming the standard or prototype for the industry; positioning the OLED TV as the first of its kind can stimulate consumers known as the early adopters to purchase.
In the United States, Sony was No. 1 in the Harris InteractiveÐ’Â® poll of brands for the seventh consecutive year. In addition, Alix Partners LLP, in its survey of consumers across all demographics in the United States, ranked Sony as the No. 1 most powerful brand in its Brand Power Index. 9
Recall: Feelings play an important role in the decision process and marketers can attempt to generate affect through product positioning. Consumers associate brands with affective evaluations recalled from memory, such as the Ð²Ð‚ÑšHow do I feel about it?Ð²Ð‚Ñœ heuristic. When consumers see the Sony brand, it may stimulate memories of playing the Sony Playstation gaming system as a kid, and how much fun it was. Positive emotions such as love, joy, or elation, can be recalled to play a central role in the decision process, particularly when consumers perceive them as relevant to the product or service. Consumer feelings are especially critical for offerings with hedonic, symbolic, or aesthetic aspects such as the OLED TV. Sony can position this product as the next step in technology for the consumers who have outgrown their Playstation system. The OLED TV should be positioned as the natural progression in technology as a child/ teenager grows into an adult.
Decision Process Influences
When a consumer is entering the decision process to purchase the new Sony OLED HDTV, they should take into account Ð²Ð‚Ñšthe absence of the backlight in OLEDs makes them much lighter and extremely thin compared to LCDs, which tend to be large due to the presence of these backlights. In addition, reduced power consumption also makes OLEDs superior to LCDs.Ð²Ð‚Ñœ OLEDs offer Ð²Ð‚Ñšsignificant power-saving capabilities that reduce the long-term application costs.Ð²Ð‚Ñœ For the consumer this allows for positive post-decision feelings because even though the cost of the OLED TV is high, the product is quality and will save them money over time on electricity and maintenance cost. 1
The manager must set a pricing policy that is consistent with the desired product position. Price must be broadly conceived as everything a consumer must surrender to obtain a prodÐ’Â¬uct. This includes time and psychological costs as well as monetary costs.
Although Sony introduced its 11-inch OLED HDTV in Japan already, the companyÐ²Ð‚â„¢s announcement in January 2008 is that the model, XEL-1, is now available in the U.S., for the price of $2,500. While the relatively tiny (about the size of 3 credit cards), exorbitantly expensive HDTV itself wonÐ²Ð‚â„¢t attract many buyers, it represents an important milestone by shepherding in the latest flat-panel TV technology, which may eventually replace plasma and traditional LCD. 10
The OLED display industry is expected to experience high growth rates over the next five years, according to a new report from Global Industry Analysts. The global market for OLED displays is projected to exceed US$4.5 billion by 2010. The increasing need for exceptional picture quality and feel is considered the major factor behind this growth. Factors driving the growth include faster response time and higher contrast in comparison with conventional displays, blur-free video motion, 180-degree viewing angle, thinner design and potentially lower manufacturing costs. 11 According to a report by Frost & Sullivan, Ð²Ð‚Ñšthe worldwide OLED display market earned revenues of $475.0 million in 2006 and estimates this to reach $1.4 billion in 2013.Ð²Ð‚Ñœ 1
The segment holds values relating to conspicuous consumption and use of credit. OLED TVÐ²Ð‚â„¢s are high end TVs and therefore regarded as luxury goods. To have one of these TVs would help the consumer to be the envy of their competition. Other consumers may then be influenced to purchase this TV as well in order to regain their perceived status and enhance their self- image.
Because certain personality traits can make people susceptible to others, Ð²Ð‚Ñšthe trait of competitiveness, for instance, can influence conspicuous consumption behavior.Ð²Ð‚Ñœ 4 Thus ads for high-end TVs such as the new Sony OLED technology TVs will help consumers to be the envy of their competition. Ð²Ð‚ÑšConsumers who are susceptible to interpersonal influence try to enhance their self-image by acquiring products that they think others will approve of,Ð²Ð‚Ñœ such as a high-end TV. 4 Ð²Ð‚ÑšThese consumers are also willing to conform to othersÐ²Ð‚â„¢ expectations about which products and brands to buyÐ²Ð‚Ñœ even when that may mean purchasing a new TV on credit because it was too expensive for them to buy. 4 (p.411).The new Sony OLED HDTV is $2500 and too much for most to pay out of pocket.
OLED is a luxury good. A television is not a necessity for the most part so our target market is definitely for those individuals of high-income status. After living expenses, the segment needs to be able to still have sufficient disposable income to spend on such an expensive good. Consumers buying this product are probably going to buy it on credit. They are also in a high income bracket and are willing to spend the money and risk on a new innovation. The implications for Sony are that until they can get their manufacturing costs down and then the consumer price, their potential market segment is very small, making it hard for the new invention to penetrate the market. Price for potential consumer is a big deciding factor, when there are alternative options such as LCDs and Plasmas conveniently placed in all the stores at a cheaper price.
It is a possible solution as many consumers may be deterred from purchasing this product due to its high price. However, lowering the price could be a problem since it is likely that production costs are high due to the new technology of the product. Because this product is a high status item, with a high price and not heavily distributed, lowering the price currently is not necessary to ensure diffusion. But later if Sony wants to reach the masses and broaden their consumer base, they will have to increase production to lower costs and then lower their price. Display Bank, a research and consulting company, administered a survey entitled Ð²Ð‚ÑšLarge-Size OLED Display Recognition Survey.Ð²Ð‚Ñœ 12 According to that survey, 50% of the expert panel agreed that attractive price points of the OLED TV can be achieved if within 50% of LCD TV prices. 12 As a conclusion from this survey, any price reduction in the OLED TV may not require the set to be sold at equal prices with competition. As long as the price of the OLED remains within a certain range of its competition, the OLED can be seen as a reasonable alternative.
Price will be perceived as an indicator of status. A newly advanced and expensive piece of technology is not something most people get. This kind of product starts at the top and works its way down as it becomes less new. This is an example of trickle down effect. Also, upward mobility is raising ones status. Some people might buy this product because it is the new fad and they might think it will raise their status.
Social class can be the cause of or motivation for conspicuous consumption and status symbols. Conspicuous consumption is an attempt to offset deficiencies or a lack of esteem by devoting attention to consumption. Conspicuously consumed items are important to their owner because of what they tell others. The visibility of these goods and services is critical because their message can be communicated only if others can see them. Conspicuous consumption can be observed in most social classes. 4 (p.339).
Because the price of the Sony OLED TV is currently so high because of the new organic technology and low amount of production, this product will looked upon by its consumers as a status symbol. The economy in purchasing this type of offering can be relevant to the lifestyles of the segment. Somewhat, if the economy is bad, demand for this product will go down. This is considered a luxury good. And if people are hurting income wise then they will save their money for necessity items. The price is important because it so expensive it has potential to sway consumers attitudes to both sides. Either consumers may think it is too expensive and not purchase this product, or they may think the high price is a good indicator for quality of the product and also social status.
It is tough for the segment to have a perception of a fair price due to the fact that this is a new product. It is the only one of its kind, so determining a fair price is not possible at this point. Sony, as well as Samsung, have not yet found a way to produce the OLED TVs in a way to price them competitively with LCDs and Plasma TVs. Once production costs can be lowered, the consumer price will be more competitive.
Situational instances for price variance may be with the retailer, and time. For instance, an HHGregg might sell the TV for more than a Brandsmart might sell it for. In terms of time, the price of this product will gradually decrease over time due to many factors like competition, substitution, possible demand decreases, and new innovations. The OLED TV can only be currently purchased through Sony directly via their stores or online. Once they can competitively price the TV due to production cost reductions, they can start to penetrate the market and sell in stores with their competition, such as the LCDs and the Plasma TVs in Best Buy and other stores of that nature.
Decision Process Factors
For Sony, lowering the price is going to be beneficial. This will help Sony to penetrate the TV market and price more competitively with LCDs and Plasmas. However, since the OLED TV is differentiated, other methods to determine problem recognition might be more useful. Since, the OLED TV was just released a high price for this new innovation seems to be fair based on past incidences of new hot products such as the iPhone. Consumers are always interested in price reductions, it allows for you to do more with your disposable income, but the early adopters like that they are the first to get the new product and that others may not be able to afford it at first.
According to a pcworld.com video, Sony is finding it hard to manage production in a way that will allow for a significant price decrease at this time. So, the 27Ð²Ð‚Ñœ OLED TV will not be put on the market as of now. Both Sony and Samsung are finding hard to compete with the current larger LCD TVs that are a bigger screen at a cheaper price. Sony is hoping to be able to lower manufacturing costs in the future and then lower the price of $2500 to a price that might easier penetrate the TV market.
Because of the size and price, SonyÐ²Ð‚â„¢s initial OLED display isnÐ²Ð‚â„¢t expected to be a part of the mainstream TV market. To penetrate the market, the TV would have to be at least 20 inches and cost much less, according to iSuppli. The most popular HDTVs today are in the 37- to 42-inch range, with LCD screens being the clear market leader. However, Sony has said it plans to build bigger OLED screens. When this happens, the consumer will have less risk in purchasing the OLED TV and sales should increase. 2
The manager must develop a distribution strategy that is consistent with the selected prodÐ’Â¬uct position. This involves the Selection of outlets if the item is a physical product or the location of the outlets if the offering is a service.
Sony currently only distributes its XEL-1 11Ð²Ð‚Ñœ OLED TV to its own Sony Style stores in the United States, and Japan. There are relatively few of these outlets, which are owned directly by Sony and showcase and sell high-end Sony consumer merchandise. 13
The current market segments targeted by Sony for its XEL-1 11Ð²Ð‚Ñœ OLED TV set are a niche market, consisting almost solely of early adopters with the desire and means to be the first to own a set with this technology. Constant price reductions in LCD technology will make the OLED market a niche one. In the long term, the OLED market will grow at a faster rate due to the low competency level of thin film transistor plants. At the same time, the anticipated price stabilization of active matrix OLEDs in a few years will increase the growth rate of the OLED market. The emergence of OLED TV will have an impact on the market only in the long term and it will remain a niche product until then. 1
In an interview with USA Today covering SonyÐ²Ð‚â„¢s OLED product launch in early 2008, analysts called SonyÐ²Ð‚â„¢s OLED set a Ð²Ð‚ÑšgadgetÐ²Ð‚Ñœ and Ð²Ð‚Ñšnot really a television.Ð²Ð‚Ñœ 14 Despite this, the excitement around OLED was palpable. This technology is an example of dramatically continuous innovation, due to its extremely thin profile, theoretical flexibility, lower power consumption, and organic composition, which is the further innovation of the TV. The consumer is required to be knowledgeable in the field to even be aware of OLED, and as such is likely to be more willing to follow a high-effort decision process. The number of expected consumers for this set, the only OLED TV currently on the market, is minimal as a result. Sales arenÐ²Ð‚â„¢t expected to take off for OLED TVÐ²Ð‚â„¢s until as late as 2013. 14 These consumers are likely willing to incur some inconvenience in order to purchase one of these sets. The small size and high cost of these sets limit the market segments it targets and the potential volume of sales.
The purchasers of these sets are likely to be home-theater enthusiasts, and generally very knowledgeable consumers. As such, any retail outlet will need knowledgeable and well-trained sales staff in order to meet this need. For a new technology like OLED, commoditized training offered at major TV retail outlets is unlikely to meet the needs of consumers.
Prior to retail launches, OLED TVÐ²Ð‚â„¢s were widely showcased at trade shows such as the Consumer Electronics Show (CES) in Las Vegas, NV in early 2008. At this show, many consumers with interest in new television technologies gathered to view pre-release products such as a 27Ð²Ð‚Ñœ OLED TV from Sony and a 31Ð²Ð‚Ñœ OLED TV from Samsung.15 & 16 These devices shined as the most exciting pieces of consumer electronics showcased at the show. Venues such as CES are a great example of a gathering of the reference group for OLED TV sales, and are a great marketing opportunity for the perfect audience. 14
The technology behind OLED TV is new and complex, requiring a knowledgeable sales staff to explain it at a satisfactory level to consumers. This staff will be required to contrast OLED technology from many other competing flat-screen technologies already on the market, clearly explaining differentiators to consumers with difficult questions. Consumers will likely have many questions regarding key features of this new technology, such as viewing lifetime and energy consumption.17 This combined with the high cost and low-volume nature of the product, have led Sony to avoid using any sales channels or external retailers for their current OLED offering.
The Sony Style outlets are perceived as high-end showcases for new and desirable Sony products. Consumers who make purchases in these stores are likely not primarily concerned with cost, as many of the products sold there can be bought elsewhere for less. There are relatively few of these stores, making OLED TV ownership seem much more exclusive than owning one of the many other flat-panel technologies out there. 13
The exclusive and direct-to-consumer distribution system employed by Sony for OLED is relatively consistent with the target market segment. In particular, these consumers will be concentrated in the largest urban areas, and are likely to have access to the relatively few Sony Style stores. Consumers who do not have direct access to these stores, but who might desire an OLED product, are still likely to be motivated to purchase it. These consumers are early adopters who are motivated to purchase this product despite size, price, or availability considerations. 14
Manufacturing costs and distribution issues have challenged the OLED penetration into the display market. The OLED market has to deal with inadequate processes. The supply chain (comprising material suppliers, technology developers, and product developers) is not balanced and this challenges market penetration. However, with the niche market identification and demand strengthening, the supply chain is expected to stabilize. In addition, the OLED market is disadvantaged by high manufacturing costs, which is a major deterrent to mass production. OLED companies like Sony and Samsung must identify cost-effective production methods and innovative manufacturing techniques to scale production lines and meet evolving market demand. 18
The desired market segment is likely to be satisfied with the high-effort decision and purchase process that Sony offers for OLED TV. Sony currently has the only consumer OLED TV screen on the market, and currently does not need to worry wider or more efficient distribution strategies from upcoming competitors such as Samsung for OLED TVs and Phillips for eco-friendly TVs. 3
The desired features of the distribution system are influenced heavily by the current state of the OLED TV market. The current product sold by Sony is largely a marketing initiative meant to showcase the technology and make way for further product launches that will bring the technology to a wider audience. Sony TV executive Kazuhiro Imai said Ð²Ð‚Ñšwe mean to begin by first marketing the TVÐ²Ð‚â„¢s as a status symbol.Ð²Ð‚Ñœ 19 As such, it is important to showcase the product in a well-defined and ideal environment, such as SonyÐ²Ð‚â„¢s own stores.
Consumers who are willing to purchase these sets are willing to be inconvenienced by the lack of retail outlets and the high price, because there is currently no competitive offering from other companies, such as Samsung. This situation is expected to change in the near future with other retailers promising OLED offerings in the next year. At that point, the distribution system for OLED will need to change to a higher-volume model with channels, wholesalers, and third-party retailers offering competitive pricing on the technology. Several of SonyÐ²Ð‚â„¢s large competitors showcased prototype OLED TV sets at CES 2008, indicating that a more competitive market might not be that far off. 15 & 16
Currently, SonyÐ²Ð‚â„¢s XEL-1 does not have a large enough screen to make a Ð²Ð‚ÑšdentÐ²Ð‚Ñœ in the LCD and plasma market. 20 Most of the worldÐ²Ð‚â„¢s key TV brands offer their high-end sets in the 30-inch to 60-inch sizes. Since the beginning of the year, Sony has toured international trade shows with a 27-inch OLED set, but that is still slightly smaller than the 30-inch. Sony has acknowledged to reporters the Ð²Ð‚Ñšdifficulties of mass producing big sets.Ð²Ð‚Ñœ The 27-inch OLEDs rely on a Ð²Ð‚Ñšdifferent manufacturing processÐ²Ð‚Ñœ from the 11-inch sets. 20
Ð²Ð‚ÑšBefore OLED TVs can reach the size and price to compete against other technologies, manufacturers will have to develop the processes necessary to make the screens in large volumes, and to build the equipment needed to build the panels efficiently. TodayÐ²Ð‚â„¢s TV market is flooded with display options, including CRT, LCD, plasma, and four types of projection systems. In addition, thereÐ²Ð‚â„¢s the potential for a variety of novel technologies, such as surface-conduction electron-emitter display (SED) and carbon-nanotube field emission display (FED). With so many options, makers of OLED TV screens may find it difficult to attract the attention of device makers and channel suppliers,Ð²Ð‚Ñœ iSuppli said. 1
Decision Process Factors
The Sony Style store is likely to make it into the evoked set for consumers of OLED TV, but only because of their willingness to undertake a high-effort purchase process. The exclusivity of the OLED technology is relatively unique to the market segment and to the consumer electronics industry. Attendees at the Consumer Electronics Show in 2008 lauded SonyÐ²Ð‚â„¢s innovation and leadership being the only company with an OLED set on the market. 14 Consumers in the target segment are likely to have already sought out information regarding OLED technology elsewhere, and made a decision to purchase or evaluate a set in person. The majority of these consumers are unlikely to have simply stumbled upon the product in one of the few Sony Style retail outlets, and are more likely to have been pulled there by prior knowledge and research.
As early adopters with means and drive to purchase this new and expensive television, the consumers are likely to expect their purchase process to include excellent service from extremely knowledgeable staff. Sony has excellent control over the design and layout of their own retail stores, allowing them to attractively place and market the OLED technology in an ideal environment.
In the larger consumer electronics market, many consumers take on a attribute processing model, in which individual attributes about one television are compared with another television. This could either be the Ð²Ð‚Ñšadditive difference modelÐ²Ð‚Ñœ (compensatory), or a Ð²Ð‚Ñšlexicographic modelÐ²Ð‚Ñœ (noncompensatory), depending on the preference of the consumer. For instance, many consumers will compare televisions based on price, size of the screen, thickness of the screen, resolution, number of video inputs or other attributes. These will be ordered according to the consumers preference, and either used as a cumulative overall preference (additive) or ranked in importance and used to eliminate one TV set (lexicographic). 21
However, in the case of the OLED TV, the consumer has already gone through a decision-making model to come to their choice, there being only one set available on the market today. They have likely followed a brand-processing model, more specifically the conjunctive model (non-compensatory). In this case, if they are interested in OLED, they have specifically set their acceptable purchase threshold at the one OLED TV set on the market. They have focused on this one brand and model, and perhaps gone on to weigh the technology versus others on the market, but likely focused primarily on SonyÐ²Ð‚â„¢s XEL-1 set.
The outlet for purchasing an OLED TV is likely selected after the decision to go with the specific product and brand. Due to the relatively few Sony Style stores, and their exclusive hold on the market, the amount of sales generated for this set by walk-ins or accidental discovery in the store is likely small. 13 Conversely, there has been significant media buzz and press around OLED televisions, particularly regarding news coverage of the CES show in Las Vegas. 22 This coverage is likely to have generated significant interest in OLED. A percentage of people reading these stories may be interested in purchasing a set, and will likely research the product and then determine where to buy it when necessary.
As this technology becomes more widely available, with more models, sizes, and competitors in the market, the portion of purchases generated in the retail outlets will become more significant. At this point, the distribution strategy for OLED TV will change drastically and will have to scale much better through wholesalers and third-party consumer retail stores.
The manager must develop a promotion strategy including advertising, nonfunctional package design features, publicity, promotions, and sales force activities that are consistent with the product position.
The success of new products or innovations depends on how many people within the market adopt it. To successfully promote this product, Sony must understand the consumer factors affecting resistance, adoptions, and diffusion. 4 (p.437). These factors are often seen as the perceived value, perceived benefits, and perceived costs.
Perceived Value: Consumers must perceive that the OLED TV Ð²Ð‚ÑšXEL-1Ð²Ð‚Ñœ has more value than its main plasma TV competitor Panasonic, its main LCD competitor Pioneer, and its current competitor in LCD and plasma and future competitor in OLED, Samsung. 23 This means that the OLED must have either greater perceived benefits or lower perceived costs than other high definition sets like LCD and Plasma televisions. Products with a higher perceived value may be more quickly adopted than those with low perceived value. 4 (p.438). Since the set is rather expensive at the onset of production, promotional strategy should focus on the greater perceived benefits the TV offers such as energy efficiency, outstanding contrast, fast response time, and high brightness. Sony should position this product to become the industry standard because of its exceptionally high quality. 4 (p.439).
Perceived Benefits: Consumers delegate benefits of an offering by its perceived relative advantage, the extent to which it offers benefits superior to those of existing products. 4 (p. 438). Sony must market the television on the characteristics that set it apart from its competition; a low perceived cost benefit doesnÐ²Ð‚â„¢t apply in this case. Sony needs to realize that if consumers do not perceive the XEL-1Ð²Ð‚â„¢s advantages of the existing alternatives or think the advantages are unimportant, the set will face resistance.4 (p.438). To communicate and demonstrate the relative advantage, Sony will need to educate its consumers who do not understand what the product is or its relative advantages. Complexity of an offering is a consumer learning requirement related to adoption and diffusion. Difficulty understanding a new product or understanding how to use a new product can affect a consumerÐ²Ð‚â„¢s perception of relative advantage. Once again, educating the consumers is extremely important for the XEL-1.
Perceived Costs: Consumer perceived costs include the purchase cost and the cost of switching to a new product. The higher the purchase cost is, the greater the resistance, and thus the slower the diffusion into the market. 4 (p.438). The cost of changing from their current product to a new one (switching costs) can also be an issue. If the XEL-1 is not adopted quickly because consumers think switching costs are high, Sony should provide incentives for switching. Advertisements may even attempt to inform consumers about the greater costs of not switching. 4 (p.439). Alternately, if the purchasing cost is perceived as too high, Sony can use special price-oriented sales promotions such as price-offs, rebates, or refunds to reduce the perceived risks. With such an innovation as the XEL-1, providing guarantees or warranties can make the offering seem less expensive. 4 (p.439). As reported in the pricing section, long- term price reductions within a certain range of competitorÐ²Ð‚â„¢s prices will allow consumers to see the OLED as a reasonable alternative.
An additional diffusion risk factor that can be overcome by promotion is uncertainty around the innovation. 4 (p.439). The most poignant aspect of uncertainty in this case is the length of the product life cycle. Consumers will avoid making large purchases on offerings that have a short product life cycle and will become obsolete shortly after being purchased. When consumers resist innovations because they worry about a short life cycle, Sony must show how adaptable the product is and therefore how likely it is to have a long life cycle. Possible demonstrations of adaptability include how the XEL-1 may be upgraded, connected to advanced systems, or used in other ways that extend the life cycle by continuing to deliver perceived value. 4 (p.440).
The Importance of Trialability: One aspect of a consumer learning requirement is the trialibality of the innovation, or the extent to which the product can be tried on a limited basis before it is adopted. A trial allows a consumer to see the productÐ²Ð‚â„¢s relative advantages and assess the potential risks associated with a purchase; products that are easy to try tend to diffuse through the market more quickly than those that do not.4 (p.441). The degree of importance place on trialability depends on the type of adopter. Innovators and early adopters may place a large emphasis on trialability because they have little else on which to base the value of the innovation. 4 (p.441). Similarly, trialability may be less important for later adopters because of viral marketing. Since the product is only available at Sony Style stores, it would be very important to have large display areas for the XEL-1 for innovators and early adopters to test before purchasing. The ability to visually observe the XEL-1 through in-store promotions will satisfy the hedonic needs of consumers.
Characteristics of the Social System: Both the kinds of people in the target market and the nature of the relationships among the people in the social system will affect the innovationÐ²Ð‚â„¢s acceptance. 4 (p.444). The modernity, the extent to which consumers in the system have a positive attitude towards change, affects the receptivity of consumers. In todayÐ²Ð‚â„¢s technological world, consumers often value science, technology, and education, and are technologically oriented in terms of goods produced. 4 (p.444). This type of social system works in SonyÐ²Ð‚â„¢s favor.
Opinion Leadership: Opinion leaders are key influencers in the diffusion process. People with credibility can have a large influence on adoption and diffusion because they can spread positive or negative product information. 4 (p.445). Highly visible opinion leaders are additional ways to communicate an innovationÐ²Ð‚â„¢s advantage. The highly credible and visible opinion leaders Sony can reach are technology experts; these people are often innovators and early adapters that have a felt involvement with such products. The felt involvement in this case will most likely be an enduring involvement, one that exists when interest in an offering or activity exists over a long period of time. 4 (p.51). These opinion leaders may also have cognitive involvement where the consumer is interested in thinking about and processing information related to his or her goal. This includes actually learning about the offering. 4 (p.51). These technology enthusiasts are interested in learning all they can about technological innovations and thus have cognitive involvement. Having the approval of known experts such as C-Net.com or Consumer Reports can help Sony promote the XEL-1 as a worthy purchase.
Reference Groups: Marketing to specific groups can be very beneficial because even a small group can have a big impact on othersÐ²Ð‚â„¢ adoption decisions. 4 (p.446). Groups such as passive consumers, active rejecters, and potential adopters all require different marketing strategies. Sony has to focus on an associative reference group in their new OLED TVs advertisements. 4 (p.402). It will be very important to appropriately represent the target consumers in the ads. This means that the clothing, hairstyle, accessories and general demeanor has to be accurate to the target social class. Sony also should choose wisely its spokesperson for the new OLED TV.
Sony will have to use accurate associative reference groups to target the market segment our team identified earlier, the early adapters who are the lower-upper class the so called new social elite from professionals and corporate leaders. This promotional strategy also can be as an aspirational reference group for lower social classes. These are the people right now who cannot afford this new innovation. In many cultures consumers can raise their status level with upward mobility by educational or occupational achievements. 4 (p.336). This typically happens in Western nations who offer the most upward mobility opportunities.
Purchasers of the new Sony OLED HDTV must have a high motivation (An inner state of arousal that denotes energy to achieve a goal.) to achieve getting the new TV. 21 Because OLED is such a new technology, there is a lot of research on the part of the consumer to find out more about it. The consumer might experience motivated reasoning where they process information in a way that allows them to reach a particular conclusion they want to reach. 21 This is where even though the consumer might not have the money to purchase the new TV, they will find a reason though motivated research as to why there is a need to purchase it, and the final purchase will probably be made on credit.
As we learned from the text, attitudes are learned and they persist over time. 4
(p.125).When the MOA is high, consumers are more likely to put a lot of effort toward and invest more personal involvement in forming or changing attitudes and making decisions. This is called central-route processing. 4 (p.127). We highly recommend that Sony understands this term for the OLED TVs` promotional strategies. The reason behind this is that consumersÐ²Ð‚â„¢ attitudes will be based on a careful analysis of the true issues within the advertised message. 4 (p.127). Sony will have to pay attention to the idea behind the cognitive response model.
ConsumersÐ²Ð‚â„¢ cognitive responses to communications can be as counterarguments, (Ð²Ð‚ÑšThis product will never work.Ð²Ð‚Ñœ) support arguments, (Ð²Ð‚ÑšI really need a product like this.Ð²Ð‚Ñœ) or source derogations (Ð²Ð‚ÑšThe guy in the ad was paid to say this.Ð²Ð‚Ñœ). 4 (p.129). Sony will have to make sure that the OLED TVs `potential customersÐ²Ð‚â„¢ response to the advertisement is positive. People who think in counterarguments and source derogations after viewing an OLED TVÐ²Ð‚â„¢s ad will have weak or negative attitudes toward this new product. Sony can eliminate these negative attitudes by creating a strong message for the OLED TV. We suggest the Sony features this new technology TV in the targeted market segmentÐ²Ð‚â„¢s favorite TV program. 4 (p.129).
Sony also can use affective basis to target its future customers with the OLED TV. When the consumers are emotionally involved in a message, they tend to process it on a general level rather than analytically4 (p.140). Sony has to be aware that they might be able to trigger strong emotions in consumers but these are also limited. If the desired target market will generate strong pleasure-seeking or symbolic motivation then it will have a better chance to change attitudes.
We suggested earlier that Sony should focus on an associative reference group in their new OLED TVs advertisements. 4 (p. 402). We also mentioned the importance of the accurate portray of the desired lifestyle for the lower-upper class market. Sony has to choose its spoke person wisely so it can capture the attention of the target market. In addition, we advised that Sony creates an ad where the clothing, hairstyle, accessories and general demeanor is accurate to the lifestyle of the segments.
The launching of the OLED TV adds a new category to SonyÐ²Ð‚â„¢s TV business. During fiscal year 2006, SonyÐ²Ð‚â„¢s key Electronics business recorded an operating margin of over 4% and, in doing so, achieved its goal a full year ahead of our plan. Notable achievements included our Cyber-shotÐ²â€žÑž digital cameras recording greatly improved profitability and our BRAVIAÐ²â€žÑž LCD televisions capturing the No. 1 position worldwide. 24
Currently, SonyÐ²Ð‚â„¢s TV lineup is centered on its Ð²Ð‚ÑšBRAVIAÐ²Ð‚Ñœ LCD TVs, and the addition of OLED TVs will provide customers with unparalleled thinness combined with excellent image quality. 25 By progressively developing the OLED TV business, and by positioning it alongside the Ð²Ð‚ÑšBRAVIAÐ²Ð‚Ñœ products, Sony will grow its overall TV business.
SonyÐ²Ð‚â„¢s promotional campaign should focus on the OLED TV as a vital part of the Ð²Ð‚ÑšHD World.Ð²Ð‚Ñœ Product links from cameras, to computers, to televisions show a horizontal linkage across the HD product line. Products that have the capacity to function as a network carry greater value and, as a result, will be more accessible to consumers. 26 Ð²Ð‚ÑšSony continues to reinforce its standing as number one in the consumer electronics industry,Ð²Ð‚Ñœ said Sony Electronics President and Chief Operating Officer Stan Glasgow. 27 Ð²Ð‚ÑšWe are accomplishing this by offering products and technologies that show our innovation, as well as the ability to deliver the best customer experience.Ð²Ð‚Ñœ 27
Decision Process Influences
SonyÐ²Ð‚â„¢s target segment for the OLED TV w
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