Premium tech goods court consumers with style

Author: Countries and Consumers

Date published: 4 Mar 2008

With tech goods now such a core part of consumer lifestyles and consumers more comfortable with current technology, the market is increasingly turning to style. Geek-speak marketing based on product specifications is being replaced by design and fashion as the new selling points – a trend that is most conspicuous at the premium end of the market.

Key trends

Premium tech goods;

Premium product launches- household electronics;

Personal devices.

Commercial opportunities

Top of the range, designer-led, elite products appeal to super rich individuals with massive disposable income. Tech goods, especially personal tech goods, are seen as a modern outlet for conspicuous consumption. Furthermore, the super rich segment will continue to thrive despite any forthcoming recession;

At the other end of the income scale, a recession may still create demand for modest luxury versions of laptops and mobile phones etc, as consumers unable to afford life-changing purchases, comfort themselves with “feel good” expenditure on more fashionable electronics accessories. (The same argument in previous recessions was applied to make-up, confectionery and other relatively small outlays, as personal “pick-me-up” purchases.);

Electronics companies are hooking up with designers to establish a style lead.

Background

The growing demand for premium products that has galvanised the home electronics market in recent years is transferring to the consumer electronics arena. Look for premium launches in the key global boom areas: flat TVs, laptops and mobile communications devices (mainly cell phones but also personal music players). At the top end, super-expensive lines often relate to PR/celebratory-related activity, but a mass market is emerging for premium lines and individualised fashion statements. The trend may also be positive at the lower end of the market, where fashion-oriented personal electronics may survive a recession better than for example large-scale premium home appliances. The entry of women (as well as design-aware men) as major buyers of tech goods in the mass market is also driving this trend to personal technology with a fashion sense.

Premium tech goods

The past decade has seen remarkable resilience in the mature home appliance market around the world, spurred on by the success of premium ranges, and notably kitchen appliances. Top quality appliances have benefited from the trend to “kitchen living” as well as rising property values, especially in the USA. Rising home values have justified sharp rises in investment in the home, with the kitchen benefiting most. The well-equipped designer kitchen has over the past couple of decades become a status symbol for the middle class family in markets around the world. Even for less affluent consumers, an upgraded kitchen has been an appealing investment.

Electronics products have traditionally been lower on the middle class wish list. They are hardly an investment (in fact prices generally go down with time), and growth has generally been in personal rather than household or family products. Nevertheless, premium tech products have been a growth area as the world economy has boomed. Furthermore, with economies rapidly cooling, the high end premium gadget sector may be a better prospect than the hard hit family home appliance.

Premium product launches- household electronics

The hottest item in the household electronics market worldwide is the flat screen TV. Until flat screen technology went mass market, the TV set had become a tired piece of antique electronics, hogging space in a room's corner, with TV sets heavily discounted. However, the coming of better quality flat screens and the mounting confidence in new standards has seen a remarkable revival of the TV market.

Flat screen prices in general quickly suffered from the traditional competitiveness of the electronics market, but a strong premium niche has also emerged. And this is no longer characterised by product functionality, but rather design and looks.

Amongst the many current examples of premium TVs are the Sony Bravia and Philips Aurea.

Sony is a premium brand player in consumer electronics worldwide, and the Bravia represented a move to maintain this in the high growth flat screen TV market. As well as a high performing screen, design and fashion are clearly a key element of the range. Part of the marketing concept is “The world's first TV designed for men and women” – and Sony websites include online tools to design a room and place a flat screen TV (similar to many online interior design tools). Sony reflects the industry in general in recognising the importance of women in household electronics purchases – once thought the preserve of the male of the household. Selling to women is clearly an aspect of design-led consumer electronics.

Philips' contribution to upscale TVs is the Aurea – with 'Ambilight'. The big feature here is its luminous frame that catches colours from the screen picture – creating lighting effects around the TV. (Philips incidentally teamed up with Chinese director Wong Kar Wai to produce a promo film for the product – further underpinning the design quality statement). For the consumer who likes this, it creates an artful lighting experience around the room.

In Europe, German-based Loewe claims to be the leading premium brand in the European television market. Recent growth has been robust on the back of flat screen TVs, with Loewe resisting price erosion to underpin its brand niche… “Our clear priority is to reinforce the brand value and associated expansion of our margin,” said last years' results statement. The clear message is that premium, high-design flat screen TVs are in demand and proving profitable.

Sony incidentally has developed a new sharp, low power technology OLED (organic light emitting diodes) and has recently begun selling OLED displays just 3mm thick in the USA for around $2,500. OLED TVs are touted as the next big thing, ultimately replacing LCD (liquid crystal display) and PDP (plasma display panels).

Whatever the technology, thin is in fashion in electronics as was demonstrated again at this years Consumer Electronics show in Las Vegas (January 2008), where a range of thinnest yet screens were on show.

Personal Devices

However, it is in personal devices that the fashion boom is most obvious, especially for the buoyant personal music player and cell phone markets. Perhaps the best known specialist in top end mobiles is Vertu (“The Choice of Celebrities.”) Vertu offers very exclusive phones “built by hand in England by highly skilled craftsmen.” The company began in the mid-1990s when Frank Nuovo, Nokia's chief designer, developed the concept of exclusive handsets and put the idea to Nokia. Prices today range from around US$5,000 upwards – as luxury items for a niche market.

There are also super expensive products out there, though these may often also be produced to enhance the manufacturer's elite image. Current examples include Swiss-based GoldVish's one-off, diamond-encrusted US$1 million “Le Million de la Nuit;” and the Sony-Ericsson Black Diamond with 5 units available at around US$300,000. An interesting aspect of this is the importance of the Russian buyer at the very top end of the global rich list market, leading to the growth of Russian-based suppliers to the luxury mobile phone segment. These businesses include Gresso, currently offering a range of phones made from African Blackwood, and Mobiado with its recently launched Stealth phone, cast in aircraft grade aluminium. A number of others players are seeking to enter the luxury end of the phone market alongside Vertu, highlighting the attractiveness of this niche in the mobile industry.

Laptops – the third of the global electronics boom areas at present – have entered the luxury market a little later. Many believe that as the tech features of lap tops become reliable and standardised (thereby raising consumer confidence) and as lap tops get smaller and thinner (thereby making them easier to carry constantly) – design will start to lead as a selling point.

Apple has of course long shone on this score. And the new Apple Air ultra-thin Macbook sets a new standard for sleek mass market portable computing. The product was launched by Steve Jobs at Mac World 2008 – by pulling the new laptop out of a standard manila envelope. It measures 0.76inches at its thickest point and weighs about 3 lbs.

Other manufacturers are bringing in specialist design houses for laptops and accessories.

Philips' “Active Crystal” range of USB keys and earphones have been produced in association with jewellers Swarovski, The “Heatbeat” USB drive, for example, is on a necklace with a crystal covered storage pouch. Swarovski teamed up with Medion for the Medion SIM 2060 laptop with a crystal covered casing tracing out the brand name and logo.

These are crystals (not diamonds) and the look is akin to the trend for girls' crystal studded T-shirts. This is high street fashion rather than premium niche marketing, but again underscores design and fashion taste (including here an element of “bling”). Other examples such as the Sony VAIO CR series of laptops, which include the inevitable pink, underscore how the fashion statements and especially the industry's growing awareness of female buyers have emerged hand in hand – radically changing a market once run by and for male “geeks.”

At the very affordable end of the fashion tech concept, consumers can change their mobiles' fascia, or add skins to their Apple laptops and I-pods, adding a low-priced design statement and individuality to personal tech items.

Outlook

High design, premium priced elite products are making a major impact on the market for personal gadgets. Industry players will continue to get involved in what is seen as a lucrative opportunity.

For mass market players, premium versions perhaps with celebrity endorsement will also be seen as a route to maintaining profile and enhance image in the global mass market, as well as appealing to burgeoning numbers of female tech customers. As tech goods manufacturers continue to pursue smaller, lighter and thinner designs, these products will be carried around more frequently by consumers, driving demand for products that make a style statement.