While tech titans like Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Sony (NYSE: SNE) hype individual products to the moon with fancy media events, consumers may be paying more attention to brand than product.
Continue Reading Below
The majority of consumer electronics (CE) buyers, 71%, only consider one brand when shopping, according to new consumer research from Parks Associates. In some categories the numbers are even more overwhelmingly in favor of consumers only considering a single brand. For tablets, smartphones, and gaming consoles 75%-80% of device buyers do not consider other brands when shopping, according to the research.
"Building brand mindshare early is critical so that consumers associate your brand with a category of products," said Parks Associates Research Director Barbara Kraus in a press release. "Consumers generally begin the purchase process with preconceived notions that have an enormous impact on the final purchase decision. CE manufacturers need to establish their brand early with an emerging product category so that consumers equate a product with that brand when they plan to make a purchase."
Basically, in most consumer electronics areas, the consumer has made up his or her mind before leaving the house (or going online) to make a purchase. It's a case of people buying into the overall concept of what the Apple, Sony, Microsoft, or other companies' brand represent more so than the individual product.
Apple has built a loyal customer base. Image source: Apple.
Why is this happening?
When a customer buys an Apple phone or a Windows computer, he or she is buying into a certain ecosystem, but also that brand's identity. Apple has generally been a hipper brand than Microsoft, while in some ways, the Windows company has always been viewed as a product line for serious business people.
In the gaming world, Sony, despite also being a large corporation, has a stronger gaming tradition than Microsoft, so for some, PlayStation 4 comes off as a cooler choice than Xbox One. It's not an exact science, but the research shows that a number of CE companies have already engendered significant loyalty.
"Certain brands have established a loyal customer base that purchases products without considering other options," Kraus said. "Apple has cornered the market for CE shoppers when it comes to smartphones and laptops. For example, 42% of those buying an Apple laptop reported they only considered one product because of brand. By comparison, just 18% of those buying HP laptops settled on a product in advance because of a brand preference."
What does it mean?
For the top-tier players like Apple, Microsoft, and Sony, this is very good news, as having this type of consumer loyalty buys a lot of leeway. It's worth noting, though, that even loyal user bases can walk away if pushed hard enough. Nintendo once had a large share of the console market and many BlackBerry customers stuck with the company long after it stopped being an innovation leader.
At one time, both of those brands were leaders in their space, but major missteps (not releasing a new phone for years and coming out with Wii U) did cause consumers to make other choices.
Kraus noted in an interview with MediaPost.comthat there is a road for new players to work their way into even the most crowded CE areas.
"There's always white space for innovation, but it's very hard to defeat a handful of very powerful brands," she said. "If you don't have that brand trust, you're not going anywhere."
A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.
Daniel Kline owns shares of Apple and Microsoft. He is about to drive 1,300 or so miles. The Motley Fool owns shares of and recommends Apple. The Motley Fool owns shares of Microsoft and has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.