Prior to the Japanese flooding the market with electronic goods in the 1970's and 1980's, consumers world over looked for durability and value for money while making purchases, of electronic goods in particular and other products in general. The marketing mantra was to provide technically durable products that were durable, relatively expensive, once or twice in a life time purchase (a radio was expected to last a life time, ditto a watch. Father bought a HMT watch for my brother, who is 8 years elder to me, in 1971 on his passing the 10th standard. This was passed down to me, and I wore it till mid 1990's!!!) and more important repairable. It was sufficient for the product to perform adequately.The Japanese changed all these. It was also partly due to technological advances in the field of electronics and later on digitalization. Masters in the art of miniaturizing, the Japanese went ahead with the concept of focusing on high performance
, quality, and less and less on durability. This had its roots in their culture and the terrain they live in, which is seismologically extremely unstable. The Japanese never wants anything to last a life time, for they are not sure when the next earth quake will strike. What they want is to enjoy high performance while it lasts, before the next quake hits them. But their emphasis on quality and performance meant that the products were technologically and performance wise far superior to those of the Western Competitors', albeit expensive. The product life cycles were also much shorter. More importantly, they were more keen on the customer replacing the product with a new one, than getting it repaired in the event of a malfunction. But these products were at least repairable. Most products lasted 3-4 years at best. Thus, the products did not just have the high initial cost, but also had high usage per day cost, for it depreciated very fast. This was not a sustainable model, as the Japanese found out soon.
, quality, and less and less on durability. This had its roots in their culture and the terrain they live in, which is seismologically extremely unstable. The Japanese never wants anything to last a life time, for they are not sure when the next earth quake will strike. What they want is to enjoy high performance while it lasts, before the next quake hits them. But their emphasis on quality and performance meant that the products were technologically and performance wise far superior to those of the Western Competitors', albeit expensive. The product life cycles were also much shorter. More importantly, they were more keen on the customer replacing the product with a new one, than getting it repaired in the event of a malfunction. But these products were at least repairable. Most products lasted 3-4 years at best. Thus, the products did not just have the high initial cost, but also had high usage per day cost, for it depreciated very fast. This was not a sustainable model, as the Japanese found out soon.
While Japanese focused on the differentiation strategy, the Chinese quickly found the achilles heel of the Japanese - the customers seething dissatisfaction as to having to pay a high usage per day cost. Using their competitive advantage of cheap labour and government controlled capital, the Chinese flooded the market with products that does work adequately, but is ridiculously cheap. They took away the concept of repair and mainternance totally out of the equation, and encouraged customers to go in for newer, cheaper, not necessarily better products every 6 months or one year, and discard it once it is used. Customer's fed up with having to pay a high price for the Japanese products, found the low usage cost per day concept very appealing, which led to high levels of initial purchase. But what about repeat purchase? This is one area which the Chinese ignored, much to their peril. Most customers of the Chinese products were one time customers, who never returned to make the repurchase, forcing them to seek out new customers as a strategy, which is very expensive as compared to retention of customers. Add to this the cost of customer dissatisfaction, and we are reaching an era of customers totally shunning chinese products. And as Nirma found out in their battle with Surf, once you get the tag of a low priced, low quality product, it is extremely difficult to change the perception even if you come out with a high quality version. Chinese will struggle in this decade to maintain their market share, as customers will turn their face away from them.So what is the alternative? It could be a combination of good quality, reasonable price, slightly longer product life cycle and less rapid technological changes. I suspect customers are getting tired of adjustments they have to make with rapid technological changes that lead to newer gadgets at very frequent intervals. What they would like is for a relatively frill-less product, sans unwanted features (most gadgets have features which one never uses! just go to the menu of your mobile, list down all the features you see there in a piece of paper, tick all those you have used during the past one month. I just did, and the % was less than 10!!!) which will bring the cost down, but retains the quality of the main features. Better,efficient functioning of the core functions at affordable prices with the manufacturer taking a reasonable margin will be the way forward. The add ons can be made optional and at a price.
Still skeptical? Type http://www.google.com/ and see what I mean. The home page is totally uncluttered, and it does its core function - searching - very very efficiently. Ditto with gmail or gtalk or for that matter most google products. And no one can deny that Google is very successful, both technically and commercially!
