Re-Charging Consumer Electronics1 Dec, 2008 By: Jacqueline Renfrow Response
After a disappointing second half of the year, electronics retailers are looking to DR to reinvigorate 2009 sales.
Where Did CE Go Wrong?
How did the CE industry get into this current financial state? Beyond the economy there are three major factors hindering high sales: low profit margins; a lack of new technology demonstrations; and poor consumer marketing.
When advertising these products, DR marketers need to be aware that CE devices tend to have a low profit margin. "A flat screen TV, iPod, you name it. After the launch of a new product, the knock-offs come out and once the competition begins, the unit price comes down," says Wesley Wood, president of New York-based Marketing Capital Corp.
Doug Garnett, president of Portland, Ore.-based DRTV agency Atomic Direct (and a member of the Response Editorial Advisory Board), says that DRTV is an exceptional channel for those in CE because it raises the margin. "In order to get higher margins, consumers have to understand what's different about each product, and this is best done in TV mass marketing," says Garnett. "Without significant brand value, a person picks on price. And when consumers start making preferences based on price, not value, it drives prices down."
Garnett also points to DRTV as the least expensive way to develop brand and the perfect venue to highlight a product's uniqueness.
"Consumers are heavily put-off by all the hassles associated with learning new technology," says Garnett. As a result, only sexy, early-adopter technology products fly off the shelves, while many extremely valuable products that are new and sometimes difficult to explain, go untouched. He adds, "DRTV — especially long form — provides the communication necessary to get past consumer intimidation and reveal the true value of that product."
He mentions, for example, the Kodak EasyShare 5300 printer (Response, May). "It really wasn't that radically different, but by explaining its value, they [Kodak] sold a tremendous amount of product," Garnett says.
The third hurdle for marketing CEs is finding the right DR marketers to convey the product's technology to the average consumer. According to Garnett, a lot of the products in the industry are developed by venture capitalists or those in the field of technology, and these people are used to doing business-to-business sales but lack the skills to market that product directly to consumers.
"I find a weird alienation between technology and consumer marketing," says Garnett. So he recommends hiring DR experts who are familiar with selling more traditional products, such as housewares. But he also warns that mediocre DRTV can turn a company off from other TV campaigns. "DRTV does not work by formula. It's easy to use formula to make stuff that looks nice, but it doesn't sell," says Garnett.
The DR Fix
One of Garnett's DRTV clients is Presto, a Mountain View, Calif.-based company that has created a solution service allowing users to send E-mails, digital photos and PDFs to individuals that don't use E-mail or don't have a computer. Basically, Presto runs the technology so that when someone sends an E-mail, it goes through the Presto mail system, and converts the information to be printed out.
Presto s line of printers for those who do not have traditional E-mail capabilities was launched via an all-media direct response campaign in November 2006.
The product launched through DR television, print, direct mail, E-mail and radio in November 2006. The company has its own Web site for retail, but also partners with retailers like Staples, Best Buy and Amazon.com. Tony Woo, Presto's marketing director, says a multi-channel approach has proved most successful.
"We decided to start off with DR, the reason being that Presto as a category is a new one," says Woo. "We thought it would be hard to drive business if we started to sell from a traditional approach. We needed to educate the consumer. As a retailer, it is hard to get in if you have a new category or a unique product. People need to understand why they want it."
Woo contends he's not sure how this year's holiday sales will hold up in the struggling economy. He's optimistic and overall, the DR marketing strategy has not significantly changed from year to year. "To a large extent, we meet a need in the market," says Woo. "Little things make a big difference, such as a change in creative or copy that can cause huge changes in consumer response. That's why we're always testing and refining — it can always be better."