COMPUTER REPORT: Selling PCs to the masses. With the increasing overspill of work into the home, the domestic PC market should be heading for a boom time, but first it must sort out its branding. By Steve Shipside

By STEVE SHIPSIDE, campaignlive.co.uk, Friday, 04 September 1998 12:00AM

You know you’re in trouble when the strongest brand in your market is a bunch of guys in Day-Glo protective suits, jiggling away to the tune of Shake Your Groove Thing (Peaches and Herb, 1978). Worse than that, the brand is actually just a component inside the product, and enjoys massively higher recognition than the product itself ever has. Intel, of course, would (rightly) point out that daft as the Intel Pentium MMX campaign has been, it has nonetheless achieved the considerable feat of turning a semiconductor processing unit into a household brand.

You know you’re in trouble when the strongest brand in your market

is a bunch of guys in Day-Glo protective suits, jiggling away to the

tune of Shake Your Groove Thing (Peaches and Herb, 1978). Worse than

that, the brand is actually just a component inside the product, and

enjoys massively higher recognition than the product itself ever has.

Intel, of course, would (rightly) point out that daft as the Intel

Pentium MMX campaign has been, it has nonetheless achieved the

considerable feat of turning a semiconductor processing unit into a

household brand.



Cynics might point out that it doesn’t face a lot of competition, with

most manufacturers seemingly content to eschew branding in favour of

pushing beige boxes with ever-bigger numbers on them. The computer

market in general is typified by whirlwind product development cycles,

tumbling prices and explosive growth. More than any other industry it is

seen to embody bare-knuckle capitalism, but figures from the Henley

Centre suggest there’s one threshold still to be stormed: the home

market.



Bill Gates’ 80s dream to see ’a PC on every desk’ now seems decidedly

modest, but a PC in every living room remains as remote as ever. From

the beginning of the 80s to 1986, the computer enjoyed rapid uptake into

the home, going from pretty much nothing to around 25 per cent of homes.

In the 12 years since then, however, that figure has only risen to 30

per cent, a growth rate far behind the business market.



’I’d say there simply isn’t a home market as such,’ Chad Wollen, a

consultant at the Henley Centre, says. ’Not like TVs. A consumer

comparing the choice of two weeks in the sun or a Pentium MMX that will

be obsolete in a year isn’t suddenly going to buy the computer. Instead

what’s happened is that people are working more from home and that’s

created reasons for having a computer there. But it’s hardly about

gathering around the IT hearth.’



Jeff Meers, the president of the European sales and marketing services

group for the world’s leading IT press and research company, IDG,

agrees.



He points out the marketing implications for the trend in home PCs.

’Customers don’t just buy a computer, they refer to an influencer,

someone technical to help you know what you need. Home consumers are

taking the brand equity of business-to-business sales and extending that

to the domestic market.



Take Hewlett-Packard, for example. Their printer brand is a trojan horse

and people know that HP is the dominant printer in the office and they

take that brand value home with them when they buy.’



Which is all well and good, you might think. Not so, says Simon Avison,

the managing director of the strategic marketing consultancy, New

Solutions.



’Things are going to change dramatically. The market penetration at the

moment is very high at work - around 90 per cent - but very low at

home.



So we will see a lot more growth potential in consumer rather than

business.



The computer companies will have to look at developing brands for the

consumer market, or else partner those with an established consumer

franchise.’



New Solutions has worked with Nokia as well as PC manufacturers and sees

lessons to be learned from the mobile phone market. ’Initially, mobiles

were sold on their benefits to a business person, so they were sold as

hi-tech kit. If you look around, the penetration has reached around one

in two people in some markets, notably Scandinavia, and levelled

out.



At which point you need a different strategy to target the

remainder.



For them you need a softer approach, about keeping in touch with friends

and family. As the market matures for PCs, so they will have to identify

different consumer market segments, and find the triggers for those

users,’ Avison says.



Hardly marketing heresy, so why has the computer business been so slow

to turn to softer approaches, based on brand or benefits, rather than

gigabytes and megahertz? ’It’s fascinating to see the way the IT

industry approaches selling products,’ Meers observes. ’It’s a totally

product-led business, run by engineers, not marketing people, and it’s a

push industry where they first come up with a product, then push it out

to the consumer. The marketing effort goes into getting products into

the channel, and the consumer simply gets left out.’



That reluctance to market to the consumer is partly because of the costs

involved. ’In business-to-business the quantities are so much greater,

and the margins are so much higher. If Bass wants to put PCs in pubs and

link them up, they put in orders of 500 a shot, plus a deal for systems

integration and professional support. Sell a PC to Mrs Jones and you

sell one, through a retail outlet that takes a cut, and when there’s a

problem she rings you and ties up your technical support team for free,’

Meers says.



If that home consumer nut is to be cracked open, however, it’s not going

to be with the traditional approach of product comparison - pushing

ever-faster processor speeds and fast-breeding memory. The home consumer

neither cares nor understands, or as Wollen puts it: ’MMX - wasn’t that

a bicycle craze in the 80s?’ Getting through to the consumer is going to

mean developing distinct branding, the problem being, as Meers points

out, that ’the IT industry on the whole just doesn’t understand the

importance of brands.



There are exceptions, notably Bill Gates and Intel, but manufacturers

have allowed Intel to be the pull, abdicating a lot of their brand

opportunity to them.’ Which would seem to defy marketing logic.

’Absolutely. I would use the analogy of big brand companies actually

doing own-label products. All credit to Intel of course, but I think

Intel would like them to put their own money in the marketing pot and

build up their own brands.’



Beige boxes might seem unlikely candidates for branding but,

theoretically, all that ad agencies need is the go-ahead. ’Of course

it’s possible to brand them,’ Dave Cockburn, a planning director at J.

Walter Thompson, says. ’It’s a purchase of pounds 1,200 or so, and

parents buying specifically for really young children often don’t know

about computers, so they’ll go for a brand name, brand values. The

opportunity is out there.’



But before they can exploit it, most companies are going to have to

rejig their operations. ’It will be interesting to see how companies

change structures,’ Avison says. ’In particular whether they opt for

consumer divisions and take on staff with the necessary skills and

experience in fmcg. Plus there will need to be a rethink of budget

allocation. A lot of companies are very mechanical when it comes to

marketing budgets which are generated as a proportion of sales on a

particular product line. Worst-case scenario is that if you have a

development product with small sales, but which is really going

somewhere, it will still have a small marketing budget.’



As with every rule there is one exception to the bland branding problem,

and that’s Apple, arguably the only lifestyle brand in computing.

Apple’s grammar-defying ’Think different’ campaign totally ignored the

bits and bytes approach to computer marketing.



’’Think different’ was about ten months ago, at a stage when Apple was

going through a tough time,’ Alan Hely, Apple’s marketing director in

the UK, says. ’It was a point of no return and a getting back to the

basics of what the company stands for. There’s no product mentioned, no

price promotion, no comparisons - just brand beliefs and fundamentals.

It’s taking communication even a stage further than the Nike style of

advertising.’



The Nike reference isn’t as left-field as you might think. While Apple

hasn’t been targeting a youth market, its brand strength has won it

awareness all the same. Hely cites a study by the European consumer

goods researchers, GfK, on brand recognition among 14- to 20-year-olds.

The results speak for themselves. ’Companies like Dell were getting just

above 20 per cent recognition, Microsoft around 90 and Apple just below

100. When asked which brand they preferred, IBM scored eight, Compaq

six, Apple 46. That’s the power of the brand,’ he says.



Apple does now have a consumer product: the iMac, an internet Mac. A

daringly futuristic, all-in-one machine, encased in translucent blue

plastic which is to be seen in action in Apple’s new campaign. Whether

the iMac’s appearance and Apple’s branding can open up the home market

remains to be seen. If it works it will be proof positive that it’s time

for the business to rethink its approach to branding.



There’s no time to waste. The next step in the development of consumer

electronics is likely to be the convergence of television and computing

to create enhanced TV, where digital broadcast images are tied to

information stored on the internet. A number of Japanese TV

manufacturers have already licensed Microsoft’s Windows CE operating

system with that in mind. Microsoft itself has joined with NEC, Alcatel

- the French telco - and DirecPC - an internet by satellite company - to

take a stake in the French consumer electronics giant, Thomson

Multimedia.



Unlike the computer companies, these players have a comprehensive

understanding of home branding and while the computing side of the

equation is crucial to the function of such devices, it’s beginning to

look unlikely that the brand awareness will reflect that.



As Avison puts it: ’With the radical convergence of TV, phone, and PC,

we’re seeing all-new digital media, and once that happens there are big

consumer brands well positioned to take control of the market. There is

a risk that the likes of Sony will simply walk in and take over.’



This article was first published on campaignlive.co.uk

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