What we can learn from the fall of SONY and Panasonic

Tom Dougherty, CEO – Stealing Share

15 May 2009

Like minded claims don’t help Sony or Panasonic

Yesterday it was SONY (lost $1 billion yen last fiscal year) and today it is Panasonic (378.96 billion yen loss, which comes to $4 billion).  It looks as if the manufacturers of high-tech devices are in for a rough time. I wonder why that is?

To fix the problem, Panasonic vowed to press ahead with “drastic business structural reforms” to try to engineer a recovery. But the question I ask is will this fix the real problem? Is the problem simply a structural business issue? My educated guess is no.

“Innovation is a category benefit and cannot be owned by any of the brands that compete for that mind space.”

The problem with most of the high-tech manufacturers is that they believe we are all simply buying innovation. Because they believe this, they also believe that as soon as they “regain” their innovative edge everyone will once again flock to their products.

Nonsense.

No one buys a flat screen TV, computer, portable music device, or any other high-tech device unless they believe it is innovative. Innovation is a category benefit and cannot be owned by any of the brands that compete for that mind space.

What all of these manufacturers are missing is just how much the consumer is woven into the fabric of the purchase decision. They neglect just how important personal affirmation is in every purchase decision.

The question Panasonic and SONY need to ask is, with all things being equal, how much more special does the purchaser feel about themselves when buying a SONY vs. a Panasonic? 

When buying a flat screen TV, the purchaser first narrows the choices based on the picture size they prefer, and then they compare the offerings and consider value. What these manufacturers miss is that we, the consumer, are part of this value equation just as much as price and features. SONY and Panasonic are confused and are therefore attacking the market as if it were immature. Because features and benefits drive a category when it is immature. A mature category is very different.

Given the confusion over not only what a brand is (like innovation) but also what it should do (like identify the manufacturer), the market will naturally default to the lowest cost provider. Want proof? Just look at who now controls the US Flat screen TV market.  Vizio, followed quite closely by Samsung. 

It seems that SONY did not realize that for years, when people purchased a SONY TV, they used to leave the little sticker on the bottom corner of the screen that said…”It’s a SONY.”

This peculiar habit was not about the SONY TV. It was about the person who purchased it.

See more posts in the following related categories: Panasonic Sony Televisions Vizio

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