With their financial performance stuck underwater, consumer electronics (CE) manufacturers are looking for new sources of profitability. Many see a lifeline in home networking. But recent Accenture research finds home networking not yet strong enough to rescue them from today’s dire financial straits. Despite some early enthusiasm for residential gateways, most consumers remain unaware of or indifferent to home networking. Three obstacles make overcoming this lack of interest difficult: Home networking lacks a clear value proposition. CE manufacturers themselves can ’t agree on the shape of the networked home—debating, for example, whether its killer app will be shared broadband access or enhanced entertainment experiences—let alone articulate a consistent and compelling reason for consumers to invest in wiring their homes. Consumers’ attention and wallets are focused on other electronics. Consumers have already set their sights on a host of electronics that they are eager to buy, from digital cameras to home theater systems. But they open their wallets for only a fixed amount of electronics spending—challenging the home network to supplant the other items on their wish lists. Consumers lack certain elements needed for a home network. Most consumers lack the devices that a home network is intended to connect, including multiple PCs. So they would have to make several purchases, not just one, in order to experience the full potential of the networked home. Without home networking to provide immediate shelter from the economic storm, CE companies must revisit fundamental consumer values and assemble a more bankable strategy. Our survey identifies four values that drive consumer electronics purchases: lifestyle fit, ease of use, functionality, and cost, in that order of priority. While the surveyed consumers are least satisfied with the cost of their current electronics, many report having projection TVs and other high-end products (instead of more affordable alternatives)—confirming their desire to meet these other needs first. While consumers expect prices to drop in the next two years, they may open their wallets for products that satisfy their other values, especially lifestyle fit, the highest-ranked attribute. We believe that CE firms can successfully exploit all of these values by creating lifestyle solutions—innovative groups of complementary products and services that seamlessly fulfill a specific customer need. In order to move to a lifestyle solutions model and realize its benefits, manufacturers should: - Build innovative and comprehensive clusters of products and services. To develop solutions that align with consumer lifestyle needs, manufacturers can reorient existing offerings around specific consumer behaviors; add complementary devices that enhance the solution; and integrate other vendors’ products.
- Reposition the brand to support these offerings. Manufacturers should transition to a solution-based brand by dominating a lifestyle space, like home theater or digital memories, and rounding out their offerings with bundles of content, software, and services. For maximum impact, lifestyle solutions must be priced to the consumer ’s wallet and display a distinctive brand signature.
- Bolster the brand with new approaches to marketing, merchandising, and distribution. Selling to consumers based on their lifestyle needs will require manufacturers to collaborate with retailers, content providers, and even other manufacturers to ensure effective, profitable sales of their solutions. Distribution channels must share the focus on solutions, rather than categories.
Lifestyle solutions represent an attractive profit opportunity, while advancing the vision of complete home networking toward reality. By first connecting devices and services that closely align with consumer values, manufacturers can reap financial rewards while promoting the longer-term benefits of a fully wired home. About the Research: This report is based on a study conducted by the Accenture Institute for Strategic Change and Accenture’s Communications & High Tech Operating Group. The insights reflect a combination of primary and secondary research conducted in the spring of 2002. White Paper Available
A white paper addressing the issues covered in this article, entitled "Watching for Value Migration in Consumer Electronics," is available to all Access subscribers. To get your copy order here.  To Top
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