Custom Electronics: Catering to specific audiences

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A generation ago designing and marketing home electronics was a simple process. Electronics companies made their rectangular black TVs and stereos, shipped them off, and then ran a few ads in the sports pages of the newspaper. There were no Disney computers complete with Mouseketeer ears. No hip-hop cell phones. No pale blue waterproof CD players for the shower. Things have changed. Father no longer knows best, and one size doesn’t fit all. Today, women control more than half of the dollars spent on home electronics. Minorities make up roughly half of the buying public. So companies have had to change.

Increasingly, devices and gizmos are being targeted at specific groups based on age, gender or ethnicity. Computers for teens. Radios and CD players in muted colors for women. Bilingual marketing campaigns from major retail chains. Nokia, for example, released a custom version of its 3300 music phone co-branded with hip-hop artist Jay-Z in 2003. The phone included Jay-Z ring tones and a copy of The Black Album, the rapper’s latest work, on a removable storage card. The Jay-Z phone, which cost $124 after rebates, was the first Nokia product targeted at a specific demographic. The company has had an ongoing advertising campaign to reach Black consumers for several years, including sponsorship of the Essence Festival at the Superdome in New Orleans.

The Jay-Z phone was built on that strategy, says Tracey Altman, the company’s director of retail marketing. “Music is a strong way to customize a phone. We definitely saw an increase in [Black consumers] buying our phones,” she says. Taking advantage of the 3300 phone’s ability to play music from removable memory cards, Nokia tweaked the phone to target another demographic. The colors were changed on the plastic housing. Music was added from the hit TV show American Idol. “You can customize the color of a phone by changing the nameplate,” Altman says, referring to the practice Nokia pioneered years ago. “We’re taking it to the next level. The American Idol phone is the same basic phone as the Jay-Z model, but it has different content and targets a different demographic.”

Today’s digital phones are essentially little computers capable of running small software programs. Nokia is exploring ways to use these add-on programs to customize phones for people who might not want a music phone. Seniors, for example, might want a health program on their phones so they can send information directly to their doctors, Altman says.

The Role of Women

Just over a year ago, sales of flat-panel plasma- and LCD-screen TVs rose dramatically, fueled significantly by women giving the nod to screens that can hang on a wall like a piece of art. But analysts say the role women play in technology purchases goes deeper than approving the purchase of a projection TV. Through direct and joint purchases, women in 2003 controlled $55 billion of the $96 billion spent on electronics, according to the Consumer Electronics Association. Manufacturers such as Sony say women are increasingly buying electronics, not just influencing buying decisions. Sony launched Sony Style stores across the country, primarily in upscale malls, to feature its full line of products. Women make up the majority of Sony Style customers.

In response to the shifting demographics, the CEA recently completed a report for its member companies titled “Five Consumers to Watch.” Those five groups of consumers are women, teens, seniors, Blacks and Latinos. Each of these groups presents opportunities and challenges for electronics companies, says CEA analyst Steve Koenig. Manu-facturers should understand those five segments as well as white male consumers, he says. At Sony, the company developed a line of products, Sony Liv, targeting women. The Liv line, consisting mostly of personal audio products, was designed to blend with home decor themes. Since 2002, Liv products have been sold exclusively at Target stores.

Have to Be Cautious

Sony spokesman Rick Clancy says the company sees consumer electronics continuing to become a more targeted industry. In addition to customizing products for women, the company has marketed gadgets toward young, single males and young professionals, he says. Sony is weighing strategies for individual ethnic groups but has not produced any products similar to the Jay-Z phone, Clancy says. “Increasingly, companies are developing whole segmentation strategies based on demographics, psychographics [such as attitudes and beliefs],” he says. “But you have to be cautious. It would be a mistake to think that all Latinos are the same. Cuban-Americans and Mexican-Americans can identify with very different things.”

In the computer industry, toy maker Mattel Inc. was an early proponent of targeted demographics. In 1999, the company introduced two lines of computers aimed at grade-school children, the pink Barbie and the blue Hot Wheels computers. More recent versions of the targeted computer go beyond gender-stereotyped pink and blue colors. Disney has joined with a German PC company to produce the Disney Dream Desk, a $900 setup that includes a flat-screen monitor with speakers shaped like Mickey Mouse ears. Targeting budding young computer users, the family entertainment company is bundling in several Disney software titles featuring its licensed characters.

Digital Lifestyles Group, based in Austin, Texas, has taken the custom-computer concept ever further, designing a stylish, wireless, modular communications center that includes a cell phone, portable music player and removable speakers that convert into a boom box of sorts. The company’s Web site shows a group of teens clustered around the hip-e computer. The flat-panel screen, which can be removed from the computer, hangs on the wall. Two girls sit on a bed, typing on a keyboard that connects wirelessly with a docking station base on a nearby desk. The basic package costs $1,699, with the phone and MP3 player offered as optional accessories.

Digital Lifestyles decided to enter the youth-computer market with its hip-e PC after CEO Kent Savage went shopping for a PC for his teenage son. He didn’t find anything with the cachet he was looking for. After a little research, Savage decided there was a market without strong competition, and he decided to expand on the company’s line of traditional desktop computers. “There are 33 million teens in the U.S. who spend [billions every] year when you include not just their allowances, but what their parents spend on them,” says Annie Bacon, the company’s marketing vice president.

The company brought in a focus group of teens to help design the stylized computer. “This is an age group that has never known a world without the Internet,” Bacon says. The company hopes to design another targeted computer in a few years when the hip-e generation heads off to college.

Nokia is exploring niche marketing of products such as the Jay-Z phone in part because it can be less expensive than mass-market advertising. But it comes with potential pitfalls. For example, men tend to focus on a gadget’s features, its bells and whistles, says Altman of Nokia. Women may care about the aesthetics of a product, but they have other questions as well, focusing on the practical side. “Women want to know how a technology is going to make busy lives easier, better and fuller,” she says.