business

Reach Out and Touch a Gadget Buyer

Electronics makers are trying to cut through the field's clutter and intensifying competition by going directly to consumers

By Cliff Edwards

One need only wander into the local electronics emporium to see what gadget makers -- and consumers -- are up against these days. Recently on display at a San Francisco Best Buy (BBY ) were 135 TV sets from 22 manufacturers, using six different technologies, ranging from plasma to digital light processing, or DLP.

The camera section had 32 digital shooters to choose from. Manufacturers would have been aghast, though, that half weren't on display because they had busted loose from their antitheft moorings and had to be stored on locked shelves.

AWARENESS-RAISING EXERCISE.

  The consumer-electronics business is a crowded and confusing place these days. With dozens of companies vying to sell hundreds of complicated gadgets that all look the same -- but aren't -- it's increasingly hard for a brand to cut through all the clutter. Which is why the likes of Samsung, Sony (SNE ), Dell (DELL ), and Kodak (EK ) are going directly to the consumer these days -- opening stores and kiosks, sending reps into Best Buys to push their products, and attending consumer-oriented trade shows like the four-day DigitalLife confab that kicks off in New York on Oct. 14.

"Competition has been escalating to the point of terror for manufacturers, even as traditional retail has become less consumer-friendly," says Kurt Barnard, editor and publisher of Barnard's Retail Trend Report. "They have to figure out ways to get closer to the consumer."

But what works best? Marketing consultants agree that boutiques and kiosks in upscale shopping malls and high-traffic tourist areas, executed properly, can help build brand loyalty by showcasing products in their best light. That's certainly what Samsung Electronics hopes to do with its new 10,000-square-foot "Samsung Experience" experiment in Manhattan. The idea is less about selling than about raising awareness of Samsung's breadth of products. The store showcases Samsung phones that play video, flashy TVs, and even a map of New York that can be manipulated with hand gestures.

NO-PRESSURE SETTING.

  Samsung hopes consumers who test-drive the products will consider its brand cool and spread the word. "It's brilliant," says Gary Stibel, founder and principal of New England Consulting Group. "It's a very simple way for the consumers to touch all their products, in an environment they can control. And it's not going to upset their retail partners because they're not going to sell any product."

With all the bells and whistles these days, shopping for a digital camera, flat-panel TV, or surround-sound system can be daunting. That's where the in-store demo comes in. At a New York Best Buy recently, a professional photographer hired by Kodak was helping customers figure out which digital camera best suited their needs. Perhaps not surprisingly, he steered customers to Kodak products, and at least one walked away with a camera from that brand.

Even better, say marketing experts, are the exhibits and workshops being sponsored at the DigitalLife show in New York by Intel (INTC ), Microsoft (MSFT ), and others to pitch media-center software and hardware that combines the functions of several devices, such as DVD players and personal video recorders. The workshops offer a no-pressure setting where knowledgeable people can educate consumers, says Laura Reis of marketing consultancy Reis & Reis. "Giving buyers the chance to check out the latest gadgets generates a lot of buzz if you have the right product," Reis says.

BASIC IS BEST.

  Still, the marketing push is no sure thing. Companies like palmOne (PLMO ) and Sony must pay high fixed costs to open shops, while holding prices near list to keep from alienating retailers who sell most of their wares.

Paying hefty trade-show exhibit fees also offers no guarantee your products will get good word-of-mouth from consumers and media attendees, and even with workshops and one-on-one time, giant trade shows still offer a bewildering array of choices. While analysts say the Samsung store could ultimately be a winning marketing gimmick, they point out that the huge expense might not be the most cost-effective way to go.

The easiest way of winning a sale, analysts say, is still the most basic. Have a cool product that convinces customers it's worth the cost. Alternatively, in a world of confusing choices, be better than others at helping consumers figure out the best way to make gadgets work together for a specific task such as downloading and listening to music or watching and recording high-definition TV.

"If you have one or the other, consumers will go out of their way to get your product. If you have both, you're golden," Stibel says. In other words, marketing is only half the battle.

Edwards is a correspondent in BusinessWeek's Silicon Valley bureau

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