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The social networks to link these agents may already exist when an innovation is introduced into an existing class of products, but it is likely that at least components of them will need to be constructed afresh where substantially new products are concerned. In the research literature, there are various formulations stressing the role of networks in innovation.
Whatever the formulation, it is clear that in studying new products, we need to look beyond their original inventors, or the champions they find in manufacturing industries. We find particularly complex webs of social interaction where new IT products are concerned, with a large number of different industrial, government, and consumer communities involved, as amply illustrated in the case study chapters which follow. New information technology and consumer products What is new about new consumer IT products?
If we are correct that they embody a revolutionary technology, the key step on from earlier means for reproducing and disseminating information is the application of microelectronics and related inventions. Consumer IT applies these new capabilities to consumer goods and services.
Innovators, aware of the opportunities offered by IT, apply it to consumer products and thus create new technological trajectories in these products. Change in the capacity of core technologies implies new opportunities for applications, ranging from minor improvements in familiar products e.
For example, it is possible to use a word processor just as if it were a typewriter. While innovators can talk comfortably about changes in the technological performance of the core technologies deploying measures of information- processing capacity such as processor speed MIPS , feature density, channel capacity, megabytes of storage, etc.
Still, we find some IT- related terms being widely used to describe certain trajectories of consumer product innovation. Thus, as trends in the heartland technology provide new opportunities for developments of applications, so technological trends in IT applications are created and named. We will now examine each aspect in turn. High volume data storage New products which allow for higher volumes of software storage are being introduced.
These media enable better quality reproduction, more rapid access to material, and storage of larger volumes of information than previous audio technologies, and are capable of high levels of programmability e. Although electronic still cameras have been introduced, without great success to date, manufacturers have agreed to standardise digital VCR technology for models expected to appear in the mid- s.
But even analogue video systems are displaying increased storage capabilities: new video recorders squeeze twice as much on to tapes as earlier models. When new products involve data storage, increases in storage capacity are also typical: consider the progress in home computers, from no data input, to tape, to floppy disc, and now to CD-ROM. Miniaturisation Decrease in the size of equipment, since microprocessors are much smaller than conventional valves and transistors.
We shall see below that portability and mobile communications complement each other in important ways. Potentially, then, these devices are very flexible — they can be programmed and reprogrammed to behave in different ways — effectively to become different pieces of equipment. Software becomes essential to drive the hardware, with programs a key element of the total system and an important part of its costs. Software also becomes highly important, as products allowing access to information resources are developed.
Another relevant term here is control. This means that the new consumer products are not only involved with delivering, recording, or transmitting information: they may also be controlling devices on the basis of programs and data inputs. Thus new consumer IT also encompasses household appliance control and also the use of IT to control external services, as in emergency alarms.
Additionally, improved interfaces in the form of new controls and displays are added to devices, as IT permits more detailed monitoring and reporting on performance. The new controls may be designed so as to aid users faced with complex decisions e. With many new products the package of information delivered, or the operations performed by the product, is responsive to inputs from the user. For example, queries to an on-line database yield a specific selection of material, as opposed to a traditional encyclopaedia or TV broadcast which is always the same.
There are different levels of interactivity, ranging from minor enhancements to devices e. A familiar example is teletext, which presents text information via the TV screen. Information of all kinds is increasingly being generated in digital form, which opens up additional possibilities for processing it.
Computer-communications Data can be processed in computers and transferred from device to device via telecommunications links. New consumer applications of IT telecommunications include cordless and keypad telephones and answering machines, which are the most visible devices at the time of writing. Multi-user communications are mediated by some of the new products e.
In principle, messages can be conveyed from one consumer product to another in a remote location, as is the case in some alarm systems, and in some integrated hi-fi systems. Intercommunicating devices become more feasible as microelectronic controls are added to products: this means that devices can report on their status to remote interrogators, and be controlled remotely — for example, telephone answering machines can replay the messages they have recorded over the telephone system.
Thus the ubiquitous remote controls mainly hand-held infra-red devices , used for control of audio-visual equipment, are being complemented by more long- distance telecontrols. It is becoming possible to transmit greater volumes of data, in part through data compression techniques, in part though new methods of delivery of data, including new cable TV CATV networks, and the early stages of the evolution from existing telephone systems towards the Integrated Services Digital Network ISDN.
Mobile communications cellular and portable telephones have been very successful with industrial and professional users, and efforts are underway to introduce consumer cellular telephony. Asynchronicity is another term with a pedigree in the computer field.
While broadcasting media to a large extent freed information from space constraints, and telephony did the same for interpersonal communications, these media were still highly time-bound. The user had to be around at the right time to receive the broadcast or telephone message. The video recorder and telephone answering machine are examples of innovations which loosen this constraint, and new media such as electronic messaging are premised on the functionality of asynchronous communications, allowing users to interact at a pace that is mutually acceptable.
The opportunity to time-shift TV broadcasts by video recorder is a further contribution to the demassification of this medium. Many consumer electronics products already were asynchronous — record and CD players, for example — but the facility is now added to a wider range of media: and as they become asynchronous they also tend to become more interactive.
They can be very diverse, precisely because IT can be used to enhance the informational components of just about any product. Efforts to apply IT in such products may take one or more of a number of forms — all of which will be seen to relate strongly to the specific characteristics of IT identified above.
Innovators may seek to improve the perceived effectiveness, quality or power of established consumer technologies by applying IT. As well as enhancing familiar products by incorporating microelectronics within them, some consumer IT innovations are new products, which accomplish activities in new ways, sometimes facilitating such change in behaviour that we may begin to speak of new activities. Some products already mentioned are often identified as new products: home computers, microwave cookers, CD players, and so on.
Whether consumers see innovations as radically new products will probably depend on the extent of learning required to use them, or the extent of behaviour change associated with this use. Thus video games consoles and home computers used for games-playing both provide alternatives for traditional board games and add interactivity to TV viewing. Interdependence of systems of products In addition to new products, we can also conceive of new systems of products.
This goes beyond, say, simply sending audio signals from an amplifier to other rooms in the house; it allows control of the amplifier, the radio, and other types of equipment, from distant locations. More ambitious home automation systems allow for the control of devices from a central location, or from any point where a communication terminal can be used.
It thus becomes possible to think of consumer technologies, not just as single products, but as systems or networks which involve interdependence between products. Specific items of equipment can no longer be viewed in relative isolation: their use will be affected by the structure of the network in which they are located. Telecontrol is extended to increasing numbers of devices, and — or so it is forecast — this will lead to new forms of integrated home systems.
New communications systems are emerging within the home, from simple infra-red controllers and devices that communicate via mains signalling using the household electric circuitry e. We have seen that products can be applied to many household activities, and that they can range from minor modifications to familiar household equipment to whole new systems of consumer products.
But a further set of distinctions is important for the innovation and diffusion process, in large part related to the types of complementary innovation required by a new product. Some innovations are stand-alone devices sold as a complete package by themselves.
A solar-powered calculator is an IT example. It may be helpful to identify IT products as stand-alone if their use is not dependent upon informational inputs from other products. User instructions can be input by typically pressing a few buttons, twisting a few dials, etc; and users can produce their own software as in home-made video films and musical compositions. Given the nature of IT, many products can be in principle linked to other products, so the definition of stand-alone may in large part reflect usage patterns and the images of products as diffused through example and through the media.
The same is true for the video recorder, but not the camcorder. Products that can be networked, but which function adequately by themselves are appropriately treated at present as stand-alone products — although this may change if home automation systems take off in the future.
The microelectronics- controlled washing machine is currently a standalone innovation, since the consumables purchased for it are not primarily information inputs. We can also put in this category other domestic appliances such as microwave ovens and many new cookers, dishwashers, and products which are mainly used by consumers to create their own recordings or informational outputs, such as camcorders, music synthesisers, and the electronic still camera.
While some of these products may be used with purchased software, they are typically used for user-produced information, with their consumables being blank tapes, discs or cartridges rather than pre-recorded information products. By contrast, software-dependent devices are critically dependent upon externally supplied information, in the form of broadcasts, telecommunications, or data supplied on information storage media like discs and tapes.
Let us first consider information products supplied on tapes, discs, and similar media, where the consumer typically buys or rents the physical carrier of the information along with the information itself. Software is the more traditional informational consumable: piano rolls for player pianos, audio recordings for LP players and cassette recorders, and more recently videotapes for VCRs. Software programs are now also supplied in order to control the functioning of products in ways beyond simply reproducing recordings.
Computer software for home computers and video games consoles is the most obvious example; software may be applied to enhance some stand-alone products, e. Both types of information markets grow alongside hardware markets — and in scale, often they surpass it e. Standards have proved very important in the delivery of both kinds of information product: the agreement of CD-Audio standards doubtless facilitated the diffusion of the hardware and software alike; while some home computers have reportedly been regarded as less useful on account of limited availability of suitable software.
Broadcast-dependent devices receive informational inputs — mainly software — delivered by radio frequency transmissions or CATV links. One common early view of radio was that it would be used predominantly in this way, but this has not been the case. Large audiences mean that the delivery of programmes per individual user can be relatively inexpensive.
Consumers access radio and TV programmes, traditionally paid for by licence fee or advertising unlike software supplied on CDs and LPs. Subscription services and pay-per-view services are still relatively uncommon, at least in the UK, so while users recognise that services are needed to make their devices useful, these services are neither paid for individually, nor are they delivered via a physically tangible medium.
Satellite and cable TV operators are seeking to change consumer expectations, by offering consumption related to payment on a per programme or per channel basis. These operators have to offer programming advantages in competition with existing channels, and with videotape rental outlets.
RDS can be used for equipment control: the signals can be used for tuning purposes e. Radio transmissions have occasionally been used for other types of equipment control — for instance, some domestic storage heaters have been instructed remotely in this way to turn on when electricity tariffs are at lower levels, and clocks are currently being marketed which set themselves on the basis of ultraprecise radio timing transmissions.
Network-dependent products here refers to those relying on telecommunications networks. The telephone network has long provided a service to consumers, who are used to paying for the ability to communicate on a one-to-one basis rather than for the access to software on the network. The service supplied, then, is not typically information provision though various information services — time, weather, etc.
These are innovations involving the network supplier, or new service companies who have hooked into the network. New IT has facilitated the development of new telecommunications peripherals and facilities. Conventional telephone answering machines, by contrast, are widely diffused peripherals.
Asynchronous messaging — the storage of text or voice communication, so that the recipient or some human surrogate does not need to be physically present for a message to be left — becomes possible via facsimile fax , electronic mail, videotex and voice messaging systems. While these have not to date made a substantial impact on consumer markets in the UK, they have become established in some business settings.
The newer telecommunications network services also enable some applications that are in some respects like the one-to-many features of broadcasting. However, the services we are here considering are not broadcast continually like teletext or only at fixed times like conventional TV. They are transmitted to the user on demand, and may be adapted to user requests as in the case of databases which deliver only material chosen by certain keywords. In some cases the services are many-to-many: in chatlines which may be voice or data , the user can add messages to an accumulating correspondence, or can immediately interact in real time with other users who are currently on-line much as several people can join in a CB conversation.
Unlike the three earlier classes of consumer IT product, how many other users there are is of direct consequence to the consumer of network-dependent products: since each successive adopter means more other users with whom one can potentially communicate. The differences in diffusion dynamics are often only a matter of degree, since other types of innovation feature some indirect equivalents: e. All types of software-dependent product require that informational inputs are made available, in the form of storage media, broadcasts, or network services.
Hardware manufacturers are thus dependent upon the availability of these complementary service products in order to secure consumer markets. One of their big challenges must be convincing the potential users that worthwhile services are available and will continue to be available for a reasonable time at reasonable prices. Our case studies The range of IT-based consumer product innovations is so great that it would be impossible to follow all of them in any detail. Thus we chose three particularly interesting examples of radical consumer product innovation for particular attention, although we have been continuing to assess the whole field of consumer IT in less depth.
Our cases were selected to exemplify some of the most important types and trajectories of development, as well as for more pragmatic reasons. We sought examples where there is significant product development underway in the UK, which considerably restricted the range of potential cases.
We have cases of software- and network-dependent innovations, but not stand-alone or broadcast- dependent products. The bulk of our research activity has been conducted within the UK and, to a lesser extent, Europe: we have been able to interview some US and Japanese informants, but we were aware that our study was bound to be limited geographically, so this influenced our choice of studies.
Since IT development is very much a global phenomenon, we cannot claim to have comprehensive evidence on the technologies we chose to study; nevertheless, we believe that we have amassed extensive material on all of them, even if we have much more depth of knowledge on UK and European developments.
We have selected three case studies: 1 Home automation products. The challenge for suppliers here is to produce and market not individual products, but to succeed in creating and marketing a viable mode of integrating products and providing control systems for such products. These are examples of network-based goods and services. While versions of services like electronic mail and videotex have been aimed at consumer markets for a decade now, there has so far been little success in achieving this; and while facsimile has taken off in business applications, it has yet to become familiar as a consumer good.
These derive from an instance of a software-dependent innovation. The new products here use optical disc technology, already familiar as a medium for audio recordings CD-Audio , to deliver additional types of information text, graphics, video in new, more interactive ways. These products and technologies are a very small sample from a very large range of new consumer IT, and we do not claim that they are typical of consumer IT in general.
They do, however, provide important illustrations of many of the features of new consumer IT that we have identified in this chapter, and Figure 1. Our research methods have been conventional: interviews and study of trade and other literatures. We have attended trade shows and industry workshops, and perused the trade press. But in addition to drawing on the innovation research literature discussed above, we have drawn on a second body of work, to which we now turn — social studies of consumption.
Notes 1 New products can be physical artefacts such as a compact disc layer or services such as telephone call diversion. Throughout this book we use the term 'products' to apply to both, unless the context makes it clear that a distinction is necessary. Over the years, elaborations and rebuttals of such readings have reached sophisticated levels. See E. Consumers may be wary of such information sources, of course, but they can bring new products to their attention, and lead them to actively search out more information about them.
See, for example, Jonathon Gershuny 'Transport forecasting: fixing the future,' and Roy Turner and Samm Cole, 'The Brighton Marina: a case study in arbitrariness, uncertainty and social welfare in planning models' in Tom Whiston, ed. The integration of the equation yields two constants, one representing the take-off point and one the speed of the whole process; applying it to real data assumes that we know the parameters of the potential user population.
Coombs et al. Chapter 5 notes some evidence that the same may be true for interactive compact disc CD-i players. Much of the current literature on the implications of IT is little more sophisticated, moving from an extrapolation of trends in the performance of microelectronics and optical fibres etc. For the view that one of the factors behind Japanese success in innovation in high technology comes from just such scanning, see F.
Teece, 'Firm boundaries, technological innovation and strategic management,' in L. Thomas, ed. Apple successfully commercialised these and, despite having borrowed the idea in the first place from Xerox, subsequently sought to stop Microsoft emulating it in its 'Windows' environment for PCs. Some commentators argue that conventional estimates of productivity are not appropriate to a new paradigm. Rogers discusses interactivity, asynchronicity and demassification, and his Table 2.
Demassification refers to the declining dominance of traditional mass media, where it could be assumed that users would be receiving effectively the same service - and indeed, that large proportions of the population would be viewing the same programme at the same time. In addition, some new products apparently restore some of the scope for do-it-yourself home entertainment do-it-yourself video recording, music synthesisers, etc.
Cawson, 'Innovation and consumer electronics,' in M. Dodgson and R. Rothwell, eds. The term 'pico-' has been employed as a prefix for even smaller products, but has so far failed to catch on widely. Thomas and I. Miles, op. But the cost-reduction and other features of new IT have given them a powerful boost. Although we were able to illustrate the discussion with reference to consumer products, most of this literature dealt with industrial innovation. Many commentators — as we shall see — suggest that this limits its value for thinking about consumer product innovation.
The demand for industrial products arises from demand for final products, which include consumer goods and services and also government expenditure, military activity, and the like. The purchasing decisions are made by firms or, rather, their managers and not by members of households. But how far do these features make consumer products and markets different in other respects? A first point to make is that social science has diverged in its analysis of the two types of market — and to some extent in its analyses of consumer and industrial products too.
Several distinctive lines of social research are concerned with consumption, and often these are conducted in considerable isolation from related whether parallel or divergent in reality! Thus the sociology of consumption, and related areas of cultural studies, have developed their own terminology and conceptual tools. At first glance these have little resemblance to those examined in the preceding chapter, although there is more in common than may meet the eye.
This work does, however, add to the contribution made by innovation theory in stressing the active role of the user in the process of innovation, and by drawing attention to the symbolic nature and meaning of products. We shall review some of the contributions which these studies can make to our task in this chapter, This work does not constitute the systematic theorisation of innovation, as attempted by the writers whose work was reviewed in Chapter 1, and we make no attempt to be exhaustive.
Rather, we wish to draw attention to several approaches, or ways of thinking about products, which we have found useful in our study. Our review is structured in terms of the various ways in which consumer products and markets may differ from their industrial equivalents. But before going into these, we wish to make one point about the markets themselves, and one about the divergent lines of research.
As to markets, it is important to stress that each type of market is actually composed of a vast number of sub-markets. In other words, each type of market is internally highly heterogeneous, and any sharp distinctions drawn between them are liable to blur, in practice, in the case of at least some of the sub-markets. Both industrial and consumer markets include diverse sub-markets such as those for livestock, energy supplies, and electronics goods.
To be sure, the marketing and treatment of pets differs from that of farm animals, the volumes of power consumed by firms and households differ by many orders of magnitude, and the electronics they use may be of quite different orders of complexity. But in many cases the two major types of market do overlap in practice. For instance, though some industrial markets concern raw materials, near-finished products and specialised industrial equipment, others deal with products that are physically identical to consumer products such as hammers, nails, telephones, video recorders and basic telephone services.
Consumer products are often mass market versions of what were first industrial products — from the sewing machine to the home computer. So differences between industrial and consumer markets may often be matters of degree rather than of absolute contrasts; some consumer markets may be more like the typical producer market than like other consumer markets, and vice versa. Even if often flouted in practice, a number of features do appear to distinguish many consumer and producer markets from one another.
We shall shortly consider some of these features. But first a word about the approaches taken by social researchers to consumption as contrasted to industrial behaviour. There are numerous strands of social analysis applied to consumption, though much of this work only tangentially addresses technological change. As we shall see, much of the analysis is influenced by studies of fashion, and of consumption as expressive of status and social values.
Some arguments of this sort can be dismissed as the attempt by advertisers and market researchers to legitimate their activities by portraying themselves as responsive to consumer demands, but there is also a large body of work — spanning studies of specific youth cultures through to diagnoses of postmodernism which see consumption as something that is produced by consumers themselves, using the artefacts that industrial society supplies them with.
Or it may reflect rather more subtle and not necessarily conscious desires to rationalise everyday life — in this view new consumer products are related to the domestic science movement of earlier years, which attempted to impose scientific management upon domestic work.
Even where these particular managerial values clearly informed the deployment of a new technology as opposed, say, to the aim of increasing customer satisfaction or introducing new product lines , often the incomplete knowledge of all parties concerned both about the technologies and about the organisation of the labour process itself affects outcomes decisively.
The interests and capabilities of various levels of employees and technical experts has to be negotiated, and users of new technologies often proved able to shape the ways in which they were used, to greater or lesser extents, and to more constructive or as in the case of industrial sabotage destructive effect. Contemporary labour process analyses rarely portray technologies as simply expressive of managerial values — and, in keeping with innovation research, often portray managerial technical choice as bounded by the existing technical knowledge of the managers.
But there are still analysts of consumer product innovation who are prone to see consumers as being putty in the hands of producers — and who cite the absence of certain desirable innovations as indicative of blinkered attitudes or unsupportive values, such as men being happy to see women chained to housework and thus not researching ways of automating laborious and time-consuming tasks such as vacuum cleaning and bed-making.
But it smacks of elitism to portray consumers as pawns of producers, who will willingly absorb whatever innovations are thrown at them. Moreover, the innovation literature would suggest that innovators pursue opportunities perceived on the basis of knowledge of existing technologies and expectations as to their trajectories — that innovations are developed on the back of past innovations.
The absence of the sorts of labour-saving innovation cited above may well derive from the lack of perceived opportunities for applying technologies to these functions at viable costs , rather than from an absolute lack of concern for them. We shall return later in this chapter to considering how the dynamics of IT research may be shaping consumer product evolution, and what implications this has for our study.
Let us now turn, as promised, to a more detailed scrutiny of similarities and differences between industrial and consumer markets, beginning with the important issue of the symbolic role of products in consumption. But how different are they in practice, and what importance might this have? It is often assumed that different rationales and rationality are displayed by industrial and consumer purchasers. The most prominent issue in the discussion of consumer and industrial markets is the supposed contrast between consumer markets as being, at least in large part, fashion- and symbol-driven pursuits of objects of desire.
Households have a range of requirements to satisfy within their budgets, with pleasure and the maintenance of family relationships accompanying the more mundane goals of nutrition and shelter. A given product can satisfy different motives, sometimes simultaneously: for example, the food processor may be acquired to speed meal preparation, to make the experience of gourmet cooking more pleasurable, or to render its results more impressive.
An influential approach to the symbolic nature of consumer purchases, focusing on fashion, actually resembles the diffusion curve literature in certain respects. While it is often the case that the pioneering elite will consist of the rich and famous, it is also possible for the relevant innovations to emerge from counter-cultures.
This is particularly the case in fields such as popular music, clothes and hair styles, for example, where important innovations have often emerged from deprived groups, often in part as expressions of their identity. Many studies by historians and cultural researchers have examined such processes in the creation of fashion, and their work documents an important element in the diffusion of many consumer products. It might be suggested, however, that the analysis is relevant to greater or lesser degrees to different classes of product.
Fashion may be the major issue in the selection of some products e. Note that fashion may also influence the choice of product within a product class e. We could speculate about characteristics of products and markets that may be critical here, such as frequency of purchase, degree of social observability of purchase, and so on, but for now we shall just remark that one could examine many of the studies in this area without discovering any discussion of factors other than the symbolic.
This is even true when one looks at studies covering broad historical periods, when substantial changes in living standards have been associated with the diffusion of household appliance and consumer durable innovations. We hope that this study contributes to the understanding of the ways in which functionalities are identified and perceived.
So, in addition to the characteristics of products mentioned above, we should also note that there are important differences between the development of products that put a new symbolic gloss on a standard activity, and offer few fresh opportunities for use; and the sorts of product innovation that allow users to do new things in new ways. While this goal may well require attention to such factors as work-force morale, good consumer relationships, environmental and other regulations, business decisions are nonetheless structured around a set of largely economic objectives.
Firms do not act: individuals act as their agents, and are necessarily acting on the basis of their own perceptions — and calculations as to their self-interest. Assumptions as to the rationality of purchasing behaviour in industry are rarely tested empirically, though there are grounds for thinking that some purchasing decisions are far removed from questions of immediate profitability.
Advertisements aimed at business show such perceptions to be played upon by suppliers. Impulse buys may happen — as observation suggests is the case at trade fairs. The demarcation between consumer and industrial purchases that puts pleasure and symbolism on one side, and rationality and efficiency on the other, then, is not a very sharp one.
Nevertheless, consumers are typically purchasing for themselves or their families, while industrial buyers are acting as agents for organisations — and may well be constrained by formal and written-down rules governing their decisions. And when it comes to new products, many of the same symbolic issues may be faced by firms and private individuals alike, including the images associated with the innovations themselves.
For instance, the personal stereo Walkman appears in its early days to have been perceived as a product for youth, so that other users may have felt inhibited about its use; this appears to have faded away as the product has become more widely socially acceptable. Some types of consumer may wish to appear go-ahead and experimental, while others seek to reaffirm traditional values and identities, and the choice of products and lifestyles is liable to reflect this, within limits. Certainly some products — faxes, mobile phones — are deployed by some firms to convey an image of modernity.
But other firms may wish to cultivate a sense of their solidity and dependable traditional service, and may thus deliberately avoid making or overtly displaying certain innovations. Images may be less easy to control than firms would hope: thus users of home computers have been liable to see IBM as providing conservative and costly products, even if these have been setting the future industry standards for workhorse computers, while Apple has been seen as providing fun and innovative, but rather maverick and also costly, innovations.
So symbolism may be associated with the entire class of consumer product e. Innovators as we shall see, are not unaware of the need to take these dimensions into account. Symbolism may itself be studied in innovation and diffusion terms: innovation and diffusion is involved in the creation and circulation of concepts about new products.
To the extent that industrial purchasers have a more utilitarian orientation to the products they purchase, one might expect them to display greater concern with reliability of the technology than do final consumers. Often industrial versions of products cost more than consumer versions, one factor being that their buyers are more prepared to pay a premium for reliability.
They are also more likely to be willing to shoulder the costs of additional services such as back-up facilities e. Consumer preferences in terms of the trade-off between price and reliability are likely to vary considerably between richer and poorer, and vanguard and laggard consumers — though we should not underestimate differences among industrial buyers. The product cycle model would tend to suggest that reliability problems will decrease as suppliers gain more familiarity with the product and improve its design.
But making products cheaper and simpler for consumer markets a topic to which we shall return may involve some compromise with reliability. The manufacturing and pricing strategies of British television producers in the s, when faced with the Japanese emphasis on product reliability, showed just how much they had misread consumer preferences. Likewise, the reliability of UK home appliances was a source of such concern in the s that NEDO produced statistics showing the declining incidence of problems with washing machines and refrigerators and thus less reason to acquire imports.
Some manufacturers of consumer electronics products — e. The sensitivity of consumers to product reliability is likely to vary by type of product and type of consumer. Hobbyists may be more prepared to accept unreliability as part of the adventure of pioneering new products. Early adopters of home computers, for example, seemed to have a surprising tolerance for unreliability of delivery and product — but this does not seem to have extended to mass purchasers further up the diffusion curve, and the unreliability of Sinclair machines in particular became quite a talking point in the trade and consumer press.
Consumers may be uncertain as to the reliability of a product in their own domestic circumstances, and in such cases acceptance may be faster when the product can be tested out without purchase, e. Other perceived risks may affect the diffusion of consumer IT products. Physical danger is sometimes an issue: are VDU screens safe? On the whole, however, such fears are probably assuaged by the testing which consumer products are expected to have been through, although there are still frequently-voiced doubts about microwaves and, notably, both health and psychological aspects of computer games.
Industrial products, too, are expected to be safe, but here there is more onus on the user to ensure safe working practices. Economic risks may also be important considerations. Consumers may delay adoption in the expectation of price reductions as the mass market develops and the product matures. There are some signs that consumers have developed the strong expectation that electronics-based products cheapen over time.
Besides that, they have long been accustomed to heavy discounts during sales, and during times of recession when retailers are desperate to clear their stocks. At the beginning of , in the middle of a major economic recession, several UK advertisers tried to persuade people that now was the time to buy — overtly saying that people who had made purchases in the run- up to Christmas would be kicking themselves. Industrial purchasers may not always have a choice as to when to acquire equipment — but often they do, and there is no reason to think that they will not delay purchase and shop around as much as consumers do.
On a somewhat different point, some writers suggest that industrial buyers should be at least initially more receptive to radical innovations than consumers. The argument is that industrial buyers can apply more precise criteria to the preliminary evaluation including formal tools for assessing purchases than can consumers.
On the other hand, marketing studies would suggest that affluent societies particularly Japan typically contain many vanguard consumers, who are willing and able to experiment with radically new products. While differences may well exist between industrial and consumer markets on these dimensions, then, they may well be equalled or even overshadowed by differences within the two markets. From the available evidence, there is little reason to expect that the general principles derived from the innovation research literature will fail to extend to consumer markets.
Market volatility We have touched on fashion as one aspect of symbolism in consumption. Fashion, of course, is notoriously prone to swings: things come in and out of fashion. If products are acquired for this symbolic freight more than because of other features, their markets are liable to be subject to rapid change, of a more or less unpredictable nature.
Thus, certain consumer products are believed to be prone to rapid boom-and-bust market developments. Being purchased more for their symbolic nature than for any more direct functionality, the market can collapse when the symbolic freight is changed — which is more easy to effect, perhaps, than changing its functionality. The perception of the consumer market as faddish influences industrial and financial activity in turn: the decline of financial support for parts of the IT sector at this time reflected distrust of this volatile and unpredictable sector, as far as we can judge from commentary in the press.
Fashionable opinion in the City is a force to be reckoned with. For example, consumers respond in particular ways to seasonal variations e. They react rapidly to changes in family circumstances such as increase or decreases in major classes of income or expense , which may particularly affect impulse buying and the consumption of luxuries. Many businesses, on the other hand, may try to maintain relatively stable levels of activity, since it is difficult to lay off and acquire staff rapidly, equipment should not stand idle, and so on; and impulse buying is rendered more difficult by the financial procedures of at least the larger firms.
How real are these stereotypes, and how substantial are their implications? Consumer markets certainly do fluctuate in various ways. Price and wage levels can have substantial impacts on consumer expenditures, as can actual levels and expectations of unemployment and interest rates.
Government macroeconomic policy has often centred on manipulating levels of consumer demand by changes in tax and consumer credit, for example. There are also predictable seasonal cycles such as the pre- Christmas demand for electrical goods, the increase in out-of-home activities in good weather, and so on. In contrast, relatively more of the demand in industrial markets is liable to be inelastic.
Staff are hired for long periods, orders are placed months in advance, equipment is installed with the expectation of maintaining certain levels of production. There is thus a built-in momentum in the production process, and this tends to smooth out short-term fluctuations in demand. Some industries are highly seasonal, however, and have adapted their working practices accordingly, such as by recourse to much casual labour — parts of construction, agriculture and tourism, for example.
While such marked seasonal swings are the exception rather than the rule, longer-term business cycles of four or five years are common in many industrial sectors. Fluctuations in consumer demand have impacts on industrial production and thus on industrial demand — suppliers may find it more profitable to reduce output or switch activities when consumer expenditure drops, rather than to stockpile products in the hope of an upturn. When products are sold globally, and when business cycles are not strictly synchronised in different countries, these impacts may be muffled as suppliers shift sales to different countries.
There are grounds for thinking that this contrast between industrial and consumer markets may be becoming less marked. Its demands upon its own suppliers and sub- contractors, then, closely follow the demand experienced in its retail outlets, so that there is much more synchronicity between the consumer market and its own industrial market — though of course this is a transnational company, which is able to put together market signals from many different countries in which it is active.
Similarly responsive strategies are being put in place by many other retail chains, in sectors such as food and DIY as well as in clothing. Nevertheless, it is likely that many consumer markets — especially those most associated with luxury and fashion expenditure — will remain volatile as compared to many industrial markets.
Thus, although consumer markets are of such a scale as to promise large rewards to successful suppliers, they pose particular risks. This was apparent in the UK home computer market in the mids, when, as we have noted, rising sales were suddenly interrupted — leading to the collapse of several leading firms in the field, and the failure of a number of new product launches.
Many commentators were inclined to think that this demonstrated that the market had simply been a fad, a bubble that had finally burst. In retrospect, it is apparent that the home computer market has simply stabilised, and that expectations as to continuing year-on-year growth were considerably overstated.
More recently, the economic woes of the early s have made it a difficult time to launch expensive new products, as suppliers of new audio-visual and multimedia products have been discovering: though there are many affluent consumers still around, many of these are cautious with their money due to fears of unemployment, mortgage rate increases, and other problems of this sort.
Complex products and unskilled users The product cycle model, as outlined in Chapter 1, suggests that early versions of products are typically harder to use than are later versions. This is a standard component of product cycle accounts. But many experienced computer users react to these interfaces with annoyance, on the grounds that these make it harder and slower for them to work in the way that they are used to with traditional command line interfaces — perhaps the new systems are felt to be overbearingly friendly, or too simple for experienced users, thus interfering with the direct use of the computer.
The expertise of users influences their responses to new products, determining how much effort requires to be put into mastering their use. Industrial goods suppliers can generally assume that buyers of complex technical products have, or will be prepared to invest in acquiring, expertise. But they will also be aware that industrial products give maximum returns when their features are exploited effectively; it does not pay the industrial buyer to purchase redundant functions.
The economies of scale in producing goods for the mass market, however, may allow the supplier to build in extra functionality at minimum cost, even where most of the buyers will never make use of the extra functions. For mass consumer products, suppliers need to assume a fair degree of technological indifference or ignorance. It will be important, then, to maintain ease of use of basic functions, even if there are many other features that can be used with some learning effort and thus appeal to hobbyists.
Thus few VCR or camera users may make full use of all the programming possibilities in current machines; this does not matter as long as it remains relatively simple for users to achieve satisfactory basic results. Training and education of users will mean different things within the two settings.
Industry employs specialised trainers, recognises specific qualifications, and so on. In contrast, the training inputs for very few consumer products will go beyond the manual that comes with the product, and often not even that will be consulted. The automobile is the outstanding example of a consumer product requiring substantial training, with paid instructors and driving tests; other means of personal transport such as horses, bicycles, sailboats, and gliders also require substantial skills acquisition, which probably reduces the difficulties that this might otherwise pose for the motor car.
As we have so often noted, the differences between industrial and consumer markets can be overstated. Consumer markets may contain hobbyists and people experienced with the product from use at the workplace or at school; consumers are liable to vary considerably in their levels of understanding of mechanics, electricity, electronics, and the like. There is also considerable variation in such specialist knowledge amongst industrial purchasers.
Many small firms are frequently technically knowledgeable only about the particular fields that bear directly on their products and markets, and may be as bemused as consumers when it comes to evaluating products that are unfamiliar or uncommon purchases.
In many ways, IT products are more technically complex than many familiar goods and services — since they are based upon technical principles to which few older people have been exposed during their formal education. This poses challenges to managers and consumers alike; and in industrial markets, the actual purchasers may be experts in particular technologies while the eventual end-users may be less experienced.
Many similar problems may thus confront professional users and consumers; and while professional users may be supported by trade press and consultancies, as well as in-house sources of expertise, it is likely that many smaller firms are less well-informed than many consumer hobbyists when it comes to purchasing, for example, personal computers. To the extent that there are differences in skill levels between industrial and consumer markets, we would anticipate effects upon the innovation process.
Technical skills and knowledge may affect both purchase decisions and the use of products. Through market and other modes of feedback, these may influence product design. Purchasers may be more or less well-informed about what products are on the market, and how their performance, price, and other features may compare; and this too may have a feedback effect on the innovation process.
However, radical innovations can destabilise this received knowledge, requiring users to learn about new core technologies that can be applied to their sectors. The trade press, the business sections of newspapers and other media, trade fairs, industrial conferences, consultancies, and government awareness schemes are busy providing intelligence on such issues.
In terms of innovation theory, these information channels are raising the visibility of the new product to the users, which should speed the pace of diffusion of the innovation. Visibility is not just a matter of being aware that new products exist; for potential users it is also a matter of having a sense of how and by whom they may be used, and of forming judgements as to whether they are products they might sensibly use — even whether they can afford not to use them.
The existence of government awareness schemes suggests that many industries are perceived to face problems in the visibility of leading edge technologies. Such schemes may go beyond simply advertising the existence of new technologies, and provide consultancy and other support to firms which can help them determine whether these technologies are appropriate for their aims.
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