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New Research Examines Triggers for Purchase of Consumer Technology Products (19/2/2004)

The AMD (NYSE:AMD) Global Consumer Advisory Board (GCAB), released its third study today, entitled A Theory of Relevancy for Technology Product Adoption. The study is the first to define what attributes makes a technology product relevant enough to consumers for them to purchase it.

Building on six attributes of product relevance identified by previous research, the GCAB study examines how those attributes come together to trigger product adoption. The study shows, for example, that the importance of a product's benefit and a consumer's familiarity with a product affect how a consumer judges its affordability.

"What may surprise the industry most about this study is that it shows that price is not the most important trigger behind a technology product purchase," said Tricia Parks, founder and president of Parks Associates, principal author of the study and chairperson of the GCAB's Relevancy Committee. "A large segment of the consumer electronics industry is going down the wrong path by focusing solely on lowering prices to jumpstart adoption. The industry must communicate the benefits of a product to people's lives - because only once a product is deemed personally beneficial will judgments about its affordability even matter."

This and previous GCAB studies are available to members of the technology industry interested in gaining a better understanding of the consumer market and improving adoption of their products and services.

The study, which surveyed more than 1,000 U.S. nationally representative households by phone, tested the intensity of six attributes of relevance that must be present at specific levels for adoption of a technology product. The six attributes that constitute relevance include: "familiarity," "importance of product benefit," "affordability," "knowledge of where to buy," "perception of ease of install," and "perception of ease of use." The study examined these attributes for six different technology products at different states of diffusion, from the microwave oven (a widely diffused product) to the wireless home network (WHN) (a less-diffused product).

Specifically, the study found that the rankings (on a scale of one to seven, with seven the highest ranking) between owners of a product and those without plans to purchase that product are widest for the attributes of "importance of benefit to me" and "familiarity." In other words, the research indicates that before acquiring a product, consumers consistently rank its benefits and familiarity at certain minimum levels before they're convinced it's worth purchasing. "Ease of use" came in third place and "affordability" came in fourth place, followed by "knowledge of where to buy."

"While it's important, familiarity alone does not make an owner," said Parks. "We found that people who are familiar with and know where to buy a wireless home network (WHN), for example, still do not necessarily have plans to purchase one; whereas people who are highly familiar with, know where to buy, and see high levels of personal benefit in a WHN do have plans to purchase. Marketers of WHNs need to demonstrate a direct, positive connection to a consumer's life to transform mere awareness into a purchase."

The study also found that owners of personal digital assistants (PDAs) ranked "importance of benefit to me" at about four on the scale - the lowest of all the products surveyed. Conversely, personal computers, mobile phones and microwaves ranked the highest of all the products, with owners ranking "importance of benefit to me" at about six.

"From a marketing perspective, the low score of 'importance' by PDA owners is troubling. It may explain why, according to analysts such as Parks Associates and Forrester, PDA sales with their current utility may have hit a plateau," said Parks. "On the other hand, personal computers and mobile phones, which scored high in importance among owners, currently have strong growth in sales, according to analyst and industry firms such as the Semiconductor Industry Association, as owners are realizing product benefits and, in turn, becoming product advocates."

"This study is moving from understanding past adoption patterns to predicting future patterns. It is the first step toward developing a Relevancy Adoption Model that would allow technology providers to assess weaknesses in product relevance, and then prescribe marketing solutions to address those weaknesses and accelerate adoption," said Patrick Moorhead, chairman of the GCAB and vice president of corporate marketing at AMD. "AMD has already begun sharing this research with our consumer electronics partners to more clearly communicate product relevance, thereby speeding adoption and helping to increase overall sales."

www.amdgcab.org