Naman Dugar

ENGW 3315 Project 2 Final

Professor Musselman
June 24 2019
MLA
Word Count - 2013

Innovation in consumer electronics: a review of 2018 – 2019 findings

Abstract

Innovation plays a key part in influencing product sales in the consumer technology and

electronics industry. While buying new devices, customers look for new features that help them

on a daily basis or help in differentiating them from the general public. In the current day, other

factors like brand love, also affect consumer behavior and what products one purchases. The

addition of new features to electronic devices influences customers’ willingness to pay more,

based on their use and the degree of social innovativeness amongst customers. Innovation is not

just limited to the product and new ways to market products and display them also has an

influence on sales. Certain kinds of product innovations come off as gimmicks while other kinds

impact the market substantially. The role of innovation in influencing the consumer technology

market and its sales is great, both positively and negatively.

Introduction

Despite tremendous growth in the consumer technology industry over the past decade, a trend of

reduced consumer spending is emerging. In the last few years, innovation has seemed to be

stagnating. Improvements only seem to be incremental and the lack of a disruption or

breakthrough in consumer technology has affected the industry. Sales of mobile phones have

been declining and major companies are being forced to come up with new innovative ideas in

order to differentiate themselves from their competition. In the past, innovations in the industry

have influenced customers’ willingness to buy a new product. Year after year, electronics

manufacturers have tried to come up with new innovative ideas and features in order to sell

greater numbers of their products. Innovations such as the touch screen, OLED display

technology (which only lights up the colored pixels in an effort to preserve battery and increase

contrast), improved cameras on smartphones and the ability to charge devices wirelessly have

appealed to customers and convinced them to buy such new devices. In the present day, the

growth of companies is slowing down due to a lack of innovation.

To address this decline in sales, major companies are striving to be the first in the market to

introduce a particular future. This ‘race’ in being first has often resulted in the creation of

unpolished and unfinished products which instead of increasing sales, as the company would

have intended, has been resulting in public backlash and customers not adopting such products.

The result is companies coming up with gimmicks that do not complement customers’ needs.

Companies like Apple have been unable to find a balance between innovation and high prices

(Curwen 194). Another reason for sales declining is the fact that most upgrades to products are
minor and incremental. This has been the case with smartphones lately with people preferring to

stick with their old smartphones that have a long lifetime instead of spending hundreds of dollars

to upgrade to a new smartphone that is not very different from the existing one (Curwen 194).

Another side to this argument comes with the concept of brand loyalty. Many customers are so

loyal to certain brands that they care more about the name than actual innovation. The idea of

being socially acceptable and a person’s possessions acting as status symbols is the primary

reason for this (Junaid et al. 210).

This review examines how innovation in the consumer electronics industry plays a part in

changing customer behavior and the market. Certain kinds of innovation like folding screens do

not have an impact on customer adoption while other ideas like eco-friendly innovation might

interest possible buyers. The effects on sales of companies building devices that last for years

and the extent of brand loyalty in some customers who do not seem to be affected by the

companies’ intentions to make more money is also explored While the sources covered do

support the claim that innovation is an important factor that influences customer behavior and

adoption, they don’t consider the fact that customers have limited money (due to wage stagnation

in many places) or that the brands do not offer what a particular customer wants (small

smartphones).

Brand love and innovation

Consumer electronics brands provide a wide array of options for customers to choose from while

buying a product. Brands have to sustain customers and in the world of electronics, the lack of
innovation year by year has slowed down customer adoption of new products like smartphones.

While innovation is usually considered the driving force behind increasing sales of products,

research has shown that customers now “look beyond these products’ functional, instrumental

value” and instead develop “strong emotional bonds” with some brands (Junaid et al. 200). The

Junaid et al. study of customer engagement and brand loyalty asked participants to answer

questions about their smartphone using a given scale. The conclusion was that hedonic pleasure

and escapism are the main causes of increasing brand love. The study showed that customers

usually prefer products, in this case smartphones, that meet the needs of what they consider to be

pleasure (Junaid et al. 209). While innovation in terms of the addition of new features to

smartphones might not be the only way to increase sales, innovating to come up with

consumption experiences for customers can lead to a deeper emotional bond to a brand (Junaid et

al. 210). As smartphone companies add experiences that please their customers, the more likely

will they stick with the current brand. The paper suggests that companies should try to cater to

what their customers like. For instance, things like “more efficient cameras”, “enhanced

displays” and other enriching experiences should be introduced to make one’s product stand out

and enhance its smartphone experience. The study shows that customers’ bonds to brands has a

great effect on their engagement that “may yield repeat purchases, cross-buying and up-buying

and win referrals of customers who are resistant to traditional marketing efforts” (Junaid et al.

210). However, these experiences need not just be limited to the product. Innovation in other

areas like a company’s retail stores and marketing enhance quality perception and brand loyalty

(Pantano et al. 206).

Innovation and customer willingness to pay more

According to a paper on new technological attributes and customer willingness to pay,

innovation can take three forms: improvements to existing attributes; introduction of a new

attribute to an existing product or service; or the creation of an entirely new product or service in

the market (Sadik-Rozsnyai and Bertrandias 1). The purpose of the paper is to determine how

innovation and addition of features to products increases a customer’s willingness to pay for it.

To conduct this research, a model on social innovativeness and how it affects perceived values of

new features is tested. It goes through other forms of research done exploring the impact of new

features and attributes on consumer evaluation. Just how the previous literature states how brand

love is influenced by catering to a customer’s wants, this literature confirms that adding new

features to smartphones has a positive effect on the perceived value when it appears to have

implied benefits for the consumer. The literature also states that consumers have a “need for

uniqueness” as it helps them differentiate from others and help “enhance one’s self-image and

social image” (Sadik-Rozsnyai and Bertrandias 7). The literature states that a market survey was

conducted in France to determine the impact of social innovativeness in consumers. The product

category for the study was TV sets. TVs are a product category that are common and in which

innovation takes place very frequently. For the study, the “multiview” feature of TVs was

chosen. The aforementioned feature allows users to view and do multiple tasks on the TV at the

same time. The study took into consideration multiple models of TVs based on price, display and

brand to ensure that the study yields correct answers (Sadik-Rozsnyai and Bertrandias 12).

Statistical analyses, the use of hypotheses, variances and regression were used to conduct the

study. The study suggested that consumers who have a higher degree of social innovativeness
care about constant innovation in the concerned product category. This results in less price

sensitivity and more willingness to pay for the product. Other sources also support the claim that

customers are willing to pay more for products that have features they think are necessary (safety

or novelty features) (Paparoidamis 12).

How innovation goes beyond just the product

While innovation, as stated earlier, is usually thought of as the addition of new features to

electronics that increase sales, innovation in other areas of the business are as important in

influencing customer behaviour. Retail stores are an important component of consumer

electronics companies. Products like smartphones and televisions need to be tested by potential

customers before they make a purchase decision. The first step for this is to get the customers to

enter the store. Clever use of marketing and innovative ideas are required to persuade people to

do so. Research states that new innovations like “interactive tools” may affect customer

preferences for stores which affects their willingness to buy a product from that store. The

literature makes claims about customer innovativeness and how a greater sense of it increases the

willingness to buy something that fulfills those needs. For example, it states that consumers are

ready to stay long queues and pay high prices in order to have the latest model of a certain

smartphone or tablet” (Pantano et al. 204).

Consumer behavior is influenced by the atmosphere of the store: the visual stimuli presented to

the customers, placement of products, appropriate use of color and text, and how well the

products are marketed (Pantano et al. 205). The literature argues that “word of mouth”
communication is also a crucial factor in affecting customer preferences. If customers have a

positive experience in a particular store, they are more likely to revisit it or even recommend it to

others. A study was conducted to determine how innovation in stores affects customer behavior.

Data from two stores, while not consumer electronics ones, with interactive window designs

were obtained. The study took an average time of 12 minutes and participants were rewarded

with $2 gift vouchers as appreciation. The statistics show that there was more or less an even

split in terms of the gender of the participants, while most were young people with a significant

proportion still in education. The study shows the importance of storefront innovation and how it

influences customer perceptions.

Conclusion

Innovation does play a major part in affecting product sales in the electronics industry. It is,

however, a broad concept and the addition of new ideas to marketing and retail, new features in

products that appeal to the customers, and brand loyalty can influence sales to an extent. The

most promising part of research is definitely how concepts like human psychology and behavior

play a crucial part in influencing industries that are not related to it. Another promising takeaway

is how brand loyalty can overpower the influence of innovation in terms of affecting sales.

However, the studies conducted do not take into account other major factors that influence

customer behavior. Income gaps and stagnant wages are issues that many countries face, which

in turn have an effect on what people can or cannot buy. The high prices of certain devices have

made it hard for companies to attain market share (Curwen 194). Other factors like the lack of

differentiating features, availability of cheaper phones in specific countries and a lack of need for
purchasing a new smartphone also influence the market. The current studies also fail to compare

and analyze the impacts of the aforementioned factors on actual product sales to see if there is a

correlation. Studies that consist of real market data and statistics need to be conducted in order to

understand the true situation of sales in the electronics industry.

Acknowledgements

I would like to thank all my fellow students on the dialogue, especially Alexandra Mogilewski

for reviewing my paper. I would also like to thank Professor Musselman for her feedback and the

help she provided regarding formatting, research methods, etc.

 ​References

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