World Business Essays 2006: Digital - The digital lifestyle: a labyrinth of opportunities?

Hitachi's vision is to create richer lives by providing products, systems and services based on the latest advances in technology.

by Mark Wilkin, head of brand & communications, Hitachi Europe

Recent years have seen a fundamental shift in the way we live. A digital lifestyle is no longer the sole domain of the technophile; it's the expected norm for an ever-growing number of consumers. However, as companies perceive this increase in demand, we see the launch of feature-led products.

And if they don't possess a new, standout benefit, such products add noise to an already crowded market. With so much competition, could brand investment help a company achieve cut-through? Recent research suggests 30% of European consumers now spend upwards of EUR1,000 every year on consumer technology products.*

So how have companies responded to this shift? Consumers are eager for 'the next big thing'. Rather than delivering on this, many are producing feature-led goods. Every year sees the launch of over 150 products into the European mobile phone market alone, each offering an increasing number of features.

And yet 62% of consumers say that they would use 50% or less of the features on a typical consumer product. And 71% professed to overwhelmed by the avalanche of launches.

And so we come to a self-fulfilling paradox. Choice is increasing but, without true innovation, this serves only to confuse. Consumers then look for a reason to believe, but companies with multiple products to market are faced with an increasingly dispersed budget. And by opening up new channels of communication, these same companies have enabled consumers to nominate the ways they can be reached.

Consumers are no longer passive recipients of messages; they decide when, where and how they communicate with those vying for their attention. The rise of channels such as the internet, mobile communication devices and the arrival of on-demand entertainment are just some of the factors allowing consumers to set their own terms. With the exception of outdoor and cinema advertising, unavoidable media no longer exists. Multiple products have created multiple channels - a market on the one hand confused and on the other empowered: is there an opportunity?

The first point to note is that companies that truly understand their customers and innovate to deliver on their requirements will prosper. Research suggested that purchasers of video cameras were confused by the competing advantages of DVD and hard-drive technologies.

Realising that there were advantages to be gained by using both technologies, Hitachi introduced the first hybrid video camera. Within less than a month, it had become the market leader in the highly competitive Japanese market.

A second point is that if used well, these new channels afford companies the opportunity to communicate with their customers in an intelligent and non-invasive way. The Web 2.0 generation uses technology in increasingly sophisticated ways.

If companies understand the different segments within their audience, and the ways to reach them, they could find themselves building closer and increasingly cost-effective relationships with customers. And as word of mouth is one of the most effective means of communication, this in turn could produce huge numbers of genuine brand ambassadors.

Finally, companies should not overlook the value of their brand. With so much to confuse, consumers are looking for ways to simplify the decision-making process. Ensure your brand resonates with your audience, and invest in it.

That's the reason Hitachi has been increasing its brand advertising in Europe. We're building brand affinities - letting people know what we stand for as a company. Our products are innovative, but we recognise this may not be enough. So we're working to ensure every product and piece of communication reinforces our brand. We believe it will help to cut through the noise.

* Source for all figures: Putting the Consumer in Consumer Technology, by KRC Research on behalf of Weber Shandwick Digital Lifestyle Unit.

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