IBM Survey Projects More Than Half of Holiday Purchases Will Involve Consumer Electronics Products

Consumers Identify After-Sales Service as Major Differentiator for Manufacturers

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ARMONK, NY - 22 Nov 2005: A recent IBM survey revealed 55 percent of consumers plan to spend some portion of their holiday budget on consumer electronics. These findings complement results revealed in another IBM survey that indicated an expansion of after-sales service could become a competitive differentiator for consumer electronic manufacturers. Eighty percent of respondents in that survey said they would be willing to pay a premium for these services.

Two-thirds of consumers buying electronic products are seeking multi-functionality from their devices. This finding fuels the growing trend of convergence among electronics manufactures and continues the prospects for growth among service providers and manufacturers seeking to fill the information and multi-service opportunities.

"Both IBM surveys reinforce the emerging trend in the consumer electronics industry that consumers are looking for Meta-Value," said George Bailey, IBM Business Consulting Services' global leader for the electronics industry practice and co-author of a soon to be released book "Irresistible! Markets, Models and Meta-Value in Consumer Electronics." "It's not just the device, but the game changing nature of combining new product technologies with accessories, services, and content to provide a simple but complete solution. A solution that changes the way the consumer lives his or her life."

Despite this unprecedented demand for consumer electronics, electronics companies are still plagued with tight profit margins averaging nearly three percent. Looking to capitalize on the high demand for electronics, manufacturers are exploring new markets and business models to create differentiating value. One area IBM is advising clients to pursue is the expansion of after-sales service to capture more market share and widen their profit margins.

The demand for high-margin services is growing. Of those buyers planning to spend more than $500 on consumer electronics, approximately 65 percent said they would pay more for services on these purchases. In fact, this year alone, 54 percent of consumers plan to spend $500 or more on electronics. Nearly half of consumers expect better service and selection from the manufacturer, and more than one-third of manufacturer-direct shoppers want access to content and other services from the manufacturer.

Almost half of survey participants (41 percent) indicated that they would seek after-sales service from the manufacturer-certified service contractor, with 24 percent choosing a private service contractor not affiliated with the store or manufacturer. Only 10 percent of survey participants indicated they would seek service from the store where they purchased the item.

While the study found that two-thirds of consumers plan to buy from mass merchandisers, a surprising number (27 percent) stated that they would make their purchases directly from the manufacturer.

Survey Methodology
The results reported represent data from two independent IBM surveys. The first study, the IBM Holiday Shopping survey, was conducted by phone and polled 1,000 Americans planning to make holiday purchases this season. At a 95 percent confidence level the survey has a margin of error of +/- 4 percent. The second survey, the IBM Electronics Shopping survey was launched online via Zoomerang with 1,017 responses from adults who purchase home electronics.

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