Monday, August 13, 2012

Marketing Funda : Marketing and Osborne Effect

Osborne effect is a phenomenon where the sales of an existing product gets affected because of the announcement of future products. Osborne Effect's story goes like this :- During 1980s, Osborne computer corporation was a highly successful computer manufacturing firm which marketed the personal computer named Osborne 1. The chairman of the corporation Mr. Adam Osborne during 1983 announced several future models promising consumers highly efficient and fast machines. When he made the announcements, none of these machines were in the pipeline.

The announcement prompted a heavy cancellation of orders of Osborne 1 because consumers and trade expected the arrival of advanced machines. This event have virtually driven the company to bankruptcy ( although many other reasons also contributed to it ). Source : Wiki , Report

The same effect is now played out in the case of Nokia- a brand which is struggling at the onset of competition from Apple and affordable Chinese brands. Nokia in 2011 announced with much fanfare, its tie-up with Microsoft for the mobile O/S. Nokia announced the shift in the OS from Symbian to Windows much before the actual shift. The first shock for existing Symbian users who began to ditch the existing Symbian models in favor of other platforms like Android. 

Then came the much touted Nokia Lumia with the hyped Windows Mango ( 7.5). The well designed Lumia range was expected to lift the fortunes of Nokia in the smartphone category. The company also launched an affordable version of Lumia in the Indian market thus effectively covering various price-points. 
Then came the announcement of Microsoft about the Windows 8 and the shock that the existing Lumia phones will not be upgradable to the new much talked about Windows 8 platform. No wonder, many of the prospective Lumia buyers will be postponing their purchase.

The trouble is not with Nokia alone. Even Android based mobiles also are facing the issue of frequent upgrades and the existing phones not being able to be upgraded to the new platforms. Google has rapidly introduced upgrades from Froyo to Gingerbread to Icecream Sandwich within a short span of time much to the confusion of  consumers and marketers.
One needs to learn from Apple on how to handle this rapid changes in the technology and specifications. Apple has an advantage since it is tightly controlling the eco-system. It makes the entire upgradation process highly secretive and this prevents any shocks on the existing inventory and product line. 

Android based phone marketers have a huge issue since the platform upgrades are beyond their control. So how can a marketer prevent Osborne effect when they do not have control over the platform changes.? The million dollar question is whether the consumer buy a Ginger Bread Android Phone even after the launch of Icecream Sandwich ? 

The only way is to build a powerful brand having value more than the platform. So till now, the Android makers were riding the equity of Google and Android ingredient brand. But to insulate the after-effects of platform changes, one needs to build their own brand showing more value so that consumers doesn't ditch the brand because of future version announcements. 

Another method is to customize the product so that consumers are lured by the customization rather than the platform itself . Amazon has tried to do that in the Kindle Fire where  the version is customized and hence the user experience is owned by Amazon rather than Android.
Brands can also insulate itself by building a comprehensive package of features and attributes rather than just depending on one single platform.

In the new fight over the platforms, the key to success is the user experience. Firms are now forgetting this and running after platforms. Although platforms are important, it will be the unique user experience that will be luring your customers to your product

13 comments:

  1. Anonymous9:48 AM

    It can be rather called a quick technology swift than an OSBORNE effect. Even an minor improvement in the software or hardware result in the change of version or the name of the O/S. Its totally useless to postpone ones buying decision on the aforesaid bases cause as we are all witnessing the rapid growth in technology. Today most of the smartphone are boasting of their feature which we do not really need. Though they are developing the same for human convenience they are for only short period of time. It might happen in near future that more and more O/S are developed which may actually be far better than now. Hence the mobile manufacturer should try to manufacture such hardware which may facilitates the installation of future O/S for at least a year so that they can survive in the market. they should be pro-active and should have intensive research and a competent R and D department who should work for the same.

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  2. good post and a great comment

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  3. Very interesting and thought provoking! Loved it :)

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  4. Good one. Can you also provide some iinsight on what is the right time to rollout a product or brand. Thorough research is an absolute need but can you please mention some steps or best practices followed in industries for identifying the go live time. Even in IT/ auto sector I came across various hurdles in the space since a single organization doesn't always controls the Eco- system and we end up delaying the rollout. Please share your thoughts on this.

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  6. I was very encouraged to find this site. I wanted to thank you for this special read. I definitely savored every little bit of it and I have bookmarked you to check out new stuff you post.

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  7. Hi there! You have such a wonderful post! I can really relate to what you have written here. Thank you for sharing this very interesting and informative post. I'll be looking forward for your other posts as well. Keep it up! C.A. Courtesy takes brand marketing and product demonstrations to the next level.
    Brand Marketing New England

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  8. There are different techniques available in market to do marketing, people doing marketing because business can get best response by that.

    Mandrien

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  9. this happens quite a lot with nintendo products ... nintendo is usually the only game console company that makes profits with its products at their launch .
    usually after the announcements of new products , the sales of their current products takes a sharp dive ... and when their new products launches , they usually run out of stock

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  10. Thanks, to sharing the marketing information. Marketing is such a vast topic, there are many other ways of marketing too. But there is something called DeMarketing/ DeBranding also which happens with many Marketers. I think we have to b more careful in ensuring that we don't debrand our company or service, that is most important. Market Research

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  11. It's such a wonderful post! The term used to describe a negative outcome from a company prematurely releasing information about future products and impacting sales of their current products. The Osborne Effect is normally seen when the company misjudges the timing for announcing the future products.

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  12. sir i need to know about the examples of products where indian brands failed inspite of applying classical conditioning theory.. can u help me out

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  13. Sandeep mishra6:58 PM

    The effect really exist only in technology sector i think so......bt thnk you sir for such a gudiance

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