Convergence has become a familiar, perhaps overused, word within the consumer electronics sector over the past decade. It describes an industry-wide trend of gadgetry mash-ups, where devices are made to serve more than one purpose.

In the paper, “Technology Convergence: When do consumers prefer converged products to dedicated products”, Jin Han, an associate professor of marketing and Seh-Woong Chung, a practice assistant professor of marketing at the Singapore Management University (SMU) examine consumers’ responses to multi-functional products, compared to their dedicated-function counterparts.

The paper was also co-authored by Yong-Seok Sohn, professor of marketing at Kyung Hee University.

Consumer decisions

While convergence is seen to be a relatively new phenomenon in the mainstream, the concept in itself is not. The notion dates back to the nineties, when manufacturers bundled different product categories into one machine. Referred to as “product bundling” then, products such as the all-in-one printer (printer, copier, fax, scanner), as well as the video phone, saw limited success.

Past studies had found that consumers perceived such multi-functional products to be inferior “octopus peripherals” – jack of all trades, master of none. Manufacturers had viewed bundled products as fringe products – that exist to expand their market share across the long tail. Today, however, bundled or converged products are one of the fastest growing product categories in consumer electronics.

Technological advancements, especially in the areas of component miniaturisation and digital processors, have made such products smaller, but more powerful, and thus, propelling their popularity. Many manufacturers have been quick to jump on board, producing highly sophisticated gadgets such as Apple’s iPhone (phone, camera, music player, organiser, internet browser, gaming console) and Sony’s PSP (gaming console, multimedia player, internet browser). Yet, little is known about consumers’ perception of such all-in-one products.

When it comes to consumer electronics, past studies have suggested that people typically base their purchase decisions on a “buying hierarchy”. This hierarchy looks at two dimensions - performance and convenience. Performance is a factor that is viewed more critically for products that are meant to serve in a specific function.

In instances where performance levels do not meet consumers’ expectations, the convenience dimension is viewed more critically. In this study, the authors drew references to a consumer “sweet spot”. This is the point where the consumer’s expectation is aligned with the technological product offering. 

Dedicated versus converged products

For the purpose of this study, Han, Chung and Sohn identified two product categories – (i) low-performance level products refer to low-end consumer electronics, such as four megapixel compact cameras, and (ii) high-performance level products refer to higher-end electronics, such as ten-megapixel compact cameras (Note that the examples reflect product offerings at the time of this publication).

Based on the responses of 51 subjects, the authors found that consumers were significantly more likely to opt for a converged product at a low-performance level, as opposed to a converged product at a high-performance level. As low-performance products fall below consumers’ “sweet spot” on functionality and reliability, consumers pay greater attention to convenience. Converged, “jack-of-all-trades” products tend to score on convenience.

Where consumers seek high-performance level products, a large majority of them chose dedicated offerings over converged products. This is attributed to a perception that dedicated products offer better performance. Past studies have indicated that people tended to discount a medium’s effectiveness if the medium had to meet multiple goals. This could explain how consumers view converged offerings.

The strategy of setting expectations

Consumers today are more informed than ever. Within a few clicks, we can easily obtain information that may sway purchase decisions. Research has shown that consumers are aware of technological trends, improving performance and declining prices, especially in high-tech categories. Will knowledge about upcoming technologies influence purchase decisions?

Consumer electronics manufacturers commonly announce future product offerings long before they become available. Referred to as the “preannouncement strategy”, this is a move that serves to (i) discourage new entry, (ii) displace competitors, and (iii) leverage consumers’ expectations – a belief that consumers, upon learning that there is an upcoming technology, will likely adjust their preferences.

The authors surveyed 77 subjects to test the effects of a preannouncement strategy on consumer preferences for a converged versus dedicated product offering. What they found was that consumers shifted in favour of a converged product, after learning about impending technological improvements. Seven out of ten opted for a dedicated product in a ‘no preannouncement’ environment. That number fell to 46% in a ‘preannouncement’ condition.

Knowledge about impending technological upgrades heightened consumers’ performance expectations. As expectations climb, more products in the marketplace fall below consumers’ performance “sweet spot”. Convenience thus becomes the critical factor. In this study, more respondents chose the converged product over the dedicated product in a ‘preannouncement’ condition – 54 versus 46%.

Repositioning convergence

In 2007, Sony introduced the Cybershot DSC-G1, a six-megapixel compact camera with a built-in mp3 player. After a poor initial reception, Sony made the unusual move of repositioning the product. Instead of playing up the mp3 functionality of the gadget, Sony labelled it as a digital camera with a “background music function for slideshows”. It became a dedicated product with enhanced features, rather than a converged product.

Han, Chung and Sohn surveyed 132 participants in a test for the “relational processing” effect, where convergence is repositioned to the consumer. In the absence of the processing effect, 82% of respondents opted for the dedicated product. When the processing effect was applied to “enhance” the converged product, the respondents’ preference for the dedicated product fell to 56%.

The results of the study show that “relational processing” can significantly shift consumer preferences. By playing up the functional relatedness of an extra feature, the product moves up on the performance dimension in the “buying hierarchy”. However, the authors point out that “relational processing” does not put the converged product on par with its dedicated counterpart. People still preferred the dedicated product to the enhanced – 56 to 44%.  

Looking ahead

A common motivation for the purchase of consumer electronics is the desire to upgrade an existing gadget to an even better one. In an investigation of consumers’ future purchase intentions, the authors found that respondents who had opted for a low-performance convergence product registered the intent to upgrade to a high-performance dedicated product in the future. Similarly, respondents who had picked a low-performance dedicated product desired an upgrade to a high-performance dedicated product.

Regardless of the low-performance product form owned, the survey showed that consumers were likely to upgrade their gadget in favour of a high-performance, dedicated product offering, compared to a high-performance converged offering. This signals the potential of a mixed-bundling approach – packaging low-performance converged products with high-performance dedicated products.

To target consumers effectively, the authors propose a tiered product-form strategy. At the low-performance portion, manufacturers could offer converged varieties of products, whilst dedicated products should be kept at the high-performance tiers. This is consistent with findings that converged products are more popular with consumers where performance falls below that of the product’s dedicated counterpart. In those instances, consumers will look to products that offer convenience.

Convenience benefits in a converged product should be highlighted, as opposed to performance-related features. The authors also recommend a focused showcase of performance-related features for high-performance products, as other messages about the high-performance dedicated offering will likely dilute consumers’ perception of the product’s performance. For manufacturers who wish to pursue a high-performance converged product strategy, they should consider integrating the extra features into the product’s core function. This is to provide perceived functional synergy with the product’s performance goal.

While it may seem as if dedicated products are still preferred at the end of day, there is no denying the increased popularity of convenient, all-in-one gadgets. The success of the iPhone is a case in point. If anything, the study has shown that the contest between converged and dedicated products lie mainly with consumer perceptions. Consumer electronics manufacturers could stand to benefit from innovative products, but perhaps more so, through innovative marketing.