(26 November 2005 2:00 pm)

MUMBAI: A recent IBM survey in the US has revealed 55 per cent of consumers plan to spend some portion of their holiday budget on electronics.

An earlier IBM survey had indicated that two-thirds of consumers buying electronic products are seeking multi-functionality from their devices. 80 per cent of respondents in that survey said they would be willing to pay a premium for these services. The survey polled 1000 Americans.

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.

IBM adds that both its surveys reinforce the emerging trend in the consumer electronics industry that consumers are looking for Meta-Value. It is 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 is what will stand out.

Expansion is key in a tight market: However despite this demand for consumer electronics, electronics companies are still plagued with tight profit margins averaging nearly three per cent.

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 41 per cent indicated that they would seek after-sales service from the manufacturer-certified service contractor, with 24 per cent choosing a private service contractor not affiliated with the store or manufacturer. Only 10 per cent 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 per cent) stated that they would make their purchases directly from the manufacturer.