General Electric: An Emotional Buying Experience

In the past, General Electric’s appliance business was struggling with declining prices throughout the industry. This is because people generally only purchased new appliances in the event that their old appliances stopped working. Rather than accepting the trend and watching their company decline, General Electric decided to invest in new product innovations and comprehensive brand repositioning. By adjusting the brand positioning strategy, General Electric was able to create new demand in a declining market. As a result, the home appliance market today is thriving as consumers seek to upgrade to trendier models with innovative features and modern aesthetic appeal. Additionally, consumers often decide to upgrade their entire kitchen to match rather than buying a single appliance. The home appliance market has changed dramatically in just the past decade, influenced by innovative thinking and careful strategy on behalf of General Electric. 

Dave McCalphin, Chief Marketing Officer at General Electric, explains that “consumers are willing to step up and buy higher end products, to spend more for appliances if you can appeal to their aspirations - if you can appeal to them on a more emotional level - if you can offer them innovation that’s different from what they have had before."  This is exactly what General Electric accomplished by overhauling their Profile and Monogram product lines to appeal to a more affluent homeowner. These product lines started as a very narrow offering of mainly refrigerators. The product lines were in a ten year slump, lacking differentiation and unique brand positioning; making them indistinguishable from the competitors. General Electric made several significant changes to these two product lines that would change the future of home appliances.

The overhauled Profile and Monogram product line featured a broader offering, now with a full package of products positioned at the higher end of the marketplace. General Electric was able to move upstream in price by offering new styling, innovative features, and unprecedented quality. The company implemented a limited distribution strategy by carefully choosing who they allowed to carry their products in order to protect the very delicate brand experience that they offer their customers. McCalphin explains that “the way we really want the profile brand to be represented to consumers is in a very elegant, upscale setting." The combination of an elegant setting, innovative features, modern aesthetic appeal, and the projected perception of luxury evokes an emotional buying experience for the consumer. McCalphin asserts that innovating their products was the best decision that General Electric has ever made.

There are several key factors to General Electric’s success with their Profile and Monogram product line. Perhaps the most important quality of their overhaul was differentiation. Kotler and Keller explain that “although marketers assume well-known brands are distinctive in consumers’ minds, unless a dominant firm enjoys a legal monopoly, it must maintain constant vigilance. A powerful product innovation may come along: a competitor might find a fresh marketing angle or commit to a major marketing investment."  This is exactly what General Electric did. Their unique product offering expanded total market demand by introducing new ways to use the brand. New features meant that an appliance could do more than its original intention, and new styling created an upscale trend of renovating the kitchen based around new, aesthetically pleasing appliances. General Electric created a demand that did not exist prior and tapped into a higher end market allowing them to curve the prices of their product line upward along with the consumers’ perception of luxury.

Just as it seemed that General Electric was moving into the decline stage, carefully planned product and marketing program modifications allowed the company to successfully recover sales in the home appliance market. Companies can stimulate sales through product modifications to include quality improvement, feature improvement, and style improvement. General Electric applied all three modifications during their brand overhaul and also modified their marketing program by limiting distribution and increasing the price to position an element of luxury to their brand. During a marketing program modification the company should assess the likely success of any changes in terms of effects on new and existing customers. It was the goal of general electric to tap into new customers by making their products more upscale, which they successfully accomplished.

The result of the evolution of General Electric’s Profile and Monogram brands has been astounding for the company. Consumer perceptions have changed dramatically resulting in much higher profits for the company. The average retail price for General Electric’s appliances has increased over 15% which has “delivered five years of double-digit earnings growth." Through product innovation, differentiation, and focusing on creating an emotional buying experience for the customer, General Electric managed to turn a declining market to their advantage. Rather than accepting market and economic dynamics as the end of the line, innovative companies must look to the future to predict and sometimes create demand to keep their enterprise afloat. This is achieved through good marketing.

References

Kotler, Philip, and Kevin Keller. Marketing Management. 14th ed. New Jersey: Pearson Education Inc., 2012. Print.

General electric [Web]. (2009). Pearson Education. Retrieved from http://media.pearsoncmg.com/ph/bp/bp_akamai/kotler/General_Electric.html