Unsterilizing the silicon: PC marketers have commoditized their business

Brandweek, Jan 12, 1998 by Tobi Elkin

"The notion people have that computers are mostly the same keeps brand loyalty down, and the way they're based on price and feature per buck has de-emphasized branding and brand loyalty," said Kevin Hause, senior analyst at IDC, Mountainview, Calif.

The IDC/LINK survey, which tracked PC brand loyalty and purchase intentions in U.S. households from last July through December, put IBM at the top of the list of brands expected to be purchased, with 10.8% of buyers saying they were "most likely" to buy an IBM Aptiva. Surprisingly, beleaguered Apple came in second with 8%, followed by direct marketer Gateway 2000, Compaq and Packard Bell, which ranked first in share of systems actually purchased. After the top five, came Dell, HP, Acer, Toshiba (which has since exited the consumer PC business), AST (which has all but withdrawn its consumer SKUs), Micron, NEC and Sony.

But the study also found that Gateway owners were the most brand-loyal: 77% of those owners who actually bought a PC during the holiday purchase period, November 1996 through February 1997, bought a Gateway product again. And for the second half of 1997, nearly 53% of Gateway owners planned to call in for more cow-spotted boxes at the peak '97 holiday sales period.

"Gateway has the best brand loyalty now because they're creating a community around the brand that people want to associate themselves with," said IDC's Hause.

Gateway's iconic, cow-spotted boxes, family-friendly attitude and consistent, down-to-earth communications help it stand out from the herd. The company has built a brand personality that has established relevance to the everyman PC user and his not-so-technosavvy life. It's not just goofy and effective ads; Gateway backs its nigh-Luddite-friendly message with price, delivery and service claims.

"Price and brand are by no means mutually exclusive," said Interbrand's Straw. "Gateway has done a great job. All of their prices are competitive, and they're viewed as a high-value, trusted brand, not a low-priced brand."

That Gateway "sense of community" is evoked in everything from the company's advertising and Web site, to the relationships it builds over customer service lines and in its Country Store showrooms, which offer a unique, folksy retail interface. As a direct marketer, Gateway has a distinct advantage in its ongoing relationship with its customers, accruing valuable data from numerous conversations over time. And Gateway hopes to make the connection between everyday people and its technology even stronger in an upcoming spring campaign.

"We're going to talk about the people of Gateway and how they do what they do," said Jim Taylor, senior vp of sales and marketing at Gateway. "We'll establish a very simple link that makes this purchase. We call our brand positioning `Silicon Prairie' because we think it fuses a bond between the sterility and ahuman components of technology and the need of people to still have warmth and passion and emotional content in their life. And their perception that when they get on this train they'll go to a new world. [People] want a wagon master, someone to help them get there; we want to be there to help them make those changes."