So many brands, so few loyalties: computer software gains at games' expense - Power Brands

Discount Store News, Oct 16, 1995

Consumers may not recognize many brand names in the emerging computer software market, but it's clear that they're ready to shift to the PC as an entertainment base, leaving video game systems behind.

Last year, when asked what brand names they'd look for in computer software or entertainment software products, Nintendo and Sega ran away from the pack, with a combined total of nearly 50% of mentions.

This year, Nintendo barely squeaked by IBM for the No. 1 ranking, and combined, Sega and Nintendo accounted for only 16% of overall brand name mentions.

On the other hand, computing's best names didn't really fare much better, with Microsoft and Quicken's mention rates falling considerably, although Microsoft held on to its No. 3 ranking. This is probably a reflection of the rise of several other software publishers, whose names, while not yet household words, are well-known enough to create confusion.

Predictably, younger and more computer-literate shoppers were far more likely than older consumers to have a favorite brand--and to have one that actually makes computer software. For instance, 12% of Baby Busters and 8% of Baby Boomers named Microsoft as their preferred brand, but not one Empty Nester named the brand.

Regionally, the replies were puzzling. Retailers named Microsoft often enough to finish first in the Southern and Midwestern regions, which, compared to the more progressive West and Northeast, lack an installed home-computer base. Microsoft finished fourth and sixth, respectively, in those two "progressive' regions, including Microsofts home base on the West Coast.

Quicken paralleled that puzzling trend, finishing in the lower reaches of the top 10 in the South and Midwest, and totally off the chart in the other two regions.

Consumers may not know much about brand names in the category. Only two-thirds (62%) said that they had a brand preference, one of the lowest figures storewide. On the other hand, this uncertainty means they want to stay with well-known brands when possible. Only one-third (34%) said that they would buy a private-label software product, the third-lowest such figure storewide.

While there is no such thing today as a true "private label" software product, several generic software programs are available at mass merchandisers nationwide. They seem to perform adequately only when they are perceived as branded products. LaserSoft, for instance, ties in with popular games like "Doom" and Rise of the Triad" and features attractive, brand-oriented packaging. This has meant success for LaserSoft with mass merchants. Others, like SofSource, which uses purely generic packaging and content, have not been as successful.

That aversion to off-brands might be good news for software publishers and retailers. Consumers know few brands in the category and presumably would be open to buying goods that have a strong overall image. Sony's showing in the consumer ranking could hint at more substantial market share gains to come. While its ImageSoft division is well-known within the computer industry, consumers are far less familiar with it.

For Sony to extend its consumer franchise into software, it needs to bring out more hit titles. Interplay has many such hits under its belt and is well known within the software industry, but is scarcely on the consumer radar. Still, as its titles, mainly games, gain shelf space, it could turn that presence into brand power. GT is another such up-and-coming contender.

Disney, LucasArts and Turner are among the players from the entertainment sphere that could benefit from the virtual brand vacuum in computer software. Sega and Nintendo also stand to make inroads as they enter the PC fray.

Consumers' changing attitudes toward switching brands supports the rising importance of national brands. While shoppers are slightly more confident of finding their favorite brands at discount, they are also much more amenable to switching brands than in the past.

The mean confidence rating rose from 5.74 last year to 6.05, compared to 7.25 storewide, on a scale of one to nine, with nine indicating certainty. The percentage of shoppers willing to switch brands shot up to 37% from 23% a year ago.

Even more importantly, no brand in the top 10 really has established a following among consumers. Nintendo, IBM, Microsoft and Sony together accounted for only 33% of responses, below the level of combined top-brand scores across most categories in this survey, where the No. 1 brand alone generally accounts for anywhere from 25% to 85% of mentions.

In such a fragmented category, and with rising openness to brand-switching, the opportunity exists to build a strong national brand through the mass market. Discount stores present a key window of opportunity.

In "generations" of software, the action is still in 16-bit, at least from the retailers' perspective. As an indication, Nintendo and Sega finished No.1 and No. 2 with retailers', respectively, with IBM a distant No. 3, virtually tied with Packard Bell and Microsoft. Handleman, which racks Kmart and Target stores, finished right behind Microsoft. No other software publisher was mentioned, with the misplaced exceptions of Game Boy (Nintendo) and Genesis (Sega).