Sep 18, 2007

Consumer Electronics Should Learn From Apparel

Players in the Consumer Electronics marketplace - branded product manufacturers and retailers alike - have much to learn from opportunities and miscues experienced by their comrades in the apparel industry.
Brooks Barnes writes in the NYT (SpongeBob Pushes Deeper Into Electronics Aisle) that Nickelodeon is introducing a line of consumer electronics branded with personalities from some of its most popular shows. SpongeBob, for example, is used for an alarm clock and a portable media player, among other things. The merchandising effort reflects a bid by Nickelodeon to sell more expensive products that will appeal to core fans as they age. The cable network and its licensing partner, Imation, are pushing retailers to stock the items amid their higher-end electronics. The brightly colored line, which also includes a DVD player and a digital photo frame, will arrive in stores like Best Buy and Wal-Mart this month.
The product line was in development by Memcorp and Nickelodeon and was continued after Imation purchased Memcorp (a U.S.-based consumer electronics marketing and distribution company) this year. Followers of the apparel industry will immediately recognize this strategy of "unbundling" branded products from integrated manufacturers. They will undoubtedly see firms such as Nickelodeon and Imation sign up overseas wholesalers to front the sourcing challenges, and retailers willing to pay for exclusive deals.
It all sounds so easy - and lucrative.
It can be, for a while. But as vendors and retailers are finding out amidst all the current recalls and health and safety scares, there's more to the 'trusted consumer brand' game than the smart low-cost sourcing and cross-licensing deals struck in hotel conference rooms. But then, Nickelodeon is probably very familiar with the risks since their partner Memcorp was involved in a 2006 product recall related to battery burn hazards in Disney®-Brand personal DVD players they managed.
But once leading in this area, major apparel retailers are now starting to abandon such arrangements in favor of more integrated - and accountable - branded product makers. Nickelodeon and others would be wise to see what's happening there before they move too quick! See my related post here.

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