If you've walked around inside an electronics store like Best Buy recently, the sheer number of electronic choices with regard to tablets, computers, printers, smartphones, et al., can be overwhelming. Yet for all the consumer electronics we buy, certain brands stand out as clear winners among consumers.
Brand Keys, a customer loyalty research company, has been ranking 375 of the United States' top brand names into dozens of categories for the past 17 years. Recently, utilizing its Customer Loyalty Engagement Index, Brand Keys broke down six consumer electronics sectors into its respective peers and delivered a brand loyalty winner in each category.
Today, I want to not only give kudos to the winners of Brand Keys' loyalty assessment, but also examine what the factors were that helped these companies achieve their segment-leading success. Understanding what these companies are doing right could help us find the next groundbreaking tech sector investment.
With PC sales dropping more in the first quarter than at any other time in their history, competition among laptop makers is getting fiercer by the day -- and margins thinner. This is a sector that requires constant innovation, so, as to be expected, Apple (NASDAQ:AAPL) and Samsung tied for the top spot.
Apple certainly won't win any acclaim for its higher price points from consumers, but its thinner and lighter MacBook Air, sleek designs catered to millennials, and non-Windows-based operating system are enough to drive plenty of customer loyalty. In addition, it's Apple -- would we really expect anything less than perfection?
As a user of a Samsung laptop, I can tell you it has done a marvelous job creating eye-pleasing designs that are becoming lighter in feel, and are also geared toward a younger generation. With innovation being everything in the tech sector, these two companies are head of the pack.
It's getting tougher to differentiate the difference between an e-reader and a tablet these days, but Brand Keys did its best to separate the two when conducting its survey. According to the results, Amazon.com's (NASDAQ:AMZN) Kindle topped the list.
This really shouldn't come as a surprise to anyone, since Amazon's Kindle was the revolutionary technology that led the transformation away from the bricks-and-mortar bookstore and into the convenience of an at-home reader. As the innovator, I would have been shocked not to have seen Amazon atop the rankings. What's more interesting in this category was that Barnes & Noble's Nook took the No. 2 spot ahead of the Apple iPad. It's quite possible that few consumers think of the iPad in terms of being an e-reader, so I wouldn't read into that too much (pun completely intended), but it was nonetheless a surprise.
Samsung's dominance continues in the flat-screen television category, taking the top ranking ahead of Vizio. Just as we witnessed with laptops, Samsung is catering to a younger generation of consumers by relying on thin, but simple, designs, and actionable, but fun, advertising to reach this group of individuals. Samsung's price point certainly will be higher than many of its peers, but it's also delivering on the higher expectations by consumers of a crisper picture with more user-programmable options.
First of all, yes, people still use printers; and that's very good news for Canon (NYSE:CAJ), which topped the printer category yet again. The ease of use for Canon printers, and the amount of specialization they can provide in an enterprise work environment, makes Canon a logical choice to continue topping this category for years to come. As a leader in customer service and a provider of stylish designs to personal consumers, Canon is a leading gadget designer.
Try not to be too surprised here, but Apple is not No. 1! Samsung actually trumped Apple in smartphones with its innovative Galaxy S-series, as its touch-to-touch file sharing and bigger screen appear to be wooing consumers in greater numbers.
It's also worth noting that Samsung smartphones run off Google's Android operating system which is the dominant OS around the world by market share. In the U.S. the difference isn't that noticeable, but outside the U.S., Android is Goliath, with nearly 70% of global market share and Apple would be the equivalent of David with close to 20% market share. Consumers love to own dominant brands, plain and simple.
As I prefaced previously, there isn't a huge difference these days between an e-reader and a tablet, so it shouldn't come as much of a surprise that Amazon took the cake here in brand loyalty. It's a bit disconcerting that the inventor of the tablet, Apple, only managed to take the No. 2 spot, but Amazon's functional Kindle Fire that dramatically undercuts Apple on price could be a key reason it takes the top honor.
What's the takeaway?
Now that we've had a closer look at which companies took this year's top honors according to the Brand Keys survey, let's examine what common themes exist among these consumer electronics that might help us recognize the next big winner.
To begin with, innovation is everything. Apple has been the king of innovators for years, but it hasn't truly changed the game since it introduced the iPad a few years ago. In the smartphone sector, BlackBerry (NYSE:BB) has been even worse. It took countless delays and nearly two years to introduce its new BlackBerry Q10 and Z10, which run on its own proprietary operating system. Thus far, reaction to the new smartphones has been lukewarm at best, as BlackBerry brought up the caboose in terms of smartphone brand loyalty.
Secondly, design matters. Millennials are caring more and more about their own image and the design of the products they use, so functionality needs to extend far beyond just what the product can do and into the actual styling of the device. Samsung's thin and sleek TV designs and Apple's lightweight and colorful laptops are prime examples of hitting on this point.
Finally, price is important, but it's also not a breaking point if the higher-priced product can deliver added value to the consumer. Amazon's Kindle Fire, for instance, generates top-tier tablet loyalty because it's both a cheaper alternative to the iPad and possesses a strong brand name. However, in laptops, Apple and Samsung offer arguably the most expensive price points, but are generally regarded as the leading brands in terms of functionality and status. In contrast, Dell (UNKNOWN:DELL.DL) ranked dead last in laptops despite its cheaper price point, as its laptops are losing their brand identity and have failed to keep up with Samsung or Apple in design freshness.
Fool contributor Sean Williams owns shares of Dell, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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