By David Dick | STC Fellow

A product that is well made and easy to use is likely to be more popular with consumers than a product that is not. When several products offer the same features and functions, consumers always consider price as product differentiator. There are other factors important to consumers, such as benefits, compatibility, and intuitive design. To illustrate this point, I present the story of the Video Cassette Recorder, better known as the VCR.

The VCR was a device to play movies or record television programs on a cassette. There were two kinds of VCRs on the market:

  • Video Home System (VHS), which was an open standard by JVC
  • Betamax, which was a propriety standard by Sony

Sony had the market advantage because it delivered the first Betamax VCR to market two years before the VHS VCR. The idea of a home-use VCR captured consumers’ imaginations, and Betamax would become one of the hottest home electronics products of the 1970s. VHS and Betamax had the same basic features and functions, but they differed in benefits, compatibility, and design. Betamax being a proprietary standard of Sony meant that other companies could not build and market a cheaper and competitive product based on Betamax.

Benefits as a Product Differentiator

Consumers want a product so great to use that it makes them want to buy another.

VHS allowed for longer playing time, faster rewinding, and faster fast forwarding. With VHS tapes, it was possible to record two or three movies onto one cassette. It was only possible to record one movie (maybe two with lower picture quality) with Betamax.

Compatibility as a Product Differentiator

Consumers want their products to be compatible with any related products.

VHS tapes would only play and record on VHS VCRs, and Betamax tapes would only play and record on Betamax VCRs. At first, this was not a problem, because movies were marketed in both VHS and Betamax formats. Over time, however, more movies were marketed in VHS because the demand for Betamax movies was lower. With fewer movies made for Betamax, consumers who owned Betamax VCRs switched to VHS.

Older televisions did not have the input and output ports to connect a VCR, so consumers had to purchase a VCR-compatible televisions.

Design as a Product Differentiator

Consumers want their products to be easy to use and stylish.

VCRs were not designed to be “plug and play.” Instructions for connecting the VCR to the television, setting the timer, and configuring it to record television shows were confusing for the average user to understand. It was easier to contact a trained technician to set up the VCR than do it yourself.

Recording a movie required pressing two buttons—Play and Record. Sometimes a person only pressed the Record button, which meant that the movie or television program was not recorded.

Final Thoughts about Product Differentiation

Just like all technology, something better came along to replace the VCR, and it was driven by price and ease of use.  Now that digital and streaming formats have emerged as  increasingly popular consumer choices, will physical media go the way of the VCR?

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