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PC buyers: Second time's the charm

Given a shrinking market for first-time PC buyers, marketing departments are looking to attract second-time buyers of computers and printers.

3 min read
Given a shrinking market for first-time computer buyers, marketing departments have their work cut out for them as they try to attract second-time buyers of computers and printers.

Personal computer penetration in the United States has reached about 40 percent and is stagnant. This will force both PC and printer vendors to adopt new strategies for marketing their products into U.S. households, according to a study released today by Lyra Research, an industry market research firm.

The study said computer companies should try to convince consumers that they need more than one printer and PC, according to the study. The study also urged computer companies to give special consideration to product launches, especially in light of the upcoming Comdex show.

One way to attract second-time buyers is to use technology that computer-savvy people use, said Chad Benson, senior marketing manager at Gateway 2000 (GTW). He noted that the Web offers a great opportunity to target people looking for a computer, because people who are online are using one already.

Gateway uses the Internet as an advertising vehicle by way of ad banners, its own Web site, and its recently launched Internet service, called Gateway.net.

The direct PC vendor also produces two versions of television and newspaper ads in order to target the two different groups: first-time buyers vs. repeat buyers.

"Television is a great resource for reaching customers," said Benson, explaining that to target the first time buyer, Gateway ads focus on lower-cost computer packages that come with a monitor and a printer. The advertisements targeted at the repeat buyer focus on technology and features.

Apple Computer (AAPL) recently introduced a new strategy to bolster sales at computer superstore CompUSA. The new initiative is aimed specifically at accommodating second-time buyers.

Apple and CompUSA are working on the concept of a "store-within-a-store" that is intended to make it easier to help experienced Apple customers find the products they need. The new Apple area in CompUSA stores will be staffed with sales personnel trained by Apple to answer questions.

Lyra's research report said the second-time buyer market that Apple is trying to tap creates a significant opportunity for PC and printer vendors, since there are several solid reasons that households should buy a second computer. Among the reasons cited in the report was the growing competition for computer time in single-computer households with students who need the computers for school projects and research.

Bob Williams, Lexmark's (LXK) vice president of U.S. retail sales for the consumer printer division, said second-time buyers are more sophisticated and more knowledgeable about new products. He noted that this makes it easier to get them to spend a bit more money for a faster printer with higher resolution.

"The second-time buyer can be an easier sale," Williams said. "They do recognize value, and the decision process doesn't take as long. Educated users will buy the first time they are at the store because they know what they want."

In order to reach these increasingly sophisticated shoppers, Lexmark is marketing its high-end printers at lower prices to encourage the second-time buyer to upgrade, Williams said.

Of the 529 consumers questioned for the Lyra study, respondents said they owned 1.52 PCs. Printer ownership was almost up to par with the PC ownership, at 1.3 per household. While that ratio is not quite one-to-one, Lyra concluded that approximately 9 out of 10 PCs owned by the households responding to the survey had a printer connected to them.

Lyra asked users to designate one of the following four broad categories as their primary PC application: nonhome-based business, home-based business, education, or entertainment. The results indicated that the trend toward multiple PC ownership in households seems to be accelerating faster in those households where the owners identified business applications as the primary use for their PC. More than half of these respondents, on average, owned more than one PC.

The long-term opportunity for multiple PC sales in the home, however, lies with nonbusiness applications, because most respondents identified the primary home PC application as nonbusiness-related, and most of these households have yet to invest in a second personal computer.