How do you maintain a market for a long-lasting product?

Question

Hey Internauts--

I am an engineer and I have no business background, so I figured I'd post this question here...

How does a company avoid what I call "The Maytag Effect"? We all know that the Maytag prides itself on selling products that are so long-lasting and maintenance-free that they rarely need replacement or repair. (So much so that the Maytag repair man is always shown falling asleep in the shop due to lack of work.) That is, how do industries, such as the car industry-- which in recent decades has advertised a product with a long lifespan-- continue to have a market to sell products to after 5 – 10 years? If they make good, strong, reliable products that still meet the users needs after 5 – 10 years, and users have no reason to buy another, how does the company continue to grow and sell more product? I know that there will be factors, such as people turning 16 and wanting to buy a new car, but I am talking about much larger underlying causes. One thing which I have been told is that, in the automotive industry at least, a couple of decades ago, began focusing on leasing programs in order to create a market for new products.

I am looking for references to books or articles that might be of use to me in researching how a company avoids having its own long-lasting products be their current products' primary competition.

As a specific example, how can a company that makes a very costly product which is spec'ed for a certain end-of-life performance level, but which is actually significantly overengineered and used by the primary customer well beyond the promised lifespan, continue to sell product and expand its market?

-thank you

Answer 1

Breakdowns and unreliability are not the only reason consumers replace their goods.

Consumer behaviour is driven by the benefits that a product offers. The benefit could be prestige, fuel economy, efficiency, performance etc. Goods become obsolete as soon as newer versions of the same product type become available. When a consumer decides that a newer version of the same product type offers a significant enough benefit improvement over the product that he currently owns, he makes the purchase. Example - a 1995 Mercedes may still be perfectly functional. A person seeking prestige however will obtain more prestige from a 2008 Mercedes. A person seeking better fuel economy would get more mpg from the equivalent 08 model.

Check out this book on planned obsolesence, which has nothing to do with manufaturers making products which fail but with stressing the benefits of new products over those previously sold: http://www.jstor.org/pss/3108138