New Washing Machine Marketplace Innovations and Warranties Driving Value Proposition Differentiation
This month I helped someone research the purchase of a new washing machine. The research was fascinating in that it wasn’t about lowest price. They were all clustered together between $500 and $575 USD. When considering a big ticket item with little price difference, it becomes about quality. Value propositions and new innovations drove the research for purchase.
There is a new breed of washing machines that work without traditional agitators. Samsung calls this Vibration Reduction Technology. LG calls it TrueBalance Anti Vibration System. I was able to speak to someone that has owned one of these impeller washing machines for a while. They stated it has quieter operation, better water extraction and is gentle on fabrics.
The Samsung and LG washing machines have different warranties than the legacy manufacturers. It is not clear if this is due to higher reliability of this machine type or as a marketing tactic to build trust. Likely it is a combination of both. Samsung model WA48H7400AW comes with a one year parts and labor warranty and two years control board, three years on the stainless steel drum and ten years on the direct drive motor. LG Model WT1101CW comes with a one year parts and labor warranty, ten years on the motor and lifetime on the drum. One manufacturer, Speed Queen, offers three year parts and labor warranty.
Most washing machine manufacturers provide a one year parts and labor warranty. Several people I talked to had stated the older washing machines lasted a decade or two. Recent purchases have lasted less time than that in most cases. I wondered aloud whether using tools like Six Sigma for efficiency over and over have reached an inflection point where they destroy quality. Once you have perfected a product and focus on taking out costs, there is an opportunity cost. That opportunity cost usually results in a loss of quality.
In The Innovator’s Dilemma Clayton Christensen demonstrates how catalytic innovations displace the market leader. A disruption in business model then goes unnoticed and market share starts to shift. This could very well be happening here. Time will tell.
Another factor to consider about the future of this marketplace is the next buyer generation. They love their smart phones, monitors and other electronics made by Samsung and LG. Younger generations know and trust Samsung and LG more than legacy washing machine manufacturers.
The communication of new performance characteristics with this washing machine type and superior warranty creates a compelling value proposition differentiation. To enter an established market in this manner demonstrates quality business strategy and execution. The number of factors affecting this marketplace may lead to a Porters of Racine type extinction event for certain legacy manufacturers. I hope to discover more consumer trends like this at the International Home and Housewares Show, March 5-8, 2016 in Chicago.
David Dalka is the Business Model Editor at the Wiglaf Journal.