- The Marketer's Playbook
- Rendering Your Own Product Obsolete To Increase Sales
Rendering Your Own Product Obsolete To Increase Sales
How to use the tactic of Dynamic Obsolescence to your advantage, increasing returning customer rates and, in turn, profits.
While you may be unfamiliar with the term 'Dynamic Obsolescence,' you are probably somewhat familiar with its uglier cousin, 'Planned Obsolescence.' Planned obsolescence is a strategy some companies use to design products with a limited lifespan or a predetermined period of usefulness, often to encourage consumers to purchase newer models.
While this strategy may be profitable for companies, it can be frustrating for consumers who frequently have to replace their devices or pay for costly repairs. Probably the most famous case of a company using this tactic is Apple.
It has been widely alleged that Apple has engaged in planned obsolescence with some of its products, particularly concerning software updates that slowed older devices. In response to these allegations, Apple has denied intentionally slowing down older devices and has stated that the updates are designed to improve device performance and prolong their lifespan. Those who purchased older devices weren't expecting to have them intentionally throttled without consent, which is a frustrating experience. Worse, it was done behind the scenes, where Apple only admitted to doing so once questioned about it, which made it appear as though it was done with ulterior motives.
This controversy has resulted in several lawsuits against Apple, with consumers alleging that the company engaged in anti-consumer behaviour by intentionally slowing down older devices to encourage consumers to purchase newer models. What ultimately came from this series of lawsuits was a new, pro-consumer legislation called the Right To Repair that effectively prohibits manufacturers and companies from repeating this process, allowing consumers to repair their own devices without voiding warranties, etc.
It is important to note that the issue of planned obsolescence is complex and controversial, and not all allegations of planned obsolescence have been proven in court. Nevertheless, the controversy surrounding this issue highlights the importance of consumer awareness and transparency in product design and marketing practices.
What's most interesting here, though, is that while Apple was possibly participating in anti-consumer behaviour by secretly throttling performance, increasing strain on batteries, etc. (planned obsolescence), it was also participating in dynamic obsolescence, which is what many people would consider a selling feature of Apple.
RENDERING YOUR PRODUCT OBSOLETE
Regardless of the above, there is a way that companies can make their products obsolete without physically doing so — changing the consumer's perspective about last year's model by juxtaposing it with new releases. This is where the concept of 'Dynamic obsolescence' comes in.
Dynamic obsolescence doesn't take the same form as 'planned obsolescence,' where parts of previous models are intentionally made poorly, updated to become less functional, or rendered useless by peripheral changes, but instead, it's the deliberate redesign of goods or services intended to subjectively render established goods and services outdated.
A great example of this, which I discovered in this wonderful video by Veritasium, is the case of Ford in the 1920s. Henry Ford had previously said that their first car, the Model T, would be the only car one would need to buy, as they were designed to be tough enough to last forever. In only a few years, most Americans owned a Model T, which was essentially everyone who could afford one.
Entering an economic downturn with no real returning customers and slow sales due to sheer efficiency, Dupont took over the controlling share in GM and intended to change this. Before Dupont, Henry Ford famously said, about the Model T, "You can have whatever colour you like, so long as it's black." Dupont reversed this by introducing vehicles in a range of colours. It was a hit, bringing customers back to purchase again and increasing sales.
The strategy behind this is what was eventually coined as Dynamic Obsolescence. In execution, for Dupont, this meant introducing the cars in a range of colours to inspire people to give up their last model in exchange for a new, fresher, more 'in' model. It worked wonderfully, and it's something that you still see in place all these years later.
A company that does this exceptionally well, with all of its planned obsolescence and lawsuits aside, is, again, Apple. Each model comes with marginal technological upgrades to help sell the change, but the critical factor is that each model looks different from the last. New colours, smaller bezel, square edges, rounded edges, four cameras, three cameras, etc.
With each new model, they intentionally redesign the product's aesthetics to encourage people to upgrade to avoid being seen with an 'older' model. This helps Apple wonderfully align with its consumer psychology angle of bolstering one's status. By making newer models appear different from older ones, they allow the consumer themselves to render the previous model obsolete through their desire to signal status.
HOW TO USE THIS YOURSELF
One extremely common issue I see with many single SKU brands is that while they may experience immediate success, they often have a low rate of returning customers. Although they may attempt to supplement their product line with complementary items, these additions typically only serve as upsells rather than enticing customers to return. As a result, these brands often experience a customer lifetime value of only one, which can spell disaster for profitability, especially when introducing tactics such as digital advertising, which requires additional margin to succeed.
One potential solution to this dilemma would be to modify the product with a slightly altered version over time, with the goal of renewing the customer's interest in the product.
For instance, suppose a brand has a product available in five different colours. In that case, the brand could remove any unsold inventory and introduce three new colours the following year, reintroduce some of the original inventory along with another new colorway the following year, and so on. By doing so, the brand can prompt customers to compare their old product with the latest colours and, in turn, inspire them to make the switch.
This technique can be applied to various product features, such as material, pattern, shape, or accessories, to make the product distinct. Each year, the brand can reintroduce the old features along with some new ones, thereby keeping customers engaged and eager to purchase the latest version of the product.
In this way, you can help to revitalize your customer's lifetime value by increasing your returning customer rate. With that, you can generate more profits and unlock greater opportunities for growth. Plus, you might be doing your customers a favour because who doesn't want the newest, coolest stuff?