Consumer Electronics Market in Belgium-Dissertation Writing Help
Executive Summary
Performance Still Strong, But Growth Levels Slowing
The consumer
electronics market in Belgium is performing strongly overall, with good growth
levels seen over the review period. Performance in many categories was lower in
2008 than for the review period as a whole, however, which reflects the growing
maturity of the market. Portable consumer electronics products are showing good
levels of growth and in-home products are benefiting from the switchover from
analogue to digital technologies.
Poor Economy Could Dampen Performance
At the end of
2008, there was much uncertainty regarding the performance of the world
economy, with recession seen in many world regions. In Belgium, the national
statistical office Statbel reports that consumer confidence is low and falling,
worries about unemployment are growing and households are increasingly unlikely
to purchase major items. This may lead sales of consumer electronics products
to be lower than anticipated in 2009, especially in the first half of the year.
Newer Technologies Performing Best
The product
sectors that are showing the best performance are those that incorporate the
newest technologies. In particular, the switchover from analogue to digital is
leading to growth in sales of TVs and DVD players, especially those
incorporating hard disks. Products that offer convenience are also showing high
levels of growth, including navigation systems, which are helping to shore up
sales of in-car consumer electronics. Products that offer greater portability
and more functions in a single device are also performing well, including
laptop and netbook computers, portable media players and mobile phones, with
smart phones in particular performing well.
Multinationals Dominate
With the
exception of the Dutch Philips, Asian- and US-based multinationals dominate the
manufacturers represented in the Belgian consumer electronics market. The
market leader Samsung has shown particularly strong performance in 2007,
allowing it to expand its overall market share considerably. The second- and
third-ranking manufacturers, Sony and Nokia, also saw their market shares
improve. Those that are winning are proving highly innovative, while those that
have not embraced the digital revolution lose out. In particular, smaller
manufacturers with less brand recognition are performing poorly.
Growth To Remain Positive Throughout Forecast Period
Overall,
positive growth levels are expected in both value and volume terms, although
growth rates will be lower than during the review period, which reflects both
this market’s increased maturity and falling prices, although technological
innovations and new product areas will lead to strong growth in sales of
in-home consumer electronics products in particular. How the economy will turn
out cannot be foreseen, however, at least for the near future, so that sales
may be dampened further than has been anticipated in the short term, although
they will certainly pick up again towards the middle of the forecast period.
Key Trends and Developments
Portable Products Seeing High Levels of Demand
Increasing
mobility and consumers’ hectic lifestyles are driving demand for convenience
and portability in many sectors of the consumer goods market in Belgium,
including consumer electronics products. This is leading to higher growth in
both the value and volume sales of such products relative to other sectors.
Consumers increasingly value the functionality that is provided portable
products, and the continuing convergence of technologies is playing an
important role.
Current impact
The trend
towards increased portability is impacting many sectors of consumer
electronics, and portable media players and mobile phones in particular are
benefiting from this trend. Many manufacturers are making innovations with
their products, while the convergence of technologies is leading to the
incorporation of more functions into portable products, such as mobile phones
equipped with mp3 players and digital cameras. The introduction of products
such as smart phones and iPod music players are examples of the success enjoyed
by portable consumer electronics products.
Outlook
The trend among
consumers towards increased mobility will continue to drive interest in
portable consumer electronics products in Belgium in the near future, with
smart phones in particular likely to drive sales of replacement mobile phones
in what is a saturated market for first-time purchases. The impending
introduction of the Apple iPhone in 2009 will prove particularly popular among
consumers and will put pressure on other manufacturers that fail to match its
functionality. Portable products are also increasingly being seen as in-home
products in the audio sector in particular, and this trend is expected to
continue.
Future impact
Innovation will
be a key driver of sales of portable consumer electronics products in Belgium
as consumers increasingly look for functionality from their gadgets.
Manufacturers will therefore have to invest heavily in research and development
or they risk falling behind their competitors. Design and ease of use will be important
factors in consumers’ decisions about purchases of mainly replacement products,
while portable products will increasingly displace their in-home counterparts,
especially in the longer term.
Digitisation of Technology Seen
Analogue
technologies are increasingly falling out of favour in Belgium as digital
electronics products become more popular and more widely available. Many
analogue products are therefore being withdrawn from the market, including
analogue TVs, cameras and camcorders. For cameras and camcorders in particular,
new digital products are seen as easier to use.
Current impact
Sales of digital
products are booming and increasingly offering a much wider range of
functionality than older analogue products. Complementary products are also
emerging, including digital decoders and receivers that tune into digital
broadcast signals and provide an input into analogue TVs, thus enabling
consumers to watch digital broadcasts without purchasing a new set. At the same
time, improvements in digital technologies are leading to the emergence of more
compact and lightweight products.
Outlook
The
Flemish-speaking region of Belgium switched over to digital TV broadcasting in
November 2008, although the French-speaking region is not due to do so until 2011.
This will drive demand for digital TVs or decoders in the short term, and it is
expected that all analogue products will have disappeared from the shops in
Belgium by 2012. In addition to the broadcasting networks, another primary
driver of this change will be the continued growth in the delivery of digital
media content, including video and music.
Future impact
Manufacturers
that are already embracing the digital revolution will be the best placed to
cash in on the trend towards purchasing digital consumer electronics products
in Belgium and the most likely to gain market share. All manufacturers must
therefore invest heavily in research and development, keeping in mind that
quality, ease of use and, increasingly, portability are key drivers of purchasing
decisions. Providing promotional material that clearly explains the
differentiators of each product will be key to their producers’ long-term
success.
Internet Sales Pick Up Sharply
According to the
European Commission, 58.3% of Belgians used the Internet regularly in 2006 and
the number is expanding. The Belgian Internet Service Providers Association
released figures in the third quarter of 2008 indicating that 97% of all
Internet connections in Belgium were Broadband. Computer penetration is also
high in Belgium, as growth in sales of computers has been high in recent years
and they have also fallen in price.
Current impact
Internet sales
of consumer electronics products in Belgium have been increasing, rising from
8.6% of the total in 2007 to 13.6% in 2008, they are expanding particularly
strongly in certain sectors. These include portable media players, mobile
phones and laptops, which are all relatively low-priced products in which
design is an important consideration and the Internet offers ample opportunity
for consumers to compare products’ appearance, together with their technical
specifications. The only sector in which Internet sales play no major role is
in-car consumer electronics.
Outlook
Internet sales
look set to increase further and will become more important in most product
categories. Many manufacturers offer discounts to consumers for purchases made
over the Internet. At the same time, however, durable goods stores will
continue to play an important role on account of the specialist advice they are
able to provide. In order to spur sales over the Internet, which are generally
more profitable, manufacturers should increase the differentiation of their
products and provide better levels of product information. They should also offer
consumers an opportunity to pose questions via the website in order to compete
with the advice available in retail stores.
Future impact
In future, more
mobile phones will offer Internet connections as the proportion of smart phones
continues to grow. This will provide added convenience to customers, who will
probably use their mobile phones to make increasing numbers of purchases via
the Internet. In order to maintain market share, manufacturers should ensure
that they provide product information that is suitable for viewing on the
smaller screens provided on mobile devices.
Strong Demand for New Technologies
Older
technologies are rapidly falling out of favour in Belgium – as can be seen by
the move from analogue to digital technologies, with many analogue products now
being withdrawn from retail stores. All technologies based on tape storage are
being overtaken by those that use disks or, increasingly, incorporate hard
disks within the devices themselves. There is also a trend towards more
compact, convenient technologies, with portable models increasingly being used
in place of traditional in-home audio apparatus in particular.
Current impact
Manufacturers
offering the most innovative technologies are those that are achieving the
greatest success in the market, and increasing their market shares. The
technologies that are currently experiencing the greatest increases in demand
include high-definition and other digital TVs, DVD players and recorders,
portable multimedia players, smart phones that incorporate music, video and
camera technologies, laptops and netbooks, and navigation systems. All these
technologies offer greater convenience to consumers as they find themselves
increasingly pushed for time.
Outlook
New technologies
will lead to a blurring of the distinctions between product categories. For
example, most new mobile phones sold today incorporate digital cameras, and
manufacturers are improving their picture quality through innovation all the
time. This will probably affect the sales of digital cameras as stand-alone
products. Smart phones also have the potential to take market share from
portable audio and other media products, and the impending launch of the Apple
iPhone will lead to dramatically increased interest in smart phones in the near
future. Netbooks also look set to grow rapidly in importance.
Future impact
Manufacturers
must constantly focus on innovation if they are to remain competitive and must
ensure that they have ample funding available for research and development.
Those that are most successful will be those that not only focus on
technological superiority but also look to incorporate multiple technologies in
more compact, convenient devices. A key focus for the long term will be portability,
which will be an important driver of growth in sales, and the increased
importance of the Internet may also see a rise in demand for products that can
be personalised to suit a particular consumer’s taste.
Prices Beginning To Fall in Many Sectors
Although average
unit prices are rising overall and will continue to do so, prices peaked in
2008 in many more mature sectors and are already beginning to fall. Prices are
stable, or even rising slightly, in sectors that are still switching from
analogue to digital technology, including TV and audio, but they are beginning
to fall in those sectors in which the switch has already occurred, such as
cameras, and steeper declines are being seen in the prices of computers and
navigation systems.
Current impact
Although
manufacturers are being forced to innovate constantly in order to remain
competitive, they are finding that they must provide more for less. Sectors in
which this is particularly the case are navigation systems and laptop
computers. Prices of navigation systems have fallen dramatically since their
introduction in 2002 and they are now becoming increasingly affordable for a
wider range of consumers, while the prices of laptops have experienced further
downward pressure since the introduction of netbooks in 2008.
Outlook
Prices in
general will hold up until around 2011, after which average unit prices will
fall across the majority of categories. As digital products continue to
increase in importance, the sharpest price falls will be seen in sectors in
which digital models have become mainstream, including cameras, camcorders and
portable media players. Manufacturers offering TVs and DVD-based products will
fare the best in the short term, but they must place a greater emphasis on
research and development to ensure that they incorporate the latest and best
technologies and that they differentiate their products adequately from those
of their competitors.
Future impact
Over the longer
term, falling prices will affect all product sectors. To be successful,
manufacturers should ensure not only that their products incorporate the latest
technology but also that they are seen to be innovative, and indeed that they
are seen to be active in the development of new technologies themselves.
Features, functionality and convenience will all be great selling points, and
the ability to customise products to meet specific consumer needs may enable
some product manufacturers to charge premium prices for the clear
differentiation that their products offer.
