Part 7: Customized Customers (try saying that 10 times fast)

Ever wonder what that song is playing on the radio? It's got the catchiest beat and the most infectious chorus since Bon Jovi's "Livin' on a Prayer" but the radio DJ never says the name of song!!?? Well, Cingular has got you covered. Using an innovative new recognition technology users can identify songs using their cell phones! You dial "#ID" on your phone and hold up the phone to the speaker playing the mystery song. A few minutes later you get a text message with the name of the song and artist and options to download a ring tone if it's available. Each time you use the service it costs $0.99, a relative bargain for some pretty cool technology.

This service is an example of a growing number of retailers offering differentiating and post sales service options to consumers. With many technologies and product becoming commoditized, firms face increasing difficulty marketing their products to stand out from the pack. Offering the customer innovative features (such as song id), customizable features (such as removable, colored, cell phone cases), and microtransactions (such as downloadable ring tones for cell phones) helps a product differentiate itself from its peers. In addition these features can represent incremental income for a company long after the initial product has been sold.

A good example of this is the ipod accessories aftermarket. While the Apple offers a limited selection of "official" accessories the 3rd party offerings easily dwarf those of Apple's own. Part of the reason the ipod is so popular is the range of accessories and after-market add-ons available for the device. The extensive list of add-ons is a selling point for the MP3 that is, in many ways, inferior to many competing playing. While the brand and cache of owning an ipod is part of the reason for its success, not doubt the accessory market helps more than hinders.

With the next generation of home video-game consoles, microtransactions are gaining momentum with companies as a way to market to consumers. By marking many small purchasers, users end up spending a significant amount of money a little at a time giving the illusion of value. Using their online infrastructure, called XBOX live, Microsoft has introduced a whole microtransaction marketplace where console users can buy new cars for racing games, remakes of old arcade games, and "skins" for their console's operating system.

As the marketplace gets ever crowded with more and more homogenous products companies will increasingly turn to after sales service, customization, and micropayments as differentiators. So next time you're in the market for a new phone make sure it has myspace connectivity!