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UI Business Professor Gruca Comments on Product Longevity

The proliferation of cheap consumer products that last only a year or two has some Americans wondering if planned obsolescence has become the norm in today's products.

Personal computers flash the dreaded blue screen of death after a couple of years. Rechargeable batteries wear out after a year, and new batteries cost as much as the product they power. The electronics fail on that high-efficiency washer weeks after the warranty runs out.

A suspicion of declining product quality is almost impossible to validate, however.

Manufacturers who track the life of their products rarely share the data, and most product ratings are released shortly after the product is introduced into the market, before longevity can be tested.

Planned obsolescence is a strategy of designing products that will become obsolete or nonfunctional sooner than necessary. The term has been around since the 1930s but was popularized in the 1950s by American industrial designer Brooks Stevens. He says planned obsolescence was "instilling in the buyer the desire to own something a little newer, a little better, a little sooner than is necessary." Planned obsolescence isn't about making marketable junk, however. The real business value to the strategy is to beat competitors to the punch with a newer, better product, says Tom Gruca, professor of marketing with the Henry B. Tippie College of Business at The University of Iowa.

"It's a strategic competition between companies to make the latest and greatest of something," Gruca says.

"You're trying to make the other guy's product obsolete." Gruca says manufacturers risk giving up the technological or fashion edge to competitors if they don't upgrade products often enough.

He says companies that sell junk products designed to wear out quickly aren't pursuing a planned obsolescence strategy--only speeding their own obsolescence by putting off consumers.

That doesn't answer the question of why so many products seem to fail or fall out of favor after a year or two. Shawna Lane has to replace the microwave oven about twice a year at her Sub City deli in downtown Cedar Rapids. The current GE microwave costs about $100 at Sam's Wholesale Club, and Lane can almost predict that the door latch will fail in a few months.

Lane has shopped for higher quality commercial microwaves that sell for $500. She didn't buy one, partly because of the cost and partly because the retailer didn't have it in stock when she needed it.

The availability of low-cost products and their unimpressive quality can be traced to a major shift in the way products were designed in the 1970s, Gruca says.

Japanese automakers entered the U.S. market with low-cost cars that surpassed American-made cars in quality, Gruca says. American manufacturers began studying the Japanese methods and found Japanese manufacturers developed products differently. They started by determining the price level at which they could sell vehicles in their target markets. Then they engineered the car with design, materials, and manufacturing methods that enabled them to hit the desired price point. U.S. manufacturers began integrating price strategy into all aspects of product design and manufacturing, Gruca says, enabling them to hit price points that opened new markets totheir products.

"If you say things aren't built like they used to be, yes, that's true," Gruca says, "but more people can afford them than (they) used to." Outsourcing manufacturing to companies in China and other low-cost production centers has affected product price and life expectancy.

Gruca says retailers often demand the 'China price' from suppliers, because it enables them to sell more products and fatten profit margins.

American consumers have seen the side effects not only in quality, but in safety. Consider the recent recalls of children's toys that contain lead and foods contaminated with melamine.

Gruca says Americans are increasingly aware of the human suffering and environmental degradation that have occurred because of Chinese factories that provide cheap goods, but many choose the low price anyway.

J. Lloyd International in Cedar Rapids sells classic toy brands, such as Tootsie Toy and Suzy Homemaker. Some are made in China. J. Lloyd International is in the process of moving most of its production back to the United States to reduce shipping costs and improve its ability to adjust product inventories to market demand.

President Jody Keener says the general quality of his company's toys is high. Many of the company's toys will last for decades and become collector's items that sell for many times the original price, Keener says. While he agrees products have shorter life expectancy, he says it's not just because of quality.

"A lot of parents buy their kids so many toys that they don't keep them for long," Keener says. "The kids throw them away, because they have something new to play with." The 'China price' can have a distorting effect on the U.S. marketplace that can accelerate early retirement of products, area business owners say.

At Hall Bicycle in downtown Cedar Rapids, owner Karl Moscrip often handles repair orders for imported bicycles that originally sold for $70 to $80 at a discount store. Many of the bikes quickly require repairs because they were not well made, he says. On a recent trip to a home improvement store, Moscrip found children's bicycles for as little as $29. "They're throwaways," Moscrip says.

Repairs often cost more than the original bike, because the bike shop pays American-scale wages and doesn't use the cheap parts used to assemble the bike at the factory.

Planned obsolescence seems obvious to Vern Steve of Steve's Business Equipment in Iowa City, which once sold and serviced mainly typewriters, but now handles mostly programmable cash registers.

Customers rarely order repairs for modern inkjet and laser printers, because the cost is often higher than buying a new machine, he says.

Steve has customers asking him to repair IBM Selectric electric typewriters that date to the 1970s, however, because they were built to last and are still valued for things like addressing envelopes.

Instead of debating planned obsolescence, Steve says many consumers simply accept it. Consumers can find a higher quality alternative to almost every cheaply made product, the UI's Gruca says.

Although the purchase price is higher, the consumer often saves money in the long run, because he doesn't have to replace or fix the product as soon, Gruca says.

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