GrandPad- A low-end, sustaining innovation for older tech users
In “Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant,” authors W. C. Kim and R. Mauborgne present a strategic sequence for evaluating innovations, similar to the framework we use in MIS4596. Using this sequence, I will examine how the product GrandPad, a low-tech, easy-to-use, wifi-connected tablet is a low-end, sustaining innovation that taps into a new market of nonconsumers.
First, the sequence looks at six buyer utility levers. GrandPad touches on four of these levers. GrandPad increases utility in the simplicity category by limiting the number of apps and features to only those users use regularly. It increases convenience by using larger icons and an intuitive interface, meaning no training or assistance is required. It increases utility in the risk category by providing seniors with a private family network, eliminating concerns regarding internet scams and risky browsing. Finally, because it’s focused on the family, it has greater utility to seniors in the fun and image category.
After establishing exceptional utility, the next step is to price the product strategically. Because the GrandPad innovation lacks excludability, rivals can take the idea and customers along with it. Therefore the price must be set low to retain customers. At $200 for the tablet, plus accessories and support, and $40 per month service fee, this product is at the low-end of the tablet and cellular service markets. This matches the price-sensitivity of seniors as well.
The next step is ensuring costs are low enough to hit the company’s profit target. The levers the authors of “Blue Ocean Strategy” reference are streamlining operations, partnering, or changing the pricing model of the industry. GrandPad uses the latter two options in its strategic costing. GrandPad is a product of Consumer Cellular who partners with large cellular companies like T-Mobile by buying their unused capacity at a reduced cost. Their pricing model is unusual in that they bundle cellular and tablet costs which reduces marketing costs for the cellular arm of the company.
The final step is to address anything that would limit users from adopting the product. The GrandPad could face user adoption issues if seniors had to buy a lot of additional components or call their families every time they needed help using the product. GrandPad solves these issues by providing complementary products like stylus pens, charging stations, protective covers, and specialized user support in the product’s bottom-line price. One user adoption issue they still need to revisit is coverage. The cellular coverage in rural areas, where many older people choose to retire, is not as good as in dense, urban centers. Despite this, the product is making waves in the tech industry: https://www.bloomberg.com/news/articles/2018-05-07/an-ipad-for-80-year-olds-senior-citizen-carrier-bets-on-tablets