"With the consumer electronics market reaching saturation, it is difficult to find people who do not have gadgets that meet their needs," Vipin Jain, president and CEO of Retrevo, tells Marketing Daily. "Customers are no longer buying products just for the sake of owning one. They are looking to differentiate. They want products that are prime examples of their category."

According to the company's Retrevo Pulse, a live report that tracks pricing and demand data for consumer electronics, demand in May for items such as digital cameras and Blu-Ray disc players continues to increase despite higher average selling prices. According to the company, Blu-Ray disc players sell at prices 20% higher than traditional DVD players, and account for more than a third of all video disc player shipments.

Similarly, more than half of all the digital cameras shipping right now have optical image stabilization and face-recognition technology, driving the average selling prices up more than 10%.

"The recession has brought more deliberation in consumer research and the shopping process," Jain says. "Because consumers today are spending less and counting their money, they're also less likely to throw money away on a product that they don't need and that doesn't put them at the center of the universe."

Yet, consumer electronics companies still need to be clear about how to communicate these innovations to consumers, to better clarify what it is their products bring that is better than their competitors', Jain says.

"Companies focusing on innovation need to work to emphasize, in the customer's mind, what the innovation really accomplishes in their daily lives," he says. "For example, not only is the customer getting a cell phone -- they're getting their own personal entourage of business colleagues, friends, followers, and family because a cell phone from your company syncs face recognition to your address book, so the most important people in your life are always at your fingertips."

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