Tasteful Design = Premium Pricing

By Dominique Trempont, Guest Author

When I met Daniel Borel and Pierluigi Zappacosta, twenty years ago, they had just founded Logitech and had come out with their first product: a well designed computer mouse.

I thought that they were embarking on a difficult business: who will buy another mouse once it comes bundled with every computer and is included in the purchase price. I expected Logitech to be crushed by “the big guys” and see its margins erode.

Well, I was wrong. Today, Logitech is approaching $2 billions in revenue and is the leader in peripherals that make the digital world more personal, elegant and fun. They make highly designed video cameras for PCs, gaming consoles, home entertainment systems, mobile phones.

The secret sauce of Logitech is Design.

The company employs very creative product designers who simulate the impact of their product ideas on the consumer digital experience. Here, design is about maximizing the consumer’s comfort, ease of use and sense of aesthetics. They market test their most creative ideas, such as the pen that stores what you handwrite. They pull them back quickly if they do not attract consumers.

Case in point, compare the design and consumer experience between the latest Logitech remote control and the traditional ones that we all have at home.

Instead of bunch of confusing buttons with double level of programming, Logitech presents a clean and crisp user interface and a device that interoperates across TVs, DVDs, VCRs, that serves as a mouse on the internet, etc. No more confusing and unnecessary complexity. Logitech brought the remote control back to what it should be: a remote navigation device that is very user friendly.

That culture is one of creativity on critical details. It manages to create the same type of surprise or “whaaow” effect as Apple. That is very hard to imitate. It is a key strategic positioning that produces sustainably higher margins.

Logitech is growing at a 15% rate y0y. It enjoys a 11.5% operating margin, which compares to 1.5% in their competitive space. Design pays off.