Memory-card leader defies industry logic

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SanDisk, moving to protect its lead from a flood of rivals in the burgeoning business of removable-digital-memory products, is fighting back with the category's first ad campaign.

"No one has invested in building brand loyalty and conviction" in the category, so marketing has focused on price, said Mark Hittie, SanDisk's senior VP-director of retail marketing. "We're going to change the dynamic. We're going to educate consumers to think about the card and take the focus off the device."

To do so, it's launching a $20 million global effort aimed at building consumer appreciation of memory products as well as inculcating a quality image.

Removable digital memory can be thought of as the digital equivalent of "film" needed to hold the photos, music or other content captured on consumer-electronic gadgets. Most cameras and cellphones come with a modest-capacity memory device. But industry experts expect that by the end of the year, marketers, in an effort to keep down prices, no longer will include memory cards. As part of the marketing strategy to get consumers to use the memory products and store photos instead of placing pictures in cameras or download them to a computer, SanDisk plans to launch Shoot and Store cards in 50- and 100-photo sizes at supermarkets and convenience stores to compete with 35mm film, President-CEO Eil Harai told Wall Street analysts in April.

falling prices expected

Prices range from $15 for a low- capacity product to more than $1,500 for higher-capacity versions. However, as supply expands to meet demand, prices are expected to follow the path of most tech products, with capacity rising and prices falling, in this case by an anticipated 30% to 40% a year.

SanDisk's print campaign, breaking this spring, shows photos of a party streaming into a memory card with the tagline "Store your world in ours." The effort, from Havas' MVBMS Euro RSCG, San Francisco, is scheduled to run in National Geographic and Wenner Media's Rolling Stone, with expansion to lifestyle and entertainment titles. A spot TV campaign running during the Olympics is planned for the U.S. this summer.

According to NPD Group, SanDisk holds a 36% share of the U.S. category, with Lexar Media at 21% and Sony at 15%. It pegs retail value of the category at $925 million in 2003, but that excludes sales at Costco, Dell and Gateway.

Another research organization, iSuppli, however, finds the market much larger, with revenue topping $4.5 billion in 2003 and growth predicted to hit $15 billion by 2007 as the mass market adopts portable music players, mobile phone cameras, digital cameras and other electronic devices.

"It's a huge wave that's coming," said Kim Kline, director-client services at Euro RSCG.

While SanDisk long has faced a myriad of competitors, some are now combining to present a stiffer challenge. Earlier this month, Eastman-Kodak Co. and Lexar announced a long-term agreement to join forces with the purpose of garnering a larger market share.

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