Yesterday, I received an email from a friend and fellow marketer indicating that I needed to do another post on Apple. He was right.
When Steve Jobs made his latest announcement on Wednesday, September 5, that Apple lowering the price of the 8GB iPhone by $200 less than two months after its release and eliminating the 4GB model, it made a fair amount of iPhone owners feeling disappointment. As Apple's early adopters tend to be passionate, fiercely loyal, vocal brand advocates that most brands can only dream of (just do a search to get an idea how many blogs, websites, forums and publications are put out by Apple customers, it's impressive), Apple CEO Jobs knows this and respects his customers loyalty (and I am certain, wants to avoid losing it).
On Thursday, in an ingenious move, just one day after the announcement to drop the 8GB price $200, Jobs issued an open letter to iPhone owners offering them a $100 credit at Apple stores for being early adopters. Of course, this open letter sends a powerful message to the world about Apple's loyalty to its customers. I strongly recommend you read Jobs letter, because, I believe, this man knows how to talk and connect with customers. He claims to have read "every one of these emails" from customers upset about the $200 price drop. Jobs acknowledges customer disappointment with Apple, shows humility and respect for customers and what seems to be a genuine desire to do right by customers and makes good with a financial reward for loyal customers, putting his money where his mouth is (of course, smartly, the $100 can only be used at the Apple store).
Every marketer and CEO should be taking notes. This is a great example of how you talk to customers in the age of the informed consumer. Jobs' puts a very human face on the brand and rewards loyalty, which is very likely to make brand advocates more passionate about their choice. It's also resulted in an enormous amount of positive media coverage, blog and message board posting, emails and old fashioned word of mouth (not just word of mouse, but good old fashioned actual one-on-one, in-person and telephone communications) for Apple and iPhone.
Kudos Mr. Jobs. All of this is is so smart, part of me wonders if it wasn't a pre-planned publicity stunt. Whatever the case, Apple has gotten a great deal of good press and word of mouth off of this, and even more, it's gotten the appreciation of its loyal fans.
Friday, September 07, 2007
Tuesday, September 04, 2007
Why All Marketers Can Learn from Apple
While I left Motorola earlier this year and am currently am on contract to a leading B2B/B2C brand not in the cell phone industry, I continue to be fascinated by the competitive activity in the cell phone space. Like many others, I am particularly fascinated by Apple. But for me, my fascination isn't merely because of a cool new music cell phone. My interest is due to Apple's marketing and brand strategies. Today, Reuters reports that, in the US, during its first full month for sale (July), the iPhone has outsold all smartphone models. Impressive, but not surprising.
Apple has shown brand and marketing management expertise with the iPod and the iPhone (which I consider a kind of brand extension of the iPod) from which all marketers, b2c and b2b, can learn a great deal. Apple provides an excellent example of the care and feeding needed to build and sustain a strong brand. Apple has done this by continually moving the iPod brand forward (think Nano then iPhone) and never milking the brand's success; it's part of why it is very difficult to steal the iPod's market share. Apple has also done some smart brand extensions which always maintain the integrity of the core brand (or subrands, if you prefer).
Brand loyalty for iPod is complex connected to many factors: product design, user interface, software, the coolness factor (it's the cool music player to be seen with) -- the fact that a user gets locked in with his/her music collection being in the iTunes format, etc. Of course, you can buy a competitor mp3 player with more features for less money than the iPod -- iPod commands a premium price, always.
Sustaining the Apple iPod music player brand meant moving the product forward, which inevitably led to the iPhone, the convergence of the music / media player and a cell phone. Apple knew it was where portable music players were headed and wanted to cannibalize iPod sales before someone else became first to mind in the space (of course, Apple didn't make the first cell phone that played music, however, it quickly has become first in mind when it comes to cell phones that play music).
Part of managing the brand is managing pricing, and Apple has always smartly exercised strong control over it's retail pricing that most marketers should look at with envy. It's hard to imagine a premium brand selling for $49 - $99 USD (the price range of many subsidized cell phones in the US) and I am confident that Apple is too smart to let that happen to the iPhone (I am also confident that cell phone carriers appreciate this; like any business, they want products they can sell for a nice profit). With iPhone, Apple has innovated in this area too. In the US, cell phone carriers (AT&T, Verizon, Sprint, etc.) have traditionally subsidized the cost of cell phones looking to service for their profit. Not with the iPhone. Reports are that Apple has ensured that AT&T is making a sizable margin on the iPhone. That's smart for both companies. After all, any business is more likely to push a brand they make a profit from rather than a loss -- it's a great differentiator and incentive for the carrier to push the product, especially when you combine that with strong consumer demand for the phone. I've always believed that cell phone makers should have been working hard to do this (i.e., offering carriers high end phones they can sell at a profit), instead of marching to the beat of what's always been done by pumping out more subsidized cell phones. It's interesting that it took a new marketing and brand savvy entrant into the cell phone market to accomplish this.
Even more, only several years ago brands didn't mean much to carriers. I remember seeing a research study a carrier had done that showed that more than 70 percent of consumers could be switched to a different brand while at the carrier's retail store. I seriously doubt this will apply to consumers coming in -- and even switching carriers -- to purchase an iPhone. I am confident those consumers are not going to be easily switched.
I'm also confident that Apple and its iPhone will change the cell phone game in many ways.
Kudos Mr. Jobs. Brilliant work. I am eagerly anticipating your next move.
Apple has shown brand and marketing management expertise with the iPod and the iPhone (which I consider a kind of brand extension of the iPod) from which all marketers, b2c and b2b, can learn a great deal. Apple provides an excellent example of the care and feeding needed to build and sustain a strong brand. Apple has done this by continually moving the iPod brand forward (think Nano then iPhone) and never milking the brand's success; it's part of why it is very difficult to steal the iPod's market share. Apple has also done some smart brand extensions which always maintain the integrity of the core brand (or subrands, if you prefer).
Brand loyalty for iPod is complex connected to many factors: product design, user interface, software, the coolness factor (it's the cool music player to be seen with) -- the fact that a user gets locked in with his/her music collection being in the iTunes format, etc. Of course, you can buy a competitor mp3 player with more features for less money than the iPod -- iPod commands a premium price, always.
Sustaining the Apple iPod music player brand meant moving the product forward, which inevitably led to the iPhone, the convergence of the music / media player and a cell phone. Apple knew it was where portable music players were headed and wanted to cannibalize iPod sales before someone else became first to mind in the space (of course, Apple didn't make the first cell phone that played music, however, it quickly has become first in mind when it comes to cell phones that play music).
Part of managing the brand is managing pricing, and Apple has always smartly exercised strong control over it's retail pricing that most marketers should look at with envy. It's hard to imagine a premium brand selling for $49 - $99 USD (the price range of many subsidized cell phones in the US) and I am confident that Apple is too smart to let that happen to the iPhone (I am also confident that cell phone carriers appreciate this; like any business, they want products they can sell for a nice profit). With iPhone, Apple has innovated in this area too. In the US, cell phone carriers (AT&T, Verizon, Sprint, etc.) have traditionally subsidized the cost of cell phones looking to service for their profit. Not with the iPhone. Reports are that Apple has ensured that AT&T is making a sizable margin on the iPhone. That's smart for both companies. After all, any business is more likely to push a brand they make a profit from rather than a loss -- it's a great differentiator and incentive for the carrier to push the product, especially when you combine that with strong consumer demand for the phone. I've always believed that cell phone makers should have been working hard to do this (i.e., offering carriers high end phones they can sell at a profit), instead of marching to the beat of what's always been done by pumping out more subsidized cell phones. It's interesting that it took a new marketing and brand savvy entrant into the cell phone market to accomplish this.
Even more, only several years ago brands didn't mean much to carriers. I remember seeing a research study a carrier had done that showed that more than 70 percent of consumers could be switched to a different brand while at the carrier's retail store. I seriously doubt this will apply to consumers coming in -- and even switching carriers -- to purchase an iPhone. I am confident those consumers are not going to be easily switched.
I'm also confident that Apple and its iPhone will change the cell phone game in many ways.
Kudos Mr. Jobs. Brilliant work. I am eagerly anticipating your next move.
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