December 29, 2008
Turning Points 2008: Shining Apple
By Tom Ryan
Editor’s note:
In what we plan to make an annual end-of-year tradition, RetailWire has
compiled a list of the most significant retail industry "Turning Points" of
2008. (See
our news release…) What follows is the eleventh in a series
of discussions based on the list.
In a brutal year for
any company attempting to grab a piece of the consumer’s dollar, Apple’s
performance clearly stood out in 2008. Sales were up 27 percent in the
fourth quarter ending Sept. 27, driven by strong Mac, iPod and iPhone demand. The company
soared passed its goal of selling 10 million iPhones for
the full year and annual profits reached the $1.14 billion mark.
Seemingly a perennial
candidate for Brand of the Year, Apple’s results were largely tied to many
tenets that have proved to be the foundation of its success over the years:
Innovation: With upgraded hardware and software,
the iPhone 3G became the fastest-selling cell
phone in the U.S. by November. The major introduction was Apple’s App Store,
which includes thousands of downloadable applications for the iPhone and iPod Touch.
Meanwhile, the unveiling of MacBook Air, the "world’s
thinnest notebook," helped drive strong Mac as well as accessory sales.
Buoyed by new features as well as the new Touch model, Apple also sold
over 11 million iPods worldwide during its fourth
fiscal quarter alone. According to some, the key to Apple’s string of blockbusters
is not only making products that meet consumers’ desires, but making complex
technology easy to use.
Price/Value Relationship: If you walk into an Apple Store,
you might pay $45 for a connector cable that typically costs $5 elsewhere.
But Apple’s core products are well within reach of consumers. A 1-Gig iPod Shuffle costs $49 with each incremental price point
containing loads more features. After launching its first iPhone for
$599 in 2007, July’s launch of iPhone 3G came
in at a more accessible range of $199 or $299. Many industry watchers believe
a $99 iPhone will arrive by the middle of next
year.
Control of Distribution: Although Apple products are increasingly
sold across retail, the Apple Store continues to mold the company’s brand
image and positioning. As opposed to other consumer electronics brands
that must educate sales people who work for someone else, Apple can control
their sales force and the messages that they learn to talk about. As a
result, everyone tells the same story about their products. Tight distribution
also keeps its products from being deeply discounted.
Marketing/Hype: The company has
gained a lot of praise for its "Mac vs. PC" ads, but Apple’s
following has also stemmed from resilient word-of-mouth activity over the
years. The expansion of Apple Stores created a place for face-to-face interactions
with the most rabid fans to feed this momentum at
the grassroots level. From the Genius Bars to special events hosted at
Apple stores, this offers an invaluable marketing asset that few of their
competitors can match. Also feeding Apple’s hipness factor is their focus
on coming up with aesthetically "cool"
looking products.
Discussion Question:
What are some obvious and some less obvious reasons why Apple has been
so successful? How have Apple Stores contributed to its success? Can
you think of one or two other companies that deserve some consideration
for Brand of the Year?
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Marketers and retailers should take note of the iPhone App Store. There is already a huge selection of retail related apps available, such as shopping list automators and quick utilities for calculating price markdowns (including tax…so you can figure out the final price of a sale item before going to the register). While text messaging is still struggling to take hold as a marketing medium, I’d say the next wave will be developing custom retail applications for iPhone and other competitive devices, such as the gift recommendation app Target offered this holiday season.
But I have to say that my favorite retail-related app so far is called Car Finder. Press a button when you leave your car in a mall parking lot. The iPhone’s GPS marks your spot and directs you back when you’re done shopping. Worth the 99 cent price? I’d say so.
Apple has succeed because its products combine a new look with sleek design and intuitive functioning. The company has consistently been in the forefront of innovative design, whether it was desktop computers, laptops, music devices or phones.
Their products work well right out of the box.
For this they can command a premium price and have legions of devoted users.
Having the latest tech gadgets to sell will help with the numbers but The Apple Store is much more than just high tech gadgets and computers. Apple has set a new standard in customer experience. When you walk into an Apple store, you are presented with an array of devices that actually work! You can listen to music, surf the net and make calls on an iPhone; something retailers tend to neglect is the working model.
The actual selling floor is designed to heighten the senses and it gets people excited about the products. No pressure and excellent lighting all add to the unique and positive experience. After purchase, they will even help you transfer your old PC files to your new Mac. Now that is service.
It goes back to the gas stations of the ’50s and ’60s where it was not just a gas tank fill-up. The attendant would check your tires and oil, clean the windshield, offer maps, etc. Apple has mixed old-time service with high-tech items.
Apple delivers on all critical fronts.
1. Develop high quality products that customers want;
2. Support customers when they have questions or problems;
3. Differentiate your products from the competition;
4. Create a brand positioning that appeals to a younger demographic;
5. Produce an exciting and compelling in-store environment that makes the destination an event.
Don’t underestimate the power of “the cool factor.” Whether you are online, in-store or getting exposed to their advertising regarding both existing or new products, customers want to be a part of the Apple experience because it is fun and cool. Their positioning reeks of cool and cutting-edge imagery.
All of that adds up to a great customer experience which then drives buzz that money just can’t buy.
Apple has the golden trifecta of products, brand and customers. While we would not describe Apple as customer-centric, the company is zealous about the other two elements, which ultimately take care of the third. There are only one iPod, one “Mac” and one iPhone.
Other key (and somewhat obvious) factors include being:
Innovative – (duh);
Strategic – they don’t follow but rather lead and go at their own pace, though in recent years they are definitely more market-driven;
Experience-centric – you know when you’re using an Apple product. Period. How many other companies and brands in their space can say that?
Don’t forget, however, that not too many years ago their stock was languishing and many people were wondering if they would maintain their position. Then came the iPod and everything changed. The iPod broadened their market and ultimately brought in more “converts” and ultimately a much more powerful franchise.
My son has been an Apple “true believer” since he was ten. I told him I would never buy an Apple computer until I could put a disk in the Apple computer, do work, take it to my office, put it in my PC, and continue to work. When that happened, I switched.
Initially, Apple got kids in elementary school.
Apple products work.
Apple continues to think beyond the current industry possibilities and introduces products that move the industry forward (e.g, iPod and iTunes).
The design and user interface is as important as the function of the device.
Apple providess value that makes consumers believe that the price delivers appropriate value.
They spend resources to train employees – this challenge continues to grow exponentially.
They have knowledgeable employees who can help in the stores as well as at the Apple Care call center.
They display the products in a way that makes it easy for consumers to try them and see how much fun it is to use them.
And then–when you get the products home, set up is easy and the products work!!!
This is not a difficult list of activities; in fact, it is pretty basic (except for having products at the leading edge of the industry). But Apple does it over and over and over.
Many others have already stated the main reasons, however, I think that the iPhone and iPod commercials for the apps maintained the same simple, clean and effective messages that Apple’s advertising has always provided. The advertising campaigns and messages have been very consistent over the years and this has helped to maintain the consistency of the brand.
Compare Apple’s advertising to that of Microsoft, where you would be hard pressed to remember one successful campaign. It has changed so many times over the years that it is now one big blur of campaigns.
Certainly the Apple Store, both online and off are very big contributors to the brand image and obviously the quality of the product, although, I must have gotten a lemon as I have had numerous issues with my iPhone. I have the original, so perhaps they hadn’t yet worked out all the bugs.
You know, what I didn’t see on that list is “quality products.” I switched this year from PC to Mac (I was scared of Vista and if I had to learn a new OS, I might as well give Mac a shot was my reasoning). I will tell you, you don’t know what you’re missing. My computer never crashes. The applications that do fail the most on my Mac are…Microsoft apps. Apple makes products that work. Microsoft makes you put up with crashes, conflicts, and “features” of products that they know are problems and haven’t fixed in literally years.
And not just to pick on Microsoft…. While Apple did stumble with the launch of the iPhone–mainly in signing up new users and partly because the volume was so high–contrast Apple’s iPhone launch with Blackberry’s Storm. I love Blackberry, I have a Pearl. But if even half the flack coming out of the press and leading edge buyers is true, I certainly won’t be rushing out to buy a Storm anytime soon. How can you rush a product to market that is either buggy or outright faulty–especially when consumers have a near-flawless competitor to compare it to?
You can chalk it all up to marketing or to hype or whatever, but it seems no matter how big the promises get, Apple, for the most part, delivers. I don’t think anyone can say the same for nearly any competitor in the space.
I could go on and on about why Apple is successful, but let’s stick to some of the in-store retail points.
1) for the most part, the staff actually knows what they’re talking about. I can’t overemphasize how important and rather unique this is in the world of consumer electronics. I’m a bit of a gadget freak, and so I usually know far more about the products in a CE store than the staff. It’s still true in an Apple store, but I rarely get incorrect information at an Apple store as I often do elsewhere. The floor staff doesn’t work on commission, the staff includes people dedicated to helping you find your way around the store and streamlining flow, and they all seem to be enjoying their work. We’ve all commented on how customer service still wins the day–Apple continues to prove it.
2) Limited selection. Some would consider this a problem, but the Apple Stores seem to acknowledge that you’re going to buy lots of items online, so they carry a limited selection of items you are likely to purchase at the same time as the hardware, and they pretty much only carry the better quality accessories. Yes, you can buy a cable for $5 online that does the same thing as the $45 one at the Apple Store, but it won’t be the same brand or quality. I expect they get far fewer returns than a Best Buy or a Frys. This also keeps the store clean and uncluttered and not overwhelming.
3) Atmosphere. People hang out an an Apple Store. You can drop your kids at the kids table where they can play games while you shop. There are people around you getting good advice, there are people waiting–patiently–for tech support, having made an appointment that seems to actually minimize waits. There are people taking lessons in another area, happily learning new skills. People say Mac (and now iPod and iPhone) owners belong to a cult–well maybe so, but it looks pretty inviting when you’re hanging out in an Apple Store.
“They remain where they’ve always been…in (very distant) second place.”
Um, no.
Apple has invented a completely different game, three times–in computing, consumer electronics and now in retailing.
And it’s the only player in any of them.
All of the above are true, particularly the commitment to deliver on the experience, each time. When the iPhone release in Canada was delayed, a significant part of the discussion was the cost of data transmission, much higher compared to US plans. With only one compatible service provider in Canada, it was interesting to see the cost of service plans fall rapidly in the months prior to release. Of course, the other service providers, including Bell Canada followed course. Many happy Canadian purchasers believe that Apple made this possible. Talk about loyalty!
“If you walk into an Apple Store, you might pay $45 for a connector cable that typically costs $5 elsewhere.” Hmmm…is Apple a retailer+manufacturer or a cult? Anyway, while I have all the respect in the world for Apple, they remain what they’ve been for decades: in (very, very) distant second place.
Apple has built a powerful brand through communications and by consistently delivering on the brand promise they have created brand ambassadors (just read the comments above!) Even with the occasional hiccup, consumers are willing to give Apple time to address the issue. Apple stores are part of the communications–think of it as an immersive branding message–and are part of the whole success.
Another company that has delivered on the brand promise is Virgin America. It is also the immersion approach; you never wonder which airline you are flying. And the brand promise follows you from ticket purchase to end of the flight.
Let’s face it, Apple is the coolest. The must-have gadgets. The latest innovation. Even while the economy is in the drain, if you get one gift–let it be an iPhone, or an iTouch. Only Wii comes close. These items become shibboleths of hope and continued “middle-classness” for many during gloomy times.
Let’s see…create innovative products consumers want to buy, control the distribution of those products so they are nearly always sold at or near full price, and sell those products in your own stores with a truly service-oriented staff. This sounds like a winning formula.
It’s interesting to note that NONE of the other consumer electronics giants have adopted this formula for success. While Sony and others have tried, they continue to do most things the same way they have done them in the past.
Certainly, many of the attributes listed in your article are what makes Apple special. Innovation is obviously key, quality of product, the control of their distribution, and the overall control of their brand. These are all points of difference.
I think it can all be summed up as strategy. They have a true strategic vision, and no matter what the shareholders might say, or industry experts, they stay on point with their strategy. Case in point is their decision to sell the iPhone via Walmart. Apple wants to own the mobile computer market, and they know that now that the early adopters have purchased the iPhone, the only way to get the masses to make the purchase is to sell via mass. Hence Walmart.
Apple also knows something else. They know statistically that many people who have never purchased an Apple computer previously will purchase one after using the iPhone. In essence, they are using Walmart as a marketing arm. Get as many people using Apple products as possible, and then when these people want to purchase a computer, they will need to visit an Apple store.
Strategic vision = long term growth of a company.
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Marketers and retailers should take note of the iPhone App Store. There is already a huge selection of retail related apps available, such as shopping list automators and quick utilities for calculating price markdowns (including tax…so you can figure out the final price of a sale item before going to the register). While text messaging is still struggling to take hold as a marketing medium, I’d say the next wave will be developing custom retail applications for iPhone and other competitive devices, such as the gift recommendation app Target offered this holiday season.
But I have to say that my favorite retail-related app so far is called Car Finder. Press a button when you leave your car in a mall parking lot. The iPhone’s GPS marks your spot and directs you back when you’re done shopping. Worth the 99 cent price? I’d say so.
Apple has succeed because its products combine a new look with sleek design and intuitive functioning. The company has consistently been in the forefront of innovative design, whether it was desktop computers, laptops, music devices or phones.
Their products work well right out of the box.
For this they can command a premium price and have legions of devoted users.
Having the latest tech gadgets to sell will help with the numbers but The Apple Store is much more than just high tech gadgets and computers. Apple has set a new standard in customer experience. When you walk into an Apple store, you are presented with an array of devices that actually work! You can listen to music, surf the net and make calls on an iPhone; something retailers tend to neglect is the working model.
The actual selling floor is designed to heighten the senses and it gets people excited about the products. No pressure and excellent lighting all add to the unique and positive experience. After purchase, they will even help you transfer your old PC files to your new Mac. Now that is service.
It goes back to the gas stations of the ’50s and ’60s where it was not just a gas tank fill-up. The attendant would check your tires and oil, clean the windshield, offer maps, etc. Apple has mixed old-time service with high-tech items.
Apple delivers on all critical fronts.
1. Develop high quality products that customers want;
2. Support customers when they have questions or problems;
3. Differentiate your products from the competition;
4. Create a brand positioning that appeals to a younger demographic;
5. Produce an exciting and compelling in-store environment that makes the destination an event.
Don’t underestimate the power of “the cool factor.” Whether you are online, in-store or getting exposed to their advertising regarding both existing or new products, customers want to be a part of the Apple experience because it is fun and cool. Their positioning reeks of cool and cutting-edge imagery.
All of that adds up to a great customer experience which then drives buzz that money just can’t buy.
Apple has the golden trifecta of products, brand and customers. While we would not describe Apple as customer-centric, the company is zealous about the other two elements, which ultimately take care of the third. There are only one iPod, one “Mac” and one iPhone.
Other key (and somewhat obvious) factors include being:
Innovative – (duh);
Strategic – they don’t follow but rather lead and go at their own pace, though in recent years they are definitely more market-driven;
Experience-centric – you know when you’re using an Apple product. Period. How many other companies and brands in their space can say that?
Don’t forget, however, that not too many years ago their stock was languishing and many people were wondering if they would maintain their position. Then came the iPod and everything changed. The iPod broadened their market and ultimately brought in more “converts” and ultimately a much more powerful franchise.
My son has been an Apple “true believer” since he was ten. I told him I would never buy an Apple computer until I could put a disk in the Apple computer, do work, take it to my office, put it in my PC, and continue to work. When that happened, I switched.
Initially, Apple got kids in elementary school.
Apple products work.
Apple continues to think beyond the current industry possibilities and introduces products that move the industry forward (e.g, iPod and iTunes).
The design and user interface is as important as the function of the device.
Apple providess value that makes consumers believe that the price delivers appropriate value.
They spend resources to train employees – this challenge continues to grow exponentially.
They have knowledgeable employees who can help in the stores as well as at the Apple Care call center.
They display the products in a way that makes it easy for consumers to try them and see how much fun it is to use them.
And then–when you get the products home, set up is easy and the products work!!!
This is not a difficult list of activities; in fact, it is pretty basic (except for having products at the leading edge of the industry). But Apple does it over and over and over.
Many others have already stated the main reasons, however, I think that the iPhone and iPod commercials for the apps maintained the same simple, clean and effective messages that Apple’s advertising has always provided. The advertising campaigns and messages have been very consistent over the years and this has helped to maintain the consistency of the brand.
Compare Apple’s advertising to that of Microsoft, where you would be hard pressed to remember one successful campaign. It has changed so many times over the years that it is now one big blur of campaigns.
Certainly the Apple Store, both online and off are very big contributors to the brand image and obviously the quality of the product, although, I must have gotten a lemon as I have had numerous issues with my iPhone. I have the original, so perhaps they hadn’t yet worked out all the bugs.
You know, what I didn’t see on that list is “quality products.” I switched this year from PC to Mac (I was scared of Vista and if I had to learn a new OS, I might as well give Mac a shot was my reasoning). I will tell you, you don’t know what you’re missing. My computer never crashes. The applications that do fail the most on my Mac are…Microsoft apps. Apple makes products that work. Microsoft makes you put up with crashes, conflicts, and “features” of products that they know are problems and haven’t fixed in literally years.
And not just to pick on Microsoft…. While Apple did stumble with the launch of the iPhone–mainly in signing up new users and partly because the volume was so high–contrast Apple’s iPhone launch with Blackberry’s Storm. I love Blackberry, I have a Pearl. But if even half the flack coming out of the press and leading edge buyers is true, I certainly won’t be rushing out to buy a Storm anytime soon. How can you rush a product to market that is either buggy or outright faulty–especially when consumers have a near-flawless competitor to compare it to?
You can chalk it all up to marketing or to hype or whatever, but it seems no matter how big the promises get, Apple, for the most part, delivers. I don’t think anyone can say the same for nearly any competitor in the space.
I could go on and on about why Apple is successful, but let’s stick to some of the in-store retail points.
1) for the most part, the staff actually knows what they’re talking about. I can’t overemphasize how important and rather unique this is in the world of consumer electronics. I’m a bit of a gadget freak, and so I usually know far more about the products in a CE store than the staff. It’s still true in an Apple store, but I rarely get incorrect information at an Apple store as I often do elsewhere. The floor staff doesn’t work on commission, the staff includes people dedicated to helping you find your way around the store and streamlining flow, and they all seem to be enjoying their work. We’ve all commented on how customer service still wins the day–Apple continues to prove it.
2) Limited selection. Some would consider this a problem, but the Apple Stores seem to acknowledge that you’re going to buy lots of items online, so they carry a limited selection of items you are likely to purchase at the same time as the hardware, and they pretty much only carry the better quality accessories. Yes, you can buy a cable for $5 online that does the same thing as the $45 one at the Apple Store, but it won’t be the same brand or quality. I expect they get far fewer returns than a Best Buy or a Frys. This also keeps the store clean and uncluttered and not overwhelming.
3) Atmosphere. People hang out an an Apple Store. You can drop your kids at the kids table where they can play games while you shop. There are people around you getting good advice, there are people waiting–patiently–for tech support, having made an appointment that seems to actually minimize waits. There are people taking lessons in another area, happily learning new skills. People say Mac (and now iPod and iPhone) owners belong to a cult–well maybe so, but it looks pretty inviting when you’re hanging out in an Apple Store.
“They remain where they’ve always been…in (very distant) second place.”
Um, no.
Apple has invented a completely different game, three times–in computing, consumer electronics and now in retailing.
And it’s the only player in any of them.
All of the above are true, particularly the commitment to deliver on the experience, each time. When the iPhone release in Canada was delayed, a significant part of the discussion was the cost of data transmission, much higher compared to US plans. With only one compatible service provider in Canada, it was interesting to see the cost of service plans fall rapidly in the months prior to release. Of course, the other service providers, including Bell Canada followed course. Many happy Canadian purchasers believe that Apple made this possible. Talk about loyalty!
“If you walk into an Apple Store, you might pay $45 for a connector cable that typically costs $5 elsewhere.” Hmmm…is Apple a retailer+manufacturer or a cult? Anyway, while I have all the respect in the world for Apple, they remain what they’ve been for decades: in (very, very) distant second place.
Apple has built a powerful brand through communications and by consistently delivering on the brand promise they have created brand ambassadors (just read the comments above!) Even with the occasional hiccup, consumers are willing to give Apple time to address the issue. Apple stores are part of the communications–think of it as an immersive branding message–and are part of the whole success.
Another company that has delivered on the brand promise is Virgin America. It is also the immersion approach; you never wonder which airline you are flying. And the brand promise follows you from ticket purchase to end of the flight.
Let’s face it, Apple is the coolest. The must-have gadgets. The latest innovation. Even while the economy is in the drain, if you get one gift–let it be an iPhone, or an iTouch. Only Wii comes close. These items become shibboleths of hope and continued “middle-classness” for many during gloomy times.
Let’s see…create innovative products consumers want to buy, control the distribution of those products so they are nearly always sold at or near full price, and sell those products in your own stores with a truly service-oriented staff. This sounds like a winning formula.
It’s interesting to note that NONE of the other consumer electronics giants have adopted this formula for success. While Sony and others have tried, they continue to do most things the same way they have done them in the past.
Certainly, many of the attributes listed in your article are what makes Apple special. Innovation is obviously key, quality of product, the control of their distribution, and the overall control of their brand. These are all points of difference.
I think it can all be summed up as strategy. They have a true strategic vision, and no matter what the shareholders might say, or industry experts, they stay on point with their strategy. Case in point is their decision to sell the iPhone via Walmart. Apple wants to own the mobile computer market, and they know that now that the early adopters have purchased the iPhone, the only way to get the masses to make the purchase is to sell via mass. Hence Walmart.
Apple also knows something else. They know statistically that many people who have never purchased an Apple computer previously will purchase one after using the iPhone. In essence, they are using Walmart as a marketing arm. Get as many people using Apple products as possible, and then when these people want to purchase a computer, they will need to visit an Apple store.
Strategic vision = long term growth of a company.