For years, Apple has been the benchmark when it comes to an effectivemarketing strategy. Apple’s marketing prowess is visible through their brandequity, which according to Forbe’s is the most valuable brand in the world at $170billion (Badenhausen, 2017). This represents 21% of the company’s $806 billionmarket value.
These numbers, alongside the overwhelming rate of growth over thelast 10 years, point towards a company that has pioneered many of the mosteffective marketing strategies. This essay will explore the strategies used, bywhat looks to be the first company in history, likely to reach a market cap of$1 trillion. Apple has always had a firm understanding of their market segmentation,allowing them to target their strategies more effectively. Apple targets threemajor groups that all revolve around lifestyle. These include home users,educators, students and professionals and web designers / publishers. Furthermore,Apple have tended to target the urban population as these areas tend to beoccupied by individuals with greater purchasing power – the early adopters.
However,distinct from many companies in the industry, Apple actually pursues a somewhatmono-segment strategy, with fewer devices marketed towards wealthy sections ofsociety. Indeed, Apple is outsold unit wise compared to Nokia, LG and Samsung 23.5to 1, yet combined generate 82% of Apple’s profit (Sigal, 2010). This is due toApple’s strategy to position their product line as a more premium interfacetargeted towards higher-income users.
Therefore, one of Apple’s key marketingstrategies is in stressing their unique value proposition rather than competingin price wars. They do not associate themselves with being competitive onprice, but they do associate themselves with being competitive on value. This pricingstrategy enables them to shift products upwards of twice the price of thecapable competition.
One of Apple’s key marketing strategies has been the use of informationvacuums around product releases. This powerful tool creates aura around Applelaunches, building intrigue, transforming customers into raving fans. Alongsidethis, Apple creates further mystery after the launch by holding back onadvertising and instead creating buzz through media and reviews. This was shownin Apple’s patent litigation with Samsung, where Schiller declared in 2007 thatthere was a period following a launch where Apple spent no money on advertising(Patel). Schiller said, “we don’t need to”, because user stories are moreeffective at selling products (Patel). That’s not to say that Apple doesn’tadvertise; they spent $97.
5m on adverts to promote the iPhone – Apple’s cashcow of the BCG Matrix – alone in the US in 2007 (Patel). However, the company’sability to create an aura around new products gives them a competitiveadvantage over the likes of Microsoft, as they can spend less money onadvertising, and instead build information vacuums, allowing the media tobridge the gaps with speculation and hype. Another successful marketing strategy used by Apple is productplacement.
ABC sitcom, Modern Family, includes an Apple fan called Phil, whosaid in an episode: “the iPad comes out on my actual birthday. It’s like Godand Steve Jobs got together and said, ‘We love you, Phil'” (Nield, 2015). Applehas a powerful grip on Hollywood, with products represented in 891 TV shows in2011 alone (Nield, 2015). Interestingly, Apple claims they don’t pay for suchplacement and instead issue endless amounts of devices. Director of WorldwideBrand Marketing for Apple in 1990, Jon Holtzman, pioneered product placement longbefore the competition.
He described it as a way of getting the brand in frontof millions of people at “very little cost” (Souer, 2017). When displayingupdates to the executives within Apple, Holtzman could remind them of the factthat Apple only had “10% market share of PCs sold, but 90% market share of thesilver screen” (Souer, 2017). This competitive advantage has remained withApple, with representation in 42.5% of the top US movies in 2011 alone (Nield,2015).
Apple approach marketing differently to their competition by creatingexperiences rather than products. The product launches are akin to a rockconcert, with Apple featuring performers like U2. Apple uses story telling andsensory dimensions to immerse the customer in the keynotes, with a subtle marketingstrategy that focuses on emotion. Marketing consultant, Simon Sinek, explainshow Apple and Microsoft can have access to the same resources but achievedrastically different results (Sinek, 2010).
Sinek argues that Apple’s success comesfrom the notion that “people don’t buy what you do, they buy why you do it.”People make decisions emotionally and justify them with logic afterwards. Thisis supported by the anatomy of the brain. The limbic system of the braincontains the amygdala, which controls decision-making (Sinek, 2010).
Theamygdala’s also the emotion centre of the brain, supporting the idea thatpeople make decisions based on feeling and rationalise them with logicthereafter. Apple creates loyalty in their followers in the same way that MartinLuther King did. His speech that raised 250,000 people from around Americabegan not with “I have a plan”, but with “I have a dream” (King, 1963). In the example of Apple’s newest creation –the iPhone X – Apple don’t market the phone’s new screen size by describing itsdimensions, but instead by using emotive language: “our vision has always beento create an iPhone that is entirely screen. One so immersive the device itselfdisappears into the experience.” This line of argument inspires a buying decisionin consumers, and loyalty in users, by appealing not to logic but to emotion.
Logic creates customers, but emotion creates evangelists. Steve Jobs wassuch a master at marketing because he was able to articulate his visioneffectively. His passion was so contagious that the phenomenon – RealityDistortion Field (RDF) – was coined by Bud Tribble to describe his ability todistort the perceptions of Apple consumers and colleagues (Fierberg, 2017).
Apple’sability to weave the brand into the fabric of everyday life extends beyondcreating loyal customers, and may also impact the way in which users think, aswas found in a study done at Duke University’s Fuqua School when comparingApple to IBM (Sawyer, 2011). Providing consumers with a fundamental feeling of creativityhelps fuel the “App lifestyle”, and level of integration that Apple consumersexhibit over the company’s various platforms. This would explain why Apple hasthe highest brand retention rate of any smartphone at 92% compared to just 42%for Nokia; the experience associated with using the product (a feeling ofcreativity) results in consumers that don’t just buy iDevices once, butcontinue to buy them again in the future (Gottsegen, 2017). Apple’s use of simplicity over complex jargon has been a lucrativemarketing strategy that has become more refined in recent years. Apple’s latestYouTube video release – “Meet iPhone X – Apple” reached over 20 million viewsin just 2 months and doesn’t contain a single spoken word besides the initialmusic.
Research by CEB found that businesses that streamline consumer decisionmaking are 86% more likely to be purchased, so Apple focuses on powerfulminimalism and strong visuals, with the only colours being the ones thatresonate from experiences that users are pictured having (DeMers, 2014). Appleare aware of a concept that neuroscientists call Inattentional deafness,whereby people who are focusing on a visual activity can’t hear theirsurroundings, because hearing and vision use the same physical region of thebrain (Venosa, 2015). By applying such principles, Apple can create grippingcommercials using dynamic imagery that encourages consumers to want to knowmore.
Apple has come a long way in marketing and branding since the companyfirst started taking products to market in the late 1980s. Back then, Applewould focus on marketing the specifics of products like Macintosh, and therewas a dichotomy between Apple products and the Apple brand, with many people thinkingMacintosh was its own distinct company (Souer, 2017). While having a goodproduct is an essential backbone to the success of Apple, the idea that theproduct comes first is an out-dated marketing idea (Clifford, 2014). There arevery few things that iDevices do that the competition can’t. However, Apple’scompetition is becoming increasingly rigorous which puts a question mark overthe company’s ability to sustain long-term growth. Apple’s TV advertising hasrecently fallen behind the likes of Samsung, with Ace Metrix – a company that ranksconsumers responses to ads on a scale of 0-950 – reporting Apple’s average tobe 522, far below the industry average of 603 (Metrix, 2016).
That said, in thefuture Apple is looking to expand into India where the smartphone industry isgrowing rapidly, using a distribution strategy that has increased enormouslysince 2002; 498 outlets in 19 countries provide the company with a substantial streetpresence (Dunn, 2017). Their sheer tangible assets, brand equity and marketshare of almost 20% of global smartphone sales, suggests that Apple’s total dominationis unlikely to change any time soon.