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Wednesday, August 27, 2008

The Real Secret To Apple's Success

At some point just about every marketer is bound to look at something that Apple is doing and wish they could have done it for their own brands. There are a few other brands that have this universal admiration from marketers. Coca-Cola is the other notable example that comes to mind. Yet there is a temptation I have noticed to simplify the success of Apple to two things: innovative products and great marketing. I would love to believe this as much as any other marketer, but there is a crucial missing third element that most people never talk about which I think is actually the most important reason Apple has been so successful. They do one thing that almost none of their competitors in any market can do ... they control distribution.

They have their own stores, their own sales people, and their own model for selling their products that cuts out any middleman or competitors completely. The fact that they control distribution offers many benefits:

  1. Consistency of messaging - 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.
  2. Removes the competition at point of sale - A big issue for many of their competitors is that a customer may come into a store with one product in mind, but can often get steered toward another during the time they are in store. Often they will walk out not with the product they intended to buy, but something that was cheaper, recommended more heavily by the sales staff, or (most frustratingly) another product whose packaging simply was more appealing.
  3. Makes upselling easier - When you walk into an Apple store, everything is Apple branded in some way (even the products manufactured by other companies). As a result, you are in the ultimate upselling situation, where you might pay $45 for a connector cable that would ordinarily cost $5 elsewhere. When you are captive in the store and already spending $499 on a big product, who really cares about another $45, right?
  4. Retail environment reinforces the community - Apple fans are enthusiastic about the brand and products that they love. Because Apple has distribution focused on their stores, they can create events, features and resources that all reinforce this community. From the Genius Bars to special events hosted at Apple stores, this offers an invaluable marketing asset that few of their competitors can match.
  5. Pricing is controlled - It is virtually impossible to find huge discounts on Apple products (particularly new ones). This is another effect of this controlled distribution, that if you are setting the places people buy your products, you can also centrally control the price. Not only does this allow for more consistency, it also gives you the ability to include pricing in your marketing materials and ads because you know its the same price everywhere.

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Comments

wow, great insights ! Maybe to add another asset :
Apple at the corp. level doesn't talk directly to final consumers, but consumers talk about Apple products to one another.

all your points are spot on the money, especially their pricing (pun intended). but to me, all this adds up to them being able to control and direct the customer experience, which, until mobileme, has been excellent. most other brands do not and they only play about at experiential marketing, but with a better focus on their customer other brands could get a stronger handle on their customer experience at a deeper level. it will be interesting to see if the mobileme mess, or more importantly, they way they get out of it, erodes any of the extremely strong loyalty apple commands.

This also holds true for BMW and certain other premium brands. I agree, control of distribution is very important if you'd like to be like Apple.

Great points but don't forget that it's the clean modern, un-intimidating aesthetic of their products. That alone generates a following. People want to look cool, and cool-looking products help them do that.

The control of distribution, the cool aesthetic of the products, and effective branding combine to create unique user experience that cannot be found elsewhere. The experience, as Laurent alluded to, spawns a tribe of enthusiasts who not only talk to one another about Apple products but also assume the role of brand ambassadors. Apple store serves a critical function of providing a place for Apple enthusiasts to interact with each other in person.

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While Apple has made great strides over the years in gaining greater control over their distribution (to great success as you rightfully point out)I have to argue that middlemen are still alive and well in the process. There continues to be a very active reseller program and Apple Specialist program where Apple's message is less controlled and fights among the messages of other lines the resellers might be carrying. This distribution channel is much more active in professional sales which might be the reason it coexists so nicely with corporate's focus on consumers and is less evident in outside appearances.

Thank you for your ongoing, valid and valuable insights; every new post has profound kernal of wisdom in it. What I agree with in this post is what apple is doing right, which is experiential branding and marketing; what I don't agree with is the thought process on the how.
Controlled distribution is nothing more than a piece in a very cohesive, seemless experiential branding initiative. It is like a tradeshow exhibit on a macro scale. They have created a ppowerful, next generation grassroots marketing strategy that relies on word of mouth and face-to-face interactions with the brand evangelists that they have sucessfully immersed in their culture...including store managers and sales people.
They have, in effect, bridged the traditional gap between marketing and sales. All of their relationships are founded on the brand platform and thus the source of their seemingly endless brand loyalty.
Every company on the face of this good earth has the same opportunity as apple; tradeshows, events and their brothren are out there, waiting to be utilized.

Fortune's short feature piece discusses Apple's product range after the launch of the video iPod, iTunes v6 and new iMac G5, commenting on the user-focused way in which Apple approaches its products, its markets and its customers.
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williamgeorge
Viral Marketing

Sorry, but I disagree completely with your analysis. Apple products are distributed extensively and through all the major retailers - though obvioulsy the extent of control over distribution will indeed vary by product type.

The Apple stores are very important in reinforcing the premium position of the brand, but in terms of a contribution to total turnover, I would guess that they are pretty inconsequential.

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