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What can Apple do to become popular again

The brand urgently needs the same recipe where a Cesar Chavez, Gandhi and the Dalai Lama persuaded people that a Macintosh made them "Think Different", says Shubhranshu Singh, global head of brand, Royal Enfield

ETBrandEquity|
Mar 02, 2019, 01.28 PM IST
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Apple had positioned itself as something “different”. Can that halo always rise over and above the technical specs?
At a trillion dollar, Apple is a wow that truly defies valuation. Yet the stock market is not sanguine about its prospects. Apple has its success and its failings to pin on one flagship product, the iPhone. The iPhone holds significant market shares in only three countries: the United States, the U.K. and Japan. Even there, its share is less than 50%. In China, it has hit all the hurdles and yet continues in the race. In Bharat, it lags behind for now. Anywhere else, its share is between 10 % and 25%.

Globally, the iPhone has less than 20% of the smartphone market. Yet it has a crushing share of the same profit pool. How is this volume to profit mismatch explained? When one buys an iPhone, one is buying esteem and self-image. The high arc of its halo rises way above its performance, which is about the same as its competitors. Hence the performance per dollar paid is poorly off. It gives a blinding glimpse of the obvious, namely that the pricing power and value resides in the Apple brand rather than the functionality of its products.

Apple is the world’s most valuable brand. Forbes' calculations put Apple on top with its brand worth $182.8 billion, up 8% from last year. Samsung sold more phones worldwide than Apple did in the fourth quarter of 2017, but 87% of industry profits ended up in Cupertino. But, as Apple’s relative brand premium declines, so does its pricing power.

It first manifest itself in volume shipments. There were declines in projected unit sales 46.9 million iPhones in the Q4 of fiscal 2018, same as a year ago, disappointing analysts. But, the average sales price per iPhone user has seen a big jump.

Then one sees it in price labels. Apple introduced new versions of its MacBook Air, Mac mini and iPad Pro products. These were sequentially at much higher prices than their respective predecessors but they don’t do much more than the older versions. The inference is direct. Apple’s volume sale is stalling, and its profits increasingly reliant upon users who are willing to pay more. The root of this phenomenon is of acute interest to me as a marketer. When wealth and value creation rests on pricing power, like Apple’s, it means the value-pivot shifted from brand pull to extraction.

Stock valuations rooted in extractive brand values fall. Consumer dissonance begins to act as gravity. But, the Apple story has some complex and unique enablers to its brand aura.

First of all, the iEcosystem. Apple was always about the hardware, the insular software and the integrative services. Think iTunes or Apple Music, the App Store, iCloud and Apple Pay. These are just some of the things that make Apple's services business its most important and fastest-growing drivers of revenue.

Second, aesthetics and design. Apple had a string of hit products topping charts on design and user experience. Apple devices were perceived as being better in quality – and certainly in design – than competing products. Steve Jobs was relentless on winning via design and ease of use. When he died in 2011 of pancreatic cancer, that singular obsession ceased. Ever since, Apple has continued to be the dominant tech company in both market share and stock price however, Apple has become iterative rather than disruptive.

The iProblem
Apple is heavily reliant on the iPhone to power its financial success. The Apple that created value was a brand humanising technology. It got to a trillion dollars because there were built-in barriers for customers to move elsewhere and a sense of intense community love.

When the revolution happened, new iPhones came with updates that could fairly be called disruptive and life-changing. The arrival of GPS, the development of app stores, streaming video - these changed the way we live our lives. Whilst advancements continue, the frequency of big life-changing features has slowed. Similarly, the continual need for extra processing power now follows the ‘Law of marginal futility’.

With iPhone’s innovation funnel petering out, the other smartphone brands have got an opportunity to catch up to the baseline. Where are the bad phones? The trillion dollar value question for Apple is what are you really paying for when you upgrade? Apple had positioned itself as something “different”. Can that halo always rise over and above the technical specs?

Apple has not been feeding its brand with singular, evocative, game changing ideas. It has done some work in showcasing customer experience into branding such as the ‘Shot on iPhone’ campaign but it was not a new pillar in building emotional connection. No matter how entertaining or creative your brand campaigns are, if there's no emotional connection with your audience, your marketing strategy is likely to miss its mark. It is that emotional connection which has cultivated such brand loyalty among Apple fans, and enabled the company to get away with pricing their products so much higher than competitors.
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