Today’s Economic Times has an editorial entitled “Apple Profits: Make in India Lessons – Branding and marketing hold the key.” As we all know, Apple has confounded pundits by posting record results in the first quarter of 2015 (October 2014 – December 2014). Its $18 billion profits for the quarter is the largest ever achieved by any company anywhere. Economic Times argues that ‘Apple’s profits owe more than anything else to the power of branding and marketing, which makes people dig deep into their pockets to buy their fancy phones, about half of whose price directly goes to the company’s bottom line.’ The business paper also argues that Apple’s innovation prowess is not necessarily the key reason behind its success; innovation by itself is not enough as Tata Namo has unfortunately shown. The business paper concludes that the key to success of Make in India, despite China’s success in unbranded manufacturing, will be in branding and marketing.
While I don’t have quarrels with Economic Times’ analysis, it is too simplistic. ‘Branding and marketing’ are broad terms and miss out on the real reasons for Apple’s spectacular success. Let’s look at what these could be:
- Differentiation: For me, the biggest reason for Apple’s success is differentiation. Apart from the fact that every Apple product has a design differentiation (God, every product looks so good!), Apple’s software is different. The rest of the computer/laptop brands are on Windows and only Apple uses its own OS (OS X Yosemite today). The Windows-based computers have to fight amongst themselves while Apple stands alone. The same is the case with smartphones. The iPhone runs on iOS while over 80% of the smartphones run on Android. There are thousands of articles that point out Android’s superiority over iOS but that doesn’t really matter – iPhones are unique. And that is not the only differentiation – Apple’s ecosystem with its iTunes and its Apps (many App developers still develop apps for iOS before moving to Android) offer the company an edge over competition. Samsung smartphones are taking a beating in recent times because cheaper brands like Xiaomi, running on the same Android platform as Samsung, are offering same or better specifications than the higher priced Samsung smartphones. While competing in the same markets, Apple products stand alone.
- Simplicity: There is simplicity in everything that Apple does – its products are simple in form and function; its product range is sparse (it is unheard for a company that is as large as Apple to have such few SKUs); its website is simple and striking; and its advertising campaigns are extremely simple, outlining a simple, compelling reason to buy an Apple product.
- Great Service and In-store Experience: Apple’s service is quite fantastic. I remember that the hard disk of the 27” iMac that I have needed to be changed because it was faulty. Apple sent me a mail offering a free replacement. I took the iMac to the nearest service centre. When the service centre connected me to the Apple helpline, I was told that the hard disk would be changed at my home and that I had no reason to bring or leave the iMac at the service centre.
I have visited Apple stores abroad and have been delighted by the attention that I received there. Because Apple has such few SKUs, the store salespersons know the product details extremely well. Even the Apple stores in India are neat and clean with the products displayed beautifully.
- Does it better: Apple has rarely been the first mover in any category; other brands have come out earlier with breakthrough products. The strength of Apple is that when it enters a product category, it does so with a product that is far superior to competitive products. Apple also plans its product introductions well in advance and thus keeps two steps ahead in the race.
In today’s world, tech brands can meet an unexpected and untimely demise. I mean, who would ever have imagined, five years ago, that Nokia would be dead and Blackberry on its last legs. But it happened. The strength of Apple is not just its branding but the other points that I have highlighted above. Apple offers all of us marketers an invaluable lesson.
Visual courtesy : https://www.flickr.com/photos/mhumphrey/