In 1996, the Apple brand bordered on bankruptcy. It was just another computer company without any real point of difference. Years of overlooked opportunities, flip-flop strategies, and a mind-boggling disregard for market realities caught up with the company. The Windows 95 launch by Microsoft had severely eroded Mac’s technology edge. Apple was rapidly becoming a minor player in the computer business with shrinking market shares, price cuts, and declining profits.
Apple looked like it would not survive, as it was a poorly run organization through the early 1990s. Executives made terrible decisions with inconsistent strategies and, most importantly, there was no brand idea for what they should be. After Steve Jobs came to Apple in 1997, he shifted the focus to rebuilding around the brand idea of “Apple makes technology so simple that everyone can be part of the future.” He took a consumer-first approach in a market dominated by an obsession with gadgets, bits, and bytes.
Here’s how the five elements of smart strategic thinking show how Apple completed its turnaround plan:
1. Set a vision of what you want
Apple’s vision was to make it easy to get everyone to be part of technology in the future. The main issue was how to create brand fans then mobilize them to spread the word to the masses.
2. Invest resources in a strategic program
Apple invested and aligned everything behind a brand idea defined as “Apple makes technology so simple; everyone can be part of the future.” The company uses this brand idea at every touchpoint, including the brand positioning, communication, innovation, purchase moment and experience.
3. Focus on an identified opportunity
For decades, Apple consistently focused on empathizing with—and taking advantage of—the consumer’s frustration with technology. In the 1980s, Apple attacked IBM personal computers as being too complicated. In 2005, they used “I’m a Mac, and I’m a PC” advertising to attack Microsoft. Each time, Apple used its “consumer-first” mentality to transform leading-edge technology into accessible consumer technology.
4. Leverage a breakthrough market impact
Apple takes a fast-follower stance that takes current technology and makes it simple to use. Every platform, including desktops, laptops, phones, watches, tablets, and music streaming delivers the brand idea of “simplicity.” And, Apple deploys high profile launch hype to use vocal Apple advocates to spread the word to their friends.
5. Performance result that pays back
Apple created a consumer bond with their brand fans to enter new categories. On top of that, Apple is now the most beloved consumer-driven brand, with premium prices, stronger market share, sales, and profits. They used brand love to help drive a remarkable 40x revenue growth over 10 years, skyrocketing from $5.7 billion in 2005 to $240 billion in 2015. This rapid growth helps cover the high costs of advertising and R&D, giving them very healthy operating margins, up over 35%. All this strategic effort has increased their market capitalization approaches $1 trillion.
The Apple Brand Plan
If you took the strategic thinking model and began to outline a brand plan for Apple brand, these would be the core elements:
Vision: Apple wants everyone in the world to be part of the future.
Goals: Continue aggressive sales growth, geographic expansion into China, launch a major new consumer-friendly technology each year.
Key issues: 1) How do we convey Mac’s superior user experience versus the traditional PC? 2) How do we enter the music industry and increase the availability of online music to support our iPod?
Strategies: 1) Apple will launch a full communications assault to challenge the PC/Microsoft Windows dominant position by finding flaws in the PC to contrast with Mac computers’ simplicity to steal significant market share by enticing frustrated PC consumers to buy a Mac. 2) Apple will launch a full assault against the entire music industry with a disruptive innovator stance to show how iTunes provides higher quality digital music on your iPod much cheaper, faster and smarter than CDs to gain an entry point into the music industry.
Tactics: TV advertising to highlight new features and challenge competitors. Launch innovation each year including phones, tablets, online music, watches and personal computers. Laugh specific products for China. Increase retail space around the world. Build out the e-commerce program.
How Apple builds everything behind the “simplicity” brand idea
The brand idea for Apple is “making technology so simple that everyone can be part of the future.” They take a consumer-first mentality, as they transform leading technology advancements into “consumer-accessible” technology, helping fuel the perception among the mass audience that Apple is an innovative leader.
Apple has done a great job in taking that brand idea and stretching it across their brand story through advertising, and their innovation plan (as they have entered many new technology categories). They have also used their brand idea to guide how they manage the purchase moment (to make sure their retail outlets are easy for consumers), and how they create happy experiences for consumers. And when they don’t nail the ideal consumer experience, they go out of their way to help out. They also have the genius bar and on-site lessons, which help increase the knowledge of consumers.
Apple’s advertising has delivered “simplicity” since the 1970s
Apple’s advertising has been relatively consistent for over 40 years and incredibly connected with consumers. The early print ads of the 1970s talked about how we designed the computer, so you don’t have to worry about the details.
The “1984” TV ads for the Mackintosh launch spoke about the freedom from machines. Although the message was a little ahead of its time, it fit with simplicity.
The brilliance of the side-by-side “Mac versus PC” TV ads epitomized the brand idea by making the PC seem overly complicated and frustrating while setting up the Mac as the simple alternative.
Apple builds product innovation around simplicity
Apple has taken many failed technology ideas like online music, tablets, or mp3 players, and turned them into consumer-friendly platforms such as iTunes, iPads, and iPods. With each new product, Apple uses launch hype to generate excitement to spark the enthusiasm of the early adopters who spread the word. Also, Apple has successfully taken its cherished brand fans into new categories.
Purchasing Apple products is very simple, including its own retail store experience
Apple uses simplicity to manage the purchase moment through its retail stores, making sure the experience is simple and straightforward. All staff carry a credit card machine and complete the transaction very quickly. No lines or cash registers. Simplicity shines through the store layout, with the genius bar for one-on-one tech questions and support and the training area to teach classes. The brand also puts every Apple product on display to allow consumers to take them for a test drive.
Even when Apple products are in other stores, the brand has used its power with that retailer to create a distinct store-within-a-store concept, which replicates a similar look and experience from Apple’s own retail locations.
Apple obsesses about the consumer experience
As Steve Jobs famously said, “You have to start with the customer experience and work backward to the technology.” Apple even believes opening your Apple products should be like unwrapping a gift.
The brand wants the consumer to be able to use any Apple product right away rather than spending hours loading software or setting up your machine. Regarding product integration, Apple products work together, and they work the same way, which makes it very simple for consumers when they move from one Apple product to another.
Brand Love leads to power
As Apple has achieved an extremely tight bond with a loyal mass of followers, they use the tight consumer bond to generate brand power that they quietly wield in the market. Apple’s retail network of stores generates twice the sales per square foot of any retailer in the world, yet it is a very soft-sell environment. I was recently on a double-decker bus tour of New York City, and when the bus went past the 5th Avenue Apple flagship store, half the bus stood up to take a photo. And, Apple has such a power over the supplier network with an array of engineers following extremely tight procedures. Also, they have a power over the media, generating over $2 billion worth of free media each year. Moreover, Apple fans want to work at Apple, many times giving up lucrative jobs just to be part of the brand.
Brand Love leads to Profit
Apple extrapolates the power they generate into profit, with their incredible financial performance over the last 15 years. And, they generate significant price premiums, relatively lower cost of goods and moderate marketing spend ratios. This holds their margins at healthy levels for a technology firm. Furthermore, Apple has entered many new categories over the past 15 years, each time their army of loyal fans has followed, moving into laptops, phones, tablets and the music business. In each segment, Apple continues to gain share to drive volumes. Finally, the higher margins and higher volumes make for a beautiful profit statement.
Even though Apple gives the perception of an extremely friendly brand who is on the side of the consumer, they are now a huge mass market corporate brand, with a market capitalization of $500-600 billion, which 2-3 times the value of companies like Coke, Procter & Gamble, Pfizer, and IBM. So, if you invested a mere $10,000 in 2005, you would have $240,000 a decade later.
Apple uses their brand’s Big Idea to turn Brand love into higher power and profits.
At Beloved Brands, here is an expanded version of the Apple Case Study, including how Apple’s Big Idea guides everything they do, how to develop Apple’s Brand Strategy Road Map and how Apple’s brand love drives power and profit. Click on the Powerpoint file below to view:
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