The strategic thinking behind Apple
Apple started out as a classic craft brand in the 1970s and 1980s, positioning their Macintosh as the computer for the “rest of us.” The brand stayed niche with a “making computers simpler” message against IBM personal computers. It focused on a niche consumer who favored the intuitive and artistic side of personal computers, as opposed to IBM’s business computers.
Apple almost went bankrupt
In 1996, the 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 Apple 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.
The disruptor version of Apple
Apple evolved in 2001 to a disruptor brand strategy, when iTunes completely disrupted the music industry. iTunes gave consumers the ability to have 10,000 songs in their pocket, buying one song at a time with perfect digital quality. And they made CDs feel disconnected from consumers and a thing of the past.
The challenger version of Apple
In 2006, Apple used its market power and substantial resources to deploy a challenger strategy, with the “I’m a Mac” TV ads to go head-to-head with Microsoft. Apple repositioned every one the potential Microsoft strengths into a frustration point for consumers. The ads set up Mac as the only solution for consumers.
Apple becomes the power player
Since 2012, Apple has become a power player brand, with stock prices continuing to climb beyond their wildest dreams. It is now a brand for the masses. The company attacks itself internally to stay at the top. Apple takes a fast-follower stance on technology, which frustrates those who loved Mac in the early days. While Apple’s early brand lovers from the 1980s may be disappointed with the brand of today, the brand must now play to the mass audience and let the true influential innovators, who once loved them, find someone else to love. In 2016, Apple’s most substantial growth came from the 55+ age segment, a clear sign the brand is for everyone. How long can Apple stay on top before someone starts to disrupt or challenge them?
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 Apple 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, they 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 Apple platform, including desktops, laptops, phones, watches, tablets, and music streaming delivers the brand idea of “simplicity.” 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. Apple is now the most beloved consumer-driven brand, with premium prices, stronger market share, sales, and profits. And, Apple has 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 Apple very healthy operating margins, up over 35%. All this strategic effort has increased Apple’s market capitalization approaches $1 trillion.
The Apple Brand Plan
Apple wants everyone in the world to be part of the future.
Continue aggressive sales growth, geographic expansion into China, launch a major new consumer-friendly technology each year.
- How do we convey Mac’s superior user experience versus the traditional PC?
- How do we enter the music industry and increase the availability of online music to support our iPod?
- 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.
- 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.
TV advertising to highlight new features and challenge competitors.Launch innovation each year including phones, tablets, online music, watches and personal computers. Launch 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.
They have 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). Apple has 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
Their 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.
Apple has used brand love to command power and enable them to drive both revenue and profits
Apple has used brand love to help drive a remarkable 40x revenue growth over 10 years, going from 5.7 in 2005 billion up to $240 billion in 2015.
This type of rapid growth helps cover costs of Advertising and R&D, giving Apple very healthy operating margins that are up over 35%. All this has increased Apple’s market capitalization to $1 Trillion.
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