Johnnie Moore is a marketing consultant and facilitator based in London. As well as 20 years of marketing experience he's trained in psychotherapy, NLP and Improv. Find out more at his blog.
Andrew Lark's more than 18 years experience of all facets of marketing, branding, sales and communications spans technology, Internet, telecommunications and consumer sectors. There he has led award-winning programs and teams for brands such as Dell, Sony, SBC, IDSoftware, Nortel, Microsoft and Sun. He is a thought leader and innovator on the convergence of brands, communications and social networking technologies. Find out more at his blog.
Jennifer Rice is a strategist and evangelist for relationship-centric brands. She brings 15 years experience in brand strategy, customer insight and marketing communications, and has worked with companies such as Microsoft, Verizon, Alcatel and Corning. Her current passion is exploring how brands are being impacted by blogs and other social technologies. Her company blog is What's Your Brand Mantra?
John Winsor is the author of Beyond the Brand: Why Listening to the Right Customers is Essential to Winning in Business and the Founder/CEO of Radar Communications, a consumer-centric consultancy. You can find out more about him at Beyond the Brand.
About this Insider
BrandShift explores key trends in branding such as customer
experiences, market conversations and social technologies. Our goal is to
help executives and brand managers evolve their brands to thrive in the new
customer-driven marketplace.
Just Released the 2008 Tribalization of Business study - an in-depth look at how 140+ organizations are managing and measuring online communities
We've written a few times about brand pull through - where one brand (iPod) pulls another through in its wake (iMac). Accoring to Good Morning Silicon Valley the brand pull-through at Apple is exceeding forecasts:
iPod, therefore iMac: And here I thought iPod's halo effect was just spillover from Apple CEO Steve Jobs' reality distortion field. Turns out I was wrong. According to a new survey by Morgan Stanley, Apple's iPod is funneling customers to the company's PC business. The research outfit surveyed 400 iPod users and found that 19 percent expect to convert from PC to Macintosh. That's twice what Morgan Stanley expected. "We believe the Mac conversion rate within Apple's iPod customer base is roughly double what the market expects today," Morgan Stanley analyst Rebecca Runkle told clients "... The street still underestimates the power of Apple's iPod." Indeed, Runkle noted that forward intentions indicate the Mac conversion rate could track closer to the 25 percent range going forward. If Apple plays its cards right, it could soon control 5 percent of the desktop computer market.
This is all food for thought, and perhaps a new metric for brand marketers - the extent to which one brand is driving loyalty and recommendation effects in another category. It also proves - again - the power of brand synergy, or, how different products benefit from a common brand experience and halo. We celebrate the difference and buy the similarity.
Great diagram - thanks. What will be interesting is if they can drive a substanial marketshare gain - like 5% or more - from the Wintel market. This would be stunning.
What will also be interesting to see is if PC manufacturers have a response to iPod's halo effect, or if anyone else capitalizes and rides the iPod's coat tails.
Based on this eWeek article, it looks like HP's attempt to capitalize on the iPod may have actually backfired.
I don't think there was ever really much chance of the HP iPod deal being a huge success for anyone but Apple. Given Apple's tight control of its technology there was really nothing that HP could be seen as bringing to the party.
On the other hand Apple was seen as playing nice with a "player" in the PC world. The market they are trying to break into.
Wow! A whole 5%! Put it this way: In public opinion polls, 5% is a rounding error.
Does it strike anyone else as somewhat pathetic that breathless postings are being made about Apple converting 1 out of 5 PC owners to Macs and as a result moving from 2% to 5% of the market? 5% is a micro-niche. Executives at larger desktop computer companies would be fired if their market share was 5%.
Historically, Apple's marketing has been quite poor. Apple is primarily an innovator and consequently are dependent on killer apps to prop up their revenue, which typically lags every 5 years or so due to the killer app cycle.
Apple has consistently demonstrated that they do not understand the desktop computer market. If Apple continues to position itself as a desktop computer maker, they will lose their whopping 5% and slide back to their negligible 2%.
However, if they change their tack to be a media company, they have a lot more potential to own a market space that lots of companies have designs on but no one has yet mastered. Of course, if their history is any indicator, they will probably screw that opportunity up by closing their system and trying to push the market toward proprietary data formats like QuickTime and AAC.
Translating market share from computers to automobiles, you see that Porsche has a market share of .2%. Does that make them a failure?
Apple's products aren't made to compete with the $300 PC manufacturers. Same as the Porsche Boxster doesn't compete with Chevy Cobalt.
Market share isn't as important as profitability. That profitability comes from selling margins or selling quantity. Apple chose margins. Apple has a sizable amount of cash at their disposal because they are a highly profitable company. Now, market share becomes interesting as that has long been a point of contention by analysts and PC enthusiasts as Apple's weakness. As analysts start to forcast a possible doubling of market share, why is that considered pointless and breathless?
Please quantify why you think Apple's marketing has been quite poor. That is an interesting statement.
Apple has made it known that they want to become the hub of home media. They may have already "changed their tack" as you said. I also would argue that the open source route may not be right for Apple. Not sure what advantage they would gain.
You are correct: Porsche doesn't compete in GM's market space (although, GM tries absurdly to compete in Porsche's space with the mundane Corvette). However, Apple has tried for 20 years to compete in the personal computer market space and mostly failed. They don't belong in that space, as your comment implies.
Nevertheless, Apple has historically attempted to compete as a desktop computer manufacturer. Consequently, Apple has been perenially referred to as a niche player, whereas Porsche is hardly a niche player in the performance car market. The Aston Martin DB9 would be considered a niche player in Porshe's market because it sells significantly fewer cars to performance enthusiasts.
The fact that Apple has -- particularly in pre-iPod days -- insisted on defining itself in the PC market space is strong indication that it doesn't understand its own products nor how to market them.
I've commented numerous times on Apple's poor marketing on my blog. Here are links to specific posts:
One other point on your comment that market share isn't as important as profitability.
Both profitability and market share are important. The objective of business in a capitalistic environment is to maximize revenue and profitability. Generally, revenue is a function of market share and profitability is a function of a company's ability to efficiently produce services or products.
If Apple were any good at marketing, they would't have to console themselves by saying, "Well, at least we have great margins." They would be able to say, "We own our space and our cash on hand is measured in tens of billions of dollars."
The fact that Apple does not have both strong revenue and strong margins indicates that they cannot compete in their market space and this strongly implies poor marketing.
I think there is a fundamental disagreement here. I don't think Apple's goal has been to be a market dominator in the arena of PC sales in general. You are willing to concede that Porsche is hardly a niche player in the performance car market, how about Apple in the "performance PC" market. Apple has long held a grip in the areas of graphic design, film making, and music making. They've made some strides to trickle down into the prosumer/consumer end of these industries (iLife, Final Cut Express, iWork).
Why would Apple want to compete in the commodity PC market? Why would Porsche want to compete with commodity cars?
I read several of your posts. You seem to be hung up on Placement and Price. There are FOUR Ps of marketing. Apple focuses more on (insanely great) Product and Promotion, which give them loftier Placement and allows them to demand a higher Price. And if price is your biggest hang up, then the advent of the Mac Mini makes headway in that area. Of course it still isn't the cheapest computer on the market, but then it wouldnt' be Apple would it?
Also you state that iPod/iTunes won't work with other services, yet it really doesn't AUTOMATE with other services. If people are hung up on using a certain music service, then they can convert files (rather easily) in iTunes, then sync to their iPod. Not really any different than ripping from a CD then synching. The only services that wouldn't work then may be subscription based services that you could then say "lock you out" of using their service with an iPod instead of the other way around.
Bottom line, it seems that if Apple were to follow your advice then they would become a commodity. Seems to have not faired so well for Compaq/HP/Micron/Gateway and the other also-rans. Dell differentiates themselves on the create-to-order PC. But if you look closely, many of their comparable products are spookishly close to the same price as their Apple counterparts.
I would contend that Apple has to be proprietary in order to survive. They nearly killed the company in the mid '90s by opening up to Mac clones. Remember that?
Jennifer Rice
Andy Lark
Johnnie Moore
John Winsor
1. Dustin on March 24, 2005 10:57 AM writes...
A while back I saw an interesting graphic on the Apple's tipping point.
A pretty good visual aid for this discussion.
Permalink to Comment2. Andy Lark on March 24, 2005 11:59 AM writes...
Great diagram - thanks. What will be interesting is if they can drive a substanial marketshare gain - like 5% or more - from the Wintel market. This would be stunning.
Permalink to Comment3. Dustin on March 25, 2005 12:05 PM writes...
What will also be interesting to see is if PC manufacturers have a response to iPod's halo effect, or if anyone else capitalizes and rides the iPod's coat tails.
Based on this eWeek article, it looks like HP's attempt to capitalize on the iPod may have actually backfired.
Permalink to Comment4. Stephen Macklin on March 25, 2005 08:49 PM writes...
I don't think there was ever really much chance of the HP iPod deal being a huge success for anyone but Apple. Given Apple's tight control of its technology there was really nothing that HP could be seen as bringing to the party.
On the other hand Apple was seen as playing nice with a "player" in the PC world. The market they are trying to break into.
Permalink to Comment5. Dave Reynolds on March 28, 2005 11:52 AM writes...
Oxymoron of the article:
"control 5% of the market"
Wow! A whole 5%! Put it this way: In public opinion polls, 5% is a rounding error.
Does it strike anyone else as somewhat pathetic that breathless postings are being made about Apple converting 1 out of 5 PC owners to Macs and as a result moving from 2% to 5% of the market? 5% is a micro-niche. Executives at larger desktop computer companies would be fired if their market share was 5%.
Historically, Apple's marketing has been quite poor. Apple is primarily an innovator and consequently are dependent on killer apps to prop up their revenue, which typically lags every 5 years or so due to the killer app cycle.
Apple has consistently demonstrated that they do not understand the desktop computer market. If Apple continues to position itself as a desktop computer maker, they will lose their whopping 5% and slide back to their negligible 2%.
However, if they change their tack to be a media company, they have a lot more potential to own a market space that lots of companies have designs on but no one has yet mastered. Of course, if their history is any indicator, they will probably screw that opportunity up by closing their system and trying to push the market toward proprietary data formats like QuickTime and AAC.
Permalink to Comment6. Dustin on March 28, 2005 06:59 PM writes...
Translating market share from computers to automobiles, you see that Porsche has a market share of .2%. Does that make them a failure?
Apple's products aren't made to compete with the $300 PC manufacturers. Same as the Porsche Boxster doesn't compete with Chevy Cobalt.
Market share isn't as important as profitability. That profitability comes from selling margins or selling quantity. Apple chose margins. Apple has a sizable amount of cash at their disposal because they are a highly profitable company. Now, market share becomes interesting as that has long been a point of contention by analysts and PC enthusiasts as Apple's weakness. As analysts start to forcast a possible doubling of market share, why is that considered pointless and breathless?
Please quantify why you think Apple's marketing has been quite poor. That is an interesting statement.
Apple has made it known that they want to become the hub of home media. They may have already "changed their tack" as you said. I also would argue that the open source route may not be right for Apple. Not sure what advantage they would gain.
Permalink to Comment7. Dave Reynolds on March 29, 2005 11:20 AM writes...
You are correct: Porsche doesn't compete in GM's market space (although, GM tries absurdly to compete in Porsche's space with the mundane Corvette). However, Apple has tried for 20 years to compete in the personal computer market space and mostly failed. They don't belong in that space, as your comment implies.
Nevertheless, Apple has historically attempted to compete as a desktop computer manufacturer. Consequently, Apple has been perenially referred to as a niche player, whereas Porsche is hardly a niche player in the performance car market. The Aston Martin DB9 would be considered a niche player in Porshe's market because it sells significantly fewer cars to performance enthusiasts.
The fact that Apple has -- particularly in pre-iPod days -- insisted on defining itself in the PC market space is strong indication that it doesn't understand its own products nor how to market them.
I've commented numerous times on Apple's poor marketing on my blog. Here are links to specific posts:
This first post describes my take on marketing, which my Marketing and Communications professional wife tells me is not a very standard view:
http://bimmergeek.blogspot.com/2005/03/my-take-on-marketing.html
With that as the foundation, here are my comments on Apple's marketing:
http://bimmergeek.blogspot.com/2005/02/apples-shitty-marketing.html
http://bimmergeek.blogspot.com/2005/03/analysis-of-apple-marketing-via-stock.html
http://bimmergeek.blogspot.com/2005/03/major-hangups-over-ipod-phone-yet.html
Other Posts That Imply Marketing Issues:
Permalink to Commenthttp://bimmergeek.blogspot.com/2005/03/pc-worlds-techlog-appletivo.html
http://bimmergeek.blogspot.com/2005/03/what-mac-mini-is-and-is-not.html
http://bimmergeek.blogspot.com/2005/03/come-to-dark-site-dave-buys-ipod.html
8. Dave Reynolds on March 29, 2005 11:52 AM writes...
One other point on your comment that market share isn't as important as profitability.
Both profitability and market share are important. The objective of business in a capitalistic environment is to maximize revenue and profitability. Generally, revenue is a function of market share and profitability is a function of a company's ability to efficiently produce services or products.
If Apple were any good at marketing, they would't have to console themselves by saying, "Well, at least we have great margins." They would be able to say, "We own our space and our cash on hand is measured in tens of billions of dollars."
The fact that Apple does not have both strong revenue and strong margins indicates that they cannot compete in their market space and this strongly implies poor marketing.
Permalink to Comment9. Dustin on March 29, 2005 12:42 PM writes...
I think there is a fundamental disagreement here. I don't think Apple's goal has been to be a market dominator in the arena of PC sales in general. You are willing to concede that Porsche is hardly a niche player in the performance car market, how about Apple in the "performance PC" market. Apple has long held a grip in the areas of graphic design, film making, and music making. They've made some strides to trickle down into the prosumer/consumer end of these industries (iLife, Final Cut Express, iWork).
Why would Apple want to compete in the commodity PC market? Why would Porsche want to compete with commodity cars?
I read several of your posts. You seem to be hung up on Placement and Price. There are FOUR Ps of marketing. Apple focuses more on (insanely great) Product and Promotion, which give them loftier Placement and allows them to demand a higher Price. And if price is your biggest hang up, then the advent of the Mac Mini makes headway in that area. Of course it still isn't the cheapest computer on the market, but then it wouldnt' be Apple would it?
Also you state that iPod/iTunes won't work with other services, yet it really doesn't AUTOMATE with other services. If people are hung up on using a certain music service, then they can convert files (rather easily) in iTunes, then sync to their iPod. Not really any different than ripping from a CD then synching. The only services that wouldn't work then may be subscription based services that you could then say "lock you out" of using their service with an iPod instead of the other way around.
Bottom line, it seems that if Apple were to follow your advice then they would become a commodity. Seems to have not faired so well for Compaq/HP/Micron/Gateway and the other also-rans. Dell differentiates themselves on the create-to-order PC. But if you look closely, many of their comparable products are spookishly close to the same price as their Apple counterparts.
I would contend that Apple has to be proprietary in order to survive. They nearly killed the company in the mid '90s by opening up to Mac clones. Remember that?
Permalink to Comment