High-tech consumer marketing: Why Apple plays in a league of its own

Remember October of 2001? A long-awaited product announcement out of Silicon Valley caused a lot of disappointment in the world of tech. The reactions were not kind: “I still can’t believe this! All this hype for something so ridiculous!” “Break-thru digital device? The Reality Distortion Field is starting to warp Steve’s mind if he thinks for one second that this thing is gonna take off.”

Or how about January of 2007? Another much hyped product caused quite a bit of frustration. Was this supposed to be all? Nice design, sure, but this lackluster feature list, the closed platform, all these technical restrictions — and this had been hyped as a revolutionary product?

Well, the iPod and the iPhone went on to become big successes anyway. To be more precise, they revolutionized their respective industries, even though many geeks and tech experts predicted their inevitable failure when these two products were originally announced.

Sounds familiar, right? The reactions to Apple’s iPad announcement were strikingly similar. Expectations had run so high previously that the actual product was almost certain to disappoint many. And as with Apple’s previous major new products, tech geeks and “experts” of all kinds were particularly critical.

But exactly as last time, these opinions will not really matter. Apple doesn’t play the same game as the rest of the gadget industry. To understand why, let’s have a look at how high-tech consumer products are typically marketed.

The definitive book on this topic is still Geoffrey Moore’s “Crossing the Chasm“. Moore explains how new products are gradually adopted in the market and which hurdles they have to clear.

New technologies are initially bought by “innovators”. These tech enthusiasts are ready to deal with immature, complex products and pay high prices, just as long as they can get their hands on the latest tech toys. In the next phase, the “early adopters” take over. These are people who want to see a certain degree of usefulness in a new product, but are still willing to pay substantial amounts of money and tolerate problems.

After that, according to Moore, new products have to overcome a “chasm”. The next segment of consumers, the “early majority”, is not really crazy about technology. These people first want to see that a Blu-ray player is really better than their old DVD machine, or that a wireless LAN at home is really useful. They want to pay a reasonable price, not spend all their disposable income on technology. Typically, they follow recommendations from their early adopter friends, but with a healthy degree of skepticism.

That’s why technology vendors target innovators and early adopters first when they want to sell new products. Once these early target groups adopt a new technology, vendors hope to reach the mainstream market. Early adopters are crucial as technology advocates. And since they pay high prices, they are important to refinance development costs, even if a product doesn’t turn out to be a mainstream hit.

There are many technologies that have crossed the chasm successfully: MP3, WiFi, smartphones, DVRs, IPTV, GPS systems. Others are still waiting for their big break: netbooks, internet appliances like the Chumby, or home servers. And many, many other products have failed to cross the chasm into the mainstream market: UMPCs, the Segway or the repeatedly failed video phone come to mind.

With the introduction of the iPod, Apple started to ignore this traditional marketing playbook, and the iPad is the latest and most dramatic example of an entirely different strategy. Steve Jobs’ company doesn’t make products for geeks, but targets the mainstream market from the very beginning.

The iPod obviously wasn’t the first MP3 player, and it didn’t offer anything that would have particularly interested the early adopter segment. On the contrary: Its closed architecture made it unattractive to serious MP3 fans. Instead, the iPod made strong technology available to normal users who didn’t have the patience to deal with the complicated players of the day. Same thing with the iPhone: No technical feature was outstanding, but the superior usability and simplicity of Apple’s phone targeted average consumers who were frustrated with overly complex smartphones.
Apple’s particular approach can’t be easily copied by its competitors. There are three preconditions for this to work. First of all, massive ad spending in mass media is essential. Apple spends a lot on TV ads, but very little on alternative new channels like social media marketing (which still mainly reaches early adopter target groups). Steve Jobs’ reputation as a gadget wizard and “CEO of the decade” helps a lot, since personified marketing works particularly well in mainstream markets.

Secondly, there have to be clear differentiators that are important to the target group. And for mainstream electronics products, it’s not about the latest tech features, but things like beautiful design and ease of use — things that no other tech company does as well as Apple. Simplicity is essential, and that’s why Apple’s closed approach with iTunes is exactly right for the mainstream market. Early majority customers want to buy content as easily as possible. They don’t really care if the songs or movies bought on iTunes are protected by DRM, simply because they don’t know what DRM is and don’t care to learn about it.

Thirdly, mainstream distribution channels are important. Apple’s stores in malls and great downtown locations are exactly the right way to sell tech products to non-technical consumers. Most people want to touch a relatively expensive product before they buy it, and many will be influenced in their buying decision by the nicely designed store and the friendly staff, not so much by long feature lists.

With the iPad, Apple is driving this strategic approach to new extremes. All the elements of its proven formula are there, but one thing is really new: For the first time, Apple doesn’t simply try to sell a product category that is stuck in early adopter land to mainstream consumers. It’s trying to define a new category out of the fragments of several niche markets.

The iPad is a bit like a portable media player, a bit like a netbook, a bit like an e-book reader and a bit like a tablet PC. All these device types have found a niche market, but none of them have really crossed the chasm. Apple is now trying to enter the mainstream market with this recombination of existing, but not yet mainstream-compatible devices.

That’s a bold move that could easily go wrong. But Apple is one of the very few companies in the world that has the marketing power and unique capabilities to pull this off.

(This article originally appeared on netzwertig.com, the leading German tech blog)

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