Thursday, February 14, 2013
Apple Loses Some of Its Polish to Samsung and It Has Nothing to Do With Price
For those of you who missed it, we announced the results of our Customer Loyalty Engagement Index (CLEI). There were actually some seismic shifts in how consumers view categories and brands, and products and services that used to be brands and now aren’t.
The biggest finding though, was if you wanted to be successful as a brand generally, and end up high on the loyalty list specifically, which comes with a raft of really good stuff including sales and profitability, you needed to establish a high degree of emotional engagement. What “emotional engagement” is depends upon the category in which your product or service competes. “Emotional engagement” is different category-to-category. You don’t buy a soft drink the same way you buy a smartphone, and emotional engagement relates directly to “brand” and what the brand stands for or is able to stand for in its category.
The other, critical finding was that in many categories “price” had become a more important driver. In some categories, the most important driver. Even more important than brand, and generally those categories found themselves bereft of emotional engagement values, with products being assessed at similar levels, with nothing to differentiate themselves with except. . . you guessed it, price!
Anyway, you need to keep that all in mind, when we tell you that Apple, which had been on the top of the Smartphone category list ever since we added the Smartphone category to the CLEI, isn’t number one anymore. Samsung is. They had been number 2 or 3 on the list (depending upon the vagaries of the BlackBerry brand – now last on the list), but now Samsung is #1.
They did it on the basis of connecting to and/or leveraging two critical emotional engagement values in the smartphone category: digital personal expression and digital identity development which, as you might guess, has to do with how smartphone users view themselves and how they manage that view via their smartphone. You only need to have watched Samsung’s advertising over the past year to appreciate the brand message they were putting out. So, the bottom line is if you possess and leverage emotional engagement values, you don’t have to rely on price.
Which makes a nice segue to the fact that Apple may be planning a cheaper iPhone. Speaking at the Goldman Sachs Technology & Internet Conference Tuesday, Tim Cook, Apple’s CEO, was asked about Apple reaching markets looking for more affordable smartphones and he said, "We wouldn't do anything that's not a great product… for people who are more price sensitive, we've lowered the price of the iPhone 4 and iPhone 4S," pointing out that Apple was unable to meet the demand after the price cut, which sounds like pricing cause-and-effect no matter how you position it. Mr. Cook continued, "If you look at Apple's history, the iPod started out costing $349. Now you can walk into a store and pick up a Shuffle for just $49.”
Now that’s true but you really need to keep in mind that the iPod was introduced in 2001, 12 years ago, so it’s not unfair to think A) there would be new products, and B) the price would come down naturally. BTW, a shuffle (2GB) coming in a palate of 8 colors isn’t really the same thing as 64GB iPod Touch, which costs $399. Just sayin’. But, no matter what, Apple is exploring more affordable options. So a price strategy, not an emotional engagement one.
That said, there’s a rumor out there about Apple and a “watch-like device” with a curved glass design, which just might be the thing to revive Apple’s emotional engagement slump. Design – good design – can be personal and expressive and emotional. And the best design is usually a formal response to a strategic question. So a possible win-win for the Apple brand.
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