Wednesday, September 11, 2013
My new book, The Meaningful Brand, is intended to be a road map for how best to generate financial value growth from a brand. The journey starts by identifying the brand’s meaningfully different experience. Once that is done, the experience must be enhanced and exploited for the commercial benefit of the business.
One of the important ways of exploiting a brand’s strength is to make the brand accessible to new consumers by making it more affordable. The objective is to encourage more people to buy the brand but without reducing either its perceived value or the margin made on each purchase. It is precisely this challenge that was discussed in Brian Chen’s article in The New York Times on Tuesday.
With the advent of two new iPhones, the high-end 5S and the 5C, a new entry-level model aimed at the Chinese market, Chen sums up Apple’s challenge as follows:
For upscale brands, there is a fine line between 'cheaper' and 'cheap.' And for Apple, the premium electronics maker, the key is to avoid crossing it.
Particularly in China, the challenge is to still retain the status indicated by the ownership of a fully-fledged iPhone while still making a cheaper alternative desirable to a broader audience. As Chen notes in the article, the crux of the dilemma facing Apple is to 'brand down' so that the people buying the expensive model believe they are getting something visibly superior, while the people who are only able to afford the cheaper model are still happy to get their hands on anything from the coveted brand.
Funnily enough, Tom Doctoroff, Asia Pacific CEO of ad agency JWT and the person I first heard use the phrase 'brand down,' thinks offering an inexpensive iPhone to the Chinese is a very bad idea. Interviewed for Marketplace, he suggests that the existence of a cheaper version of the iPhone will immediately signal that the brand is not so elite any more. In the same report, Rob Schmitz notes the threat posed by cheaper, Chinese company brands. Apple, it seems, could fall between two stools with a mid-priced smartphone.
This said, Schmitz ends his report by noting one major factor that could make the pricing issue a sideshow. A deal between Apple, the most valuable brand in the world according to the 2013 BrandZ Top 100 Most Valuable Global Brands ranking, and China Mobile, the tenth most valuable, would open up access to 745 million subscribers. My bet is that if this happens there will be plenty of people eager to get their hands on a shiny new iPhone, enough to ensure Apple stays number one for a few years yet.
So what do you think? Is a cheaper iPhone a good move or a big mistake? Please share your thoughts.
This entry was posted on Wednesday, September 11, 2013
and is filed under Brands, Media, Digital.
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