Apple’s Better, Special, Different
Watching the Apple keynote this week – and reading this – all highlighted the importance of starting with the product to drive differentiation. Everything Apple does is about difference – not just to others in the market but to what preceded it.
Prices then go up over time and are a result of innovation.
As Tim Cook said in his interview with BusinessWeek:
“We never had an objective to sell a low-cost phone,” says Cook. “Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost.”
And critically, the product and pricing are optimised for a specific market – where the Apple ecosystem is most vital – America. As Ben demonstrates well:
The Apple ecosystem is of most value in the American markets first, the European markets next, and the Asian-style markets last … therefore, it’s very rational for Apple to optimise its pricing for the American-style markets, and the most logical price is $550/$99.
What Ben is getting at in all of this is a set of marketing fundamentals I see most marketers, miss:
- Price to product differentiation – not just relative to market but also prior product instantiations. Don’t price solely to category entry point or pricing dynamics.
- Pricing must exist in the context of broader market dynamics in most cases, but not all. There is little logic to the iPhone Pro pricing relative to other competing products. It is priced on its merits as a “luxury” device. Pro is always the misnomer in tech – it’s code for luxury.
- Pricing substitution isn’t necessary – each Apple product is priced relative to the market and its brand effect. iPhones don’t sell for less than they are worth in the hope you will buy iPods and other services. There is no “hope” in Apple’s strategy.
Start with: product (innovation & differentiation), position, price. Not with price, the product, then position.
Effectively Apple’s brand power is the point of leverage and “strategy” insurance. The massive investment in the Apple brand creates the halo that protects pricing power and ensures demand. But without effective product innovation, priced and packaged to the core target market, the brand wouldn’t make the difference up.
Stratechery is a great read and well worth paying for.
TV Matters, Or Does It
Youtube’s most recent upfront reignited the debate around the relevance of TV and the much-maligned 30-second spot. Ritson counterbalanced the hyperbole with:
“I think most marketers these days agree that the reports of the death of linear TV have been wildly exaggerated. But nonetheless, we have to accept that a lot of people are watching a lot less linear TV than perhaps they once did,” said Ritson.
“That’s a major problem, especially for big brands who have for decades depended on linear TV to build their brands at the top of the funnel through its enormous reach. And that’s exactly where YouTube plays a wonderful role. As a supplement to linear TV, especially on connected televisions, YouTube provides a brilliant way to restore that reach, particularly among the younger demographics that have proven so difficult in recent years to reach out to.”
While Ritson is right, there are two problems with this.
First, the idea of a “top of the funnel” is antiquated. We are in need of the continuous creation of mental, physical and digital availability for our brands across all stages of the funnel. All buyers buy infrequently. The funnel is a broken metaphor. More to come on that.
Digital mediums – Youtube – plays a critical role in generating that availability. The issue is efficiency, effectiveness and reach. That is where the debate starts. So even if we are watching TV less – much less in my case – does that smaller viewing audience more efficiently and effectively create availability? I can’t recall a single ad or brand I’ve seen on Youtube but can recall brands I’ve seen on TV. Samples of one make for terrible evidence.
Second, drawing two mediums into a compare and delete debate is futile. The reality is all marketers of any quality will be working the media mix for outcomes. It’s not either, or – but rather where to allocate the spend across a mix. As more of us consume formats that move – TV, video, social the real losers will be static media. Not just in terms of the reach and efficiency of that media but also the complexity and cost in making that media work.
What is true is that we must adjust all marketing to reflect the attention span of audiences – short formats for intercepting the “feed” and much longer formats for engagement.
“Six second bumpers and 15-second spots. A smart mix can build a great story … languishing behind is the 30 and its cousin, the 45-second spot, which generate the lowest ROI across all screens … 30-seconds is too complex to automate, too simple to convince. It’s too short if I’ve chosen to engage with it, and it’s far too long if I’m forced to watch it. Consumers tend to skip the platform if they’re faced with the forced 30-second spot. Hence skippable format and the burst of the six second bumper. It’s long enough to grab my attention and over before I have the chance to object.”
The best performing ads, created by only 15 per cent of advertisers, were longer than three minutes, per Hunt.
So, go long, go short – but don’t get trapped in the middle.
Using Asana
I get asked a lot about how to use Asana effectively in marketing.
There are heaps of tips I’ll post here over the coming week but these tubes are a great starting place.
- New goal-setting feature (so happy to see this!)
- How to use tags
- Mistakes to avoid
- Good overview video
- Another kind of Asana
The endless diatribe about whether marketing is a science or art is entertaining but ignores the point that marketing is also about the process. It’s a set of processes that when done right unleash effectiveness.
Also, take a look at Simple for more advanced marketing resource management. And Asana and Simple work well together.
Marketing Spending Ups and Downs
Interesting chatting to CMOs on the shifts in marketing spending during the apocalypse. The majority I’ve chatted to reflect The CMO Survey at Duke University’s Fuqua School of Business which found that 30% of marketers surveyed have not experienced changes to their marketing budgets while 41.3% even reported gains and just 28.4% reported losses. On average, marketers reported a 5% increase in budgets during the pandemic and expect digital spending to grow by 4% in the next year. The top two goals? Building brand value and retaining current customers. Social media continues to be a key part of marketers’ planning. In fact, the report found that 84.2% have used social media for brand-building and 54.3% have used it for customer retention.
The nutty bit of those last two sentences IMHO is the expected impact of social on brand. I get it for customer retention but brand building, nope.
Real Marketing vs. Fake Marketing
One newspaper, two different messages. No news there though.
On the one hand, we read a column with the media pundits crying that it’s no time to abandon your brand; consumers are consuming more media than ever; engage your customers… So, we end-up with advice like this:
“But we know that Australians are spending in retail, grocery, pharmacies and online as such FMCG (fast-moving consumer goods), pharmacy, local/state and federal government, health advice and online retail should be very active in media spend now,” said Mr O’Brien, chairman of Atomic 212, Australia’s biggest independent media agency.
This won’t make much sense to the well trained, commercial marketer. They don’t need to be active when consumers are facing limited availability in channels; high demand; pressure from the retail duopoly (= low margins); and constrained manufacturing and distribution. It’s just further evidence of how out of touch most on the Agency side are with marketing as a profession. That’s not saying they aren’t awesome at their element of the communications discipline.
And I keep hearing the same old, same old being pedalled:
“History shows companies that keep investing in their brand in down times cannot only build market share but are also best positioned to come back fast when better times return.”
Really? I’d love to see the evidence of this for the majority of brands in the market and not the minority with the balance sheets to pull it off. Yes, consistent investment in Brand matters. But not at the expense of the balance sheet and not with the same message pre-crisis.
Moreover, there are plenty of examples of companies navigating out of a crisis specific to them. BP, Ford, Exxon come to mind. It’s a different territory managing a crisis of such scale and profound impact as Covid-19. This will result in massive change. Not a return to a new normal such as that we saw post GFC.
On the other, a column, written by my favourite marketing opinionator – Mark Ritson – pointing out rightly that communications are just a fragment of what marketing is, and that marketing needs to get back to its core functions in a time of crisis. Actually, all the time. Nail pricing. Refine product and propositions. Rethink packaging. Drive to new channels.
Mark is right. The media pundits are wrong in absolute terms, but right if that fits with your strategy.
“In reality, brands should be occupied with a bigger mission: selling stuff. The pandemic is a massive societal threat.”
The example of Uber Eats developing new propositions and rethinking how it engages with local restaurants is spot on the money. So much better than running platitudes about being here to help. The real work for Marketers right now is the real work around the other Ps.
