Apple's Branding Strategy Delivers Superior Results

Apple once again delivered very strong results in the face of hesitant consumers under recessionary pressures. Total revenue growth for the latest quarter was +36% led by the Mac brand in personal computers at +51%. The MP3 segment led by the I Pod brand delivered growth of +1% while the iPhone sold 1.7 mm units.

So how is Apple able to deliver consistent sales and profit growth in tough recessionary times with premium pricing while many of its competitors deliver poor results. In a phrase --it's their superior branding strategy.

A company's brand name is often its most valuable asset. Simply put a "Brand" is a name that consumers associate positive or negative benefits or attributes about a particular product, service or company. Many people think of brands as it relates to the supermarket industry. However, a brand can be more than just a product name. Strong brands can evoke images of dependability " Maytag", safety "Subaru", luxury " Tiffany" or in Apple's case "cool or hip and technologically superior".

There are many types of Brand names. You can have a corporate brand name "General Mills" for example (GIS). Most General Mills products have their own individual product brands "Cheerios". The Big G logo is put on most General Mills products to signify trust and consumer confidence. The individual brand "Cheerios is what most consumers remember. In Apple's case, Apple is the corporate brand with iPod being the individual brand. Some companies brand a service or a component of a product "Intel inside". Other companies use an "Umbrella" brand Pepperidge Farm (owned by Campbell Soup-CPB) This where they use the same brand for multiple products (cookies, bread, crackers etc.). Umbrella brands are used when marketing funds are tight and the umbrella brand provides instant name recognition to the consumer. However, companies must be careful not to use the umbrella brand for all products. Kraft (KFT) means "cheese" to consumers. Cheese based products under the Kraft brand have done very well. However, when Kraft Foods has used the Kraft brand on other categories (salad dressings, barbecue sauce etc) their results have not been as strong and effective.

Apple's success in the last year is based on two strong strategic moves they have made over the last several years. The first was branding and marketing support behind the launch of the iPod. They created a segment (MP3 players) using a very cool, image based television campaign featuring big name music stars to appeal to the image crazed teenager crowd. They provided a good product (not superior in my mind) but correctly branded it and provided a high level of marketing support to cement their image as the only cool MP3 player. I have 3 teenagers and consistently tried to get them to settle for the less expensive Sansa brand (Sndk) but was told it was an iPod or nothing. Apple created a value added difference vs. =their competition (image) based primarily on advertising and "Branding".

Secondly, they followed up that success by supporting their Macintosh line of personal computers and highlighted the ease of use vs. the Vista operating system and other computer manufacturers. Their recent quarterly results for Mac's +51% shows this effort has also delivered. Consumers have bought into their branding efforts for Mac's -- they are easier and simpler to use and also more cool than traditional personal computers from Hewlett-Packard (HPQ) and others. In this situation Apple, also benefitted from what's known as the "Halo" effect. In advertising terms this is when when one product or brand from a company benefits in sales from a 2nd product or ad campaign from the same company. The iPod has had a halo effect on the Macintosh brand by bringing in younger, more image conscious consumers. The iPod brand has also provided some of this same "halo effect" to the iPhone. Consumers clearly know that all 3 products are made by Apple (the corporate brand) and this translates to consumers believing Apple's products are more hip and technologically superior than competitive products.

The benefits to Apple as company for this superior branding strategy are immense. It provides a fantastic platform for future new products. Consumers will constantly seek out their new products and view them as the next generation with a cool image and technological superiority, It will also provide them with superior pricing power over the long term. This means that Apple will continue to lead and deliver above average sales and profit growth. As in consumer food products a superior brand name is worth its weight in gold.

Comments

[Azazello]

Dear Clueless!
Oh, never mind...
Cheers!

[ramankandola]

AAPL is a pioneer ! Case closed.

[PK deC'ville]

Rick,

You make some nice points about the branding strategy, but your dismissive attitude to Apple's widely acknowledged technical and design brilliance is surprising.

Perhaps you ought to read a little more widely and gain an appreciation for Apple's magic sauce.

[top_tier]

As a branding specialist I can tell you that you only have half the equation right. Yes indeed Apple is among the best in positioning and exploiting their brand; however, it doesn't matter how good your brand is if the product doesn't deliver an exceptional experience. In Apple's case, it's the best of both worlds, thus the brand and product feed off each other synergistically; the product line meshes well, seamless, and all product lines representing the edge of technological achievement. No small feat.

I find it interesting as competitors; Dell a good example that I'll use here (who's had a decent "brand"); they fall all over themselves trying to reinvent themselves thinking it's their stale brand that's made them fall behind, Dell extends this thinking into revamping the industrial design of the products, in their mind this and increased emphasis on improved marketing efforts is what it will take for them to regain their luster. They will fail because they're just a box maker who's past success was efficiencies passed on to the consumer. Those days are gone because it's the experience that's suffering, they're beholden to others for that.

So while yes, the Apple brand is exceptional, so is the product and experience. One without the other would not see Apple at the pinnacle it is today.

[MacManMaz]

Rick,

IMHO your article comes off as if you are saying that Apple is just real good at advertising. You missed the bigger picture. Successfully creating new markets (iPod) and revolutionizing existing market standards (iPhone) requires a commitment to excellence in the user experience from Research and Development all the way through to product support. That is what makes it so easy to market Apples brand.

Look at the MSFT. Vista was cleverly marketed and advertised by a company with an established name and should have been a slam dunk.
Vista's failure is not due to poor marketing or lack of flashy commercials, it just sux.

[All DayBreakfast]

I think your commenters have a better grasp on the situation than you do.

[2bitRick]

To reiterate what the previous commentators have said. Apple's brand was not built by advertising. It was the result of exception design and development, products that just work, superior support (AppleCare), the ability to look at old things in a new way (iPhone) and most of all to not listen to any of the naysayers but instead listen to the customers and give them what they want.
With the release of the iPhone Apple did very little advertising, the product created it's own because of it's innovation, not the Apple name.

[jcsegenmd]

I have nothing to add to what the others have said; one interesting question is, given the superiority of its products, does Apple even have to advertise, when the word of mouth enthusiasm of those who use its products is already viral?

[vtmarketingprofessor]

Rick....You missed a major point.....Apple's products are simply BETTER. They look better, the work better, and the user has a much better EXPERIENCE all the way around.

[User 10769]

I would like to know where the Apple Stores are in Florida.

[deepakhj]

user 10769, I know for a fact there is one in Orlando. That's where 62 year old dad bought his Mac Mini without my help. I'm 3000 miles away! ;)

[zato3]

Rick knows that Apples' success is not just advertising or branding. The article is black PR, written to demean and discredit Apple and the quality of their products.
To attribute what Apple has done to slick ads or branding is a very large insult to Apple, without who's efforts since 1975, this internet we now enjoy probably wouldn't exist.

[pendolino]

trying to be completely unbiased (and its hard with apple), i have to agree with some of the contributors here that say it is a two-pronged approach of branding/placement AND technical excellence/innovation.

[dukeoconnor]

Other companies were selling MP3 players -- not many people wanted an MP3 player. When apple came to market, they sold "1000 songs in your pocket." A lot of people wanted that. So that's marketing, but it's also what informs the design of the iPod and the user experience. So like the commenters before me, I think you've missed the point. Now, about "The Internet in your pocket"...

[Zach Bass]

The less obvious branding strategy comes into play with television commercials and print ads that show Mac computers or OS X screen shots in the ad, but the ad is about product unrelated to Macs. Perhaps this is because creative people that produce the ads use primarily Macs. Brilliant long term thinking on Apple's part to keep these people using Macs.

Also, as a technologist, I have noticed that most tech books also use OS X or Mac software related screen shots. Again this may be due to the preference of the graphic artist or author of the book, but it simply makes the article or book look more credible,more readable, because the Mac screen shots look better than equivalent Windows screen shots.

-zach bass
www.zachbass.com

[JohnKoetsier]

"All Day Breakfast" hit the nail on the head.

What people who don't really understand branding don't understand is that the best branding, the longest-lived branding, and the most financially remunerative branding is branding that is a result, not a cause.

The brand is authentic because it first arises from actual value and actual experience.

Brands that are invented via marketing alone are typically short-lived, expensive, and doomed to crash and burn. The product and the client experience need to be what the branding says in order to generate long-term value.

[Webster]

What a farce - title should be "Apple's PR Snow Job Strategy Delivers Superior Results" Apple sells junk, I say "sells" because Apple MAKES NOTHING and hasn't since the mid 90's and began out-sourcing with the Apple ][e in 1980 being made by a subcontractor in CANADA! Now Apple just announced a "new" iMac, but let take a "small" look at Apple FLAWED history of garbage iMacs!:

Oh Macs are always "perfect"??, there's never been problems with iMacs!!??, Mactards are always in denial folks. Let's just refres=h your MEMORY about JUST ONE segment of Apple's "colorful history" of foisting garbage on the unsuspecting (because the Apple Media Hacks hide it) consumer public -

"Apple iMac: ‘New and inferior,’ lawsuit says" March 31, 2008 -
apple20.blogs.fortune..../

"iMac LCD problems continue to grow" Monday, Dec. 3 2007 -
www.applegazette.com/i.../

"Apple confirms iMac freeze problem" Monday, Oct. 8 2007 -
www.applegazette.com/i.../

"20" iMac LCD color problems?" (this one actually is about another Apple lie)-
www.tuaw.com/2007/09/1.../

"Apple faces up to iMac flaws By Louisa Hearn" February 13, 2006 -
www.smh.com.au/news/br.../
1139679517842.html

And INTEL even helps Apple with MacIntel PC Clone bugs too!
"Intel Core Chip Bugs May Affect Macs" January 23rd, 2006 -
www.macobserver.com/ar...

"iMac Vertical Lines" January 4, 2008 (read the fellow owners commments) -
imaclines.blogspot.com...

"iMac G5 power supply burning" Mar 09, 2005 (WELL known flaw!) -
macosg.com/group/viewt...

Even the Mac Hack Media guys complain ... sometimes, for good reason.
"HEY LA, HEY LA, MY iMAC'S BACK" September 16, 1998
www.businessweek.com/b...

"G3 iMac have a tendency to suffer from video failure" (Our school Dist lost 340 iMacs in 16 months back in 1999 from this!) - www.macopz.com/columns.../

Oh, but lets go back to the BEGINNING of the iMac, the KOREAN made G3 iMacs:
"iMac Flaws" February 1999 -
lowendmac.com/imac/eva...

HEY, I could go on for pages and pages because the web is FULL of Documented Apple built-in FLAWS that the Apple Hack Media and Apple FUDs suppresses. Look for yourself .... well unless you live in the land of denial .. Mac Fantasy-land.

[Webster]

Two days later -
Guess I left Rick Shea and all the Apple FUDs speechless ... which usually happens when FACTS are quoted with references showing Macs are actually garbage, because Apple FUDs don't deal with facts, just BS Mac vs. PC lie ads and rhetoric flaming.

[digivision]

webster phreaky...
lol get a life check out the Dell or Gateway support board .. you will find nothing but complains ...

Did Steve jobs steal your girlfriend in college ??