Articles

Apple’s Snob Marketing and the Declining Fortunes of the iPhone

25 Jan 2013

Views: 3,238

Font Size: a / A

Apple-iPhone-1209.jpg-Apple-iPhone-1209.jpg

Apple iPhone
 

Calixthus Okoruwa
 
There is a lot to be said about Apple, the phenomenal institution that the genius of Steve Jobs sired. Any company that revolutionizes three mega industries: personal computing, music and mobile telephony, respectively, truly deserves the iconic status in which Apple continues to bask. The managerial principles of its founder continue to be painstakingly documented in scholarly articles and books, to be studied in business schools and by business executives around the world. The painstakingly choreographed approach at managing publicity leaves lessons for marketing communications practitioner and scholar alike.

The iPhone is perhaps the most iconic of Apple’s gifts to the world of technology. Introducing the product in 2007, Jobs had begun this way: “Every once in a while, a revolutionary product comes along that changes everything”. While the original Macintosh for instance, changed the computer industry, the first iPod changed the music industry. “Today, we’re introducing three revolutionary products of this class. The first is a revolutionary iPod with touch controls. The second is a revolutionary mobile phone. And the third is a breakthrough Internet communications device.” But these were not three separate devices, he said. “This is one device and we are calling it the iPhone.”

The iPhone was a runaway success. By the end of 2010, some ninety million units had been sold and Apple had cornered at least half of the profits generated in the global mobile device industry. A delight to behold and a truly innovative work and pleasure tool, the iPhone deserves the status it continues to occupy as the pre-eminent smartphone…or as today’s reality now seems to dictate, what was once the world’s pre-eminent smartphone.

Is the iPhone for Africa?
There is nothing in Apple’s marketing of its iPhone that suggests that Africa or indeed any of the poorer regions of the world are of any real consequence in the equation. For instance, more than five years after its global launch, the iPhone cannot be procured officially anywhere in Nigeria or indeed, West Africa. The handful of business executives who bandy the iPhone have sourced it either while on trips abroad or from friends and relatives visiting from abroad, who on noting the gap in the market created by its absence, stock their suitcases with a handful of iPhones while on trips to Nigeria.

Like many American companies, Apple does not have a physical presence in Nigeria. Indeed, Apple does not have a physical presence anywhere in Africa. Its products including the Mac computer and notebooks are typically marketed by intermediary dealerships.

Sales model for the iPhone
Apple pursues a rather dogmatic model with regard to sales of the iPhone. In this model, it enters into contracts with carriers or telecommunication network operators and it is essentially on the basis of this collaboration that the iPhones are made available to end-users. Typically, the iPhone comes in bundled data packages and is sold at a discounted rate on the particular telecommunications network which has entered into a partnership with Apple. Of course such a phone is “network-locked”, meaning that having procured it at a discounted rate from a particular telephone network the end-user is bound to that network for a particular period, typically one or two-years. There is, however, the option of getting a “network unlocked” version of the iPhone, which is considerably more expensive, being devoid of the discount which its network-locked cousins enjoy.

But even these network-unlocked variants, still must come from telecommunication carriers which have contracts with Apple.
Apple’s products are sold through customized sales outlets which it calls iStores. Again in the classical Apple approach to selling, each iStore is configured in that painstaking predilection to detail and optimal customer experience.

Opening of Apple’s Store in Nigeria
Despite Apple’s global popularity and the popularity of its products including the iPhone, Apple’s first iStore only recently opened in Nigeria. Located in the relatively new Ikeja City Mall, the store in many ways reflects the peculiar Apple brand persona. However, while it is stocked with the iPads, Macs and notebooks as well as lots of accessories including headsets and carrier bags for the products, the sole Nigeria iStore does not stock the iPhone. Run and operated by Africa’s sole Apple dealership, South Africa’s Core Group, the iStore does not stock the iPhone because, according to the Group’s director, Rutger-Jan van Spaandonk, Apple is yet to enter into a contract with any telecommunications carrier in Nigeria. Of course this speaks to the importance which Apple places on markets like Nigeria’s and elsewhere in the developing world.

Samsung in Contrast
Barely six weeks after Samsung launched its rave-making Galaxy SIII smartphone globally, it was officially available in Nigeria. Samsung has a physical presence in Nigeria coupled with an aggressive sales organization. Its Samsung Galaxy SIII phones are available for sale at dealer shops and other sales outlets all over the country as well as in bundled packages with select telecommunication network operators.

The result is that if you need a Samsung Galaxy SIII in Nigeria today, all you need do is to visit your regular IT shop and you’ll get one. Because Samsung has a physical presence in Nigeria, in all likelihood you’ll get a warranty on this purchase, together with reliable after sales support.

Barely three months after the launch of the Galaxy SIII, Samsung launched yet another smartphone, the Samsung Note II, an equally prodigious work and pleasure tool. A few weeks ago, it announced that it would this year introduce the Samsung Galaxy SIII mini, a smaller version of the original. The potency of its approach of introducing smartphone models at such quick intervals is of course debatable, with this writer sharing the opinion that intervals ought to be better spaced to guarantee optimal uptake. What is unquestionable, however, is the company’s determination to make these products just as accessible to customers in Nigeria and the rest of Africa, as they are to customers elsewhere in the world.

Philosophy of inclusiveness
According to Strategy Analytics, the global technology research firm, Samsung made close to 57million shipments of its smartphones in the third quarter of 2012, while Apple made just 27million, less than half of Samsung’s total shipments. In simple terms, the Samsung Galaxy SIII now considerably outsells the iPhone.
Similarly, IDC’s data shows that by the third quarter of 2012, Samsung had a 31 percent market share of the global smartphone market compared to Apple’s 15 percent. Indeed, Strategy Analytics has predicted that Samsung will extend its lead over Apple’s iPhone in 2013, extending its market share to about 33 percent versus a 21 percent market share that is predicted for the iPhone.

This January, there have been reports from Japan’s Nikkei and the Wall Street Journal respectively, indicating that Apple may have cut its orders by as much as half of what it had originally planned for the first quarter of 2013, for screens for the new iPhone 5, from suppliers like Sharp and LG. The reported cuts in components may be a reflection of slowing demand for the iPhone 5 and the effects of Apple’s competition with Samsung.

Both companies, however, have continued to enjoy growing gross profitability over the last two years. While Samsung’s gross profitability has risen from 17 percent to 30 percent, Apple’s has grown from 33 percent to 50 percent.
It is difficult to say by how much Samsung’s inclusive and aggressive sales approach has impacted on the fortunes of the Samsung Galaxy SIII and its other smartphones. What is plausible, however, is that its philosophy of inclusiveness in making its smartphones accessible may have driven it not only to make the products readily available and accessible in such markets as Nigeria and other developing countries that Apple would typically snob but also to make the products perhaps more aggressively accessible even in the more developed markets. In addition, making products accessible in markets like Nigeria is accompanied by the imperative of promoting these products. Samsung advertises very regularly in the Nigerian media for instance and pictures of such famous African sports stars as Didier Drogba, Mikel Obi and Michael Essien in Samsung-branded jerseys are to be seen on hoardings across Nigeria and elsewhere in Africa. This year, it is the major sponsor of Africa’s biggest football fiesta, the Africa Cup of Nations, a project that will help to beam its brand name to millions of homes across Africa and further enhance its brand visibility and perhaps even brand affinity.

Benefit of jettisoning Snob-Marketing Approach
While it is true that Apple’s iPhone continues to enjoy a good standing in some developed markets, the meteoric rise of Samsung’s Galaxy SIII should give Apple cause for concern. Samsung’s Galaxy SIII is no doubt a great phone, as attested to by lots of customers across the world. The Galaxy SIII’s greatness is obviously aided by the fact that it runs on the far more pervasive android operating system. (The iPhone runs on the less widespread iOS). Greatness, however, cannot be the sole determinant of market success. Samsung’s distribution, one of the critical elements of what marketing experts refer to as the 4Ps (Product, Placement or distribution, Pricing and Promotion) has been deft.

Apple needs to jettison its rather haughty marketing approach, especially with respect to selling the iPhone. As we approach a future that will be increasingly defined by technological innovation in a dizzyingly fast-paced smartphone-led market, it is vital that the company which practically re-invented this critical industry does not become stuck in the successes of its past; in the anachronism that there will always be customers in the developed world queuing come-rain-or-shine to buy the iPhone. Among others, Apple needs to re-look its selling strategy. As Samsung has so eloquently demonstrated, the competition is never very far away.
 
Okoruwa first published this article on www.flairng.com

Tags: Apple iPhone, Business, Featured, Nigeria

Comments: 0

Rating: 

 (0)
Add your comment

Please leave your comment below. Your name will appear next to your comment. We'll also keep you updated by email whenever someone else comments on this page. Your comment will appear on this page once it has been approved by a moderator.

comments powered by Disqus