Editor's note: In what we plan to make an annual end-of-year tradition, RetailWire has compiled a list of the most significant retail industry "Turning Points" of 2008. (See our news release...) What follows is the eleventh in a series of discussions based on the list.
In a brutal year for any company attempting to grab a piece of the consumer's dollar, Apple's performance clearly stood out in 2008. Sales were up 27 percent in the fourth quarter ending Sept. 27, driven by strong Mac, iPod and iPhone demand. The company soared passed its goal of selling 10 million iPhones for the full year and annual profits reached the $1.14 billion mark.
Seemingly a perennial candidate for Brand of the Year, Apple's results were largely tied to many tenets that have proved to be the foundation of its success over the years:
Innovation: With upgraded hardware and software, the iPhone 3G became the fastest-selling cell phone in the U.S. by November. The major introduction was Apple's App Store, which includes thousands of downloadable applications for the iPhone and iPod Touch. Meanwhile, the unveiling of MacBook Air, the "world's thinnest notebook," helped drive strong Mac as well as accessory sales. Buoyed by new features as well as the new Touch model, Apple also sold over 11 million iPods worldwide during its fourth fiscal quarter alone. According to some, the key to Apple's string of blockbusters is not only making products that meet consumers' desires, but making complex technology easy to use.
Price/Value Relationship: If you walk into an Apple Store, you might pay $45 for a connector cable that typically costs $5 elsewhere. But Apple's core products are well within reach of consumers. A 1-Gig iPod Shuffle costs $49 with each incremental price point containing loads more features. After launching its first iPhone for $599 in 2007, July's launch of iPhone 3G came in at a more accessible range of $199 or $299. Many industry watchers believe a $99 iPhone will arrive by the middle of next year.
Control of Distribution: Although Apple products are increasingly sold across retail, the Apple Store continues to mold the company's brand image and positioning. As opposed to other consumer electronics brands that must educate sales people who work for someone else, Apple can control their sales force and the messages that they learn to talk about. As a result, everyone tells the same story about their products. Tight distribution also keeps its products from being deeply discounted.
Marketing/Hype: The company has gained a lot of praise for its "Mac vs. PC" ads, but Apple's following has also stemmed from resilient word-of-mouth activity over the years. The expansion of Apple Stores created a place for face-to-face interactions with the most rabid fans to feed this momentum at the grassroots level. From the Genius Bars to special events hosted at Apple stores, this offers an invaluable marketing asset that few of their competitors can match. Also feeding Apple's hipness factor is their focus on coming up with aesthetically "cool" looking products.
Discussion Question: What are some obvious and some less obvious reasons why Apple has been so successful? How have Apple Stores contributed to its success? Can you think of one or two other companies that deserve some consideration for Brand of the Year?