Those of us, formally trained in Strategic Planning, can distinguish between ‘strategy’ and ‘tactics’. We also know how and when to alter strategy, the importance of monitoring the market, watching trends and being deeply aware of life cycle, segmentation, product categorization and other strategic marketing models that many business executives simply ‘glaze over’ to, whenever these topics are discussed.

It is clear that Apple has the best of the best operational folk money can buy, and an appalling lack of strategic nous.

This is demonstrated by two glaringly weak strategic activities:

  1. the regression to Type I (continuous) innovation in its new product development (phones & macs), and the debatable wisdom of its only recent Type II (dynamically continuous) innovation. (iWatch)
  2. Pricing Strategy that is devoid of strategy, ignorant of segmentation shifts, that clearly undermines Apple’s future and growth.

I’ll leave the nature of innovation to another day… but Apple’s PRICING STRATEGY is in dire straights!

Yes, price skimming and profit gouging works in certain circumstances, but even naive marketing graduates understand cascade down pricing strategy.

Apple MUST be shouting down commentary from within about ‘value-based’ pricing, about elasticity of demand, about market development theory, or even when confronted by competition analysis.

Some VERY WEAK senior management must be at the helm to maintain the strategies of last year, when it is in fact THIS year!

When you observe, “it has always worked this way, way change it”, or “If its not broken, don’t fix it” in the halls of power… you know the empire is crumbling.

But Apple’s Pricing Strategy right now is building a road for Apple to end up where it was in the mid 90’s…

Apple needs HUGE strategy, NOW!

SOMEONE, needs to go in and identify their true PRESENT capabilities, not past ones.

SOMEONE needs to REALLY grasp the needs and wants of TODAY’S market, and tomorrow’s market, not yesterday’s.

SOMEONE needs to align and engage the whole corporation with love and passion for NOW, not yesterday’s.

SOMEONE needs to bake some humility into the APPLE pie!

Think about this…

Apple has cost leadership strengths, economies of scale, and brand preference (marketing advantage) … Why the f^&* are they still price skimming when they could own the market by by pursuing price advantage?

Their insistence on maintaining their 20th century pricing policies, have created massive competition, made the industry easy for nee entrants, built sufficient margin for others to establish brand equity, and (effectively) brought on high competitive rivalry that didn’t need to be there!

I defy ANY APPLE EXECUTIVE to show me complete and hard evidence that their pricing strategy is nothing short of ludicrous in today’s market… and even if they COULD present a case, I’d probably challenge the validity of the research.

But, mark my words, if Apple maintains premium pricing you will see decay of market share, better and more potent competition, and Apple’s slow fading into insignificance and decline.

Too many marketing strategists believe their own BS! Pricing Strategy, Communications strategy, Online Strategy, branding strategy etc. isn’t genius… it is obvious, common sense that evolves out of the fact that perfect knowledge leads to perfect decisions.

I’ve had an extraordinary number of commercial successes in my career, record-breaking ones… NOT because I am one bit smarter, more intuitive, have more street cunning or am unusually lucky, but because I persevered long enough in learning my trade to be able to recognise the one, inalienable truth of business: If you genuinely know what the customer wants and can give it to them, they WILL buy!

The absolute secret, of all extraordinary business success, is knowing the customer.

Is it REALLY that simple?

Whether it is the individual or the segment – yes!

There are so many examples of this across the internet, in each of our careers, recorded, diagnosed, studied and reported by academics around the world, and demonstrable in every case study and high return annual report… so why do we complicate and confuse, cloud and cover this fact?

Think about it…

Pricing Strategy: In particular Value-Based pricing? Know the customer!

Communications strategy: In particular advertising & positioning? Know the customer!

Retailing: In particular store layout, ranging, staffing, location? Know the customer!

Manufacturing: Everything from branding, sizing, packaging, new product development, distribution strategy? Know the customer!

Why is the business community in denial?

When FMCG hummed a merry tune, the industry habitually committed to segmentation studies annually… but as operational executives with corporate political skills rose in a culture of corporate arrogance, costs were cut to carve out larger profits, ignorant to the fact they were really blunting competitive advantage and digesting brand equity.

In adequately training marketing personnel, briefing and sustaining market research of questionable quality, undermined the payback from segmentation studies and other market research.

Over the years, the team at my firm has written strategy for transport, banks, FMCG, commodities, utilities, government that has generated record-breaking results, unimagined sales growth, and extraordinary profits… why? Simply better understanding of the customer – EVERY time!

During my Feb 2012 presentation at the FMCG summit at MGSM in Sydney, I asked the group of about 60, “When did you do your last segmentation study?”.

I was appalled to find only 1 company had undertaken a segmentation study in the past seven years… SEVEN YEARS!!!!!!!! (Less frequent than 3 years is considered intolerable!)

There was once a time when FMCG marketers were recognised as leaders, gurus even, in the execution of marketing science: An FMCG marketer was the herald of super-normal profits, profit maximising decision making, and management leadership.

When segmentation is the most powerful tool in the arsenal of a marketer’s weaponry, and the professional standard slips to such a low, no wonder FMCG companies are crying poor!

But, are their marketing executives to blame? I wonder….

Could it be the declining quality of market research services in Australia has so declined as to undermine the anticipated value, insight or trend identification?

Could it be that senior management is so diluted in marketing training that those who control the purse strings – ignorant of how much they don’t know – simply are not allowing marketing departments sufficient budget for segmentation studies – denying resultant sustainable competitive advantage and brand equity investment?

Could it be that the pure-academic standards in the tertiary education of marketers has simply eroded the passing down of commercially important training and skills to the point where marketing graduates simply are not empowered with proper education in marketing anymore?

I sit, jaw agog, sometimes at the wasteful and poor marketing communications efforts in TV advertising spend and creative, at outdoor ads, online ads and other marketing communications execution that just denies justification, and I wonder… but with the revelation of such poor strategic marketing management helps me understand the woes of the industry and from where they come.

Pepsi challenge #marketing, a tactic which pits No.2 and against No.1, always succeeds if used properly – but many people don’t realize how.

Many might be surprised to find that Coke’s sales INCREASE when Pepsi does a taste test challenge, The growth in Pepsi’s sales and share comes from minor brands suffering and losing market share.
What the strategy does is send a strong message “There are only two brands worth considering”, the focus of consumers’ interest ensures trial and adoption from OUTSIDE the Coke franchise as well as reinforcing brand equity of the existing franchise – a double edged sword… only soured by the knowledge that it assists your major competitor too.
Coles & WW are using it, with a price war that couldn’t have been better organized if they had colluded to do it on purpose 😉
NOW Facebook and LinkedIn have adopted this strategy in a movement that is likely to hamper growth and undermine THEIR competitors.
While short-term benefits may offer a consumer advantage, the long term development of unconquerable oligopolies offer an inevitable industry wielding too much power and to the larger populations’ disadvantage.
Great if you’re a shareholder, of senior executive on a performance bonus… not so for the masses 😦