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If you’ve been keeping up with my recent articles, you may recall me discussing the overwhelming saturation of products in today’s marketplace. Consumers are bombarded with advertising messages to the point where they have become desensitized. I emphasized that in order to be successful with a new product, one must strive to establish a new product category and I provided strategic guidelines on how to achieve this.
In this article, I want to take the concept of a product category a step further. Let’s imagine you aspire to become the biggest of the big, a new-age business megalomaniac, if you will. Well, I’m here to share a couple of examples of companies that have achieved just that, along with the rules they followed to get there.
Let’s begin with Example One: The Apple i-Pod.
If there’s even one person in this forum who hasn’t heard of the Apple i-Pod, I can only surmise that they’ve been living with their head buried in the sand. This product dominates the portable MP3 player market, boasting an astonishing estimated 80+% market share. To put this in perspective, the average market leader struggles to hold 50%.
While Apple’s i-Pod was not the first portable hard drive-based music player, it was the first to utilize a USB/firewire interface, enabling rapid and seamless file transfer. In a sea of black competitors, Apple dared to be different with its sleek, white design. The aesthetic appeal of the i-Pod truly set it apart.
What makes this even more extraordinary is that Apple is not primarily in the business of making music players (although this is changing). Apple is primarily a computer hardware and software manufacturer, with proprietary control over its operating system and software applications. Nonetheless, Apple’s approach is transparent, and there’s nothing stopping you from adopting the same strategy and achieving success.
So, what is Apple’s secret? Let’s dive in:
1. Apple has a crystal-clear understanding of its target market and maintains a narrow focus on that demographic.
In particular, Apple targets the youth home computing market, with minimal attention given to business or older markets (though they still attract those demographics to some extent). The business market is largely dominated by Microsoft. The simplicity of this concept should not be underestimated. Just take a look around you – how many brands try to appeal to everyone? The answer is far too many, even though the first rule of marketing is that no brand can be all things to all people. Remember: keep your focus narrow.
2. Apple has a deep understanding of its target market’s desires and preferences.
Young consumers gravitate toward cool, sexy products. They love listening to and mixing their own music, making movies with webcams to share on platforms like MySpace and YouTube. They’re technologically savvy and enjoy surfing the Internet. These insights have become the core of Apple’s product development strategy.
3. Apple ensures its product mix aligns with its core target market.
When you step into any Apple Center, take note of the standard applications on an Apple computer. You’ll find I-Tunes, which allows you to store music that synchronizes with your i-Pod; garageband, a mini recording studio for mixing your own music; i-Movie, enabling you to create your own movies; i-DVD, facilitating the creation of your own DVDs; and the list goes on. All these applications come standard, at no additional cost, and are seamlessly integrated with Apple’s operating system. By doing so, Apple keeps its brand relevant to its audience, as established in point 2.
4. Apple launched its product through publicity and maintained its success through advertising.
The iconic silhouette advertisements were initially unveiled in October 2003, approximately two years after the i-Pod’s initial launch. Apart from exuding “cool” value, these ads leveraged the product’s signature white color to reinforce brand identity and differentiate Apple from competitors who primarily produced black products.
5. Most importantly, Apple self-cannibalizes its own products before competitors can catch up.
Apple’s i-Pod success hinges on its product development and life cycle management strategy. Unlike many manufacturers, Apple isn’t afraid to make its own products obsolete before competitors have the opportunity to release imitations. Understandably, product development often involves a lengthy development cycle, even when copying someone else. Apple is relentless in this strategy because they comprehend a simple truth when it comes to technology: nobody wants to buy something that’s already outdated. It is this relentless pursuit that consistently keeps Apple ahead of the competition, with imitators left trailing further and further behind.
Now, let’s move on to Example Two: Toys “R” Us.
Toys”R”Us provides a classic example of retail domination within a specific product category. Numerous other businesses, such as the UK-based Wagamama, have achieved similar success by following these rules:
1. Select a category that is not yet dominated by any other retailer, and learn from the dominant retailers that came before you.
2. Focus on a singular product category, in this case, toys.
3. Maintain extensive inventory within your product category. This entails stocking all types of toys comprehensively (depth), without venturing into other children’s products (width).
4. Seek cost-effective purchasing options, which may involve leveraging buyer power by owning multiple stores or consolidating buying power through cooperation with multiple stores (such as a franchise).
5. Retail at competitive prices to make it challenging for other players to compete with you.
In my next article, I will discuss the importance of positioning your product. But for now, feel free to check out my bio at www.fionamackenzie.com.au.
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