Will the iPhone 7 deliver on the hype
Much has been said about the rise and rise of Apple and the astonishing success the company has achieved over the last decade. The largest company in the US by market capitalisation, their success seems to know no bounds.
Apple has long been able to command premium prices well above industry averages. This is enabled by a number of factors. Their products are of high quality, their operating environment is class leading, they have the largest range of apps available and iTunes set the benchmark for Music management. However underneath the surface some cracks are appearing. Apple’s largest weakness is the large dependency on one core product, the iPhone.
Apple recently released their latest flagship model the iPhone 7 earlier this year and despite a healthy list of new features, there are still many skeptical of Apple’s ability to stay ahead of the competition. To understand this we turn to marketing metrics. John R. Hauser and Gerald M. Katz state Metrics: You are what you Measure. In their thesis they state “that every metric, whether it is used explicitly to influence behavior, to evaluate future strategies, or simply to take stock, will affect actions and decisions.”
This gives us critical insight as to understand that not only will marketing metrics help us understand the current strategy but also give us valuable insight into future opportunities. Very few successful businesses would take key decisions without the support of marketing metrics
Pundits will look to a number of source to prove their own opinion on Apples fate. Let’s look at some of these.
So what should Apple look for?
Stating the obvious analysts will be looking keenly at the sales volumes on initial launch.
For Apple this has meant a major new phone launch every two years with a lesser phone upgrade in the years in between. Apple has been served well with extensive media coverage when earlier versions of the iPhone’s were launched. Stories of queues that stretched around blocks and of long lead times as Apple struggled to keep up with early demand. While these stories themselves are not explicitly of interest to Apple it does indicate how early sales volumes are critical to market penetration.
Most smartphone makers look to major product launches to take market share as well as reinvigorating sales. Apple marketing team were never afraid to publish these result in previous years . however surprisingly , they recently announced they would no longer be publishing first 6 months sales volumes. Not a tactic that is likely to abate the skeptics.
iTunes and Music Streaming
The relevance of iTunes in a Music streaming future is of further concern to Apple. Anyone who has invested their music catalog to iTunes ecosystem will see changing devices as a barrier. To move your iTunes purchased Music to an Android platform is far from a tap and go procedure. However this is already coming under significant threat from music streaming services and a key reason why Apple recently launched their own streaming service. This year digital media streaming exceeded physical music sales for the first time. Apple will looking carefully at their own share of this important market as a key indicator of future successful iPhone sales. Unfortunately you can see from the graph, courtesy of Statista, Apple has some ground to make up. You can be sure this will be a key marketing metric.
The other marketing Metric is the trend of Android growth in key demographics. Could Apple age with its consumer base? Android appeals to younger less wealthy consumers due to the lower cost of handsets. Apple themselves know the importance of a captive ecosystem which makes transition between brands difficult and time-consuming. and the youthful purchaser is a key battle ground. Will these consumers transition to Apple once they become more affluent or will they be lost to Apple forever.
It’s still a great phone
There is more uncertainty in this recent launch than probably any previous iPhone launch but that is not to say it won’t be successful, it’s still a great high quality phone. In itself Apple have taken some of the changes in its stride as they were well aware of some of the negativity some time before launch and it would be naive to think Apple didn’t listen but rather had confidence that its product. It has enough new features to continue to be relevant and continue to keep Apple top of its game. Now they just need to dive deep into the metrics to come up with their next trick.
Most importantly they will tell Apple and the analysts exactly where they are heading. And of course we will keep an eye on the most important metric of all, Apple’s share price.
Posted by Simon Ellis Student ID #216210226