It still turned a huge profit (one that most brands would tout as a great quarter) but most investors are worried that the Apple magic is gone as AAPL was down 7% in after-hour trading. iPhone sales did not grow for the first time ever and Apple’s sales declined for the first time since 2003.
Pundits talk about Apple’s lack of innovation in its product portfolio. Nothing has REALLY been new since the Apple Watch if you discount brand extensions of different sized iPhones and iPads.
Even music sales have moved beyond Apple’s iTunes store as more and more music consumers subscribe to streaming services and no longer buy music. What was at one time a disruptive technology, iTunes now seems like yesterday’s news.
But the REAL problem is an emotional issue. It is a brand problem.
Apple. The world’s most powerful brand (Ticker symbol AAPL) does not look so indomitable as it once did. It looks, well, vulnerable.
What is missing? Magic masqueraded as vision. Steve Jobs is missing.
I own AAPL and virtually every Apple product
As an Apple guy since I bought my first Mac in 1984, I have never owned a PC. My first smartphone was an iPhone and my first tablet was an iPad. I have upgraded all of my purchases along the way and own an iPad Air, iPad Pro, iPhone 6, MacBook Air, Apple TV (new generation) and AirPort routers. Even our office server is a Mac.
If you look at my stock portfolio, I own a nice chunk of AAPL. I bought most of my AAPL stock before the iPhone launch and have enjoyed both growth and more recently dividends from the company. But my personal identification has suffered. I don’t have the personal connection with the Apple brand I once knew. I even occasionally miss the Keynote announcements that were once marked in my weekly planner.
I used to think
of Apple in personal terms. I thought of Apple in terms of Steve, the mad genius behind the curtain. I waited with baited breath for the next insanely great product that all came in rapid succession since the introduction of the first iMacs.
I like Tim Cook. I think he is an amazingly competent CEO. I admire Jonathan Ive, who is more than just a gifted designer. I still love the products. But it is harder to have that deep of an emotional connection to the company.
Like most of you, I felt I had a relationship with Steve. I recognize that it was a complete fabrication of intimacy, but those of us who buy emotionally into brand loyalty rarely self examine the core reasons why we care so deeply. We care and that is enough in itself.
Apple could come out with a reinvention of the automobile. It could reinvent the television. It could reinvent the kitchen for that matter and it would not replace the loss of connection I felt with the brand itself.
Apple will continue to be a powerful brand and will continue to innovate and make money. AAPL will rebound from its current drop and take its place in the world of Blue Chip stocks. But, make no mistake, the BRAND (as an emotional religion) is in decline.
I may appreciate BMW and IBM but I do not LOVE them. That died with Steve Jobs. I held onto the scraps of that affection for a long time. But I no longer think it blasphemy to buy a competitor’s product. Suddenly, I am looking at product benefits and attributes and the blind affection that arose from the elevation of the brand to mythical proportions is sadly gone.
AAPL Apple sales shrink was last modified: April 27th, 2016 by Tom Dougherty
The splitting of HP into two companies is only the start to brand repair.
One tactic of brand repair is to distance yourself from the damaged part of the brand so that you are accepted once again in the market or into a new one.
The news of HP splitting itself into two companies – HP (PCs and printers) and HP Enterprise (software) – is an attempt at just that kind of brand repair. The HP brand has long been associated with hardware, but it’s struggled in the software market where its brand does not have permission to play.
The reason for that goes far beyond just the simple fact that it is known for hardware. HP has never positioned itself emotionally so that it would have permission to be a software provider. Its positions have ranged from “What you care about, we care about” (which makes it sound like a community bank) to “Invent” (which works on the hardware end, but not so much with software).
Lately, it has been using “Make it Matter,” which sounds like it’s closer to allowing HP to have permission but I have no idea what it means. CEO Meg Whitman, in announcing the position, said it is a sign that what HP makes matters.
OK, but it doesn’t read that way without knowing the backstory. According to an interview with Whitman by All Things D, HP gathered 50 marketing executives together in a room and began brainstorming.
Lord. I can’t even imagine what that was like. No wonder the end result was something so meaningless.
Splitting the company into two makes logical sense, but it’s more of a sign that HP acknowledges that it’s floundering in its search to gain brand permission to enter the software club.
It might work in the long run, but only as long as HP Enterprise carries a meaning that will make it unique and meaningful to audiences. I probably would have named it something else, but then it’d have to be discussed by 50 marketing executives trapped into a room.
There are better ways to do it than that, but let’s see what that committee dreams up going forward.
HP splits into two: A lesson in brand repair was last modified: October 15th, 2014 by Tom Dougherty
How now Gateway cow? Poway computer maker abandons folksy prairie image for a hip, urban appeal… Gateway was born.
Bruce V. Bigelow STAFF WRITER
What about Gateway Computers?
Gateway was born in a barn and reared on the prairie. But something has changed this year, as the Poway computer maker rolls out its offerings for the holiday season.
The talking dairy cow is gone, along with cameo appearances by Ted Waitt, the company’s ponytailed founding chairman and chief executive. Gateway’s trademark cow-spotted shipping boxes have also been put out to pasture. The make-over, exemplified by TV ads that began weeks ago, constitutes what Waitt has called the “de-prairiefication” of Gateway.
In texture and tone, the company has shucked the quirky and folksy aspects of its image for a look that’s more hip. In short, no more country shtick. Gateway is moving its brand downtown. Gateway’s new ad campaign, for example, features computer users in a series of vignettes with an urban look and feel. In one, an attractive woman riffs about Gateway’s new tagline, “a better way” while the neo-soul duo Floetry plays a syncopated tune in the background. Information about Gateway and its digital products is simultaneously displayed in colored boxes that border the video like a picture frame. The new campaign is intended to solve a basic problem: Gateway’s down-on-the-farm image ran counter to the identity it wanted as a high-technology computer company offering the latest advanced components.
The decision to alter Gateway’s longtime rural identity was not made lightly, officials said. While Waitt wanted to take the country out of the corporate image, he also wanted to retain Gateway’s identity with consumers as approachable and customer friendly. “I actually pushed the team to the outer limits of seeing how far we could evolve the brand without abandoning the core elements that made it great,” Waitt said. “I even had them explore package designs that didn’t include the cow spots. “In the end, I think we settled in a place that really works,” Waitt said. “It’s still Gateway, but with a fresher, more modern attitude.” Whether it’s all enough to create a stronger affinity for the Gateway brand remains to be seen, though the Christmas shopping season offers the first test. For example, Gateway’s old logo, which featured a cow-spotted shipping box, has been replaced with a symmetrically triangular form that still suggests a cow spot, or what some marketing professionals call a “heritage echo.”
The New Logo
The new logo also carries a computer power button laid on its side to form a stylized “G.” Gateway intends eventually to use the new logo as a stand-alone graphic, like Nike’s distinctive swoosh. The decision to change Gateway’s identity actually began in late 2000, with Waitt’s return as chief executive after a yearlong hiatus, said Brad Shaw, Gateway’s senior vice president for marketing and communications. “He said the very first thing that needs to change is our product line,” Shaw said. Of course, product design was only part of a much-bigger overhaul that included withdrawing from overseas markets and refocusing Gateway’s business on the United States, especially in mass-market retail.
Much of Gateway’s new strategy became evident this year in new merchandising efforts, as the company expanded its lineup of digital products. By April 2002, the industrial redesign Waitt commissioned had replaced Gateway’s beige-colored desktop PCs with silver and black models — or, as Gateway prefers, “platinum and graphite.” All of this has happened with the technology industry in recession and the personal computer industry under pressure on several fronts. If anything, the challenge at Gateway is trying to accomplish everything at once.
“While advertising helps, advertising is not the key in turning a company around,” said Dominique Hanssens, a professor of marketing at The Anderson School at the University of California Los Angeles. Customer tracking research done after Waitt’s return also showed “some deterioration in terms of technology leadership and reliability,” Shaw said. While consumers considered Gateway’s advertising “entertaining,” “friendly” and “Midwestern,” Shaw said market research showed “We were not playing well in the business space with the cow motif.”
During the 2002 Winter Olympics in Salt Lake City, Gateway was running frequent TV spots with Waitt and the talking dairy cow — a campaign created by a Los Angeles ad agency, Siltanen & Keehn. “I think the cow idea was cute,” said UCLA’s Hanssens. “It has probably given them some brownie points in terms of consumer awareness, but it really doesn’t do much to build the brand.” Though Gateway’s talking cow ads continued to run through June, the company had already commissioned a new branding campaign from the Arnell Group, the New York ad agency run by Peter Arnell. “We tried to make a simpler, easier, more understandable communication program to let you get more easily to the product and what it is,” Arnell said. Arnell’s firm also selected a palette that helps consumers “put the product into a lifestyle setting,” like paint chips around the border.
A key benefit to the New York agency, Shaw noted, was Arnell’s partnership with Steve Stoute, an executive producer at Interscope Records. As a result, Gateway’s TV ads feature Interscope artists, such as Floetry and Robin Thicke, son of TV entertainer Alan Thicke. “I believe the sense of discovery that comes with music is one of the most powerful elements you can have in your marketing mix,” Shaw said. “And Ted is as avid a music fan as I am.” These artists have yet to make their commercial breakthrough, Shaw acknowledged. But they’re less expensive than more popular alternative artists, such as Ryan Adams, Wilco and Beth Orton, who appeal to the market segment Gateway has targeted. Even so, linking Gateway’s products with up-and-coming artists is essential to conveying how innovative the company is. “It’s got to be very cool and believable, that’s the key,” Arnell said. “It’s got to be very hip.
It’s got to drive in your mind a certain believability and reality. ” Tom Dougherty of Stealing Share, a Greensborough, N.C., brand development and naming company, says consumer loyalty regarding PCs has been based on the lowest price rather than brand recognition. Dougherty doesn’t think any of the major PC makers have done a good job of creating brand loyalty.
The object of a brand campaign, Dougherty said, is not that a company is selling the latest and greatest stuff. CD burners and other bells and whistles are not what differentiates a brand these days, Dougherty said. “The brand is not the product, and it’s not the business,” Dougherty said. “It’s the customers and who they want to be.” The real measure of success, Dougherty says, is if consumers watch a Gateway ad and say, “I want to be that.”
In general, BMW, Chrysler, Chevy, and Ford all get the job done, but BMW does it a little better and with more style. The BMW is more expensive, but you get what you pay for, right? Even though a BMW is considered to be a better car, most consumers go with the Ford purely on price. Forget about brand for a moment. Consider if BMW and Ford were the same price. Which one would you choose now?
Let’s even suggest that, for a limited time only, the BMW is cheaper. Now which one? Obviously this proposition is relatively extreme for how things actually work in the marketplace, but it is a fact that superior products are typically charged at a premium.
Consumers are well aware that they would never be able to buy a new BMW for a lesser or equal price than a Ford, Honda or Toyota. But what about in other industries? Does this always ring true? Clearly this is not always the case in the computer industry.
Intel branding has long dominated the computer chip market. They developed cutting edge products during the dawn of personal computers and have done an excellent job in branding its company and product. Intel’s logo and audio “chime” that is in every commercial are etched in our minds. Intel stands for trust, performance, and being “inside” your computer, making consumers believe that, without Intel inside, your computer is a second-class citizen.
Best Is Not Success
However, Advanced Micro Devices (AMD) chips are considered to be better and are actually less expensive by some experts. (Read a recent look at AMD here)They perform better at lower clock speeds, do not run as hot as Intel, have a 64-bit technology that can run at 64 or 32-bits at the same time, and their dual core chips allow far superior multitasking than their Intel counterparts. In addition, AMD chips cost less and generally require a less expensive motherboard. However, AMD has never had more than a 20% share. In fact, in data compiled by Mercury Research for the end of 2005, saw AMD’s share at about 16.6% and Intel’s share at 82.2%. If the chips are better and they are less expensive, why do they have less than quarter of share that Intel does? The discrepancy: Brand. Intel branding is better.
It comes as no surprise that a branding company would suggest the reason a company is not optimizing it’s potential is because of a lack of brand meaning. One could also argue that Intel has engaged in less than fair competitive practices as evidenced by a pending suit filed by AMD.
But at its core, it is the absence of brand meaning that is AMD’s biggest problem. As previously stated, Intel has done an excellent job of branding itself. To most computer users, Intel brings to mind certain associations. The idea of “Intel Inside” is a very powerful statement. It tells consumers that any computer without Intel inside is not a computer, and, as most casual computer users do not know a lot about computers, making sure they have an Intel Pentium chip in their computer means one less thing they have to worry about. Intel is a name consumers know and trust.
In many ways, it means more to consumers than HP, SONY, DELL, Gateway and any other computer manufacturer that you can mention. AMD means very little if anything at all. AMD has Shrek and Lance Armstrong as “spokesmen,” but AMD does not gain any ground with them. There is no “AMD Inside” imagery to which the consumer can build an emotional attachment. Rather, AMD’s messaging seems to focus on responding to or addressing Intel in some way. (Read about SONY’s failure here)
This is futile. AMD cannot compete with Intel’s deep pockets and intel branding focus and must concentrate on building their brand with the consumer. AMD has real opportunity to build their brand. They have a better, less expensive product, both consumer and business. A coherent brand is what they lack. AMD must find a connection to the consumer, and that connection has yet to be identified. AMD needs to address the questions, “when a consumer purchases a computer what does that say about who they are?” and, “What do people who purchase AMD computers believe to be true about the world in which they live in?” Do they believe that simplicity is better? Do they believe that a person’s worth can be understood by the choices they make? Responses to these questions bring about the beginning of brand.
At Stealing Share, we begin our process by asking questions as part of our Preceptive Behavioral Modeling. Before we brand, we must understand. The answers to questions about consumer’s beliefs, which we refer to as precepts, are where brand is most effective. If brand correctly portrays consumer precepts, then it gives the consumer a reason to choose and connect. Thus, consumers must choose that brand because it is an extension of themselves. Not choosing the brand would feel like emotional suicide. Brand is not about pretty logos and catchy theme lines.
It is not about creating a glitzy name or about how the company views itself as a company. Rather, brand represents the consumer’s emotional “hook” to a purchase. Things like logos, theme lines, and names merely hang from this hook in order to convey the brand purpose. So far, Intel is the first and practically the only coat we see on the rack. Even Apple, the maverick of computer manufacturers, switched to INTEL chips — AMD was a viable option for them but the INTEL brand was simply preferred. (Read our technology thoughts here)
Intel Branding: To Brand or Not to Brand was last modified: April 7th, 2015 by Tom Dougherty
Being the best in your category did not help Apple until the dawn of smart phones and tablets
By Tom Dougherty
Dispelling Another Brand Myth
How much of your corporate time is spent on R&D to create the best product? How much of your efforts are spent in marketing your product or service as the finest choice in your category? Building a brand that can steal market share and grow your market is aided in a big way by being the “best in the category.” It is a great luxury to own that rare equity that maintains a demonstrable lead over the competitive set.
However, if we are frank with ourselves, most of the time, the differences in our product or service over the competitive set is hard to pin point. Often as not, the differences in efficacy between our brands and those of our competitors is so narrow it would be hard to slide a sheet of paper between them.
FedEx is the preferred next day delivery provider but can any of us say with certainty that the ability to get our packages “overnighted” is better served by FedEx as opposed to UPS or DHL? Being the best in your class does not promise success and dominance any better than being first in the category. (See our treatise on Being First)
Apple is A Case In Point
I doubt if even the most ardent Windows aficionado would argue the fact that Apple Computer has innovation as its middle name. Being best in a category is a difficult thing to quantify but if ease of use and elegance in design are a fair measure, Apple has earned that accolade many times over.
If selection of software and the availability of 3rd party peripherals are your measure, than the “Windows world” is entitled to its own claim as best. Let’s assume the former yardstick for just a moment. Using the measure of best design, innovation and simplicity, Apple wins hands down and yet, being best did not ensure success.
Let’s look at a prime example. Apple computer became a market leader in the early 80s with their Apple ll. Innovative. Simple. Popular. In 1984 they introduced the Macintosh — with a graphic operating system and heretofore unheard of graphic capabilities. It was a milestone.
Mac’s system was 15 years ahead of the competition. In 1997 Apple introduced the iMac. A revolution in internet connectivity. It was the first PC to eliminate the floppy drive and replace it with a CD drive. In 2002 Apple introduced OS X, its 10th operating system. The UNIX based system is virtually crash proof and has shown it to be at least 5 years ahead of the latest Windows release. (Read about the importance of simplicity in branding here)
Apple’s latest release of Mac OS X Yosemite, promises to increase the advantage by another couple of years. Before the advent of the desktop PC, IBM was the market leader in computing. Their mainframe systems had set the world standard for 20 years. Their brand was synonymous with the word computer. Based on Apple’s success, IBM saw an opportunity to grab additional markets, IBM launched the PC Jr. in the early 80’s. The game was afoot. Microsoft received a license to package its DOS with every PC manufactured. Aside from the tightly held Apple market, the only competitor to DOS was a grouping of non-compatible proprietary systems (Commodore, TI, etc.).
A Better Brand is Better
The resulting market share has never reflected the innovation by Apple in the category or their advantages in design and engineering. At the same time, their advertising has been considered world class by most advertising experts. Being best in the category is no promise of success.
Apple experienced success when they rebranded from Apple Computer to Apple Inc. This was more than just a change of brand name. It marked a seminal change as Apple began to market its brand. More importantly, Apple began to market aligned products that forwarded the brand and paid off its brand promise of elegance and simplicity.
The success of iPod, iPhone and iPad moved the legacy of Macintosh forward and not the other way around. The BRAND was more than the sum of its parts. The Apple brand became the primal proof point of cultural simplicity and modernism. To choose Apple, regardless of which product became a lifestyle choice. This turned out to be more important than a better or more reliable software system on the Mac.
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