The negotiating power of a great brand: Apple
Tom Dougherty, CEO – Stealing Share
22 February 2011
A great brand can call its own shots in negotiation
Behind any great product there needs to be a meaningful brand and that brand provides negotiating power. The brand message needs to be clear, meaningful and must not be afraid to say who it is for and who it is not for. It needs to speak consistently across all additional products offered to ensure that the message is never broken. It is a process that in time will create equity. In turn, that equity allows a select few companies the luxury of not focusing their competitive efforts on table stakes like availability or price. The endgame of a great brand is that a company now has the ability to call the shots.
It is this level of a great brand that has allowed Apple to unveil its new subscription service that will effectively entitle Apple to 30% of all subscription services purchased through iTunes.
“Apple has a preferred brand and it has paid off with negotiations that only require input from only one party – Apple. The other parties involved must simply follow suit, as any rebellion would only be at their expense.”
When I first read about this service and the 30% fee Apple would be taking, I could not help but visualize a mob-like scenario in which a helpless shop owner is pulled into a back room filled with large seedy individuals who would have a quick “chat” with the owner about what the boss’s cut would be. The owner inevitably emerges with a black eye, a limp and the raw end of the deal.
I don’t want to antiquate Apple’s strategy as being in any way villainous, only that its reach and great brand power is so large that it no longer has to ask permission. Apple has a preferred brand and it has paid off with negotiations that only require input from only one party – Apple. The other parties involved must simply follow suit, as any rebellion would only be at their expense.
This brand dominance is also present in the recent Verizon commercial for the Verizon iPhone. In case you have not seen it, the storyboard frames of the ad are basically, iPhone- iPhone- iPhone- iPhone- iPhone- iPhone -iPhone-something about Verizion- iPhone. There are only a few companies in which brand A is so powerful that advertisements made brand B look like that are an ad for brand A.
Companies continually push for best practices in the hopes that efficiencies can be created. What is most often overlooked is that the emotional intensity a great brand has with a consumer always supersedes the rational. That’s what Apple understands and everybody else is just playing catch up.
Or finding themselves in the back room.
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