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Apple Understands How Consumers Co-Create Value
If any success story offers crucial strategic insights to marketers now, Apple's iPod is the best example I know. Apple keeps getting it right, over and over again.
So what makes Apple's strategy to hard to beat?
Apple understands that success just begins with the design and development of a great product. But, they take their strategy much further. Unlike many other companies that focus on continuous and incremental product improvement, Apple adds value to its product by continuously enriching the channels through which users derive value from their iPods. In other words, the product may be a value engine, but the environments in which the product is used are being enriched and extended.
Here again, we see Ted Levitt's augmented product strategy: compete through enrichment and surprise.
Apple's announcement today that they are commencing a connectivity initiative with airlines gets right to the value-creation point. When iPod owners take flights in the near future, some airlines (Air France, Continental Airlines, Delta Air Lines, Emirates, KLM, and United Airlines) will provide connections that will allow users to recharge their iPods during flight. Apple scores big psychologically because it's the fear of boredom on the longest flights that make an iPod most attractive to consumers.
Cooler yet, users will be able to watch downloaded videos and movies on their seatback flat-panel screens. These screens are considerably bigger than the iPod's small screen, and will improve the movie-watching experience. Apple further announced that it is will be working with Panasonic Avionics, the world's category leader in the development of in-flight entertainment electronics, to innovate further in the future.
What's the point here?
More value isn't being created by improving the iPod, itself. The value is being created by enriching an iPod owner's ability to use the product more optimally (a larger viewing screen), longer (continuous recharging will keep an iPod video player going for hours), and in a setting where owners really want to make use of the product. (Hey nothing helps pass a long flight faster than access to music, movies, games, and more!)
Strategically, Apple is taking smart advantage of its category leadership. More vitally, this move also very effectively defends that leadership. Because iPod is far and away the leading portable digital entertainment device, anyone who's looking to add value to their own product or services (i.e. the Airlines listed above) wants to collaborate with and add value to the largest cohort of people - iPod owners.
In terms of category leadership defense, Apple is making yet again another argument why consumers should choose an iPod over Microsoft's new rival product, the Zune.
Apple's move makes a good case why marketers must extend their strategies well beyond making the product quality case to enriching the channels and environments in which consumers create their own value. Because consumers control how, when, and where products are used, they co-create the value proposition with the product or service's creator.
Once again, Apple rocks.
Posted on November 15, 2006 12:12 PM | Permalink
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Comments
I've been following this new Zune introduction and pondering these same issues. You're so right that Apple's invention of new channels or enhancement of existing channels through their products is a key to their category leadership.
I just returned from a trip and had an airline experience that got me thinking about similar issues. It had only been about three weeks since my last flight, and I fly pretty often, but on today's flight on Delta I saw something I hadn't yet seen... they used the in flight movie monitors to display flight information during the trip. A little airplane icon hovered over a detailed, dimensional map, indicating where we were along the way, what major cities and landmarks we were passing, altitude and airspeed, and time to destination. This very simple thing made me feel better about sitting in that seat for two hours, and it got me thinking... "Am I doing the same thing for my clients?" Am I figuring out ways to share the process of our work with them that inform and dare I say even entertain them along the way? If a simple thing like knowing the airspeed and location and time to destination made my Delta customer experience more enjoyable, then what simple new channels might be hidden in my work process and waiting for me to deliver to my clients?
Sometimes I think we forget to watch an learn from organizations like Apple when we think of them as distant from our own category of work, but as you've pointed out, finding ways to enrich channels of delivery is a universally sound strategy that transcends industries. Thanks for getting me excited about it again with your great post today.
Excellent!!!
Great post, as always. I think that another of Apple's strengths is that they have the ability to get (most) things right the first time.
The best example is the iTunes Music Store. While the industry didn't know what to do about purchasing music online, they came up with the idea of selling tracks at $0.99 and albums for $9.99 with very fair digital rights management and instant delivery (there is no greater feeling than being able to by a CD at 12:30 PM after hearing a performance of a track on the Tonight Show.)
This would qualify as a "Why didn't we think of that" move that has worked in spades for Apple. The fact that iTunes is marketed for, and along with the iPod (another channel for added value for the device) and that Windows users can get in on the fun, couldn't hurt either.
Kevin - I completely agree with your point of view here. The hardest thing for any marketing company is getting it right the first time. For some reason, judgment is in short supply when it comes to making early decisions right.