Is an iPhone a product or service?

Monochrome-Apple

Apple is again the world’s most valuable global brand this year at US$247 billion, the latest BrandZ Top 100 Most Valuable Global Brands study reveals. Why is this? This blog will suggest the reasons behind apple’s success in understanding its approach to product, brand and new product development.

Is the iPhone a product or service?

Products are goods or services (Iacobucci, 2013) which are essentially differentiated as tangible or intangible, although there is a continuum from completely tangible to absolutely intangible.

The search, experience, credence line of the continuum is particularly relevant to the iPhone. Clearly the device is a tangible product however I suggest that the purchase of an iPhone is more about experience and credence than the product itself. (?link to definitions). To use the analogy of Charles Revlon, “in the factory we make cosmetics, in the store wScreen Shot 2016-04-18 at 12.17.12 PMe sell hope” (Iacobucci, 2013). In line with this apple is making iPhones in its factories but in the words of CEO Tim Cook, “We built the iPhone for you, our customers, it is a deeply personal device, it is an extension of ourselves” (Apple CEO, Tim Cook).

 

What is the Apple’s brand approach?

As the worlds most valuable brand Apple has positioned itself as a ‘benefits’ company, focusing on emotions, that has cleverly leveraged the customer benefits of branding.  By using the umbrella brand approach the Apple brand is linked with all our purchases. Apple was strategic in changing its name from Apple Computers to Apple Inc in 2007, when launching the iPhone, turning its brand into a highly recognisable commodity that we all must have in order to enhance our lives.

Whilst other smart phones have moved into the market they have been unable to reach number one status. The Australian Financial Review quarterly sales figures have shown Australians’ love affair with Apple’s iPhone continues to blossom, with sales jumping 31 per cent in the quarter, at the expense of chief rival Samsung, and other suppliers running Google’s Android operating system.

I suggest this is due to the this intangible element, that Apple have focussed on and leveraged that you can’t get from another device. Whilst other smart phones have moved into the market  they have not been able to develop the ‘extension of ourselves’ that Tim Cook described. What do you think?

What role do new products play in Apple’s success?

Brands develop new products for many reasons such as being consistent with an innovative image and responding to the macro environment (Iacobucci, 2013). In the iPhone market you could assert that Apple has become the macro environment, and the word Apple has become synonymous with innovation.

New products are like contagious diseases (Iacobucci, 2013), once one person on your circle ‘talks it up’ others purchase it and the cycle goes on. Apple have maximised this diffusion process like an epidemic. The queues outside the Apple stores pending the release of a new product are testament to this. Apple manages to convince us every time of the relative advantage of the newest product. Why aren’t you out queuing for the imminent release of the iPhone 7 now? Although it is still a few months away.

Jason But in his blog in 2013 suggested that the iPhone could end up in the same situation as the Blackberry, dead and buried. Three years on you would have to say he was wrong.

As they celebrate their 40 year anniversary they have become a company that none of us can imagine living without.

One last thing, why is it still called a phone? It seems a long way from Alexander Graham Bell’s innovation.

Therese Cotter: Student ID 214407067

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