The Brilliant Marketing Decision Behind Apple’s iPhone SE
And what we can learn from it
On April 15, 2020, Apple announced the launch of a new iPhone SE. The phone, which is built with the body of an iPhone 8, the processor of an iPhone 11, and the camera system of the iPhone XR, comes with a surprisingly low price tag.
How low? Only $399.
Not only is the new phone a good deal for iPhone fanatics, but it’s also a brilliant marketing decision for Apple. Here’s why:
A staggering economy
Because of the negative impact of COVID-19, the economy is at a place that would have seemed impossible only three months ago. Global markets, although rising slightly in the past two weeks, are still in turmoil. Aggregate demand and aggregate supply curves in both the U.S. economy and around the world have been hit with negative shocks, resulting in fragmented supply chains and the shortages of goods.
With the negative shocks emerged high unemployment rates. As of this writing, over 22 million Americans are seeking unemployment benefits.
It doesn’t seem like a buyer’s market. It also doesn’t seem like a good time to release a product.
But that’s exactly where Apple saw an opening. The company, realizing that wallets are thin and extra spending money scarce, deemed the release of an affordable, cost-effective iPhone to be necessary.
It makes sense, of course. Few people will likely be able to afford the $699 price of a 64-GB iPhone 11 or the $599 price of an iPhone XR. But many more consumers will be able to pay $399 for the iPhone SE.
How does this help Apple? By enticing more Americans to switch to iPhones.
The Apple bandwagon
From a marketing perspective, there is no better strategy for a company to attract new users than to undercut competitors and offer a cheaper, more affordable option. Apple’s entire product line is based upon loyal consumers that return to the brand again and again.
How loyal? A 2019 study found that less than 10% of iPhone users intended to switch brands after upgrading their smartphones.
Apple understands customer loyalty, and the company has found continued success by attracting consumers and keeping those consumers for long periods of time. Once you buy your first iPhone, it is likely that your next phone will also be an Apple product. Then your next phone, and the next, and so on. Once you are hooked on an iPhone, you will never switch back to Android.
Buying an iPhone is not just investing in a smartphone — for many users, an iPhone purchase will lead to the purchase of a MacBook and Apple Watch. When you buy the smartphone, you are also buying into the brand.
Apple knows this. The company also knows that phones — and electronic devices — are more necessary in these months of quarantine than they have ever been before.
As an article by the Verge points out, “The SE’s lower cost and Touch ID sensor may have slightly more appeal than usual, especially as people realize that they’ll be wearing masks more often. Apple noted that it believes that people are depending on their phones more than ever right now…”
Apple has taken advantage of the competitive market by offering an affordable phone at a crucial time. That’s good for the company, but what can we learn from it?
Timing is everything
When it comes to marketing, timing is the most important factor. Apple saw just how necessary electronic items would be during this time, and they acted upon that need.
It’s important to note that the best marketing strategy could fail if used at an improper time. When the economy was operating at full force in December and January, a less-expensive iPhone would likely have been thought of as a cheap ploy to attract low-income consumers. Now that millions of Americans are struggling to find work, however, a cheaper iPhone alternative will be in high demand.
To their credit, Apple timed the launch of the new iPhone SE impeccably.
Know the consumer
Apple could have released a new iPhone with a $799 price tag, but they didn’t. Why? First, it wouldn’t have increased sales for the company. Second, Apple understands that consumer loyalty only extends to a certain point.
Although Apple users have shown a tendency to return to the brand time and time again, it’s unlikely that this trend would have continued in the face of a looming economic recession. Apple’s marketing team knows that consumers like iPhones, but they also understand that consumers are generally smart and will gravitate toward cost-effective deals when pricing is an issue.
To succeed in your own marketing goals, you must know the consumer. You must respect the fact that the consumer is intelligent.
Finally, you must meet the consumer’s needs. Even the most loyal buyer won’t stay with your product if the product doesn’t suit their needs.
Apple knows that the iPhone SE might not be every consumer’s first choice. Although a smartphone with strong technological specifications, there are other Apple products that far exceed the iPhone SE’s capabilities. But Apple also knows that regardless of whether it’s what people will want, the iPhone SE will likely be what consumers need.
It’s a simple lesson, but it’s one that many marketing teams fail to understand. So, the next time you are marketing a product or a good, ask yourself: what does my audience need? What do consumers need?
Like Apple, you might find a benefit in answering those questions.
© Aaron Schnoor 2020