Tuesday, August 10, 2010

Apple's Biggest Branding Mistake - Preface

I feel that it's appropriate that this blog posting is actually being written from the Apple Store line-up at 4am in the morning. The last three weeks have proven to be one of the most interesting consumer behavior experiences I have ever witnessed.

On July 30th Apple released their highly anticipated iPhone 4. The first person in line that day arrived at 9pm the night before. I arrived around midnight; a full 10 hours before anything would be sold; the line was already about 60 people strong. The crowd is a real mix characters, but all fit within three very distinct categories:

1. Die-hard fans: these are the people who actually use the stickers that come with iPods. They will have numerous Apple devices, defend his Majesty Jobs to the bitter end, and who's emergency contact is their local store manager. They're easily spotted listening to iPhone 3Gs and reading Winnie the Pooh and 1984 on their iPads.

A little background: this is where things get interesting. For those unfamiliar with the iPhone 4, they are currently available in numerous countries, however very few are fully unlocked, making Canadian iPhones very valuable to countries where they are not yet sold or are sold unlocked. To avoid dealers, the Apple Store limits purchases to 2 per customer. This has necessitated a breed of placeholders.

2. Placeholders: people paid to stand in line to fill quotas of iPhones for international grey markets.

3. Cash Men: these are the ringleaders of the operation when it comes to placeholders. Typically there are 2-3 of these per store. They each manage a varying number of placeholders; 4 up to 10. They're easily spotted nervously pacing around on their cell phones carrying messenger bags full of at least $10,000-$20,000 in cash in neatly folded piles.

Alongside these groups there is always one leader, usually a cash man who controls The List. It adds order to the line, recording who arrives and in what order. When you aggregate the market situations such as super-low supply, high international demand and a lots of globally-sourced cash, Apple has inadvertently created a new society.

This new "line society" has its own currency (ticket reservation stubs), its own market (the line itself), a leader (the line master), a god (Apple itself), a purpose (to attain iPhones) and inherent laws. The creation of this society was a completely unexpected and is uncontrolled. It will also prove to be Apple's greatest branding mistake of all.

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