Applying the theories of Guth and Marsh, how has Apple used the public relations process to deal with this issue?
R: Not having access to Apple’s internal intelligence leaves me partially clueless about the research in which they conducted before dropping the price of the iPhone so drastically. According to some analysts, Apple wanted to boost sales of the phone, thus decreased the price. Apple probably saw a great opportunity for increasing sales and jumped on it. Apple also considered how this would affect its stakeholders, and planned appropriately to address them.
P: Apple obviously took steps to plan the delivery of this announcement. The main evidence of their strategic PR plan is CEO Steve Jobs’ letter to all iPhone customers. In this letter he honestly addresses why Apple decreased the phone price, and he empathizes with those negatively affected. Another part of Apple’s plan was to address its stakeholders. They did this by recently offering $100 gift certificates to the Apple store for early iPhone owners (check this FOX News article for more detail). To see if you are eligible for this rebate, click here.
C: Steve Jobs and Apple addressed their publics very affectively and appropriately through their letter to all iPhone owners. This letter was basically a public service announcement to current and future iPhone/Apple customers. Once Apple released Jobs’ letter, news outlets all across the country commented. The coverage ranged from reputable papers such as the NY Times and Chicago Tribune, to Business Week blogs and other random blogs. From written media to broadcast media, there is no debate that Apple successfully communicated its plan.
E: Since this is such a recent event, and multitudes of opinions (negative and positive) are still coming in from iPhone owners, we will have to wait and see how Apple evaluates their decision. I’m sure if sales boost into the Christmas season, they will be happy with their decision.
Want to see an iPhone get put to the test in a blender? Check this out...
8 comments:
Dan,
Nice job with your blog post about the iPhone pricing fiasco.
Thanks for the analysis, which was well supported with facts, figures, and outside sources that you connected us with through the interactive hot links. True, we don't have access to all of the internal research and planning, but you filled in the blanks with secondary reports based on your extensive research. Good effort!
Personally (and professionally), I think Apple blew this one. Despite what they said about their aggressive pricing strategy, the price drop that occurred so soon after the initial sale of the phone tells me that they didn't plan ahead very well. They burned the initial buyers (perhaps some of their most dedicated customers) and then tried to save face with a $100 rebate that still left early customers $100 in the hole. If it were me, I would wait a few months before buying the next new Apple gadget that comes on the market.
Steve Jobs' letter contained a statement that comes across as an apologetic knee-jerk reaction: "We need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these."
OK, this statement (and letter)communicates an important message about company values (e.g., trust and customer loyalty); but Apple could have avoided this fiasco by having a better marketing/pricing strategy and a better public relations plan prior to offering the first phones.
Aside from your analysis, I was especially impressed with your application of technology -- the news clip was informative and the "Will it Blend" clip was fun to watch. It must be nice to be wealthy enough that you can destroy a $400 (or was it a $600 version?) cell phone!
Thanks,
Mark
Mark-
I understand where you are coming from when you said Apple blew it, but I am not sure I totally agree. Yes this was a PR fiasco for the company, and sure it may have been a slap in the face for early owners, BUT the publicity over this issue has only caused more awareness for the iPhone, ESPECIALLY for the iPhone's reduction in price.
If it were not for all of the publicity on this case, people who originally did not want to pay $600 may not have known that they can now purchase it for $400. The publicity was basically FREE advertisement for Apple, and has probably only increased their sales.
As far as ticking off the early owners (a.k.a. loyal customers/rich people), Steve Jobs hit the nail on the head in his letter when he said, “This is life in the technology lane. If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon.” How true is that! I don’t think the early owners can really be kicking themselves in the butt for paying the $200 extra – they chose to purchase early, and they have received a high quality product that was worth what they paid when the bought it. In addition, the early owners were not expecting a $100 dollar gift from Apple, so they should be happy that Apple even did anything for them. If anything, Apple may have gained loyalty from its customers with this move. I guess we will just have to wait and see. If enough early owners are that ticked off, maybe we will start to see more iPhones being blended on youtube…
OK, Dan, I have to admit you made some good points. In the industry, it is often said that all news is good news -- in terms of publicity. However, you hope that news about your organization is positive!
As for your argument that the news and price cut could generate more buyers (and profits for Apple), I would counter that your argument is based in ethical terms on a teleological (utilitarian) philosophical model -- where you try to do the greatest good for the largest number of people. In this case, the price cut will benefit far more people then the number of people who bought the phone in the first two months. I would argue, from a deontological philosophical model that Apple still hurt (financially and credibility wise) a small number of people. Since we should always try to do what's right for everyone (I know, this is hard to do), Apple deserves criticism for undermining the initial wave of customers.
Finally, OK, good point about the fast pace of technology advancement. However, I think Jobs' decision to lower the price was more related to economics (Apples profits) than technology. They SHOULD have offered the phone at the lower price to begin with!
Thanks,
Mark
Touche!
iPhone, what a joke! I hear that phone isn't even a good phone because it caps out because of all the apps it has on it. But, I guess you'll pay anything to be 'in' these days.
Devo -
I have got a close buddy who is a die hard Apple fan. Obviously he is biased, but everyone in his family bought the iPhone the day it released and they all love it! Bias aside, he is a very critical guy, especially with his technology. He said the only bad thing about it is that you cannot change the ringer or any of the alerts. So if you're in a room with 100 people who all have iPhones and one person receives a text message, every single person is going to look at their phone. Pretty damn annoying eh?
If it was me buying the phone, I would most definitely wait for generation 2 to be released. This gives it time to lessen in price, and for some of the kinks to be worked out. That goes for all technology.
Dan-
This is a good case to look at because this is not the only bad thing I have heard about the iphone. People love them, until they get a 300 page bill detailing every single thing they have done with the phone in one month. Or how about until the battery dies after 400 charges and it takes 2 weeks to get a new one. Now anyone who can afford a $600 phone is certainly someone who can't afford to be without one for two weeks.
As far as pricing goes, any knowledgeable consumer knows that prices are higher when things first come out, and if they wait long enough they will drop. However, it costs a pretty penny to run with the 'in crowd' these days.
Anyone who followed up to the release of the iPhone knows how much press and publicity the new release got. It was all we heard about for a very long time before it was released in stores. In that nature, I think the PR department did a very good job. However, it seems they have gotten themselves in a pickle, and it might be a little while before they figure out how to get themselves out of it.
It’s hard to tell if the drop in price was a marketing scheme from the beginning or if they’d simply dropped the price in hopes of a sales boost. I feel that Apple should have done a little more research before drastically dropping the price. Didn’t they figure people would get furious? It’s great that they implemented some sort of a credit, but if I were a consumer, I wouldn’t be so keen on the idea of having to go through all the hassle of getting this credit.
I think that Apple did a good job in addressing this matter to all its consumers and stakeholders. It sounds like Apple did some thorough research prior to making any sort of announcement. Having an explanation for why something was done is a great way to gain credibility. They seemed to have utilized all the media outlets in efforts to communicate their announcement. There’s no going wrong here.
Ultimately, I feel that despite Apple’s efforts in apologizing and trying to right their wrongs in every way possible, people are going to remember this. If I was an early iPhone consumer and found out just a couple months later the phone was being sold for $200 cheaper, I’d be hesitant in trusting Apple ever again. I’d probably seek out other ways of being fancy shmancy and get a BlackBerry or something (even though it doesn’t do nearly as much as the iPhone does). It’s too bad that Apple didn’t stick to their original pricing. They still would have sold out at $599 per phone.
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