Learn to Market Like Apple: How the Tech Giant Maintains High Margins, High Prices and a Luxury Brand Identity

In today's fiercely competitive business landscape, where technological advancements are rapidly reshaping industries, one company stands out as the undisputed champion of marketing: Apple.

Apple has won the CMO Survey Award for Marketing Excellence for 15 consecutive years. And it’s no wonder why.

Renowned for its innovative products, minimalist design philosophy, and iconic branding, Apple has consistently been the world’s most profitable company. From the sleek lines of its devices to the captivating narratives woven into its advertising campaigns, Apple has mastered the art of marketing in a way that few others have been able to replicate. In particular, we will focus on how the tech giant maintains high margins, high prices and a luxury brand identity.

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Price Ladder

One way Apple’s price ladder encourages people to spend more by reserving features for higher priced models.

The most noticeable is the difference between the iPad and the iPad Air with a $270 price difference. With the same starting storage capacity of 64GB, the main distinction is style. The. iPad Air has a sleeker look with no home button and an edge-to-edge display.?

If the iPad Air isn’t enough, you’ve got the iPad Pro showing up for another $200 price bump, with the latest supercharged M2 chip that’s not available in any other iPad. Want the bigger screen? That’s $300 please. Apple’s price ladder is subtle but it works hard to encourage customers to part with more and more of their money.

Walled Garden

Apple’s walled garden is infamous. It’s the way Apple integrates all of their products together in such a way that makes it hard to leave once you’ve bought in. AirPods don’t work as well on Android with no access to Siri. HomePod and Apple Watch require an iPhone to setup.?

iPhone is the gateway to this garden with iMessage being the drawbridge. Those blue messages sent between iPhones have become a status symbol while the green ones have become a sign that the other person can’t afford an iPhone. This problem is more pervasive in the US where Apple has a 64% market share. iPhone has a 30% market share in Europe where Whatsapp reigns supreme.

Macs, Apple Watch and iPad can all receive and respond to text messages and Universal Clipboard allows you copy text on iPhone and paste it on Mac and vice versa. iCloud syncs all documents and photos between all devices and Airdrop allows easy transfer of files between different people’s devices.

Margin

For the first quarter of 2024, Apple’s gross margin was 45.87%. Maintaining such high margin has prevented Apple from entering certain markets such as the television market where average gross margins are 10-20%. Apple combated this by entering the market with the Apple TV. A plug-in box offering a library of apps This allowed Apple avoid entering the display game and of apps starting at €169.

Apple was also considering entering the car market. They spent more than $10 billion over ten years developing a self-driving car. Ultimately the project was abandoned and the staff were rerouted to work on AI projects or let go. Even if Apple had continued developing a car, the margins in the car industry are razor thin. Volkswagen reports a net profit of just 5.11% for Q4 of 2023. Apple wouldn’t get out of bed for that.

Luxury Brand

It’s no secret that Apple has positioned itself as a luxury brand. Apple belongs in the same conversation as Rolls Royce, Gucci and Rolex. Apple has achieved this through never discounting their products, an excellent unboxing experience and unparalleled stores.

Steve Jobs was steamrolled in the media for opening the first Apple store. It was seen as a step backward what with big tech firms like Amazon championing online retail. But Steve knew that retail locations would position Apple as a luxury brand and allow it control over every second of its customer experience. Apple’s fifth avenue store places Apple next to brands like Armani, Gucci and Cartier while the Opéra store in Paris looks as much like a boutique five-star hotel as it does a tech store:

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Conclusion

Apple's unparalleled marketing success can be attributed to a combination of factors that set it apart as the leader in the industry. Through its high margins, high prices and luxury brand identity, Apple has created an undeniable powerhouse in the tech space.

By consistently delivering products that are not only technologically advanced but also aesthetically pleasing and seamlessly integrated into users' lives, Apple has cultivated a loyal customer base and achieved remarkable brand loyalty.

As the company continues to innovate and push the boundaries of what is possible, its marketing prowess will undoubtedly remain a key driver of its success in the global marketplace.

Reach out to us for a free 30-minute consultation if you want help developing your own marketing strategy at https://cosmos.ie/contact/ .

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