From its direct and channel pricing strategy to its retail and online storefronts, Apple sells its products like no other company in the consumer electronics space. If you know "the channel," you know this is by no means an easy trick. And it works, big-time. But it does raise two interesting questions.
First, can other companies "sell like Apple," or is Apple's sales and channel strategy unique to Apple? And second, is it permanent, or will Apple eventually lose control over its positioning, pricing, and channel?
Let's find out. First, here's what makes Apple's sales and channel strategy unique:
- Apple never discounts through its direct channel. It does discount refurbished products and, of course, there are price changes, but there's no "sale" pricing, say on a holiday, for example.
- Apple keeps reseller pricing stable. While it's illegal to set dealer pricing (to its customers), Apple still manages to keep retail pricing remarkably stable. It probably does that by keeping dealer margins slim, offering no volume discounts, and keeping terms consistent between resellers of the same product.
- Apple's retail and online storefronts are unique. They're more about education and support than selling. They're simple, even austere, with minimal signage and crystal clear messaging. The pervasive feeling is that lots of folks are there to help you and nobody is there to sell you anything.
- Apple products are positioned as unique categories. To the extent that it's feasible, Apple likes resellers to sell its products as unique categories, as opposed to side-by-side next to competitors, either on storefront shelves or online. For example, Best Buy online has a section called "iPad and Tablet PCs." They're distinct and separate.
Now, the strategy of positioning a product as unique relative to competitors and maintaining tight channel control and pricing to manage that positioning is nothing new. In fact, it's sort of the holy grail of selling.
Loads of companies have tried to do it with various products and with varying degrees of success, including Intel processors, Microsoft software, Tiffany jewelry, Swarovski crystal, Dyson vacuums, and certain "premier" manufacturers of everything from wine and watches to guns and knife sharpening systems.
In every case, it really comes down to the same five factors that enable that holy grail of sales strategy:
- Perceived or real high demand and limited supply
- Unique and superior value proposition or brand perception
- Perceived or real monopoly
- High enough margins to support a robust channel support infrastructure
- Clear, top-down sales / channel strategy and disciplined execution
Having said all that, the practical matter of maintaining the practice over an extended period of time is almost impossible. Sooner or later, it breaks down. Sooner or later, things change. It could be a change in the competitive landscape, intellectual property protection ends, a new widget or innovation comes along, societal trends change, or even changes in government regulations. Sometimes, the company itself is willing to break its discipline to accelerate growth at the expense of profit margins.
The bottom line is it can be done, given certain factors. And those factors change over time.
So, if you've got a company and a product where some of those five factors exist, by all means, develop and execute the most airtight sales channel and pricing strategy you can and milk it for as long as you can. Go ahead, sell like Apple, if you can. Just make sure you keep an eye on market conditions because, in time, they'll change, and you want to be as proactive as possible when or, better still, before they do.
And that goes for Apple, too.
Thanks to Steve Tobak / BNet