Tuesday, September 11, 2007

How to spend $20 million

I really like reading Seth Godin's blog. He's got a grasp of marketing that isn't matched by anyone else that I'm aware of.

And as it turns out, that list even includes Steve Jobs, Apple's CEO and a legendary marketing guru in his own right.

Recently, Job's cred as a marketing genius took a hit with Apple's decision to drop the price of the Iphone by $200, bringing howls of outrage from the early adopters who bought one as soon as it was available. Although Apple quickly tried to mollify folks by offering them a $100 store credit, the furore hurt Apple's reputation (at least in some peoples' opinion) and obscured some of the other things that were announced at the same time, like the new Nano and the iPod Touch.

In a recent blog post, Seth explains how Apple blew it and deftly points to a few ways that they could have easily handled the situation to keep everyone happy. Jobs and Co. would be wise to consider hiring Godin before their next big announcement, just to make sure they're not screwing up again.

Here's an excerpt:
When Steve Jobs gave a $200 discount to the late adopters of the iPhone, the early adopters were incensed. They were being treated differently, but in the wrong way. My guess is that his $100 store credit and personal note helped a great deal, but it also cost about $20 million in profit. If Apple had thought it through, he could have offered any of the following (and done it during the presentation he did of the new products):

  • Free exclusive ringtones, commissioned from Bob Dylan and U2, only available to the people who already had a phone. (This is my favorite because it announces to your friends--every time the phone rings--that you got in early).

  • Free pass to get to the head of the line next time a new hot product comes out.

  • Ability to buy a specially colored iPod, or an iPod with limited edition music that no one else can buy.

The key is to not give price protection to early buyers (that's unsustainable as a business model) but to make them feel more exclusive, not less.

(Via Seth's Blog.)

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