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Why Apple Doesn’t Do Discounts

By November 25, 2009 December 3rd, 2012 10 Comments

Despite a tanking economy, Apple has record sales and profits and doesn’t need a fire sale to compete this holiday season.  Find out four things they have mastered which make this possible.

Apple is coming off the best performing fiscal year ever according to cNet, with $1.67 billion in profit – which is a whopping $1.82 per share of earnings.  This along with record sales for the Mac and iPhone, I wonder how Apple does it.

When other companies struggle to weather the economic storm, how is it that Apple is able to sell a record number of some of the most expensive phones and computers on the market?  Why is it that people are willing to put up with AT&T just to have the glorious iPhone?

Dell just came out with their earnings a few weeks ago and missed even the most modest analysts expectations with only $727 million in profit, or $0.27 per share.  Not even close to Apple, and the new Netbooks with Windows 7 is apparently pretty hot, right?

the imac from apple

Part of the answer is how they package it. When you buy any Apple product, the packaging is very high end – you feel like you have purchased something very special.  When I first opened my new MacBook Pro box, I felt like I was opening a gift from Nordstrom’s. Open an HP box and it’s nothing special.  You actually get instructions that look like they were meant for a 5-year old, or those wordless graphics like you see in the backseat of an airplane.  Yep – I think I can figure out how to put the battery in – thanks.

Part of the answer is how they market the products. If you visit www.apple.com from a PC, you see a page really hyping the new iMac.  If you visit the page from a Mac, then you get a page pushing new accessories.  This is smart marketing.  Visit www.dell.com and to find a monitor, you first have to decide if it’s for Home or Office – as if it matters – do they price them differently?  The Apple home page is simple, easy to navigate and puts a big focus on the “hero”, which are the products.  Their checkout process is refined and brilliantly cross-sells other accessories leaving you no choice but to fill your cart with about $300 of more stuff that you absolutely have to have.  After all, that’s great marketing, right?

Part of the answer is their trusted brand. Apple has spent years building a brand.  A brand that you can trust is reliable and where the products will last.  The only company that decided it was better to manufacture the hardware and the software all in the same place.  That means installing new software or applications will only require you to click and drag an icon, rather than having to scour the Internet for a driver.

Part of the answer is innovation. The innovative products that Apple keeps pumping out are a huge factor in their success.  If your company doesn’t change, or innovate, you likely will not experience explosive growth, revenue or profits.

So if you have all of these things and you’ve been able to create insatiable demand, you really don’t need to have sales on days like “black Friday.”  Not only would a sale “cheapen” the brand, but it creates an expectation in the mind of the consumer that all you have to do is wait and eventually the price will go down.  This is what the cable companies do at the end of every month, and car companies do at the end of every year.  Surely you’ve heard the best time to buy a car is at the “end of the year clearance sales” – right?  Apples doesn’t need sales, and unless the competition brings, well….competition, they probably won’t even have to lower their prices much either.

Ryan Kelly

Ryan Kelly

Ryan is the founder and CEO of Pear Analytics and has helped hundreds of customers with their Internet marketing since 2003. He has spoken on various topics of SEO, Analytics and other marketing at conferences in New York, Chicago and Vancouver. Clients he has consulted include Sears, KMart, CareerBuilder and PEER 1 Hosting. Ryan currently teaches two Internet marketing classes at Trinity University in San Antonio.

10 Comments

  • Tom B says:

    Branding is all well and good, but, the fact is, if you have real work to do, the Mac will help you get it done, without getting in the way. That’s why scientists and artists love them so much: efficiiency, stability, security, functionality.

  • Sykes says:

    Part of the answer is user experience.

    Apple is one of the few consumer electronics company that puts design and user experience top on their list. User experience counts for a lot in Apple’s design (both hardware and software). That is one of the biggest selling points of Macs, iPods, and iPhone. I have not see Microsoft Windows 7 yet, but I hear that the user experience unlike previous editions of Windows is getting to be quite good because Microsoft is finally beginning to pay attention to user experience as opposed to just adding on features without knowing how to execute it so users can use it and have a good experience with it.

  • Ryan Kelly says:

    @sykes – you’re absolutely right….I missed that one. How great is it to plug in your phone and sync everything in a matter of seconds? Click here, tap that……you don’t need an instruction manual for their products, which is a good indication of great user interface design.

  • jsk says:

    Apple’s home page rotate three or four different items at random. Test your theory, I just visited http://www.apple.com from my Mac using Safari v4 and got the page pushing the iMac, not accessories.

  • Kevin says:

    Won’t have to lower their prices much? What about the fact the the iPhone premiered at $300 and is now as cheap as $100? Doesn’t this fly in the face of “creating an expectation in the mind of the consumer that all you have to do is wait and eventually the price will go down?”

  • Ryan Kelly says:

    @kevin Yeah, the 8GB 3G…..who the heck wants that? You wouldn’t be able to use half of the apps. I see your point, but I don’t see this quite the same as waiting 6 months or a year for the Blu-Ray, or a plasma TV, or an X-Box to go down in price. We’re talking 2 1/2 years since the first iPhone 🙂

  • Andrew says:

    actually, they do do discounts. they offer my brother a 15% discount on anything he buys. it’s pretty easy to get them to do this.

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