Repeated adjustments, Apple's price strategy still works?
Unbelievable, the iPhone has made three price adjustments in just two months.
When Apple released the iPhone XR and iPhone XS last year, it took the initiative to withdraw from the price range of 5,000-6,000 yuan. The iPhone was re-killed through continuous price adjustment. The most recent round of price adjustments starting from March 5, the highest drop of 2,300 yuan, the iPhone8 is to lower the price to below 4,000 yuan.
The iPhone's move has shown that Apple is revising its previous "high pricing" strategy and its determination to be a must-have for the high-end market in China's mobile phones.
Apple price adjustment, wake up the sleeping smartphone market
The loose price of the iPhone began to emerge from the news that Apple repeatedly exposed poor performance last year.
On January 10 and February 1, Apple has already carried out two rounds of price adjustments on the e-commerce platform. The latest round of price adjustment started from March 5, and was also initiated by the e-commerce platform, mainly focusing on the iPhone SX and iPhone XS Max two flagship models, the highest price is 2,000 yuan cheaper than the official website. More than March 6 announced that the price of the products participating in the platform is reduced by 300 to 500 yuan on the basis of the low price of the whole network. The price of the iPhone XSMax 256GB coupon is 2,300 yuan cheaper than the official website price of Apple.
The intention of the iPhone price adjustment is very obvious, in order to boost sales, but intensive price adjustment in a short period of time, in addition to sales, the greater intention is to test the market bottom line, psychological game with consumers, expand the price boundary of the iPhone in the middle and high-end market And the coverage of the target customer.
On the other side of the iPhone price adjustment, the domestic brand is represented by Huawei, and with the gap between Apple's war, it has completed the penetration of the mid-to-high-end market that originally belonged to the iPhone's "sphere of influence." In addition to corporate development pursuing a higher brand premium, one of the bigger reasons is that the mid- to high-end market is an incremental market.
According to the Counterpoint report, in the third quarter of 2018, global high-end smartphones (more than $400) accounted for 22% of the total smartphone market, with shipments of approximately 85 million units, up 19% year-on-year, significantly better than the broader market situation (- 5%).
In the competitive struggle between the two forces, the smartphone industry is experiencing a slow recovery and climbing. In the process, the importance of the mid-to-high-end market has been mentioned by mobile phone manufacturers. For the iPhone, the mid-to-high-end market is its “base camp” and “self-retained land”; for domestic brands, the mid-to-high-end market is the only way for them to take the next step.
Domestic mobile phones need to be wary that in the domestic market last year, although Huawei and OV combined with Xiaomi to suppress Apple, but in the international market, the momentum of the iPhone is still good. In the US market, the overall iPhone shipments reached 67 million in 2018, and the profit margin of the iPhone in the US market is still rising; in the Japanese market, iPhone sales have increased by 20%; in Western Europe, iPhone sales have reached 31.84 million.
Although the domestic mobile phone has tried its best to come up with its own best products, Apple has further narrowed the price difference with the domestic brand flagship model through this price adjustment. In terms of brand premium and product quality, the iPhone still A bit higher than the domestic mobile phone. The poor sales of the iPhone before, the big reason is that high prices not only shut out new users, but also inhibited the willingness of quite a few old users. However, the current situation has changed. After the price adjustment, it will inevitably stimulate the upgrading of fruit powder consumption and the transformation of Android users.
Apple, which has repeatedly tested the price, is refactoring the high-end mobile phone purchase decision model.
In the previous rounds of price adjustments, many media and industry people have expressed doubts about Apple's "operations". The analysis believes that such practices will lead to negative evaluations of Apple's brand image damage, brand premium shrinkage, and reduced user loyalty. However, it still has no hesitation in the third price adjustment in two months, one of the reasons is only one, Apple believes that "not yet in place."
The business logic behind the price adjustment of iPhone products is that Apple is trying to rebuild the high-end mobile phone purchase decision model based on its own business needs and market competition.
Comparing the sales strategy of luxury cars, you can find that Apple's gameplay is highly similar now.
Before the iPhone X, for consumers, buying Apple is a short decision-making process. Although the iPhone price is slightly higher than other brands, the iPhone is usually the preferred target within the budget. When Apple injects too much brand premium into the iPhone and the price crosses the threshold of 10,000 yuan, trying to create an image of “electronic luxury” for the iPhone, even if it really loves fruit powder, it will hesitate before buying. It must be considered by many parties. After making a purchase decision, the entire purchase decision process is lengthened.
The most direct consequence of this kind of "long decision-making" is that the high-priced threshold will block some of the intentional customers out of the door, and the sales volume will be frustrated. On the other hand, the customers in the decision-making process, the competitors who are not in the scope of consideration will also enter the competition. Within the scope of vision, it gives domestic brands the opportunity to take the lead in the high-end market.
The unchanging price policy is obviously unable to adapt to the ever-changing market competition. The strategy adopted by the luxury car brand is to maintain the brand image with high pricing and use the flexible terminal price as a lever to adjust the sales volume in stages. The marketing campaign responded by finding the best data mix model between sales, market share and profit. Therefore, it is often seen in the automobile market that the terminal price of a car has been changing, and the discount in the off-season is the norm. The promotion in the peak season is the basic operation.
The sagacity of the automaker's pricing strategy is that no matter how the terminal price changes, the official guidance price remains the same, and the brand image is also protected to the greatest extent. The iPhone is also adopting this strategy to rebuild the high-end mobile phone purchase decision-making model, maintain brand potential with constant official pricing, and switch the offensive and defensive position of the market competition at any time with flexible terminal prices.
Specific to the recent round of price adjustments, Apple may consider the following three points.
- The price reduction strategy has obvious effects, and the off-season plus yards regains lost ground.
Apple apparently tasted the sweetness of price adjustment. According to Tencent Technology's report, from January 1st, Apple's first round price adjustment began to January 30, Suning's iPhone sales increased by 83%. After Tmall made price adjustments on the iPhone on January 13, as of January 29, iPhone sales on Tmall soared 76%. This shows that the iPhone, which has been sung for a long time, will have a huge sales potential as long as it gives a certain price concession.
After a company introduces a new pricing policy, it will generally completely digest this wave of price policy to launch a new policy, and Apple's approach shows that it is unusual. When everyone thinks that the iPhone price is already in place. At the time, throw a "bomb" and expand the price potential. Apple is aiming at the traditional sales off-season vacuum period from March to June. It uses an intensive price policy to speed up the marketing rhythm and speed up the recovery of the market. The pace of losing ground.
- Price suppression on intensively released domestically produced new machines
Apple uses the price to test the market, while domestic mobile phones use new machines to test the market. In February, first, vivo launched its new high-end brand iQOO, and then Xiaomi released the latest flagship model Xiaomi 9, although from the price point of view, these two new machines are still unable to compete with the iPhone, but the price adjustment After entering the price range of 3,000 yuan, the iPhone 8 still gave them great pressure.
Apple’s sales in China were frustrated in 2018, but in the mid- to high-end market, Apple’s status is still difficult to shake. Counterpoint's report shows that in the third quarter of 2018, Apple's sales accounted for 43% of the high-end smartphones sold over $400 worldwide, with a profit share of 62%. In the market price range of $600 to $800, Apple's sales accounted for 61%, and in the market of $800 or higher, Apple's dominant position rose to 79%.
In the face of the absolute market share of Apple's high-end market, the iPhone after re-adjusting the price has given a huge problem to the domestic brand new machine. If the product power and brand power are not improved, no matter which price range , will be suppressed by Apple's price.
- For the second half of the year, the new machine will give up the price space and form a multi-generation family product matrix.
Before the iPhone 7, every time Apple pushed a new product, the last generation of products will be dead. The advantage of this approach is that the management of the supply chain is relatively simple, the market is hit hard, the shortcomings are also obvious, and the market coverage is limited. Nowadays, Apple's official website has already arranged four models of iPhone 7, iPhone 8, iPhoneXR and iPhone XS. The price also covers a very wide range from 3,000 yuan to 10,000 yuan.
Multi-generational product matrix has been formed. What Apple has to do now is how to design a set of first-end and mutual care for these products, and a cross-price system, especially the flagship model, must be given to the new machine listed this year. Leave enough price space. After all, Apple has already suffered from the "high price" strategy before this.
After the price adjustment, in the mid-end market of 4,000 yuan, Apple has iPhone 7 and iPhone 8 guarded, and the high-end market of 5,000 yuan or more, Huawei P series and M series are also unable to withstand the competitive pressure of iPhoneXR. It is expected that for a long time in the future, the price of the iPhone before the launch of Apple's new products will be difficult to regenerate, and now is the best time to start.
It’s a tough choice for domestic mobile phones to follow.
The change in the iPhone's full-line product price system is not only an internal adjustment of Apple, but also affects the entire mid-to-high-end market. As analyzed above, the iPhone after the price adjustment not only extends the Android camp to its original “site”. The model has been fully suppressed, and the price of its low-end models (iPhone 7, iPhone 8) has entered the “comfort zone” of domestic mobile phones.
In the face of Apple's aggressive price offensive, domestic mobile phones are in a dilemma. Whether it is to maintain the offensive situation or stick to the fruits of victory, they have to pay a huge price. Bell believes that the following changes may occur in the follow-up market.
- Frequent price fluctuations will become normal
The reality that domestic mobile phone manufacturers need to recognize is that smart smartphone innovation is an industry problem. Compared with Apple, Android technology is not extraordinary. Moore's Law is playing a role for every mobile phone manufacturer. In the minds of consumers, Brand image and premium valuation have also been finalized, and Apple has an advantage in terms of similar product prices.
There are two options in front of domestic mobile phones.
First of all, as before, the high-end flagship models are used to test the high-end market. Just like the Huawei MateRS Porsche version, the sales volume is not too high, and more is to promote the brand image. The “cross-subsidy” approach drives sales of other models.
Secondly, adopting the same price strategy as Apple, according to their own marketing needs, through repeated price adjustments to increase sales, and the core principle of this approach is to avoid the price of the benchmark iPhone model, do not face it.
2, 5G mobile phone approach steps slow down
If the frontal breakthrough is difficult, then is it feasible for domestic mobile phones to use 5G to complete the corner overtaking? nonexistent.
Although it was called the 5G first year in 2019, there is still a long way to go before the 5G base station, chip standard, and landing application are fully completed. Coupled with this wave of iPhone price adjustments, it is likely to slow down the pace of 5G mobile phone entry. Because when the sales of iPhones rebounded, the huge potential energy decided that this would be a huge base, inciting China and even more than half of the mid-to-high-end market in the world, and the new machines in the hands of users could fight for another two years.
From another perspective, as a company with the world's largest cash flow, Apple's ability to control the 5G era is stronger than we think. Imagine that when the iPhone was launched in early 2007, we were only in the 2G era. Apple was also very cautious about 4G. It was gradually promoted in the deployment of products, but this did not prevent Apple from leading in the 4G era.
3, the practice of apples also have a bottom line
Apple, which has been in the midst of a lack of innovation and controversy, is actually the biggest pragmatist. We can see that Apple’s release of innovative technologies in all new products is based on proven and practical application scenarios. Bought. A muscle show like the "folding screen" has never been Apple's acting style.
At the marketing level, Apple will also follow its default baseline.
Before Apple adjusted the iPhone price, it was profit-first. Now that the strategy has changed, the priority of market share has been mentioned first. Starting from the price, first seeking market share, and then seeking marketing profit.
Return to the analysis of this round of price adjustment. The adjusted iPhone products have already completed the price matching with the competitors, and the price difference between the products is very close, especially the drop of up to 2300 yuan, which has greatly squeezed Apple's profit margin. According to Apple's consistent style, I have never done a "losing business", so in this year, the chances of iPhone price adjustments are small.
This is good news for domestic mobile phones and bad news.
The good news is that the iPhone price has finally stabilized. Don't worry that Apple will continue to infiltrate into its "ventral". The bad news is that the situation of the middle and high-end market being suppressed will exist for a long time. (This article is the first titanium media)