Apple’s Evolution Continues. Next Stop: Disillusionment

“Remember the old bit about a General Motors car in every garage? Today, iPhones, MacBooks, and iPads seem just as ubiquitous, especially at Starbucks.”

That’s a line from Roben Fazard’s great article on BusinessWeek about how Apple’s fall mirrors its struggles this year.

Apple’s stock tumbled 23 percent last Wednesday, pushing it to a four-year low to $545. According to BusinessWeek, the one-day misfortune eradicated $35 billion in market value for Apple.

So, what gives? If you’re a regular reader of my blog, you know I’ve discussed Apple a few times over the course of the semester. My most recent post on the company divulged how it is losing face as it inches further and further away from Steve Jobs’ original vision.

The article outlines a few more reasons for discontent:

  • Investors have not yet gotten that mega-dividend they prayed for ahead of the U.S. fiscal cliff.
  • Increased competition, notably from Samsung
  • The closed-off nature of the App Store experience, which is a turn-off to consumers
  • Management discord, particularly after Scott Forstall left the company after its failure to duplicate Google Maps resulted in the laughably erroneous Apple Maps

Apple’s products will not sell forever just because they carry the brand’s name. Competitors will catch up and perhaps pass Apple in terms of innovation, technology, and price. This dip may just be an unfortunate-but-natural deviation from Apple’s grand scheme, but the company should try to forestall this autumn of discontent from becoming a year of one.

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A Lemon Bar With That Jeans Purchase?

I love this article from Bloomberg BusinessWeek about the rise of the retailer-restaurant. It talks about how shopping stores from Urban Outfitters to JCPenney are adding cocktails, espresso bars, and other foodservice outlets to their storefronts.

Source: Creative Commons

Source: Creative Commons

Having covered the foodservice industry for the past couple years, before coming to NYU, I actually think that from the business’s perspective, this move is great. Malls have food courts, which are often crowded and bustling no matter the time. So why not create a mini-food court of your own, in your store?

As a consumer, this scares me a litte. Mostly because I think it will work. I know how much I love getting a bubble tea or frozen yogurt at the mall to walk around with, and the more stores that include yummy options like these in their stores, the more tempted I will be.

One of the last articles I wrote before I left QSR magazine and moved to New York was about Macy’s opening its first co-location with Pinkberry. I spoke to Pinkberry CEO Ron Graves and Macy’s director of brand operations, Chris Burr. They both concurred that their brands fit well together; the Macy’s shopper is also likely already a Pinkberry consumer, too. Thus, fans of both brands are already familiar with the other company, and if they’re only familiar with one, they’ll have a wide open opportunity to try the other.

This harkens back to the power of co-branding, which I talked about in my very first blog post(!) when I discussed the potency of Taco Bell and the Doritos Locos Taco. Co-branding associates two distinct brands at once, and if it works well, consumers remember not just one but two brand names at the end of the experience. Any fan of Taco Bell also knows the Doritos Locos Taco. A fan of Harry Potter may associate Universal Studios with the enterprise. Universal is owned by NBC, which has little link to Harry Potter otherwise, but its theme park broadens its fan base. And so on.

One downside to this new trend is that consumers allow retailers to dictate which foods we eat and make our dietary assumptions for us. Not wholly, of course; we can always exit the store. But their plan is to keep us in there for as long as possible, and if a store ever opened a taco window in its clothing or shoe department, I’d be hard pressed to say no.

When Companies Get Swept Into the Facebook Mythology

You’ve probably heard by now that the SEC is considering a lawsuit against Netflix for a post it published on its Facebook page in June. CEO Reed Hastings shared that the video-streaming platform saw more than 1 billion streams the previous month, and as a result, its stock rose 6.2%.

netflix-logo1

The SEC is displeased. According to securities law, companies must share information in a “non-exclusionary method,” like in a press release or a newswire. The SEC wants all investors to have access to the same information—a fair point, if you ask me—and admonishes that Netflix did not file an 8-K or issue a press release in conjunction with the CEO’s status update.

This speaks to a broader problem with life in 2012, outside the micro world of video streaming and company profits: there is a pervasive atmosphere of over-share, promulgated by Facebook and his cousin Twitter, and companies and CEOs need to know where the line is. Perhaps, in fact, we all do.

The ease of sharing on Facebook and Twitter coincides with an overall loss of privacy—which, granted, we all give up easily and without thought, completely ignoring the battle for personal privacy that courts have fought on our behalf for decades—and with no one reminding us when to curtail that sharing, we keep on hitting those “like” and “comment” buttons.

Netflix isn’t the first company to throw some stats up on Facebook, and it certainly won’t be the last. But companies need to not buy into the Facebook mythology that the social network has successfully concocted and spun into all of our brains. We don’t have to share our thoughts on daily happenings, our commentary on sports and politics and our families. We, surprisingly, do not have to post photos of every gathering we go to with our friends.

Facebook has done an incredulous job as a brand, getting us to believe we must log on to feed off its life-giving energy and survive our daily routine.

Regardless, we’ve gotten used to sharing and liking and tweeting our pants off. So what happens when Netflix gets sued for getting caught with its pants down?

The Problem That Spanx Covers Up

Spanx before and after. Credit: CottonTrendy

Spanx before and after. Credit: CottonTrendy

Spanx, the body-shaping undergarment brand, opened its first storefront at the end of November in McLean, Virginia. Spanx and similar garments have primarily been sold in department and clothing stores. Now, the company hopes to compete with Victoria’s Secret to become a brand for the “everywoman.” Hooray! Right?

Spanx has been famously used by women to shape their bodies by smothering flab and slimming unwanted bulge. That’s not to say it’s used primarily by heavy women; even some normal-bodied women enjoy Spanx to shape curves.

I’m all for a brand that boosts the self-confidence and body image of women. Absolutely nothing wrong with that. And in a nice move, Spanx has positioned itself as the more everyday competitor to Victoria’s Secret.

But here’s the problem with Spanx: it encourages the everyday woman to think she needs body-shaping. It still nonetheless reinforces the idea that her natural body isn’t quite good enough. She may not be able to attain the angel ideal of Victoria’s Secret, but she still needs something to fix those body flaws.

Remember the Dove ad campaign that promotes “real” women and uses models that are not of the industry’s thin standards? The Dove Campaign for Real Women, as it’s called, “started a global conversation about the need for a wider definition of beauty after the study proved the hypothesis that the definition of beauty had become limiting and unattainable,” according to Dove’s website.

While Spanx takes the time to broaden that definition by inviting everyday women into its stores, the brand may still makes them think they’re not quite up to standard.

As the BusinessWeek article states,

“The sale here isn’t sexiness. Rather it’s about looking healthy and fit—even for those who are neither—and self-affirmation.”

Well. As long as ladies continue to look the part, right?

The Future of Groupon Depends on Goods, Not Deals

As Groupon’s stock has tumbled recently—it is now down 80% from its IPO, at about $4.69—so has the company’s confidence in its leader, founder and CEO Andrew Mason.

Screen shot 2012-12-09 at 4.23.05 PMThat’s because the company’s strategy of selling discounted deals to local restaurants, shops, and entertainment venues isn’t profiting like it did at its debut. LivingSocial and other competitors rose up. People grew tired of Groupon’s ceaseless emails.

And though brands that participate in Groupon deals may prosper from increased awareness and customers, the deals themselves really don’t make participants much money. For example, if a restaurant sells a deal worth $50 for $25, it only makes $12.50 off the transaction. That’s a 75% loss.

(Here’s a breakdown of how Groupon makes money off deals, from an article I wrote for FSR magazine last year.)

The one bright spot in all this, perhaps, is that Groupon goods are accounting for more revenue at the company than its deals. This means that Groupon could reposition itself as a direct seller of goods, like Amazon.

The Journal article states:

“Direct merchandise sales like television and jewelry should improve the company’s overall revenue growth, though its profitability is threatened by fiercer competition from the likes of Amazon.com Inc. (AMZN) and eBay Inc. (EBAY).”

So what’s the next step for Groupon, given this? Perhaps a pivot into retail territory. It could keep selling deals as an offshoot, which would differentiate it from competitors such as Amazon and eBay, but a brand needs to a) know who is buying its products and b) continue to offer what is profitable. At some point, those discount deals will cost more than they are worth, and those nifty hair straighteners and wine openers known as Groupon goods will be the future.

Want A Rolls-Royce For Christmas? Good News, It’s Expanding

If you want a Rolls-Royce for Christmas but are having trouble finding it, the company has good news for you: it plans to expand its dealerships from 105 to 120. Phew. I just didn’t know what to get my family until I heard this.

My Christmas gift to my parents.

My Christmas gift to my parents.

Jokes aside, there is something to be said about Rolls-Royce doing well enough in this economy to expand. I have to wonder how in-demand the brand is. According to the BusinessWeek article, Rolls-Royce has been unfazed by the European debt crisis (it is based in England), and in 2011, the brand sold a record number of 3,538 cars.

There was a possibility that Rolls-Royce’s strong performance could mimic a comeback in the economy, but the article says that the leaders at Rolls-Royce admit there’s a possibility that developed markets could slump.

A company that specializes in luxury goods needs to be hyper-aware of which markets boast unencumbered wealth. Rolls-Royce has pinpointed Asia and South America as its growth targets for the coming years. (With its fiscal cliff and divisional politics, it’s little surprise that the U.S. doesn’t make the cut.)

Here’s why all of this matters: There is a lesson to be learned here. Rolls-Royce is a growing company and a smart brand. It knows which geographical consumers to target and which to let go of. It’s not pinning hopes on slowing economies or those stuck in political doldrums. It’s being realistic in a lazy economy and it’s teaching many other brands a lesson along the way.

As Apple Leaves Steve Jobs’ Ideas Behind, Competitors Catch Up

Let’s be serious: Steve Jobs never approved of the iPad mini. Yet here it is, available for users to play piano medleys of Heart & Soul and do whatever else they’d like on it.

 

Steve Jobs with the original iPad

Apple CEO Tim Cook took the stage last month during an Apple event and introduced the iPad mini and a smaller MacBook pro, among other items. As Forbes contributor Nigam Arora wrote, there was nothing flashy at this Apple event. No “wow” factor, no introduction of never-before-thought-of products—instead, there were simple improvements upon preordained products.

Why has Apple stopped introducing those mindblowing products? Where’s the mini music player that we all gaped at in 2003 before integrating the iPod into our lives and now being unable to live without it? Where are those flashy laptops with the pretty, indented apple logo that don’t run on Windows and are inherently intuitive? Why does the iPhone 5 have so many issues?

I guess it all leads up to the grand question: Where is Apple these days?

Let’s find a solution. Here’s a crash course in the basics of branding: it begins with defining your company’s personality or identity and building off of that.

Rob Frankel, an author and branding expert in L.A., spoke to BusinessWeek about branding and had some wonderful advice that Apple and Tim Cook may want to consider:

“Branding is about getting your prospects to perceive you as the only solution to their problem. Once you’re perceived as ‘the only,’ there’s no place else to shop. Which means your customers gladly pay a premium for your brand.”

Is the iPad mini going to continue to convince customers that Apple is the only destination for 7 inch? No. Absolutely not. Samsung has the Galaxy Tab. Google has the Nexus. And Amazon has the Kindle (Fire).

As Apple steps further and further from the revolutionary ideas that defined it in the first place—from it’s personality—its competitors are catching up.

Check out this article from BusinessWeek, describing how Samsung is the brand that’s hot on Apple’s tail. In fact, the article reports that Samsung outsold the iPhone during Q3:

“Strategy Analytics says that more Samsung Galaxy S III phones than Apple iPhone 4S handsets were sold in third quarter of this year. Samsung Electronics moved 18 million such handsets, while Apple sold 16.2 million during the three-month period, says the research firm.”

I can’t decide whether competitors are catching up to Apple now because it was only a matter of time, or if it’s because Apple has quit being the innovative powerhouse it once was. What I do know is that when my cell phone contract runs up, I’m considering ditching my iPhone for the Samsung Galaxy—and I never would’ve thought to do that two years ago.