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Brandon_Mills-10924_headshot_small
Brandon Mills
Manager,
ZS Associates
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Jason Bell
Associate Principal,
ZS Associates
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John DeSarbo
Principal,
ZS Associates
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Kyle Heller
Associate Principal,
ZS Associates

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What Apple's iPhone X and 8 Can Teach Tech Companies About Capturing Customer Segments

Posted by Alec Goldfield on Wed, Sep 27, 2017

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With Apple’s recent, dramatic product launches—the iPhone 8 and X—the tech giant continues to fill the market with phones of different price points and features. This latest release builds on Apple’s history of appealing to multiple customer segments and offers lessons for other tech companies in doing the same.

At the hefty starting price tag of $999, the iPhone X represents the phone’s return to being a luxury item. The original iPhones were marketed as luxury items and were much more expensive than other phones on the market. This new phone will satisfy tech junkies who are willing to pay for the latest and greatest technology, and because it looks very different from previous versions—with an edge-to-edge, OLED screen and lack of a “home” button—it also will appeal to those who want to make a statement.

The iPhone 8, on the other hand, starts at $699 and will appeal to those who still want a top-tier Apple phone but aren’t willing to pay for the new iPhone X. It includes many of the same new features, including a new chip and wireless charging, but it fills a need in the market for those who don’t want to be early adopters of a fairly significant change—the removal of the home button—or those who are indifferent to having the newest tech. Apple also hopes to appeal to even more market segments by selling older models like the iPhone SE, 6S and 7 at lower price points.

Here’s how tech companies can follow Apple’s lead and appeal to different market segments:

  • Make your products indispensable and “sticky.” When you take a photo on your phone with an iPhone, it will immediately upload to your MacBook or iPad; the same goes for saving songs on Apple music. The use of wireless charging also increases the “stickiness” of owning suites of Apple products. Other Apple products, like the Apple Watch and AirPods, charge wirelessly, so it will make sense to own multiple Apple products in order to use one charging pad, which also will be sold by Apple in 2018. Like Apple, tech companies should strive to make their products simple and user friendly, and seamlessly connect to other products in their portfolios.
  • Invest in customer insights. Apple has figured out that there are different segments of the market that are willing to pay different amounts of money for phones, and some care about certain features while others do not. They also know how to appeal to different types of people: those who are slow to adapt to new technology, those who want the latest and greatest, and even those who care about one significant feature. Many older consumers, for instance, care about having a big screen, so Apple introduced the iPhone Plus. The lesson is to take your product segmentation beyond a pricing perspective and think about features to include with the pricing models based on what different populations care about. 

  • Don’t just pay attention to super fans. Apple understands the features that tech junkies are clamoring for and what they’re willing to pay for them, but it also works to appeal to customers who don’t care about having the latest phone. It’s important to get your loyal customers’ insights and opinions, but it’s equally important to get the voice of the consumer who hasn’t bought your products before, or who wants to buy older, less expensive versions of your products. Appealing to both segments also helps you determine which products to keep on the market, which to discontinue, and which features to include at different price points.

Overall, the new iPhone X and 8 should be successful for Apple because of the phones’ broad appeal: Customers who want the latest and greatest technology at a higher price point can get it in the iPhone X, and those who want to spend less or aren’t keen on making a big change with an upgraded phone can find that in the iPhone 8. Such expansive customer appeal is something that other tech companies should strive for.

 


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Topics: customer experience, customer insights, High Tech, Customer Segmentation, Apple, iPhone

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AUTHORS
Brandon_Mills-10924_headshot_small
Brandon Mills
Manager,
ZS Associates
Jason_Bell_11099_headshot.jpg
Jason Bell
Associate Principal,
ZS Associates
John_DeSarbo_thumbnail
John DeSarbo
Principal,
ZS Associates
Kyle_Heller_thumbnail-1
Kyle Heller
Associate Principal,
ZS Associates
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