Just last August 2018, Apple’s stock price reached an all-time high of $207.05 per share, putting the company on a trillion-dollar status. It’s a remarkable feat — considering that Apple was founded only 42 years ago by the late Steve Jobs.  To put things into perspective, the company’s $1tn market capitalisation is larger than the economies of Switzerland and Turkey!

“Growth was strong all around the world” – Luca Maestri, Apple’s Finance Chief

What Goes Up Must Go Down

Apple’s trillion-dollar reign, however, was short-lived. Just last month, the company lost 20% of its value. The plunge started after they announced that they would make $4 billion dollars less profits two months ago.

Tim Cook, Apple’s CEO, blamed the company’s demise on its battery repair program, Donald Trump’s trade war with China, and the slowdown of iPhone sales in China. Critics, on the other hand, blame the iPhone’s lack of new features and innovation.

Here’s my take on it.

Personally, I think the reason for the decrease of Apple’s stock value is not only the lack of innovation, but also the combination of their battery replacement program, price increase, and drifting away from their brand identity. Let’s talk about each case below.

Battery Replacement Program

Apple instituted a battery replacement program last year where old iPhone users, who were already out of warranty, could have their batteries replaced for $39AUD. This is an $80AUD discount from the usual price of $119 AUD. The offer ended on December 31, 2018.

The battery replacement program was launched after Apple was caught “throttling” or slowing the performance of old iPhone models. In an open letter, the company said that they did it to protect the batteries of old models and to prevent them from shutting down unexpectedly. However, customers felt cheated and perceived Apple’s action as a low-blow to compel them to upgrade to newer, more expensive iPhones.

Marketing Lesson:

Always be clear with your intentions from the get-go. If Apple made this announcement years ago, customer sentiments may have been more positive.  Instead, they kept their mouths shut and only opened up about it when they got caught. Brand loyalty is easily lost when you are not honest with your customers.  

Ridiculous Price Increase

They call it the “Apple Tax”. And it is something that most customers are willing to pay just to get their hands on the latest Apple craze. But customers have had enough.

For Apple, the price increase is justified by the high costs of innovation and making futuristic devices and components. But are they really innovating? It’s unfortunate that most Apple execs equate innovating to improving.

Innovation means introducing a new idea or product. The only revolutionary thing that Apple has done these recent years was getting rid of the earphone jack — which doesn’t really make sense. All they’ve been doing are incremental improvements to the camera, software, and display.

Here’s what Apple innovation really looks like:

Marketing Lesson:

Brand loyalty has a tipping point. For example, you absolutely love the coffee from your favourite coffee shop. You can’t do without it and you are extremely loyal to the brand. What’s the most you’ll pay for that coffee? Is it $7? $11? $15? No matter how much you love that coffee, there will always be a tipping point.

There should be enough upside for the consumer to justify the price. If that coffee could reverse ageing, you might be happy to hand over some serious dollars to get your daily fix. The same is true with Apple’s golden days. When Steve Jobs introduced the iPhone, customers were ecstatic despite it being more expensive than the competition. Why? Because it was an innovation. 

Fuzzy Brand Identity

Apple was founded around “simplicity” and “being different.” But these past few years, the company has been slowly drifting away from their brand identity. Why do we need so many iPhone models when, in reality, most of them only differ in size, display, and camera?

Apple’s marketing message has been affected too. When Steve Jobs introduced the iPhone in 2007, his marketing message was “Apple reinvents the phone.”

When iPhone Xs was released last year, Tim Cook’s marketing message was “the largest display on an iPhone.”

Which one do you think sounds more innovative? More exciting?

Marketing Lesson:

Don’t drift away from your brand identity. Moving away from your brand’s purpose will have repercussions. It will create confusions across the board — from products to marketing. At the end of the day, a fuzzy brand identity will drive customers away.

Conclusion

Apple should know its customers better. All this could have been avoided if they did ample market research and listened to their customers. Nobody asked for a bigger screen. Nobody asked for a thinner phone. People asked to bring back the headphone jack, customers wanted more ports in the MacBooks, iPad users wanted expandable storage — but the company did not listen.

If Apple will not correct its course, what we are seeing right now could be just the beginning. And this time, Steve Jobs will not rise from the dead to help.