Thursday, July 30, 2009

More Quick Posts

In the past couple of weeks, there have been some great posts on Techcrunch -- the kind of news you probably won't see if you aren't following the site and linked into the tech world.

Internet and Security
There have been posts like this one, The Anatomy of a Twitter Attack, talking about how Twitter's core operations were infiltrated by a hacker. It's a great lesson in the challenges facing modern internet security and a cautionary note for how you deal with your passwords. I would call it a must read (but you may not be able to sleep afterwords).

Marketing to the Premium Segment
Another post recent post highlighted some analysts numbers about Apple's marketshare -- and is an excellent stepping stone into some exploration on branding and product lines. The Mac Versus PC Debate Has Never Been Clearer deals with how Apple, while it dominate in overall marketshare, totally dominates the 'premium' market for PCs (over $1000) with 91% marketshare.

One interesting aspect of this article is how it highlights how all of these voices outside of Apple that keep saying Apple needs to create a low cost product. Contrast that to Apple's actual position in the market. One my consulting MBA students tells me that this was also a topic theme in a recent class. When Mercedes introduced the C-class, it's low-cost entry level product line, overall sales and revenue were impacted:
  • Profits dropped as high-end, high-margin product (S-class, AMG models) sales dropped.
  • C-class unit sales took off, but profit from these lower cost, lower margin sales did not make up for the drop from the high end.

  • Buyers who liked the exclusivity of the brand found themselves drawn to 'more exclusive' brands like BMW with a higher entry-level price.
  • Overall market perceptions of quality went down. Concerns about quality carried across all model lines.
Now keep in mind that I don't have the specific data that supports these points, so I may be misrepresenting some of the data. However, the key message is that selling more isn't always better and that reaching out to a lower price segment can have a negative impact on your premium customer base. I'd love to hear your comments and anecdotes.

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