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Why consumers find the iPhone irresistible despite its premium price

Apple recently unveiled three new iPhone models – iPhone XR, iPhone XS and iPhone XS Max, with all three steeply priced at US$749, US$999 and US$1,099 respectively.

The news no doubt rattled consumers with some vowing not to switch iPhones unless malfunction occurs. Others pledged allegiance to Android phones, and some mocked Apple for jacking up the price of its iPhones while fitting it with technology that is lagging behind Android phones. Despite all the gripe online though, multiple media reports stated that the iPhone XS and iPhone XS Max are selling out. And this is not a first time feat for Apple.

Fans have also been known to religiously line up to purchase the new iPhone.  Business Insider, last year, reported that the iPhone X sold out in “minutes” and that demand was “off the charts”, while South China Morning Post reported in 2016 that the iPhone 7 Plus sold out in less than 10 minutes. The price points then, had been deemed by some as pretty expensive as well.

So what is it about the iPhone that makes the product so darn irresistible?

Founder of crombie.design, Andrew Crombie, described Apple to be a “remarkably strong brand” and is a luxury brand in the tech space. He said that strong brands are given some leeway to deliver slight mediocrity from time to time without losing too much. However, technology brands are more “at risk” than other categories, as cutting edge innovation is a central part of the brand’s emotional promise. Crombie added:

Apple shows that the path to profit in this category does not rely on product innovation alone.

“It is a perfect example of the value good brand management and excellent execution can add,” Crombie said. Nonetheless, Apple will eventually alienate more than just marginal followers if it does not deliver some significant technology innovation to justify it’s premium price, he added.

Meanwhile, Ashvin Anamalai, chief strategist, Be Strategic said Apple pricing its new iPhone over US$1,000 “clearly showcases” its intent on being a luxury product for a selected demographic. He said:

I believe that is Apple’s goal, to set itself apart from the other ‘peasant’ phone brands from the market.

As such, its positioning as a luxury lifestyle brand as opposed to a functional brand, that has allowed Apple to become the most sought-after benchmark for “creative qualities”.

“Heavy investment into perception quality such as product design, physical shop interior design, advertising campaigns, digital interface, and management presentation has built it to become one of the most desirable brand images to be associated with,” Anamalai said.

Also weighing in on the conversation is Fusionbrand’s CEO Marcus Osborne, who said when consumers buy an iPhone, they buy into the whole Apple ecosystem that embraces and works with that, and that is what branding is all about. “Because Apple understands that the organisation is the brand, just about every interaction at every touch-point – think Apple Care and Genius Bar – is best in class,” Osborne said.

While some might argue that iPhone’s technology is less superior to other phones, Osborne said it is “far from average”. He explained that the iOS is built on hardware exclusive to Apple, unlike Android phones, and iPhones come more efficient when upgrades are made over time.

“The X is likely to sell 150 million units this year, and contrary to most expectations, it’s blowing the competition out of the water. Apple will have done it’s research and know what is an acceptable price point for the new phones,” he added.

Clash of the titans

Shortly after the launch of Apple’s new iPhones last week, Samsung also announced it will launch a new mobile device under its Galaxy line next month. In reaction to this news, Osborne said while Samsung has been trying to outdo Apple for years, including being aggressive on advertising, it did not work. He said:

This is further proof that even with deep pockets, advertising can’t build brands.

“Samsung needs to create an ecosystem like Apple’s and have the same influence over strategic partners that Apple has,” he said.

Meanwhile, Be Strategic’s Anamalai said the Galaxy line of phones continue to provide consumers with innovative features at a reasonable price point, and should lean on a value-for-money, high return on investment proposition.

According to market intelligence provider TrendForce, Samsung’s market share was 21.9% in 2017, while Apple’s was 15.2%. As such, Crombie said the question here is whether Samsung needs to drown out Apple or instead, use Apple’s efforts to reinforce its own positioning.

Social conversations

According to statistics from Meltwater, social mentions of the iPhone XS peaked on 13 September with 1.9k mentions. Majority (52%) of social sentiment was negative, with only 10% being positive. Trending themes surrounding this news include XR 63GB, XR 128GB and iPhone XS. Meanwhile, some brands also seized the opportunity to tease Apple for its premium-priced iPhones:

Skyscanner:

Huawei:

Klook:

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