Trade-off Map and Strategy for the iPhone: Should Apple Cut Down the Price of the iPhone?

THE TRADE-OFF MAP & STRATEGY FOR THE IPHONEShould Apple Cut Down the Price of the iPhone?

Dr. Rod King

Inexpensively Leapfrogging the Competition

ALTERNATIVES: ………………Trade-off Quotient (TQ)= Pain/Delight= Inconvenience/Fidelity= Customer Exp. Quotient

SELECTION/ACTION: ………

DELIGHT-PAIN BALANCE Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal

• Personalization (Identity/Character)

• Differentiation (Social Status/Cachet)

• Quality (Content/Performance)

DELIGHT (Fidelity)

• Complexity (Time)

• Inaccessibility/Unavailability

• Cost (Price)

PAIN (Inconvenience)

TOOL

Copyright 2009. Dr. Rod King. [email protected] & http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing

MARKET (CUSTOMER MAIN DESIRED EXPERIENCE/INTENT/NEED/OBJECTIVE/JOB): …………………………………………………………………..……….

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TRADE-OFF MAP For Total Customer Experience Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal

(-): PAIN

(+): DELIGHTDisruption Spot

Luxury Spot

Strategic Choice

High

Low

Low High

Zero Trade-off(“What customers ultimately want:Free, Perfect, Now”)

MARKET (CUSTOMER JOB): ………………………………….Period/Year: …………….…………………………………………..





TRADE-OFF MAP Illustrating All StrategiesStage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal

PAIN: Inconvenience

DELIGHT:Fidelity

‘Hit’ Zone

Convenience Inconvenience

High-end

Low-end

Disruption Spot

SuperHit

Green Ocean

Oasis

Sweet Spot

No Man’s Land

Volcano

Luxury Spot

Red Ocean

Fidelity Belly

MARKET (CUSTOMER JOB): ………………………………….Period/Year: …………….…………………………………………..

Zero Trade-off(cf. “Wrecking-ball moment”)




Copyright 2009. Dr. Rod King. [email protected] & http://businessmodels.ning.com & http://twitter.com/RodKuhnKing

TRADE-OFF STRATEGY For Luxury Spot Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal

Name of Business: ………………………………………………………………………………………………….… Year: ……………………

Sector/Ecosystem/Industry: ………………………………………………………………………………………………………………………

Mission/Vision: ……………………………..……………………………………………………………………………………….…………………

Quality (Content/ Performance)

Accessibility/Availa-bility

Cost (Price)

Social Aura/Cachet

Identity ('Character')

Simplicity

Love (Loyalty/Fun)

Need

0

5

10

Trade-Off Strategy for Typical Product/Service inLuxury Spot

Zero Trade-off Luxury Spot

ELEMENTS OF TRADE-OFF STRATEGY FOR LUXURY SPOT-PRODUCT/SERVICE:

Trade-off (Value Chain) Strategy• FIDELITY (Delight) TACTICS:- Eliminate ……………………………………………- Reduce ……………………………..…..……………- Increase ……………………….……….……………- Create/Procure ……………….…….……………

• INCONVENIENCE (Pain) TACTICS:- Eliminate ……………………………………………- Reduce ……………………………..…..……………- Increase ……………………….……….……………- Create/Procure ……………….…….……………

Customer Value PropositionHigh performance (brand) at exclusive price

Targeted Customer Segment (Interviewees)Well-to-do customers in the ‘short head’

Customer Experience/Value Proposition: …………………………………………………………………………….…………………




Scenarios for Apple’s iPhone

Should Apple drastically cut down the price of the iPhone?


TRADE-OFF MAP for the iPhone ExperienceStage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal

(“Should Apple drastically cut down the price of the iPhone?”)

PAIN: Inconvenience

DELIGHT:Fidelity

‘Hit’ Zone

Disruption Spot?

Luxury Spot (2009)

Zero Trade-off(cf. “Wrecking-ball moment”)

High

Low

Low High

Fidelity Belly(Super-)convenience

MARKET (CUSTOMER JOB): Communication/Information Processing at Work/Home/Outdoors Period/Year: 2007 to Date

SuperHit? Sweet Spot?

Oasis?





Customer Experience/Value Proposition: High functionality-smartphone/mobile computer (that is affordable)

TRADE-OFF STRATEGY for the iPhone (2009 & 2011) Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal

Scenarios of the iPhone for 2009 and 2011Name of Business: Apple, Inc. Year: 2009

Sector/Ecosystem/Industry: Communication/Computing

Mission/Vision: Platform or hub for mobile communication and information processing (computing)



Cost (Price)

Social Aura/Cachet


Simplicity

Love (Loyalty/Fun)

Need

0

5

10

Trade-Off Strategy for the iPhone Experience

Zero Trade-off iPhone (2009) iPhone (2011)

ELEMENTS OF TRADE-OFF STRATEGY FOR CHEAPER IPHONE (2011)

Trade-Off (Value Chain) Strategy• FIDELITY (Delight) TACTICS:- Eliminate ……………………………………………- Reduce Social Aura & Cachet/Identity (‘Character’)/Love- Increase Quality (Content/Perform.)/Need- Create/Procure ……………….…….……………

• INCONVENIENCE (Pain) TACTICS:- Eliminate ……………………………………………- Reduce Cost (Price)/Complexity- Increase Accessibility/Availability/Simplicity- Create/Procure ……………….…….……………

Customer Value PropositionHigh performance (brand) at lower price

Targeted Customer Segment (Interviewees)Average customers in the ‘long tail’




Scenarios for Motorola’s RAZR

Should Motorola have drastically cut down the price of the RAZR?


TRADE-OFF MAP for the RAZR Experience(“Should Motorola have drastically cut down the price of the RAZR?”)

PAIN: Inconvenience

DELIGHT:Fidelity

‘Hit’ ZoneZero Trade-off(cf. “Wrecking-ball moment”)

High

Low

Low High

Fidelity Belly(Super-)convenience

No Man’s Land (2007)

Volcano (2004)

Luxury Spot (iPhone - 2007)

MARKET (CUSTOMER JOB): Communication/Information Processing at Work/Home/Outdoors Period/Year: 2004 to 2007





Customer Experience/Value Proposition: Highly aesthetic mobile phone that is affordable

TRADE-OFF STRATEGY for the RAZR (2004 & 2007) Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal

Scenarios of the RAZR for 2002 and 2007Name of Business: Motorola, Inc. Year: 2009

Sector/Ecosystem/Industry: Communication

Mission/Vision: ……………………………..……………………………………………………………………………………….…………………



Cost (Price)

Social Aura/Cachet


Simplicity

Love (Loyalty/Fun)

Need

0

5

10

Trade-Off Strategy for the RAZR Experience

Zero Trade-off RAZR (2004) RAZR (2007)

ELEMENTS OF TRADE-OFF STRATEGY FOR CHEAPER RAZR (2007)

Trade-off (Value Chain) Strategy• FIDELITY (Delight) TACTICS:- Eliminate ……………………………………………- Reduce Social Aura & Cachet/Identity (‘Character’)/Love- Increase Quality (Content/Perform.)/Need- Create/Procure ……………….…….……………• INCONVENIENCE (Pain) TACTICS:- Eliminate ……………………………………………- Reduce Cost (Price)/Complexity- Increase Accessibility/Availability/Simplicity- Create/Procure ……………….…….……………

Customer Value Proposition2004: Superslim camera-phone at high price2007: Superslim camera-phone at low priceTargeted Customer Segment (Interviewees)2004: Well-to-do customers in ‘short head’2007: Average customers in ‘long tail’




CUSTOMER LOYALTY

Higher level criteria for assessing impacts of a

business strategy:CUTTING DOWN THE PRICE

OF THE IPHONE

CORE COMPETENCE (KNOWLEDGE)

SHAREHOLDER VALUE

BRAND EQUITY

STRATEGIIC FIT IN VALUE NETWORK ECOSYSTEM GROWTH/SUSTAINABLILITY

PROFIT (REVENUE) COMPETITIVE POSITION IN SECTOR





WHY?

DECISION-MAKING QUESTION:

SHOULD APPLE CUT DOWN THE PRICE OF THE IPHONE?

WHEN?

HOW MUCH?

WHO?

HOW? WHAT NEXT?

WHAT? WHERE?



