Apple’s Dream Team: How Limiting Consumer Choice Jumpstarted the Company’s Success

Discussion on “Why a simple product line is integral to Apple’s success” (Edible Apple, 2009).

In the Edible Apple article “Why a simple product line is integral to Apple’s success,” the argument is made that limiting consumer choice is the key to Apple’s success. The fundamental premise of Consumer Theory is that a consumer maximizes his total satisfaction from consuming goods and services, given his personal consumer income constraint. In pursuit of utility-optimization, consumers construct indifference curves between analogous bundles of goods/services based on their own ordinal “relative ranking” of the bundles of goods/services. Apple, in accord with confidence in its product quality, strives to simplify for consumers the “relative ranking” process of Apple’s products versus its competitors’ products by offering a more select and comprehensible product line.  Some companies such as Microsoft and Sony have elected to give consumers a large menu of product choices, often with small differences between both the products’ names and the products themselves.  This strategy has contributed to a market that is overwhelmed with product proliferation and consumers that are confused about how to select between alternatives in various product categories. 

When Steve Jobs made his famed return to Apple in 1997, he was confused by the product offerings.  He determined that if he was confused, consumers must have been confused as well.  Apple has responded to this consumer problem by keeping its product line simple and not attempted to satisfy every consumer need.  The names of the products reflect this simplistic approach to the product line (iMac, iPod, iPhone, iPad) and allow consumers to have a greater understanding of the overall product offering.  This simplistic style is also reflected in the packaging of the products.  Due to Apple’s simple product line, consumers are not as confused and feel empowered by a greater understanding of the product’s capabilities.  For example, many consumers knew the function of the iPhone even before it was released, because Apple released one, simple product rather than a line of iPhones tailored to meet the needs of individual segments of consumers.  Apple’s new and simple approach to business galvanized the company’s success as it ascended to power in the technology industry. 

The author provides the analogy of the 1992 United States men’s Olympic basketball “Dream Team.”  After the United States finished a disappointing third place in 1988, the 1992 team faced a highly anticipated return to the Olympic Games.  The team was one of the strongest ever in any sport and defeated its opponents by on average over forty points per game.  The article asks: Would you rather have seven All-Stars on your basketball team or “a full 12 man roster with 1 All-Star, 2 above average players, 3 mediocre players, and 6 benchwarmers”?  Presumably, Apple’s simple product line is composed of a select few “All-Star” products rather than many products where only a few are great (á la Microsoft).  The author quips, “The Dream Team wins every time, baby” indicating his or her preference for Apple’s simple line. 

Consumers benefit in multiple ways from having a limited number of options to choose from among a company’s product offerings.  Limited product options reduce the need for a consumer to engage in extensive information search about product characteristics.  This not only reduces consumer frustration that results from a difficult and technical comparison of numerous models of a single product, but also makes consumers more apt to buy a product from a company when they are easily able to research and understand how the product fits into their lifestyle.  Simplicity of options offered by a firm makes it easier for consumers to gain in-depth knowledge about the available products and therefore increases consumer confidence.  Ultimately, when a consumer’s needs are fulfilled by a product, trust is built between the consumer and the firm.

Firms also benefit from a limited product offering.  When they offer a limited number of product options, firms are able to direct their employees’ talents more efficiently because they can focus their time and energy into making the few products the company offers truly extraordinary instead of stretching their talents to offer a broad range of mediocre products.  Companies can synergize their workforce to a higher degree, because when a company is focused on a smaller set of products it is easier for that company to have clear-cut and definite goals about the quality and performance of those products.

Both consumers and firms benefit from limited consumer choice when companies are able to provide higher levels of technological support.  Employees don’t have to memorize extensive amounts of information about numerous products.  Rather, they can become vastly knowledgeable about the few products that their company offers.  This eases the burden of knowledge on the employees.  As a result, consumers benefit because they are assured that all of the technical support staff has the necessary knowledge needed to solve their problem.  In return, the high level of technological support provided increases customer loyalty for the firm.

Offering a select line of quality products works particularly well for expensive technology. Specifically, Apple’s comprehensive development of the hardware, operating systems, software, and technical support for its select few computer, media player, and smart-phone products has allowed them to sustain prosperous success. However, companies whose goods are differentiated typically for consumers to express their style preferences—clothing and footwear for example—can also sustain a competitive advantage by offering expanded consumer choice and customization. For case in point, Nike Inc. has offered its NIKEiD service that allows consumers to personalize and design their own Nike merchandise. NIKEiD offers a variety of basketball, skateboarding, and “lifestyle” shoes that can be color and/or monogram customized on a multitude of shoe components. NIKEiD provides an interactive website and phone application, as well as 110 retail customization shops in seven languages and over six countries for consumers to interactively customized their shoes. Brand Keys, a research firm that studies customer loyalty, found that “customization is 30 percent of what draws a person to a brand today as opposed to a mere 6 percent in 1997.” Ultimately, once a company understands the factors driving customer satisfaction in its category, as well as the expectation levels of those customers, it can refine its business model to meet these ends.

Posted by Kathleen, Cameron and Chelsea (Section 1)


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