Apple recently decided to open up its flagship stores in Singapore and India (Crabtree & Kazmin, 2016). These two countries were expected to support the further growth of Apple as the sale of Apple in China slows down. So far the place strategy of Apple has worked perfectly for the success of Apple around the globe.
One important aspect of place strategy is the distribution channel used. Usually, distribution channel is taken as the network of firms that help bring products to the market and help customers obtain their desired products. While most companies stop here, Apple chose to go beyond.
Apple used its carefully selected and well trained staffs in its flagship stores. These employees approach customers with personalized welcome, try to understand their needs and try to provide them their professional advices meanwhile presenting the leading features of Apple’s products.
Usually, companies have to choose between intensive and exclusive distribution. In intensive distribution, companies try to market and advertise their products with huge efforts(Li & Scarlett, 2001). While this could help put their products close to a large number of customers, it makes companies less likely to control the customer experiences. On the contrary, if companies chose exclusive distribution, they may have greater control over their customer experience, but may fail to produce enough sales. The recipe of Apple is to choose an integrated strategy of these two.
Apple uses its flagship stores to allow customers have a trial on their complete package of products. These stores have well trained employees to provide customers with superior and professional service. These stores could only allow customers to buy products from Apple. They also help Apple to establish its image as a highly innovative company and the leader in the tech industry.
Have you had or heard of such an experience that a customer may complain about the poor service of a retailer to the company?
While the company may promise to improve the service of its retailers, usually that company cannot do much about that situation. This is what commonly referred to as power and conflict in channels. Companies and retailers usually have conflicts in how much customer service retailers should provide customers with. Traditionally, companies have been trying to strike a balance between inadequacy and too much. Inadequate service could lead to customer dissatisfaction and loss. Too much customer service could lead to conflict and dissatisfaction of retailers.
Apple perfectly solved this conflict between itself and retailers with its flagship stores. With its flagship stores, Apple shifted the burden of customer education, customer service and customer trial to its well trained and well paid staffs. Customers demand for services from retailers is much lower as they may already have very good knowledge about Apple Products from these flagship stores.
While this place strategy may be simple, there are very inspirational ideas under such a strategy. I could still remember the awful experience of trying a smart phone from a retailer. The retailer had been continuously pushing me to buy one even though I had not made up my mind since I have not tried other smart phones. I believe many people must have very similar experiences. With flagship stores like the ones of Apple, customers would not be troubled by such an awful feeling. Therefore, underlying such a place strategy is a deep and careful consideration for customer experiences.
Therefore, one valuable lesson from Apple for many businesses is that they should probably stop talking about big ideas about which place strategies they should choose, but to focus their attention on their customer experience.
Crabtree, J., & Kazmin, A. (2016). Apple applies to open own-brand stores in India, Financial Times, retrieved on May 6th, 2016 from: http://www.ft.com/cms/s/0/98b9c6b4-bf3b-11e5-a8c6-deeeb63d6d4b.html#axzz47yRn1x4c
Li L, & Scarlett. (2001). Exclusive or Intensive Distribution? The Signaling Role of Channel Intensity in Consumer Information Processing. Advances in Consumer Research. 2001, Vol. 28 Issue 1, p204-204. 1/3p.