Monday, July 14, 2008

How Detroit can create the next iPhone


Like hundreds of thousands of people across the country, I stood in line this weekend at the Apple Store in Newport Beach to buy the new iPhone 3G for my daughter after three unsuccessful attempts at nearby AT&T stores.

Witnessing this exuberant demand for a new product made me wonder if this feat could be repeated in other categories, such as the auto business. What would an automaker have to do to seduce consumers to stand in line to buy a hot new car? Here are some lessons from the iPhone:

Functionality: Auto execs pondering how replicate the iPhone’s commercial and cultural success would be wise to note that the iPhone is not simply a marketing phenomenon. The iPhone is a breakthrough product. It revolutionized the mobile phone business through design, features and functionality.

One way for auto companies to create breakthrough products may be to begin thinking like a consumer electronics brand. Technology brands are the new car. Throughout the last century the automobile stood for freedom, mobility and joy. Cars represented modern life at its best. Today that role is served by each new smart phone, gaming system, wafer-thin laptop or lifelike home theater that joyfully proclaims that today is better than yesterday. An automaker should commit to creating a truly modern car, a car that democratizes the latest technologies; a car that liberates us from tired compromises by proving that design and performance go hand-in-hand with safety and environmental responsibility; a car that is an extension of the personal technologies we use to make our lives smarter, more organized and more entertaining. Create a car that joyfully proclaims that today is better than yesterday.

Design, design, design: The iPhone looks like nothing else. It took no cues from category norms. It wasn’t an exercise in incrementalism, as if often the case with domestic auto design.

Cult of celebrity: Auto companies tend to believe “celebrity” is attained by having A-list actors and rappers drive the car. In Apple’s case, its celebrity is organic. Steve Jobs is a celebrity. Jonathan Ive, Apple’s head of design, is a celebrity. It is time to elevate the automotive designers to be the face of the company instead of the suits. Let's see these designers on the cover of Fortune, People and Vanity Fair. After all, at their core these companies are industrial design firms.

To fast track this cult of design celebrity car companies should enlist a hot industrial designer (Yves Behar) or an accomplished architect (Frank Gehry) to create the next “must have” design of the year. And I don’t mean creating a “Cartier” edition, which usually means a special trim package. Fully empower this outside designer.

Limited supply: Here’s a very simple rule: a company shouldn’t produce more product than it can sell. Sounds simple, but seldom happens in the car business. Limiting supply negates the need for brand-sucking discounting and creates a perception of rarity that strengthens the marketer’s pricing power. Apple is genius at this.

New distribution model: Sales associates at Apple stores are extremely well trained and are living ambassadors of the brand. Consumers may not get this same experience from car salespeople. So here’s where the auto companies need to swallow a brave pill. Don’t sell this hot new car through dealerships. Signal change by changing how the car can be bought. Establish centrally located viewing galleries – in shopping malls, in airports, in downtown business districts – staffed by the same well-trained ladies and gentlemen hired for car shows. Sell the cars there or online. And, knowing that state franchise laws don't allow cars to be sold without dealers, give dealers a reasonable commission on all sales that take place in their designated sales area. Dealers must be properly compensated because they play a crucial role in providing ongoing service.  (Fixing a car is a tad more complex than fixing an iPhone.)

Advance buzz: When Apple launched the original iPhone it created a huge amount of buzz and curiosity by doing the opposite of what auto companies tend to do: Apple said absolutely nothing. Auto companies tend to debut the concept car three years in advance at an auto show, create microsites for sneak-peeks, and give the buff books early test drives in return for good coverage. And what happens in return? The buzz peaks well ahead of the product's retail launch. The new mantra must be to reveal less and intrigue more.
 (Dealers did this quite well back in the days when they'd cover up new models until launch day to keep curious faces pressed against store windows.)

Apple did all of this and more. Breakthrough product. Inspiring design. Smart pricing. Clever marketing. Seems so simple. And therein lies the beauty of Apple’s success.

6 comments:

Anonymous said...

apple also does an amazing job of sequencing product revisions. people are desperate for the newer version. when does this happen in the car world? how about fewer revisions year on year and building anticipation for the next model not just the next year version.

Chelsea Johnson said...

This is my favorite WikiBranding entry so far. This is such a great insight, I would love to see these ideas implemented!

Christopher said...

“The buzz peaks well ahead of the product's retail launch. The new mantra must be to reveal less and intrigue more.”

So why does this happen? Well the main reason is that auto companies know they get an immediate peak at introduction and first year of sales from a new product. And that car shoppers, unlike someone buying a $199 or $599 phone, consider vehicles in their consideration set 6-9 months out (CNW Auto research). It’s a very considered decision and if a company doesn’t even get on one’s list 6-9 months out the probability of being a considered purchase is non-existent so this is one of the biggest reasons why automotive firms lead so far out with new product news that and the auto shows are a forum for product intros, much like Apple’s MacWorld where press and auto insiders wait for the latest news. Keep in mind Apple shows their products off often months before launch in their forum too, so it’s not like they don’t share the technology prior to launch day.

Anyway, I think there are some valid points around better use of buzz marketing techniques and developing products with more flare. This does happen with more whimsical brands like Mini and Smart for example but certainly is a struggle for the Detroit brands since they are not niche manufacturers and tend to dump product ideas if the market size is too small (example: think GM not doing hybrids a few years back because it was too small of a market) and this definitely hurts innovation which the Detroit automakers definitely lack when it comes to production decisions. So, I agree a lot more could be done on the product design side of the equation.

Anonymous said...

There were hundred of thousands in line outside the Newport Beach Apple Store? Wowsa. I bet local restaurants were really pleased by all these new customers.

Anonymous said...

I am sure they are making a ton of money which would certainly be a new thing for US car manufacturers. However, Apple is number 4 in the US which does not include Nokia, Siemans, SonyEriccson. I think to hold them up as the model for the car companies is faulty. iPhone is loved for features and functions by the fashionable crowd(20-30) and the disposable income crowd wishing to be fashionable(50-60). This is not the bulk market and will require continuous innovation. Apple is not winning on reliability and battery life - the corporate user.

I think the big car cos. will have a very tough time making this type of market focus shift and go for being smaller than the big global players.

captmrdude said...

Remember when the Plymouth Prowler and Dodge Viper were first launched as limited production vehicles? They actually did a bunch of the things you've talked about. Then they got greedy and tried to commoditize the concepts instead of coming up with another great idea.