As Apple surpasses oil group Exxon to become the world's most valuable company by market capitalisation, one has to ask the question; how did they manage to build such a strong and effective brand?

Apple has built a lifestyle brand and not a functional brand, it's peoples perceptions of what Apple says about them (lifestyle brand) and not what it does for them (functional brand). In the fast-moving technology sector functions are bench-marked by competitors at the speed of light, and can't be used as enduring differentiators. So it's down to consumers to decide if they want to be an Apple person or a Sony, Dell, Microsoft, etc. person.

A Lifestyle Brand

Apple has been able to build a lifestyle-brand by making Apple mean "Creative" in the sub-conscious minds' of consumers. No-one will claim you'll become more 'creative' by using Apple products, but you will belong to the 'creative-class'. So why do people find 'creative' so appealing? Why do people want to be seen as creative and identify with creative people?

‘Creativity’ is a highly sought after quality in the opposite sex. It’s an indication on intelligence and problem-solving abilities which again could lead to high financial earnings in not only the traditional business world, but also, and more importantly, in the creative industries like entertainment, advertising and design. It part of evolution and fits with human reproductive strategy; our perception of what Apple says about us will affect how we feel which again will affect our decision-making-process benefiting Apple's bottom line.

Apple's Brand Strategy

So what have Apple done to create this ‘creative’ brand? Well first their brand philosophy has always been ‘Think Different’. And the act of thinking differently represents; smart, innovative, clever, and creative. Then they have lived up to the claim of 'thinking differently' by actually 'acting differently' by going against the norm - always asking the question; "what's different about this?". One example is when all personal computers where gray and dull, they came out with the fun and colorful iMac.

From Strategy to Execution

So let's have a look at how Apple has translated "Think Different" into all its brand touch-points. What they have done to make all their brand touch-points communicate "creative"?

Product Design

This is probably where they shout "think different" the loudest. From colorful iMac's to iPods, iPhones and iPads, no other company has changed the way products look, feel, work more than Apple. They are the complete opposite of a me-to company, not satisfied with small improvements, only leaps and bounds will do.

Interface Design

A lot of companies invest heavily in product design, trying to create an object of 'desire' only to keep the same old interface. Apple on the other hand can radically change the interface but keep the product's physical design unchanged, the iPhone 4s - introducing Siri, being an example.

Interior Design

Apples retail stores basically visualizes brings a creative lifestyle to life through a combination of product and retail design. Walking into an Apple store is almost like walking into a creative design studio, where products aren’t sorted by type and stocked in shelves, but rather displayed together on tables. iPod, digital camera, printer and speakers are plugged into a laptop with iTunes installed, for customers to walk over and start to 'play'.

Exterior Design

After so many years of shop facades, it took a company like Apple to really 'think differently'. Not content with a sign like everyone else, they have created facades which resembles modern churches where people can come an worship the latest iPhone.

Advertising

Have a look at the video below and ask yourself if the ad is focusing on 'product' or 'lifestyle'. Most ads will mention the products new features, performance, quality or price. Apple on the other hand barely mentions what the product does for you (functional-brand), instead it's all about what the product says about you (lifestyle-brand) - who you are when using an Apple.

Price

If you compete on price you're no better than the rest. If their product is a bit 'shit', yours' must be as well - seeing as it costs the same. Apple enjoys one of the highest price points in the industry, to the envy of it's competitors, who all bang on about 'value for money'. Only problem for them is that customers know "you get what you pay for".

Management

Let's just quickly have a look at the faces of Apple and Microsoft. On the Apple side you have cool, trendy and innovative Steve Jobs, the underdog. On the other side you have geeky, bad dressing Bill Gates (sorry Bill), with his dominating big business. One represents design, innovation and creativity, whilst the other represents product, functionality and corporation. In human sexual selection strategy a product that will increase your reproductive success will always win over one that mainly represent functionality (survival). It doesn’t matter how ‘clever’ or cool looking the Microsoft phone is, when they compete in a highly visual category where products have become jewelery it’s what the brand represent that matters. People don’t buy the product for it’s functionality but for its self-expressive benefits, it’s brand image. So customers will choose Apple over Microsoft if they are going to use the product in public.

Staff

How you noticed how all Apple staff look like laid-back designers and media people? They all look like they belong in a creative agency, and know what they are talking about. Apple's HR strategy ensures that the staff also communicates "creative".

Customers

Their main user base of Apple products has traditionally been the creative industry, usually known to be designers and media people. This endorsement has helped Apple enormously in selling the 'creative' lifestyle as it helps customers imagine cool and trendy creative people, sipping cappuccinos, tapping on swanky laptops and lounge in stylish offices. Another company which have manged the same level of customer endorsement is no doubt Harley-Davidson; with it's free-loving, no-nonsense, tattooed customers. It's free advertising, just make sure those customers represent a desirable lifestyle.

Return on Investment

So what's the value of a lifestyle-brand? A creative lifestyle brand which people can use to build their own image, an image that would send out the ‘right’ message about them, to increase their chances of reproductive success. Apples share price says it all.

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Price, Quality, Service, Design?

Where can companies find a competitive advantage in today’s market situation? A number of strategies have had their day in the sun, but as they get bench-marked one by one differentiation becomes increasingly difficult.

Differentiate on Price?

Distribution systems, outsourcing and location can and have all been bench-marked by the three major supermarkets in the UK. The other problem with competing on price is that price can only go so low. Price-wars have been known to happen when a company cuts its prices so low that it looses money, but attracts customers to itself and away from the competition. Profits have to be made and a company can only underbid its competitors for so long.

Differentiate on Quality?

In the 1980s the Japanese started to focus on quality to differentiate their products. This was referred to this as ‘Kaizen’, when you try to make your product a little bit better than yesterday. As a result Japanese products flooded the European and American markets. Consumers had little problem accepting better products at a lower price. This led to companies focusing on total quality management (TQM), but ‘while everything may be better, it is also increasingly the same’ (Kunde, 2002).

Differentiate on Service?

What service can you find on ‘The World’s Favorite Airline’ that you can’t find on Virgin Atlantic or Singapore Airlines? They all have online booking, lounges, sleeper beds and in-flight entertainment.

Differentiate on Innovation?

So what about innovation? Surely it must be an area where a company can compete? Daniel Muzyka16 (1994), The Dean of Sauder School of Business at University of British Columbia wrote in an article in the Financial Times that ‘only the constant pursuit of innovation can ensure long-term success.’ If we look at British Airways who took a financial risk by innovating a sleeper bed for their business class, we can see that it turned out to be a success. Customers where happy to foot the extra cost to compensate for the reduced number of seats. So BA would now seem to have a competitive advantage over their competitors being the only one offering sleeper beds on long haul flights? Afraid not, the reality is that before you could blink all the other major competitors also had their version of the sleeper bed (without the cost of innovation research or the risk of failure). So why innovate if you can benchmark at the speed of light?

So how do we know which one to pick; if all aspects like features, technology, price, service and design are identical? When everyone’s basically offering the same product/service; with only the name being different?

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So things are produced cheaper and faster, so what?

The problem with that is the side-effect ‘benchmarking’. Companies just takes the best form its competitors offerings and incorporates into its own. It’s not a new concept, but this time around it can be done fast and at an affordable price. These processes are eroding most unique selling points (USP’s), leveling the playing field. A product is hardly unique when everyone has one, even it you invented it.

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Several developments have shaped the business reality we face today.

Everything has become much cheaper to produce do to outsourcing, and speed to market have been greatly increased do to technology. This have lead to an influx of products and services; an influx of choice. And consumers love ‘choice’, right? The problem is that all these products seem to be more or less identical, and as a result, consumers have become paralyzed by to much choice. No USP, just shelves full of identical products.

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I was asked by Brazil's most respected business magazine Exame to explain how Skechers and their toning shoes have become such a huge sales success.

Market Situation

"Although Nike has held on to its top spot in the U.S. woman's athletic footwear market, its share slipped 7.2 percentage points, to 31 percent, or $412 million, in the first quarter from a year ago, according to researcher SportsOneSource. Reebok share more than doubled, to 6.7 percent, or $90.3 million, and Skechers tripled to 17 percent, or $225.7 million." reports Businessweek.

The Interview

Is it possible to explain the phenomenon of toning shoes? Is this a relatively new phenomenon? Why are they such a hit?

Toning shoes are such a massive hit because they score high in both the functional and social aspects of the human decision making process; people’s perception of what the product does for them and their perception of what the product says about them.

As a functional product the toning shoe promises weight-loss, firmer legs and a tighter bottom - all for as little as the $100,- (for a pair). Plus consumers don’t have to take any time out of their daily schedule to do the “exercise”. No fitness club can compete with the low price or convenience - it’s easy to see the appeal.

It’s very difficult for consumers to communicate to their peers that they are fit, healthy and exercise conscious without, well, bragging. They can drop ‘clues’ by dressing like they’re going to the gym and even hold a bottle of ‘pure’ water in a vain attempt to ‘get the message across’. But they might just end up looking like someone who couldn’t be bothered to put on some proper clothes. As a social product the toning shoe clearly communicates a “health conscious lifestyle” due to its distinctive and unmistakable shape - everyone will know you’re “toning” right this moment. It’s a bit like walking around with a part of the gym permanently attached to your feet - unmissable.

These products are still considered controversial for many physicians and still they are hits. Is it related to the fact that Skechers is such a strong brand?

$100,- for a pair of shoes is not a lot to pay when compared to a gym membership with a minimum 6 months contract. Consumers don’t have to set aside any of their precious time like they would have to do for the gym.

A lot of experts say they don’t work, but for most people an investment of no time and only $100,- is well worth the risk for something that just ‘might’ work. If experts told woman anti-wrinkle creams didn’t work, women wouldn’t stop using them, as it’s better to be safe than sorry.

In 2010, Skechers became the number 2 footwear brand in the US. Do you think it is possible to analyse the main points that made this success possible?

Sketchers should be very thankful to Nike who allowed them to have first mover advantage. This meant they could almost re-brand Skechers from meaning just “Shoes” to mean “Shape-Ups toning shoes”, and in doing so they where able to become synonymous with the toning shoe category itself. So when consumers think ‘toning shoes’ they think ‘Sketchers’, it’s a step further than being top of mind - it’s being the category.

Branding is all about creating meaning, it’s what consumers think of when they hear a brand name or see a brand logo. And in this case, Nike and Reebok alike can’t be synonymous with toning shoes as they both offer so much more then just shoes. Their brands have become synonymous with inspiration, empowerment and self-determination, which are all transferable across their individually branded product lines. Sketchers didn’t have this “restriction”, and has been able to become synonymous with the product category itself; toning shoes. It’s a great place to be when people crave the category, but what should worry Sketchers is what will happen when people loose their cravings.

Imagine after a few months when all the hype and excitement has worn off and people haven’t lost any weight, or dropping a jeans size. Toning shoes are no longer “new” and can’t be seen as the “latest” thing to have. The Kardashians popularity has dwindled, as they might lack staying power in the fast changing reality TV world. It’s risky to get endorsements from someone who’s here today, but might not be tomorrow.

If consumers loose interest in toning shoe category, its fall might just take the (toning shoe synonymous) Sketchers brand down with it. If Sketchers brand doesn’t stand for something that transcends the product category - and the category fails - the Sketchers brand is as good as dead. The DVD killed off all video synonymous brands whilst technology synonymous brands just changed their offerings from video to DVD – offering the best technology whatever the product.

Last year, Skechers did a very simple marketing spot during the Super Bowl, differently of what most companies do, and they noticed that men actually started buying the shoes. On the other hand, they spent 103 million in measured media. How important is marketing in Skechers strategy?

Sketchers incredible growth and market share can also be put down to some clever marketing efforts. Firstly Sketchers’ product name ‘Shape-Ups’ has an advantage over Reebok's ‘Easy-Tones’ as it suggests the user will be “Shapely” with everything moving “Up”. ‘Easy-Tones’ suggests the user is a bit lazy, as they would need an “Easy” way to “Tone”.

Secondly, Kim Kardashian's endorsement will have Shape-Ups flying of the shelves, as the Kardashians are admired, envied and identifiable to most young girls around. They are models, financially independent, successful businesswoman and yet have all the relationship problems most girls have.

Thirdly, ‘Buy-Buy Trainers’ ‘Hello Shape-Ups’ reaffirms what most people already knows; that trainers are a bit 80’s. What is cool on the other hand are sneakers, the only problem for sneakers is that they are very difficult to distinguish from trainers. Shape-ups on the other hand have a very distinct shape - which can be easily recognised. Consumer’s sub-conscious decision making process might go something like: “Best to get a pair of Shape-ups so no-one will think I’m wearing trainers - even though I’m wearing a pair of the latest $150,- über cool Nike sneakers”.

Skechers has different products aimed at different market segments. Does it amplify the chances of success?

A market-focused product strategy will always have a greater chance of succeeding, as it’s tailored to people’s generic needs found within specific segments. It means removing doubt from their decision-making process and amplifying the chances of success.

Important footwear brands like Reebok are entering the toning shoes market. What does this competition means for Skechers?

The fact that a brand like Reebok have entered the toning shoe market is what you could call a category endorsement. Their entry legitimates Skechers claims of toning, health and fitness and puts doubters at ease.

Toning shoes aren’t a hit just because of Skechers alone; it’s the marketing efforts of Reebok and Skechers combined that have grown the category - at the expense of Nike. They have both benefited from each others efforts in convincing the consumer know they should buy toning shoes instead of ‘normal’ trainers.

Have Nike missed the boat?

It wouldn’t be very trendsetting of Nike to follow Skechers and Reebok. It might make financial sense in the short-term, but it could have a negative effect on their brand in the long term. A leader should never follow even if they’ve made a wrong turn - if they do, then they’re no longer the leader.

My Recommendation

Nike should start to offer toning shoes but don’t advertise the fact. Just tell customers; “Yes, they are over there” when they ask in store. It means taking out all the hype and “pretend” they have been selling them for some time (and not missed anything). This way they won’t be seen as “followers” or not being “with it”. And hopefully they would be able to claw back some of their lost share in the U.S. woman's athletic footwear market without loosing face.

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