Apple's Secret to Success: Let's Consider Half a Billion Reasons

It’s widely assumed by both industry executives and consumers around the world that Apple is a market giant because of its leading technologies and inviting packaging. It stands to reason, then, that the company’s products fly off-the-shelves because of competitive advantage realized through superior engineering and ingenious design.

If that is in fact the case - why, then, did Apple spend a half a billion dollars this year - $501 million, to be precise - on marketing? A HALF OF A BILLION DOLLARS: $500,000,000. Given that Apple products presumably “sell themselves”, with their undeniable appeal and in-your-face differentation, would that HALF A BILLION DOLLARS be spent more intelligently else - I.E., research & delvelopment? Employee bonuses? Charitable foundations? Apparently, not.

Indeed, Apple provides all of us with an instructive marketing lesson, precisely because of its superior product offerings and dominant market position. The iPhone is super-cool and will continue to lead the market for the foreseeable future, but once the concept was proven successful, companies rushed to develop competitive offerings and refine and/or reposition existing products (Blackberry, Droid) to give consumers options. Commoditization happens, no matter how high the barriers of entry.

Looking out across the marketplace, we’re all familiar with the high profile B2C example of marketing at work - think big spenders like Procter & Gamble, AT&T, and Disney - but similar rules apply in B2B as well. Accenture has paid tens of millions of dollars to Tiger Woods to be its spokeperson; IBM regularly spends more than a billion dollars a year on marketing, as does Microsoft; and most everyone with a TV is familiar with UPS’s “What Can Brown Do For You?” campaign. Marketing and promotion is simply a cost of doing business.

And the rewards associated with the right balance of marketing and product management can be downright staggering -  Apple has generated about $20 billion in profits over the past five years, so the $2.5 billion or so it’s spent on marketing during that period seems a pittance.

If a tree falls in the woods and no one is around to hear it, does it make a sound? Does your company have a compelling product or service to sell, but no one knows about it because marketing isn’t a priority — or even a consideration?