Apple Consumer Behavior and Marketing

Apple Consumer Behavior and Marketing

The Problem of Apple Mini Cannibalization

The Problem of Apple iPad Mini Cannibalization

Within the last week Apple released sales figures for the Apple iPad Mini, indicating it was cannibalizing sales of the larger and more profitable iPad2. Apple disclosed to investment analysts that 47% of iPad Mini purchasers are entirely new Apple customers, leading to an assumption that these customers passed up purchasing the larger and more expensive iPad2 (Apple Investor Relations, 2012). In related surveys the investment analysts told Apple they had seen as much as 34% of planned iPad purchasers choosing the iPad Mini over the larger iPad2 (Apple Investor Relations, 2012). In addition to this cannibalization challenge, the company also must consider how the iPad Mini could over time impact their iPod net sales which are 4% of total revenue for Fiscal 2012. The pie chart to the right illustrates the distribution of revenue by product for Apple.

Analysis of Cannibalization Problem

The Apple customer base is considered among the most loyal in high technology, with the average long-term customer owning up to three generations of the company's products (Barwise, Meehan, 2010). This continues to be one of the most significant factors in the company's overall growth, ensuring the successful introduction of new products over decades of new product development. How Apple consumers define themselves from a psychographic standpoint is shown in the following graphic, which illustrates how price insensitive they are to new products and also how loyal they are to the brand over the long-term. The long-standing base of Apple loyal customers have not adopted and purchased the iPad Mini as quickly as they purchased the iPad2 and other products while entirely new Apple customers have (Apple Investor Relations, 2012). Apple must solve the problem of getting their customer base to adopt the iPad Mini to keep growing profitably, as this customer base can be upsold additional products and services easily.

Psychographics of Apple Customers

Sources: (Anthes, 2011) (Barwise, Meehan, 2010).

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