Marketing, hype, and the ipad launch

[Italianblend]

Hello, I know very little about business and marketing, but I would like to get some opinions on this.

Consider the recent ipad2 launch: People lining up at the stores literally every day to try to get one of roughly 10 new ipads in stock. (differing each day of course, but you get the point.) I stood in a few lines last week because I am on spring break (I am a teacher) and had the time.

Now, it was kind of fun trying to chase down the ipad, waiting for shipping, sharing stories in the shipping thread. But it was because I had some time off, and it was an interesting process.

However, a part of me thought "Why doesn't apple just manufacture for another few weeks and launch the product when there is ample supply for the demand?" It's clear that apple is not desperate for the money that they know they would be getting in a few weeks anyway.

Now, I know that some of you think that's a pretty naive view - and it probably is, because I don't understand the marketing behind it. And I also know there are other countries launching soon, and competition are also factors.

A lady I was standing in line with last week seemed to think that they could've waited, but don't simply because of the hype. People see the long lines and think "oohhh what's that about?" It will grab more people's interest. If there was an ample supply there would be no drama, no hype, etc.

One other thing, I think a delay would help out the apple store, best buy, and target workers by not having them answer the same question over and over "no, we are out of ipads...no, we are out of ipads..."

...not to mention that customers would be more satisfied because they didn't have to wait in lines, track one down, or wait for very long shipping times. - doesn't apple want customers to be satisfied? Or is there something to say for wanting a product that you can't quite get your hands on yet.

I would just like to hear your thoughts on this process. Do you feel as if apple could've, or should've delayed the launch to accommodate more demand? Do you feel as if the long lines and hype are good for the company, and that was a factor? Do you feel as if competition pushed the launch date? (Meaning that people would be able to buy another tablet on the market sooner, and maybe apple would lose some customers that way).

 

[roadbloc]

Omg, none of this have ever been thought of before. Omg guys this guy is a g.

 

[Italianblend]

Thanks! I put a lot of thought into that post. What do you think about the issue, roadbloc?

 

[talkingfuture]

I don't think they will have enough manufacturing capacity to keep up with demand for a good few months, it took ages for the first iPad to be on 24 hrs availability at the on-line store. Better to get them out now, get the marketing hype and get people to order before they change their mind / look at the competition.

 

[citizenzen]

I'd have just ordered it online.

Standing in line only to find out the product has sold out sounds like Hell to me.

 

[strider42]

building up inventory costs a lot of money. You need to store all of that hardware somewhere, and manage shipping it out in larger quantities.

You say that apple "isn't desperate for the money". Businesses don't turn down business because they somehow make enough. You try to maximize your profits at all times. And yes, delaying costs you a lot of money. As I stated above, you need to pay to stockpile all those extra units (and pay to store them at the stores while demand slowly buys up that stock). Also, you are forgoing having your customers money right now. That can be huge when youa re talking about these kinds of dollars. We are talking abuot millions of dollars that are put into accounts and earning interest. delaying by even days means you've lost out on a ton of free money.

 

[strider42]

building up inventory costs a lot of money. You need to store all of that hardware somewhere, and manage shipping it out in larger quantities.

You say that apple "isn't desperate for the money". Businesses don't turn down business because they somehow make enough. You try to maximize your profits at all times. And yes, delaying costs you a lot of money. As I stated above, you need to pay to stockpile all those extra units (and pay to store them at the stores while demand slowly buys up that stock). Also, you are forgoing having your customers money right now. That can be huge when youa re talking about these kinds of dollars. We are talking abuot millions of dollars that are put into accounts and earning interest. delaying by even days means you've lost out on a ton of free money.

Delaying also gives your competitors more time to compete with you. not good. Motorola just announced some new xooms and had to redesign them to compete with the iPad. Launching early disrupted the competition.

You also speak abuot hype as if its a bad thing. Apple woudl want the hype, wouldn't they. They want their product to be in demand, for people to be impressed that you have one. If its a hum drum rollout and people aren't excited, that can impact units sold.

So in summary, its not entirely about marketing anyway. its largely about logistics and making money. In so far as marketing is involved, apple probably doesn't mind the constant news stories about how in demand their products are. Thats a lot of free advertising.

 

[mscriv]

I think you are right in pointing out the marketing aspect, but no company has a guarantee of their product "flying off the shelves". There have been many hyped products that fell flat. However, I'm pretty sure Apple has done their market research and has a pretty good idea of what to expect in terms of initial sales.

So, in short, the buzz about a new release (long lines, limited availability, etc.) is usually considered good from a marketing standpoint. But, that only lasts if the product itself is a winner.

 

[rdowns]

While the hype has been there for this launch, it was far below other launches due to the earthquake and tsunami in Japan. That dominated the news and pushed what would normally be 3-4 minute free commercials to short 30 second mentions.

 

[benzslrpee]

if i remember correctly, Apple runs a pretty lean supply chain with 2-3 days of inventory at any given time compared with a 3 week average observed in electronics retail industry.

the advantages:
- reduces their demand exposure
- reduces the inventory holding costs
- they achieve lower taxation assuming they use LIFO accounting
- etc

the disadvantages is what the OP noted:
- towards the beginning of the release cycle there are tons of consumers always in line for hours waiting to buy one
- potential lost sales could occur amongst impulse buyers
- angry/frustrated customers
- etc

also, keep in mind of the supply side. if Apple wanted to max out every square inch of retail space with iPads that would depend on Foxconn's ability to manufacture that much. historically, in order to ensure the level of quality and efficiency Apple is demanding, Foxconn has invested hundreds of millions in capital equipment just dedicated to making Apple equipment.

it doesn't make sense for Foxconn to throw money in buying new manufacturing equipment just to accomodate the launch day surge. what happens when consumer demands starts leveling off? the extra capacity would just be idling and costing them money and in the manufacturing industry, idle time is a four lettered word.

piecing it all together could Apple theoretically achieve a 1:1 ratio for iPad and customers? yes but it would be pretty cost prohibitive and would disrupt their other product supply chains. as for the launch date... well, first mover's advantage counts for a lot in retail. like someone mentioned above, Samsung had to go back to the drawing board and Motorola had to readjust their pricing strategy.