Apple’s iPad2 launch: sold out or sellout?

Sure, I know.  It’s pretty rare you hear the words “Apple” and “fail” even mentioned in the same neighborhood (unless it’s a snicker aimed at 1993’s Newton launch,) so let me clarify.

You can call me something of an Apple freak: since my first Mac Classic II in 1990, I’ve upgraded through the IIci, the LCIII, the Quadra line to the Power Mac, Peforma into the Bondi iMac G3. I’m also one of the six people who still owns two G4 Cubes.  I then fell in love with the G5 flatscreen iMacs, and bought a bunch – first the white ones, then the aluminum babes.  My latest supplications:  the latest Powerbook and the 27″ iMac G5. You can call me sentimental:  I still listen to rock tunes on my white (huge) first-generation iPod. You can call me ridiculous:  I was on line in June 2007 for the first iPhone, and have upgraded obediently through iPhone 4.  (And I’ll get my iPhone 5 this June, if they’re in stock!)

But now, you can call me peeved.  This iPad2 release has left me – and a lot of other folks just itching to be separated from hundreds of hard-earned dollars – a bit flat.  iPad2 was launched in stores on March 11, at 5:00 pm. I’m not down on the early evening release:  it helps the retail stores to get their inventory squared away, and get the systems upgraded to handle massive checkouts.  But unless I’m mistaken, it also makes for great localized PR – virtually every local newscast carries stories of the ridonkulous lines around the block at every Apple store in the country. Every day, I visit my local Apple store to hear the sad news from the dude in the blue shirt:  “we had ‘em.  But we sold out. In, like, 10 minutes.”

What’s going on here?  Is this an epic fail of distribution planning?  A gross underestimation of demand?  A glitch in the system?  A return to what Chris Anderson calls “scarcity economics” in The Long Tail?  All not likely from the historically over-prepared Apple Inc.  What’s more likely is that they’re enjoying kicking their competitors in the gut with yet another huge hit of performance computing.  So why not milk every last drop of extra PR coverage out of this sucker?

[In fairness, there are logistical problems facing many parts manufacturers in Japan, impacting their delivery schedules.  (The tsunami and the iPad release on the same day.  Weird.) But Apple has said nothing of the matter – instead, they’re enjoying the long lines and long waits. Call me cynical.]

Here’s the worst part.  I, and many others in my situation, am starting to come to the horrendous realization that maybe, perhaps, just a bit…I could live without an iPad2.  After all, I’ve waited nearly three weeks.  What’s another year?

If your company is considering any kind of PR stunt in the near future, make sure your consumers get the BENEFIT of the stunt, not the brunt of it.

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I’ve just read Jay Goltz’ blog post on NYTimes.com entitled “Is Groupon Ruining Retailing?”  A good read, and lots of good points that got me thinking about couponing as a marketing tool.

A classic sales promotion method, couponing has grown steadily over the past several decades.  According to a recent report issued by NCH Marketing (a Valassis company,) shoppers saved $3.7 billion with coupons in 2010.

Sort of a perfect time for Groupon to be coming out of its shell, eh?

However, there are some important rules of the channel that the Groupons of the world might be missing.  Couponing is not for everyone, is more of an awareness-building tool, less of a customer acquisition tool, and it has a limit.  There are also many factors at play besides redemption rates that have to be taken into consideration.

So why do marketers coupon?  A solid coupon program will create:

  • Incremental sales (for either new products or labels past maturity)
  • Brand Awareness
  • Program ROI
  • And maybe some additional opportunities for sell-in at the store level.

A colleague of mine, David Adelman of OCD Media, also reminded me that couponing has to be looked at in context of what the running sales trend has been for the particular brand, and then re-evaluated months after the program.  Sure, there can always be a spike in sales in the short term, but some coupon programs can hurt, since, on some level, you’re discounting future sales for that spike this week.

The real balancing act with couponing is about redemption:  too little redemption and the program won’t deliver the requisite ROI.  Too much redemption, and the value of the program ALSO goes down…how is this?

Coupon Redemption Scale

 

Turns out that too many redemptions can erode the brand in several ways:  super-redemption can cut into overall margins, so while moving more volume, the marketer can be incrementally losing share on every purchase.  Look for a redemption range [in the blue dotted lines] that helps move sufficient volume without over-saturating the market. Better to under-estimate, since you can always pump more coupons into the market, or hand-distribute in stores.  Also, if the coupon is on a 1+ offer, (most are) you can erode repeat purchase by an even longer period…further delaying the product sales rebound…a deadly combination with over-redemption.

So coupon carefully.