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Trade-off Map and Strategy for the iPhone: Should Apple Cut Down the Price of the iPhone?

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Industry Analysts are speculating that as Apple expands coverage of the iPhone especially in Asia, Apple will have to slash the price of the iPhone. This expectation appears logical, given the laws of …

Industry Analysts are speculating that as Apple expands coverage of the iPhone especially in Asia, Apple will have to slash the price of the iPhone. This expectation appears logical, given the laws of supply and demand. However, will the iPhone loses its 'coolness' and ultimately, its desirability and profit as Apple expands?

This presentation provides a systematic framework for analyzing and answering the above question. The Trade-Off Map as well as ideas from Kevin Maney's new book, "Trade-Off," play a key role in the analysis.


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  • 1. Inexpensively Leapfrogging the Competition
    THE TRADE-OFF MAP & STRATEGY FOR THE IPHONEShould Apple Cut Down the Price of the iPhone?  Dr. Rod King
  • 2. DELIGHT-PAIN BALANCE Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal
    MARKET (CUSTOMER MAIN DESIRED EXPERIENCE/INTENT/NEED/OBJECTIVE/JOB): …………………………………………………………………..……….
    DELIGHT (Fidelity)
    PAIN (Inconvenience)
    • Quality (Content/Performance)
    • 3. Cost (Price)
    • 4. Differentiation (Social Status/Cachet)
    • 5. Inaccessibility/Unavailability
    • 6. Personalization (Identity/Character)
    • 7. Complexity (Time)
    TOOL
    ALTERNATIVES: ………………
    Trade-off Quotient (TQ)
    = Pain/Delight
    = Inconvenience/Fidelity
    = Customer Exp. Quotient
    SELECTION/ACTION: ………
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing
  • 8. TRADE-OFF MAP For Total Customer ExperienceStage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal
    Zero Trade-off
    (“What customers ultimately want:
    Free, Perfect, Now”)
    MARKET (CUSTOMER JOB): ………………………………….
    Period/Year: …………….…………………………………………..
    High
    Luxury Spot
    Disruption Spot
    (+): DELIGHT
    Low
    Strategic Choice
    Low
    High
    (-): PAIN
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing
  • 9. TRADE-OFF MAP Illustrating All StrategiesStage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal
    Zero Trade-off
    (cf. “Wrecking-ball moment”)
    ‘Hit’ Zone
    MARKET (CUSTOMER JOB): ………………………………….
    Period/Year: …………….…………………………………………..
    High-end
    SuperHit
    Sweet Spot
    Luxury Spot
    Disruption Spot
    Oasis
    Volcano
    DELIGHT:
    Fidelity
    Low-end
    Green Ocean
    No Man’s Land
    Red Ocean
    Fidelity Belly
    Convenience
    Inconvenience
    PAIN: Inconvenience
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing
  • 10. TRADE-OFF STRATEGY For Luxury Spot Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal
    Name of Business: ………………………………………………………………………………………………….… Year: ……………………
    Sector/Ecosystem/Industry: ………………………………………………………………………………………………………………………
    Mission/Vision: ……………………………..……………………………………………………………………………………….…………………
    ELEMENTS OF TRADE-OFF STRATEGY FOR LUXURY SPOT-PRODUCT/SERVICE:
    Trade-off (Value Chain) Strategy
    • FIDELITY (Delight) TACTICS:
    • 11. Eliminate ……………………………………………
    - Reduce ……………………………..…..……………
    - Increase ……………………….……….……………
    - Create/Procure ……………….…….……………
    • INCONVENIENCE (Pain) TACTICS:
    • 12. Eliminate ……………………………………………
    - Reduce ……………………………..…..……………
    - Increase ……………………….……….……………
    • Create/Procure ……………….…….……………
    Customer Value Proposition
    High performance (brand) at exclusive price
    Targeted Customer Segment(Interviewees)
    Well-to-do customers in the ‘short head’
    Customer Experience/Value Proposition: …………………………………………………………………………….…………………
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing
  • 13. Scenarios for Apple’s iPhone
    Should Apple drastically cut down the price of the iPhone?
  • 14. TRADE-OFF MAP for the iPhoneExperienceStage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal(“Should Apple drastically cut down the price of the iPhone?”)
    Zero Trade-off
    (cf. “Wrecking-ball moment”)
    ‘Hit’ Zone
    MARKET (CUSTOMER JOB): Communication/Information Processing at Work/Home/Outdoors Period/Year: 2007 to Date
    Luxury Spot (2009)
    SuperHit?
    Sweet Spot?
    High
    Disruption Spot?
    Oasis?
    DELIGHT:
    Fidelity
    Low
    Fidelity Belly
    (Super-)convenience
    Low
    High
    PAIN: Inconvenience
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing
  • 15. TRADE-OFF STRATEGY for the iPhone (2009 & 2011) Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal Scenarios of the iPhone for 2009 and 2011
    Name of Business: Apple, Inc. Year: 2009
    Sector/Ecosystem/Industry: Communication/Computing
    Mission/Vision: Platform or hub for mobile communication and information processing (computing)
    ELEMENTS OF TRADE-OFF STRATEGY FOR CHEAPER IPHONE (2011)
    Trade-Off (Value Chain) Strategy
    • FIDELITY (Delight) TACTICS:
    • 16. Eliminate ……………………………………………
    - Reduce Social Aura & Cachet/Identity (‘Character’)/Love
    - Increase Quality (Content/Perform.)/Need
    - Create/Procure ……………….…….……………
    • INCONVENIENCE (Pain) TACTICS:
    • 17. Eliminate ……………………………………………
    - Reduce Cost (Price)/Complexity
    - Increase Accessibility/Availability/Simplicity
    • Create/Procure ……………….…….……………
    Customer Value Proposition
    High performance (brand) at lower price
    Targeted Customer Segment(Interviewees)
    Average customers in the ‘long tail’
    Customer Experience/Value Proposition: High functionality-smartphone/mobile computer (that is affordable)
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing
  • 18. Scenarios for Motorola’s RAZR
    Should Motorola have drastically cut down the price of the RAZR?
  • 19. TRADE-OFF MAP for the RAZR Experience(“Should Motorola have drastically cut down the price of the RAZR?”)
    Zero Trade-off
    (cf. “Wrecking-ball moment”)
    ‘Hit’ Zone
    MARKET (CUSTOMER JOB): Communication/Information Processing at Work/Home/Outdoors Period/Year: 2004 to 2007
    Luxury Spot (iPhone - 2007)
    High
    Volcano (2004)
    DELIGHT:
    Fidelity
    No Man’s Land (2007)
    Low
    Fidelity Belly
    (Super-)convenience
    Low
    High
    PAIN: Inconvenience
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing
  • 20. TRADE-OFF STRATEGY for the RAZR (2004 & 2007) Stage of Customer Experience Cycle: Adoption/Usage/Maintenance/Disposal Scenarios of the RAZR for 2002 and 2007
    Name of Business: Motorola, Inc. Year: 2009
    Sector/Ecosystem/Industry: Communication
    Mission/Vision: ……………………………..……………………………………………………………………………………….…………………
    ELEMENTS OF TRADE-OFF STRATEGY FOR CHEAPER RAZR (2007)
    Trade-off (Value Chain) Strategy
    • FIDELITY (Delight) TACTICS:
    • 21. Eliminate ……………………………………………
    - Reduce Social Aura & Cachet/Identity (‘Character’)/Love
    - Increase Quality (Content/Perform.)/Need
    - Create/Procure ……………….…….……………
    • INCONVENIENCE (Pain) TACTICS:
    • 22. Eliminate ……………………………………………
    - Reduce Cost (Price)/Complexity
    - Increase Accessibility/Availability/Simplicity
    • Create/Procure ……………….…….……………
    Customer Value Proposition
    2004: Superslim camera-phone at high price
    2007: Superslim camera-phone at low price
    Targeted Customer Segment(Interviewees)
    2004: Well-to-docustomers in ‘short head’
    2007: Average customers in ‘long tail’
    Customer Experience/Value Proposition: Highly aesthetic mobile phone that is affordable
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://businessmodels.ning.com & http://twitter.com/RodKuhnKing
  • 23. BRAND EQUITY
    PROFIT (REVENUE)
    COMPETITIVE POSITION IN SECTOR
    CUSTOMER LOYALTY
    Higher level criteria for assessing impacts of a business strategy:
    CUTTING DOWN THE PRICE OF THE IPHONE
    CORE COMPETENCE (KNOWLEDGE)
    SHAREHOLDER VALUE
    STRATEGIIC FIT IN VALUE NETWORK
    ECOSYSTEM GROWTH/SUSTAINABLILITY
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing
  • 24. WHO?
    WHAT?
    WHERE?
    WHY?
    DECISION-MAKING QUESTION:
    SHOULD APPLE CUT DOWN THE PRICE OF THE IPHONE?
    WHEN?
    HOW MUCH?
    HOW?
    WHAT NEXT?
    Copyright 2009. Dr. Rod King. rodkuhnking@sbcglobal.net &http://tradeoffmap.ning.com & http://twitter.com/RodKuhnKing