In the real world of building products and attacking market opportunities, market segmentation is the process of defining and sub-dividing the aggregate, homogeneous market into addressable, targeted needs and aspirations buckets. Buckets that are in turn, thresholded by demographic, psychographic and/or budgetary constraints.
Market segmentation strategy enables a company to drive complete, unified product solutions that are harmonious with messaging, customer outreach, and channel strategies for selling and supporting customers.
In this regard, Apple's product strategy is a study in market segmentation. Versus merely trying to stuff a product, burrito-style, with as many different features as possible, they target specific user experiences, and build the product around that accordingly. Apple's segmentation strategy, and the folly of conventional wisdom
Mark points out that Apple has defined and addressed these market segments (or buckets) by delivering a range of devices which have differing but powerfully complementary and mutually attractive portability, wearability, pocketability modalities. Apple has brilliantly seen that in the age of mobile computing it is highly desirable to offer your users different styles and weights in which devices may be donned, doffed, cuddled, clutched or tethered; best not to have them 'lugged' or 'humped'. The way the devices look and the way they feel matters more if you are carrying them around. Their touchability, weight, balance, their reflectivity and colour -- all these are important with tools which are becoming almost a part of our wardrobe (or at least will often be taken out of our handbag). Style becomes an aspect of function when the objects are to be worn and carried. He also provides us with a helpful diagram of the range:
Mark Sigal goes on to point out that this segmentation is complemented by highly effective integration at the level of the OS (to a degree -- making us parenthetically wonder when will iOS 4 move out towards the desktop and down towards the Nano?) and most importantly, and more universally, through the e-commerce platform iTunes and the media layer. The media layer is universal; we should reflect on the defensive strength that gives the Apple product skeleton. We should reflect on the accretive potential that this breadth of cultural objects gives to the device constellation. Because there are many, many more, choices at the media level it is essential for the Apple eco-system that the individual choices of consumers are shared within their individual device grouping. The media layer is where the consumers individual choice reigns supreme and it is in this sense the most 'open', the most consumer-committing, and potentially one of the most profitable aspects of the differentiation strategy.
Further, when you see how Apple has used its vertical integration of the iPod media player and the iTunes marketplace across all of its devices to create a billing relationship with 160 million consumers vis-à-vis simplified discovery, purchase and distribution, it provides a window into how they've facilitated a market segmentation approach that is simultaneously harmonious and discrete. Apple's segmentation strategy, and the folly of conventional wisdomHarmony is key, the range and mutually supporting quality of the Apple product segmentation is making it very difficult for competitors to mount an effective challenge to the iPad, and to an extent to the iPhone. And we notice that hardly anybody is trying to mount a competitive challenge to the iPod Touch which may be the most effective, defensive/aggressive, unit in the Apple line-up.
Life is difficult for the consumer electronics and device manufactures who compete with Apple, but following Mark Sigal's analysis what are the implications for media owners?
- The first point to understand is that Apple's strategy is broadly media friendly. Especially to media that wish to establish subscription services to Apple's large iTunes audience. The device manufacturer and the mobile network operator may be in direct competition with Apple, but the media producer should aim at a symbiotic relationship with the leading mobile media platform.
- Furthermore the Apple strategy is working and it needs to be followed. But notice that this does not mean that a media owner should aim at segmentation at the service level. Quite the opposite. Books, films, magazines, newspapers, TV shows should be sold as all-in inclusive services wherever possible. The media should flow between all the device options that confront the consumer and wherever a publisher can establish a direct relationship with a consumer, that relationship (a subscription) should be transferable to any other device or access solution that the consumer is wearing/lugging. Segmentation at the device level should be married to integration at the service layer.
- Apple is building its services on top of web solutions. Apple's universal media layer is driven by web services, as (See John Gruber on Apple and the Open Web where he points out that Apple is heavily invested in HTTP but not much in HTML). Follow that model. The web is fundamental to all media distribution, and it is at the level of web distribution that the media owner can hope to provide a fluid service for users who may be part in and part out of the iOS device network.
- There will be scores of new device options in the next two years. Apple's present lead in media delivery will be steadily encroached. Avoid the mistake of building solutions for devices (there will be 5", 7", 9", 11" and more screen sizes on tablets next year). Respect the integrity of your product and your service and deliver the same solution everywhere, as far as possible. The best solution may not be fully deliverable on some platforms, but make sure that the core offering is available there (even if some of the bells and whistles are missing).
- Consider, at every step in your relationship with Apple, that the consumer is king. Apple will not lightly grant access to consumer information and private data that the Apple devices may obtain, or that ill-mannered apps might obtain without the consent of users. Apple will not and should not pass on this private data and do not expect them to do so.