Does Apple’s effort to stay genuine work? Part I

Apple has been always zealous about its branding. Well, nothing is wrong with that. This is what an established brand does to defend its name and fame. In order to provide a genuine experience and to prevent cheaper “copies” being sold to customers through various channels, Apple has been following a sales restriction strategy to foreign markets. That means, Apple’s latest devices will show up about two to three months later in foreign countries after they are launched in North America. For example, China has been currently the 2nd biggest market of Apple devices following USA. But to prevent brand authenticity, Apple would be doing two things: first, it would launch its devices later in China, second, once launched, it would restrict sales only through a very limited number of resellers. Apple has authorized only two resellers in Hong Kong to sell iphone 5. As a part of resellers’ policy, customers have to produce government issued ID to buy devices from these stores. This is how Apple thinks it would restrict sales and provide genuine experience to only authentic customers.

However, customers are not happy with this sales restriction policy. They want a hassle-free purchase of Apple devices, naturally. As the old adage goes- “when there is a will, there is a way”, so has been the case with aspiring Apple customers. Can you prevent people from buying something when there is a demand in the market? If there is a strong demand in the market vis-à-vis restricted supply, someone else in the market will find this as an opportunity and fill-in the gap in a smarter way. So when you restrict sales amid strong demand, the market system will force the appearance of “grey” market. Is it true that genuine Apple devices are being sold through unauthorized channels in the grey market? Oh yes, unfortunately so. Does it mean that Apple’s effort to distribute only through authorized resellers has backfired? Oh yes, unauthorized sellers have tapped in the opportunity and are currently charging much higher price in the grey market than what would have been charged in the legal market.

Here is a big question. Why Apple is doing this, and letting this happen in the China market? What is the implication of allowing a grey market to exist and doing nothing against it? Please wait for part II to know the answer. Can somebody guess why Apple is doing this?

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About 1mmarketing

Working as Associate Professor, School of Business, United International University, Bangladesh; a North-American graduate, with doctoral studies from UUM, Malaysia; cherishing a wide-view of the world, with multiple interests in culture, people, traveling, and specifically marketing science. I have a colorful and diversified background with a blend of corporate experience, research, consulting, training, public speaking and teaching. I love to write about marketing issues that affect our lives, and talk about its direction that would promote the greatest human welfare.
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2 Responses to Does Apple’s effort to stay genuine work? Part I

  1. Tanzila Habib says:

    The ‘authentic’ customers will go only for the genuine ‘Apple’ whatever time it takes. Reseller as a distributor is a significant factor. Apple can assure its credibility to its target market by restricting and preventing unauthorized channels to sell the products. It will be advantageous for Apple. If all are selling Apple, even the target segment of ‘genuine Apple’ will find the product suspicious because there are huge probability of being the product a ‘copied one’. Apple’s headache is not with the fact that whether others are filling the gap up when Apple is absent in the market. It is not easy for someone else to take the place of genuine Apple. The enthusiastic customers will either wait for the desired product or they will bring from other place where it is launched as they are something like devoted to ‘Apple’. This is not my guess why Apple is doing so; but somehow it is good for them!

  2. azfarulislam says:

    It would be safe to say that Apple has successfully muscled out it’s competitors and achieved a position as such in the the market, which affords them the luxury to make bold moves as such. Though the customers are somewhat irritated with this type of maneuvering but the credibility of Apple will not be questioned despite how ignorant they are to the demand of the customers (at least it looks that way). To be honest genuine apple products has it perks, it’s not just about the appearance of the product or keeping up with the up-to-date trend; it is about sending a message and we can definitely agree that using an Apple produced phone brings a certain amount of luxury and respect to the table.
    In an another perspective, we can see that bottlenecking the supply in a large market like China gives Apple an edge in publicity, as they say in the media there is no such thing as bad publicity. For example, the people who were disappointed that they could not afford iphone 5 when it was hitting the market, are now getting more enthusiastic about saving up a bit more to actually buy the product. It’s much like back in the medieval days waiting for a regal visit with the queen, the Chinese market (along with the rest of the world) waits for the iphone 5.

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