You might be interested to read part I before reading this part of the write-up.
Alright, we were talking about Apple’s all-out effort to restrict sales and maintain authenticity in the market. Our initial question was, whether this strategy of restricting sales is working towards maintaining its authenticity.
Well, I believe nobody would disagree that maintaining authenticity for a brand like Apple is really important. Restricting sales is just a way of limiting the possibility of Apple products falling in wrong hands. Thus, maintaining brand authenticity and restricting sales are altogether different issues. The latter is just an option to achieve the former. Having said that, it seems their policy of restricting sales has miserably failed, as far as sales restriction is concerned in this case. Thousands of customers who qualify for buying Apple iphone5 are already contracted by grey market retailers to buy and resell to those retailers! This is what we call a classical case of being a “surrogate” customer. These surrogate customers are ultimate suppliers of iphone5 to retailers in the grey market. The only positive thing this sales restriction policy has resulted in is the positive buzz that has been created out of the suspected scarcity in the market. Ironically enough, this buzz has also boosted the grey retailers’ apprehension of scarcity and made them spiral-up the price in the grey market. These grey retailers are also used in the retail network of “copy phones” to be sold in near future.
Thus, the ultimate results of Apple’s sales restriction policy are two-fold: first, it helped created a grey market by smart retailers, subverting the very intention of Apple itself; second, the price of iphone5 is high in the grey market, which will not be resulting in high margin in Apple’s pocket.