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India Knowledge@Wharton | Skimming the iPhone market

India Knowledge@Wharton | Skimming the iPhone market
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First Published: Sun, Sep 28 2008. 11 16 PM IST

Illustraion: Malay Karmakar / Mint
Illustraion: Malay Karmakar / Mint
Updated: Sun, Sep 28 2008. 11 16 PM IST
When Apple rolled out its iPhone in India on 22 August, it did not roll too far: Missing were the lines and fanfare that accompanied the iPhone’s launch in the US and some other parts of the world. A lack of marketing and a high price point have left many thinking that iPhone’s introduction to the Indian market has been less than successful.
“The build-up for the iPhone launch in India has been poor, if not pathetic,” says Harish Bijoor, brand specialist and CEO of Harish Bijoor Consults Inc. “One of two things has happened. Either Apple believes the game has been lost in India even before it has begun, or it feels that the service providers will do magic with their mega reach in India. There is a near abdication of ownership of the brand in the Indian market. The model at play seems to be outsourced marketing, outsourced branding and outsourced selling.”
Illustraion: Malay Karmakar / Mint
But Wharton marketing professor Peter Fader is inclined to believe that Apple may have a smarter strategy for its Indian iPhone launch than is immediately apparent. “If you compare (the iPhone’s) US launch to the India launch, it is a beautiful example of the distinction between a ‘penetration strategy’ and a ‘skim strategy’,” he says. “Here in the US, Apple basically wanted to bust the market open all at once. So, they had all these people lined up all around the block, and when they flipped the switch—boom!—the market existed. In India, it’s almost like they are doing a test market.”
In Fader’s view, Apple’s India strategy allows for much more flexibility. “It lets (the company) learn about the market in a much cheaper, lower risk way.” Apple could use that extra cushion to understand how its early users react to the product and its features and even reassess which service providers it should work with (currently Vodafone and Bharti Airtel).
“A skim strategy is a great way of testing the waters so that you can change course, whereas with a penetration launch, whatever tactics you committed to, you’re stuck with,” he says. “This way, they can change the price, change the messaging and broaden out to the larger market in a few years.”
Several risks are associated with a product such as the iPhone that is “radically different” from others in the market, he adds. “There is social risk (with people wondering) ‘What kind of phone is that?’ as well as a functional risk.”
Apple does not have a large installed base of Macintosh users in India, and that may also have persuaded it against a penetration launch for the iPhone, Fader notes. “If you don’t (have a significantly large base), you must go with a skim strategy because you can’t create that market overnight.”
The baggage of experience can be a problem
As the workforce becomes increasingly mobile, many companies look to hire experienced workers to improve productivity quickly. Those workers, however, often bring baggage from prior jobs that can negate the benefits of their prior experience, according to new Wharton research.
“Human resources managers will want to (hire) people who worked in a related industry or firm for the skills they bring. That makes sense from a human capital perspective, but we question whether that’s all they bring with them. Do they bring other experiences... positive or negative?” asks Wharton management professor Nancy Rothbard, co-author of a paper titled Unpacking Prior Experience: How Career History Affects Job Performance.
To explore the relationships between prior experience and productivity, Rothbard and her authors examined employment applications and hiring records at two call centres for a major property and casualty insurance firm. Their findings show a strong relationship between prior experience and knowledge and skills on the job. At the same time, however, the models indicate that prior experience does not always signal increased productivity.
According to the paper: “Habits, routines and scripts that contribute to performance in one organizational context may detract from performance in a different organizational context. That is, the relationship between prior related experience and performance may not be wholly positive.”
Rothbard says executives at the insurance company were told about the hiring of a talented and highly trained adjuster from another insurance company. While the hiring company provided high-end insurance with a strong emphasis on customer service, the adjuster came from a company that was more focused on keeping costs down. Rothbard says the adjuster just could not help himself from “nickel and diming” customers on their claims, even though that attitude conflicted sharply with the firm’s strategic direction and culture.
Rothbard and the other researchers were intrigued by the notion that the values employees pick up in the culture of one firm are not easily shed. “Those kinds of transfers really are not discussed at all when we talk about mobility of the workforce.”
Rothbard says the research findings are important not only in light of the increasingly mobile workforce but also because so many companies are in a constant state of change themselves. “If your business has changed, you need to consider trying to retool people, not just in terms of their skills, but in terms of their values,” Rothbard suggests. “Not that people can’t shed these things. But it may take more training and socialization than you first expected.”
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First Published: Sun, Sep 28 2008. 11 16 PM IST
More Topics: iPhone | Apple | Brand | Smart phones | Launch |