Marketing failure: iPhone in India

Guest post by Shailendra Jain, associate professor of marketing, UW Foster School of Business

iphoneApple has been called “the most admired company in the world.” There are some good reasons for this. Apple is very innovative, very cool, very personality-oriented.

But while Apple’s iPhone has achieved landmark success in the United States and redefined the smart phone category, it has so far struggled in two of the world’s largest markets. The iPhone has yet to create much interest in India and is, at best, a fledgling brand in China.

It has not met the success in these markets that Apple expected for a variety of reasons.

First is a technology issue. In India, the market I’m most familiar with, the iPhone has compatibility issues. That’s an amazing thing to ignore. Your product has to be aligned with the context in which you are marketing it. Apple, reportedly, is in talks with carriers in China and India to overcome this compatibility issue and is believed to be launching an iPhone with CDMA technology, which is compatible with Chinese and Indian telecom standards. It will be interesting to see whether this enables Apple to capture a larger chunk of these two enormous markets.

Second is a pricing issue. At its introduction, an iPhone cost about the same price in India as it did in the U.S. (about $700). But the way consumers process price information is interesting. In India, many potential customers reasoned that for the price of three iPhones they could buy a Nano car. And they were not sure if this was a good trade off. For these consumers, Apple may have gotten the price wrong. They may have ignored the how people in these countries process price information.

A third reason is that people in India are used to an unlocked phone. Apple does not want people to buy unlocked versions of its phone. But the moment there is a gray market where people can buy another compatible version of the iPhone, Apple will be challenged.

A fourth reason—and this is personal speculation—is a misalignment of “softer” brand attributes. What Apple as a brand means in the U.S. is very different from what Apple means in Asian countries. It was born in the U.S. and has produced a long line of successful “i” gadgets—iMac, iPod, iPad—whose branding is rooted in individuality. This is clever branding, and has been a good fit for an influential segment of the American and Western population: rebels, early adopters, would-be innovators who want cutting-edge technology and are relatively less sensitive to price. In Asian countries this is not such a strong fit, in terms of perceived personality. Asian cultures tend to be more collectivistic, and the theory is that millions of consumers in these cultures may find “i” less appealing than “we.”

For the iPhone, a whole set of factors converge to the same outcome. And I think this is typical of marketing failures. Rarely is it the fault of one or two factors. Usually it’s a complex confluence of multiple factors—product design, pricing, revenue model, distribution, promotion, branding, competition. Underestimating your weaknesses or overestimating your strengths. More often than not, multiple factors feed into most marketing failures.

See 15 Cautionary Tales: Failed Marketing Campaigns for more information.

6 Responses

  1. Mark Bigelow

    Excellent insights, Shelly. It’ll be interesting to see if the iPhone technology holds up against competing technology when the brand equity around iPhone and Apple is stripped away. I hope you’ll keep us posted!

  2. ipad 2 cases

    For the iPhone, a whole set of factors converge to the same outcome. And I think this is typical of marketing failures.

  3. Prasoon Agarwal

    Dear Prof Jain,

    Nice analysis.However, I would differ with you point wise as under –
    1. I doubt if there is any compatibility issues with Indian network. The only drawback was the absence of a 3G network in India, which has been launched last year. I myself use an IPhone in India ( unblocked), and it works excellently well. There is a large number of Apps available from India – which does hint towards the popularity and adaption of this phone in India.
    2. Regarding your comparison of Iphone price with Nano, I would say the target segment is totally different. The Nano is targeted at the middle class families in India, who have always aspired for a four wheeler- and it is their chance to have one. On the other hand, Iphone is a top of the end smart phone, targeted at the economically well-off, business users, and youngsters with high disposable incomes ( IT/BPO).
    3. For your information, the Iphone being distributed in India ( by Vodafone and Airtel) is an Unlocked one. Also, for people like me, who took a locked IPhone from France to India, unlocking is available as a low end technology ( can be done by paying local technicians less than 5 $) – in fact, I did it myself using a video from you tube !
    4. Apple uses an small “i” and not a capital one. If the letter “i” denotes anything to an Indian, especially young, it is nothing else but “internet”. Also, the Gen-X where this phone is targeted is very much an “I” generation – closely linked to the USA culturally.

    According to me, and I ain’t an expert in Marketing, the only reason why Apple has not launched Iphone in India is affordability. There are no shortcuts in Apple marketing strategy – its always full throttle – excellent stores, good supply chain, genius bars, etc etc etc. As of now, Apple can not see such volumes to be able to make investments viable. Come Iphone Nano, or wait for few years when disposable incomes rise in India, Apple would come knocking to India – and in a big way !

    Looking forward to your comments, and excuse me in case I got over enthusiastic ( being a big Apple fan myself! )



  4. J.

    I agree with most of your arguments for iPhone’s setbacks in penetrating the Indian market. However, I sort of disagree with your “i” vs “we” argument. I come from Indonesia, a Southeast Asian country, and even though we live in a more collective society compared to the individualistic Americans, the “i” does not affect the appeal of the iPhone itself.

    I was an iPhone user before I returned to my home country, and I switched to a blackberry soon after. I believe there are a number of reasons the iPhone is not popular in my country:

    1. Price. The iPhone is considerably way more expensive than other smartphones such as Blackberry’s and Androids.

    2. Cellular network: iPhones are notorious for their short battery lives. In my experience, my iPhone’s batteries burn out faster than it did back in the States because a lot of the time, my iPhone was trying to search for data signals that come and go.

    3. “Following the majority”. If everyone around you owns a blackberry, and uses the blackberry messenger to get in touch, eventually you’ll join the crowd. It’s like how Facebook and Twitter gain popularity.

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