Walmart vs. Apple

In this blog entry we will analyze the organizations’ success techniques looking deep inside the ideas and the principles these companies have used to become the mega-successes they are today. The common denominator, the major piece of the puzzle of the domination method is PERSPECTIVE. That is the business strategy that all of these companies have used.

What is Walmart’s business strategy?

They talk about low prices every day so that it is assumed in our minds that Walmart is one of the cheapest shops out there. That is not true, though. People know that Walmart doesn’t always have the cheapest prices, but that concept has helped them so that they can offer better deals than the competitors of their size.

If we compete for the lowest price ever, in the longer run, for small businesses, we are almost always going to lose, because we are working on such a small margin that, if somehow a competitor of ours manages to lower the cost by even a fraction, we have lost. So, going for the cheapest cost ever does not always work.

There is another reason why the lowest cost does not always work. It is because in our mind it is considered “cheapy”. Let’s say,for example, if you buy a T-shirt in Walmart, it is not perceived to be a good shirt, because Walmart doesn’t carry good quality clothing, shoes and suits. But the brand perception of associating a person with a brand in terms of clothing or shoes or those kind of things it is not really perceived to be elite; it is considered “cheapy”.

Let’s take another example: Apple.

Apple created their whole brand by charging premium pricing and when a person has an Apple product, it is considered to be cool. When we use Apple products we talk about them with pride. But we don’t always talk with pride for something that has been bought from Walmart because it is considered to be cheap.

It is all about the perception of how a person is perceived based on the products he is associated with.

Are you associating with a phone that Apple offers or a phone bought from Walmart? So the way you price your products matters.

If you are the lowest cost ever, you might attract a lot of people but you will probably lose because, if your competitor lowers the price of the product that is already the lowest for you, you are going to be working with really  small margins and on the other hand you are not going to have a pretty good brand impression and association with people in terms of perception of the quality.

On the other hand, if you are selling premium products like really over-priced or high-priced products, they are perceived to be elite.

You can generate additional revenue from your brand name itself.

But there is a problem with charging elite prices. Only 5% of the people are really super-rich. If your prices are really high, basically you are eventually eliminating 95% of the population who cannot afford your products.

However, there is a solution and that is the PERSPECTIVE STRATEGY. What is the perspective strategy? That was the strategy used by Apple and other success companies. What the perspective strategy says is to position your product in such an angle that it is perceived to be of higher value and people like to associate with your product, service or brand.

Apple is basically in the PC industry but through their advertising and marketing efforts, they engraved in the consumers minds that their computer are not PC, they are Mac.

Basically a Mac is also a personal computer but they said “no, we are not PC’s. This is something else, we are Mac.”

Get a Mac

And they have created a high priced product. They have different colors. Usually computers are black or gray in color, but Apple created white-colored computers and they positioned it totally differently so that people say “ok, this is a Mac and this is a PC” although they are all PC’s. Apple used this strategy in Ipod’s as well.

It is known as the principle of the domination method and it shaped the way Apple is running today.

Apple has repositioned the way people look at its products.

When people are talking about IPhones, they are not really comparing prices because they are just talking IPhones to IPhones. They are just one.

Perspective strategy is the basis of the domination method: the way you can dominate the market is by eliminating all the other competitors by changing the perspective.

That is, when you create an IPhone, there is nothing like an IPhone. So basically you have eliminated all your competitors.

In other words, you can reposition your business in order to create a perception of elite-ness or something that people would like to associate with.