I previously wrote about how consumers “suffer” from having too many choices. A recount of my experience – recommending which laptop my little cousin should purchase.

At the end of the post, I commended Apple on their focus (in the laptop segment). Unlike other brands, Apple essentially give consumers only 2 choices – the MacBook Pro (performance) and the MacBook Air (casual + portability). I argue that this simplifies the consumer’s purchase decision.

Today, I’d like to share with you another takeaway from his biography that is related to the subject.

Focus

One of Steve’s greatest strengths was focus.

“Deciding what not to do is as important as deciding what to do,” he said.

After Steve made a return to Apple in 1997, a product review was conducted and it revealed how unfocused Apple had become. Not only did they have a dozen versions of the Macintosh, each with a different confusing number (still prevalent today – GPS models, camera models, other laptop models), they were also in the printer and server business.

He finally asked “Which ones do I tell my friends to buy?”

He couldn’t get simple answers and hence proceeded to discontinue many models and products. Soon, he had cut 70% of them. He had reduced Apple’s bloated computer range from about 40 to just 4.

The passage below is from his biography and it describes how he did it.

He grabbed a magic marker, padded to a whiteboard, and drew a horizontal and vertical line to make a four-squared chart. “Here’s what we need,” he continued. Atop the two columns he wrote “Consumer and Pro”; he labeled the two rows “Desktop” and “Portable”. Their job, he said, was to make four great products, one for each quadrant.

This “laser beam” focus of his saved Apple.

For the fiscal year that ended when Jobs became interim CEO in September 1997, Apple lost $1.04 billion. Yet for the full fiscal year of 1998 (after he returned and introduced Apple’s new product strategy), it would turn in a $309 million profit. Amazing huh?

Want to hear it from the man himself? Check out his keynote below from WWDC’97.

There are 4 ways to go about increasing revenue.

1. Increase the number of customers you serve
2. Increase the average transaction – i.e. sell more items per customer
3. Increase the frequency of transactions per customer – i.e. loyalty/repurchase
4. Raise your prices (margins)

So during my last employment, I was cracking my head over the issue of growth. The company had been growing organically only through means of distribution channels (opening of more retail outlets). 

“How can we possibly move beyond organic growth? Setting up a retail outlet sure is costly. Not to mention how long it’ll take to break-even. Sounds like a terrible return on investment proposition.”

AHA! Why not increase the number of customers we have with our existing distribution channels?! Perhaps we could attract new segments!

*Cue dramatic music*

The innocent marketer that I was, little did I know then that I’d be breaking one of laws of marketing.

I’d identified our largest segment – our main target market – the baby boomers. The people who actually own homes (I was previously in the retail industry – the DIY/home maintenance industry). Yet! I decided to try and appeal to this little segment that we had – the young urban professionals.

“We can expand our customer base!” I confidently thought to myself. “It’s too expensive to get through to our main target market anyway!”

And with that, I decided to get through to this segment of the market. Raising awareness about the brand and promotions through media that targeted the young urban professionals – the wrong audience.

Instead of advertising to the audience that could immediately identify with us, I told the story to people who probably didn’t care.

Instead of advertising on BFM 89.9 – the right audience (which I thought was too costly with our measly budget), I settled for RED FM 104.9.

It was a poor compromise that diluted the brand.

So the moral of the story? Focus on the people who really give a damn. Focus on people who can relate to your story. If it is compelling enough, they’ll tell their friends.

And that’s how successful companies grow the number of customers they serve. They attract the ideal customers. The one whose ROI is far greater than the customer that isn’t qualified.

P.S. – The advertising campaign was also interruptive. Perhaps I should have just focused on improving the retail experience of frequent customers. And hope they would tell their friends.

A few days ago, my little cousin enlisted my help in picking out a laptop. It was time consuming but yet somehow inspiring (leading to this post).

The purchase decision of a laptop can be simplified when one has a set budget, a set of minimum specification requirements (laptop specs), and a preferred brand. Consumers who go through this decision making process are generally the savvier ones. But…

What about the average consumer? The one that doesn’t know much about technical specifications?

1. “What in the world is RAM? And what does it do?”
2. “What’s the difference between Nvidia and ATI’s graphic cards?”
3. “If there were two laptops with almost identical specifications and price, but different branded graphic cards (Nvidia vs ATI again), how do we determine which is better?

Many laptop brands are trying to solve this problem of the “unsavvy” consumer with product usage segmentation – each offering (product line) targeted at a particular segment:

Asus has 5 major laptop lines – Gaming, Special Edition, Mobility, Multimedia Entertainment, and Versatility. (with subsegments and various models within each)

Dell has 3 major laptop lines – Gaming, Home, Business. But within each line are sub-lines - XPS, Inspiron, Inspiron Mini, Alienware, Latitude, Vostro, Precision.

It’s the same with almost every other laptop brand out there. You could argue that the quest for segmentation has been taken to the extreme. And the path certainly isn’t paved with gold. “Over-segmenting” has only added complexity to the purchase decision process. Is it really necessary for Dell to offer three different lines of business laptops – Latitude, Vostro, Precision?

American psychologist Barry Schwartz wrote a book about this called The Paradox of Choice – Why More is Less. He demonstrates that having too many choices often leads to the consumer being perplexed when facing the choice, and less satisfied even after taking a decision. He cites studies that indicate people are less likely to buy when faced with too many choices for fear of making wrong/poor purchase decisions.

Therein lies the genius of Apple.

• 2 lines of laptop products – The MacBook Air and The MacBook Pro
• It’s portability versus performance
• Whichever it is, the consumer only gets to decide his preferred: screen size, available memory, and hard disk space.

Wouldn’t you agree that it’s much easier to decide on which Mac laptop to purchase?

Perhaps the key is to FOCUS then on a select few products. Not offer multiple lines with multiple configurations (Apple discontinued the white MacBook line).

To me, marketing is about values. This is a very complicated world. And we’re not gonna get a chance to get people to remember much about us. No company is. And so we have to be really clear on what we want them to know about us.

The way to do that is not talk about speeds and feeds. It’s not to talk about MITS and megahertz.