Leadership Strategies

How Brand Trust and a Strong Product Portfolio Drives Apple’s Success

Apple has expanded its product ecosystem from personal computing roots to include media, possible entry into the electric car market, and more. See how brand trust drives this growth with IDC's David Myhrer.
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On the heels of its Fiscal 1Q21 earnings report in which Apple reported record revenues, the market is once again abuzz about Apple. This time, it’s for its predicted entry into the electric car market. Brand trust is the foundation which allows Apple to continue to thrive, expanding into adjacent and stretch categories, fueling continued growth and profitability.

Apple Produced Record-Setting Financial Results Last Quarter

In January, Apple announced strong financial results for the October-December 2020 quarter. Apple hit it out of the park, setting an all-time quarterly revenue mark, propelled by significant double-digit year-over-year growth across its device and services categories.

Apple’s Success Came Despite Significant Challenges Along the Way

In 2020, the COVID-19 pandemic provoked supply chain issues which delayed the launch of Apple’s new 5G iPhones. There was Tim Cook’s congressional testimony, along with executives from Google and Amazon. There was the dust-up with Epic Games over Fortnight’s right to be in the App Store and Apple’s cut of revenues. 

Despite all of this, in 2020, Apple’s team did yeoman’s work and delivered compelling new generations of products and slick virtual Apple marketing events. All of these elements played an important role in Apple’s big success. Yet, as important as those were, Apple would not have had anywhere near the success it had without the longstanding consumer trust in Apple.

Brand Trust Drives the Apple Ecosystem & Superior Results

The more consumers trust a brand, the more they use that brand.  They spend more with that brand, giving it a disproportionate share of wallet. Apple’s ecosystem shows this in spades. Hundreds of millions of consumers vote with their money to buy more and more of Apple’s products and services, of their own free will and volition – they are not compelled by a lack of available options.

Apple’s huge installed base of trusting users has tremendous value, driving a high level of spend with the brand. With each positive experience that consumers have with Apple, with each need fulfilled, across its many products and services, this trust is reinforced, the result of a virtuous cycle.    

These deep relationships with consumers drive exceptional loyalty and superior conversion rates throughout the Purchase Funnel, making Apple stickier with consumers and less likely to even consider competitive alternatives.

Consumers Give the Brands They Trust the Benefit of the Doubt

When some of the very public criticisms were launched at Apple – particularly during the highly-publicized feud with Epic Games – there was some fallout with consumers as they questioned Apple’s motives.

Despite this, among Apple users, the company’s reputation for truly caring about consumers remained unchanged, even strengthening further. Apple users increasingly say Apple understands their needs and expectations and consistently meets them. This is ensured by Apple’s stated commitment to make technology that is easy to use, seamlessly integrated, and private and secure.  As a result, Apple’s empathy, competence, and integrity drive trust in the brand.  

Brand Trust Spawns Extendability

At high levels of brand trust, consumers have a higher-than-expected opinion of brands and give them license to extend into new areas, launching new products, services, and apps. This is certainly the case with Apple. 

It’s also why consumers don’t blink when they hear about an Apple electric car. Very high levels of brand trust cause consumers to suspend disbelief and give brands license to do things that might otherwise seem to be a huge stretch. 

Apple’s Rumored Entry into the Car Market

Apple’s entry into the car market has been much anticipated after years of rumors. Over recent years, little had been heard.  This extended silence led me – and many others – to question whether Apple was still pursuing this initiative or whether anything would come of it in the near term.  

So it was somewhat surprising last week when reports arose suggesting that a deal was imminent with Hyundai-Kia to manufacture Apple’s long-awaited car – news which the automaker has since been forced to deny.   

Whether Apple’s electric car project is as far along as this announcement implied is not clear. Time will tell.  One thing is certain, Apple was not at all pleased with Hyundai-Kia. 

Not Everything that Apple Touches Turns to Gold

Since introducing Siri to much fanfare in October 2011, the voice assistant has disappointed. Today, Apple users resort to Amazon’s Alexa or Google Assistant in large numbers and with great frequency. Despite the growth in its services revenue overall, Apple lags competitors in the gaming market, which has seen extremely high growth during the COVID-19 pandemic. The same is true for Apple TV+, the company’s nascent OTT service, leading Apple to extend free trials again recently.  

Apple’s Future: Stabilization or Continued Growth?

Currently over 60% of U.S. households own at least one Apple device and those devices drive penetration of Apple services. Apple demonstrates a unique ability to simultaneously drive both volume and premium pricing. Apple consistently captures the crème de la crème in each segment: young, highly educated, and high-income buyers who spend more on tech and who are market influencers.

What does the future hold for Apple? Will its growth naturally slow down as the business reaches a larger and larger absolute size, making it more difficult to sustain growth? Or will more and more consumers see benefits and value in the Apple ecosystem, causing its attractiveness to snowball further? 

The performance of Apple’s new Macs could drive incremental growth if they are able to appeal to the large group of iPhone users who currently own a Windows-based PC. In the U.S., 89% of iPhone-owning households also own computers. Only 37% of them own a Mac; 63% own other PCs (mostly Windows-based). 

Key Takeaways & Actionability for Product Developers, Marketers & Strategists

  • Trust is the foundation which underpins Apple’s continued success. 
    • From Steve Jobs to Tim Cook, Apple’s brand is built for the long haul – built on an obsession with consumer-centricity and the user experience. 
    • Its ability “to walk a mile in consumers’ shoes” and deliver products and services which meet their needs and work together engenders trust. 
  • Your brand can build trust. It is not exclusive to Apple.    
    • Trust is not a “zero sum” game.
    • Consumers can and do trust multiple brands – not just one. 
  • Building trust is more about hard work and commitment than magic.
    • It’s about choosing to put the consumer at the center of what your company is doing and delivering excellent experiences, over and over. 
    • The key is to empathize so strongly with the consumer and understand their needs so well that they look at your products and services and sense, “That’s how I would have designed this.”

IDC’s Consumer Technology Strategy Service (CTSS) leverages a system of frequent consumer surveys to provide B2C marketers with the full view of the consumer they need to anticipate and meet changing consumer needs and to outperform their competitors. This includes measuring brand trust and helping companies to understand how to cultivate it. 

In addition to my syndicated service, I work closely with clients on custom research projects and consulting.  Find out more here.   

David Myhrer

Research Vice President, Consumer Strategies