Relationship Marketing and Apple

Source: Regis McKenna, Relationship Marketing: Successful Strategies for the Age of the Customer (Reading, MA: Addison-Wesley Publishing, 1991). Copyright 1991 by Regis McKenna.


Regis McKenna was heavily involved in shaping the public image of Apple in its early years. The McKenna company played an integral role in developing the marketing strategy for the Macintosh: they helped develop the notion of the "knowledge worker" as the Mac's potential market, and also identified several key points about the Mac ("Macmessages," as they're called here) that were repeated endlessly-- communicated to journalists, highlighted in press releases, and touched on by Apple officials in interviews.

McKenna discussed his work on the Macintosh in Chapter 11 of his 1991 book Relationship Marketing. The following extracts, from the sections "The Audience" and "Macmessages," describe how McKenna and Apple developed the "knowledge worker" concept, and the key messages to use in communicating with journalists and other industry influencers.

The Audience

(p. 192) During the first two years of the Macintosh project, there was no marketing staff involved. The project was driven purely by technology. The Macintosh team and its budget were both small, and team members wanted to put all their time and money into development, not marketing.

In 1982, though, the Macintosh group began adding some marketing people and holding strategy sessions. Four or five people (including myself) met every two weeks to talk about positioning for the Mac. The meetings were mostly brainstorming sessions. We spent a great deal of time trying to figure out how to create the market, what users to target, who was going to use Macintosh, and how we could best communicate new ideas to those potential users.

We decided that Mac's target audience would not be a traditional market segment. For some products, it is possible to target a neat slice of the market-- for example, all small businesses in service industries with annual sales between $500,000 and $1 million. But that type of segmentation wouldn't work for Mac. Mac cut across the usual boundaries. We needed to come up with what I call a "concept market." Most marketing managers look to divide a market along demographic or geographic lines. But concept markets are divided along 'psychographic" lines; that is, they include people with similar attitudes and beliefs.

We came up with the idea of targeting "knowledge workers." These are people who typically sit at a desk during the day. They create ideas, make plans, analyze data. Knowledge workers exist in many different settings. Some work in large offices as professionals, others in homes as consultants, and still others in dormitories as college students. One internal Apple marketing plan described knowledge workers this way: "Knowledge workers are professionally trained individuals who are paid to process information and ideas into plans, reports, analyses, memos and budgets. They generally sit at desks. They generally do the same generic problem solving work irrespective of age, industry, company size, or geographic location. Some have limited computer experience-perhaps an introductory programming class in college-but most are computer naive. Their use of a personal computer will (p. 193) not be of the intense eight-hour-per-day-on-the-keyboard variety. Rather they bounce from one activity to another; from meeting to phone call; from memo to budgets; from mail to meeting. Like the telephone, their personal computer must be extremely powerful yet extremely easy to use."

After making some rough calculations, Apple figured there were about 25 million knowledge workers in the United States that might use Macintosh computers. That included 5 million in small businesses (those making less than $5 million in annual sales), 5 million in large businesses (Fortune 2000 companies), and nearly 9 million in medium-sized businesses. The other knowledge workers were in the college and home markets.

At the time, not many knowledge workers were using personal computers. People need a significant amount of expertise and training to use the Apple II. Selling the Apple II was like selling a telephone that the buyer had to put together. But Mac would be different. It would be nonintimidating and easy to use. People could learn to use it in two to four hours, rather than in the twenty to forty it took to learn the Apple II. Knowledge workers would feel comfortable with it. With Mac, Apple could tap into a new market of 25 million workers. Mac could become the standard product of knowledge workers.

We began to view knowledge workers as those who would be the next stage in the adaptation sequence for personal computers. As discussed in Chapter 6, most new products are accepted by the market in stages: first by Innovators, then by Early Adapters and Late Adapters, finally by Laggards. Before Macintosh, personal computers had been purchased only by Innovators. Innovators were willing to read a 400-page user's manual and spend twenty to forty hours learning how to use the computer. The computer was an important part of their lives.

But the market had begun to run out of Innovators. In the same way many Americans had waited for Interstate 80 before heading West, so too were many people waiting for easier-to-use computers. Most knowledge workers were part of this group. The next generation of computers had to address the needs of these workers.

We spent hours discussing such questions as: Who are knowledge workers? Where are they? How can we identify them? The strategy was to make Mac so unique and innovative that knowledge workers would be romanced into using it.

At the marketing meetings we also spent a lot of time thinking about words and language. How could we communicate to the public about Mac? We decided we had to create our own vocabulary. Revolutions create their own language. We knew language would be very important in positioning (p. 194) Mac. We knew Mac was radically different from other personal computers on the market, and we didn't want them compared. We didn't want people to compare operating system versus operating system, keyboard versus keyboard. Instead, we would create our own words. Then, when the press and dealers talked about computers, Mac would stand out. It was a type of forced differentiation.

Some words were obvious, like mouse and user interface. But most of the discussion focused on the word appliance. Mike Murray, the marketing manager for Mac, felt that Apple could position Mac as an information appliance. Some of us, myself included, were highly skeptical. We argued that computers were more complex than refrigerators and other traditional appliances. We also worried that the word appliance would target Mac toward the home, not the office.

But Murray insisted. He gave away miniature food processors to members of the Mac team. In August 1982, when Murray wrote the first product plan for Mac, he drew heavily on the appliance metaphor. But the marketplace didn't pick up on the metaphor and the analogy died a quiet death.

Differentiating Mac from competitors' products was only part of the marketing problem. Just as important, the Mac marketeers had to figure out a way to differentiate Mac from the rest of the Apple product line. All Apple computers, those on the market and those in development, were aimed at roughly the same audience. There were serious fears that each Apple computer would cannibalize the others.

All companies with more than one product face this internal conflict. The typical solution to this problem is to divide up the turf. Target one product at small businesses, another at professionals. Sell one product at a premium price, another at a discount. If products overlap too much, dealers and customers will be confused. Dealers won't know how to sell the products, and customers won't know which one to buy. Each product must give up a bit of its territory for the sake of maintaining its clarity.

At Apple, however, this normal approach seemed impossible. Each Apple product group was an individual fiefdom, and the managers of each group were more interested in competition than cooperation. Many Apple products were targeted at small businesses and professionals, but the different Apple marketing groups wouldn't sit down together to resolve the conflicts.

Perhaps the biggest conflict occurred between the development of Mac and the development of Lisa. The two projects had very different roots. The Lisa project was a major corporate effort, with lots of people and lots of money (p. 195) available, while the Mac project involved much less cooperation and fewer resources. By 1982 the two projects were on a collision course.

Lisa's development group hoped to establish its product as one that would set a new standard in personal computing. Mac's group had the same hopes. Lisa's team planned to make its computer dramatically easier to use than traditional computers through the use of a new graphics-based user interface. Mac's team had the same plans. Lisa used the Motorola 68000 microprocessor. Mac used the same. Lisa used a mouse as a pointing device. So did Mac.

Even the target audiences were alike. In the beginning, Mac's designers shunned business applications. They wanted to bring computer power to the masses, not to money-hungry businesspeople. They were suspicious of anyone who read the Wall Street journal and actually enjoyed it. But when Jobs took over the Mac effort, he steered the product toward office applications and knowledge workers-aiming it at much the same audience at which Lisa was aimed.

The two groups became intensely competitive. Each wanted to outshine the other. The general managers of the two groups, Jobs and John Couch, even made a personal bet over which computer would reach the market first. The loser would have to throw a celebration party for the winner.

Conflicts also existed between Mac and the aging Apple II. Most people saw the Mac as the replacement for the Apple II. The Mac would make the Apple II obsolete. That could cause big problems for Apple, however. Despite its incredible growth, Apple was still, to a large extent, a one-product company. It was doing $500 million in sales with one basic product, the Apple II. What would happen if that one product became obsolete overnight?

When developing a successor to an existing product, companies usually try to arrange for one product to replace the other gradually. As sales of the new product shoot upward, sales of the old one gradually fall. Many Apple marketeers worried that the transition from the Apple II to the Mac would not be so smooth. When Mac was introduced, they figured, Apple II sales would plummet. But Apple would have to build up its production of Macs slowly. The transition could be disastrous....


(p. 202) In preparing its merchandising and public relations campaigns, Apple marketeers had one overriding goal: They wanted to establish Macintosh as the third standard in the personal computer industry.

Apple argued that only two products had emerged as industry standards in the eight-year history of the personal computer industry. Those products were the Apple II and the IBM PC. The Mac would not become a new standard overnight, but Apple wanted to plant the idea early.

To convince customers and the media that Mac was indeed a new standard, Apple stressed its product features. Mac marketeers wanted to drive home the point that Mac was significantly different from other personal computers. They identified four key messages about the Mac. Then they repeated those messages over and over. The messages were:

The Mac marketeers spread these four messages everywhere: in meetings with the media, in meetings with dealers, in customer brochures. At the time of the product's introduction, every one of the 10,000 salespeople selling the Macintosh could recite the four key messages. Apple kept its messages clean and simple. With the Apple IIe, Apple gave forty pieces of information to dealers. With Mac, the company gave dealers a single book.

In meetings with journalists, Apple added a number of other messages about Macintosh. To some publications, Apple stressed the new automated Macintosh factory. The factory, filled with the latest robotics equipment, would turn out one Macintosh every twenty-seven seconds. Many people were worried about the manufacturing capabilities of American companies. The United States seemed to be losing out to Japan in robotics and other manufacturing technologies. The Mac factory story stood out as a bright spot in this dark environment. While Atari had just shifted its manufacturing overseas, Apple was bringing its manufacturing back to the United States.

What's more, the Mac factory was located in Fremont, California, where General Motors had just closed down an automobile factory. The opening of the Mac factory was seen as a clear case of a new industry taking over (p. 204) from an old one. It helped give Macintosh a higher profile. Mac was not just another computer. It was a symbol of the American future.

The Mac marketeers also focused attention on the engineering team that developed the Mac. The team consisted of a dozen or so young people who had contributed their sweat and talent for Macintosh. They had worked day and night for four years. The story of the engineering team showed Apple as a human company, a personal company.

Apple already was perceived as having a strong corporate personality based on the success of the Apple II. The Macintosh story built on that image. Apple was a company the public liked to root for. Apple people were young, dynamic, and innovative. Steve Jobs and Steve Wozniak became models of entrepreneurial success in America.

With these and other stories, Apple turned the Macintosh launch into a huge media event. Mac managers began giving key journalists a sneak preview of the machine months before its January 24 introduction. In mid-January the journalists were taken on a big press tour, capped by a Macintosh "coming-out party" on January 29. On the day of the introduction Apple mailed out 3,000 press kits, each containing not only pictures and press releases but also a Macintosh T-shirt. After five years of being in development, Macintosh finally was moving outside of Apple and into the world.

Document created on 30 May 2000;