The Cult of Apple Apple recently became the world's most valuable company. Not to be confused with the company that produces the greatest revenuethat would be WalmartApple is the company that has the highest stock market valuation. Although Walmart has more than three times the sales of Apple, it is worth only about one-quarter of Apple's value. While Apple's satisfaction ratings regularly rank at or near the top of consumer-focused companies, Walmart's ACSI scores are generally among the lowest of large retail companies (see Exhibit 14.3). As Claus Fornell, founder of the ACSI, says, "Companies with weak customer satisfaction often have weak stock performance." With the launch of the iPhone 4S, Apple opened up a major gap between its customer satisfaction scores and those of its competitors, like Nokia, LG, or Canadianbased BlackBerry devices. In spring 2012, the Apple iPhone's ACSI score was 83 (on a 100-point scale), which is eight points better than its nearest competitors (HTC, LG, and Nokia, which all scored 75 points) and 14 points better than BlackBerry, at the bottom of the list with a 69 rating. That high level of satisfaction among Apple's customers, combined with their willingness to stand in line overnight for the privilege of paying the iPhone's premium prices, has led some observers to refer to the extremely strong relationship between Apple and its consumers as a "cult." The biggest problem for competitors is that Apple is perceived by consumers to be offering superior value, even at premium prices. When Apple launches a new laptop, tablet, phone, or other device, it is able to charge a substantial premium over its competitors. Take the first iWatch as an example. A number of other companies, including Pebble and Samsung, were in the smart watch market well before Apple entered, but Apple quickly gained a dominant market share. In fact, the iWatch sold more units in its first three months than either the first iPad or the first iPhone. When the $20,000 Apple Watch Edition went on sale in China, it sold out in less than an hour! In fact, even when products fail to meet expectations, it does not seem to significantly affect how most consumers feel about Apple. The Apple iPhone 4 was introduced with an antenna that resulted in dropped calls. Apple responded by telling customers to get a case for the phone that would solve the problem. The iPhone 4S was launched with a massive advertising campaign that introduced the world to Siri, a voice-activated virtual assistant. The ads made it appear that you could talk to Siri and ask the assistant to finish variety of tasks with relative ease. In practice, many consumers found Siri's ability to be more limited than they expected and some have even sued Apple for misleading them. Apple's response: If you don't like the phone, take it back and get a refund. More recently, consumers have had trouble using the lightning connector to charge their iPhones. Yet, Apple continues to surge forward. The company has launched new services that charge a subscription fee to store photos and stream music. Once again, these products are expected to be significant players in the consumer market for cloud-based services at a price premium to the competition. To fuel this growth, Apple is relying on the value it has created in the very strong relationships it has with its very satisfied consumers. Sources: Barrie, Joshua (2015), "The $20,000 gold Apple Watch Edition sold out in China in less than an hour," Business Insider, April 10, http://www .businessinsider.com/apple-watch-edition-sold-out-in-china-2015 -4#ixzz3eBwC3C7z accessed on June 26, 2015. Cassidy, John (2012), "How Long Will the Cult of Apple Endure?" The New Yorker, Online Daily (March 20), http://www.newyorker.com/online/blogs/johncassidy/2012/03/how -long-will-the-cult-of-apple-last-for.html, accessed May 23, 2012. Cline, Seth (2012), "Don't Like It? Get a Refund, Apple Says of Siri Lawsuits," US News & World Report (May 18), http://www.usnews.com/news/ articles/2012/05/18/dont-like-it-get-a-refund-apple-says-of-siri-lawsuits, accessed May 23, 2012. Reed, Brad (2012), "Apple Dominates Other Smartphone Vendors in Customer Satisfaction," Network World US (May 15), http://www.pcadvisor.co.uk/news/mobile-phone /3357579/apple-dominates-other-smartphone-vendors-in-consumer-satisfaction, accessed May 23, 2012. Villapez, Luke (2015), "Apple Watch US Sales Outpacing iPad Debut, According To New Estimate ," IBI Times, June 4, http://www.ibtimes.com/apple-watch-us-sales-outpacing-ipad-debut -according-new-estimate-1950917 accessed June 26, 2015. Questions 1What meaning is being transferred from Apple to its customers? 2Are Apple customers satisfied, or are they feeling a different, more powerful emotion as part of the iPhone consumption experience? If so, what might that emotion be? CASE STUDY 3How has the iPhone changed what consumers expect from a smart phone? How might this change in expectations affect consumer satisfaction with competing products? 4Why have the dropped calls of the Apple 4, the underperformance of Siri, and other product issues not had a more negative impact on satisfaction with the iPhone? Are Apple's customers suffering from a confirmatory bias? Are they attributing the failure to something other than Apple itself? 5How can other companies compete with Apple's powerful "cult" of customers?