Apple Watch and the Strategy of Exclusivity

No lineups for new device, as in-store purchases will be by appointment only
April 7, 2015 Updated: April 7, 2015

Apple enthusiasts will need to make an appointment to preview and try on one of Apple’s smartwatches before they’re even allowed to preorder the new device that officially launches on April 24. 

The move is part marketing strategy—to lend the smartwatch an air of exclusivity—and part effort to familiarize consumers with a relatively new concept, so they can make the best use of the product.

The watch will be selling at three different price points, from $349 for the rubber strap sport watch, from $549 to over $1,000 for the stainless steel fashion models, and an 18-karat gold version that sells from $10,000 to $17,000. The watch requires the user to already own an iPhone to run it.

Marketing Ploy

Erich Joachimsthaler, chief executive and founder of Vivaldi Partners Group, said the appointment-only approach is really no different from the usual long lines outside Apple stores on launch day—it’s to create artificial scarcity.

He calls it a “quintessential Apple tactic” of selling luxury. “[It] has always been the Steve Jobs approach. And it has worked,” he said.

Apple hired many executives in recent years from the luxury and fashion sectors, such as Patrick Pruniaux from Louis Vuitton and its TAG Heuer luxury watch brand, and Angela Ahrendts former CEO of Burberry. 

“This is more likely a way to apply fashion or luxury marketing principles in today’s world where ‘appointment only’ also guarantees the reaching of influencers—social media on steroids,” said Joachimsthaler.

Customer Confidence

The other perspective is that appointment-only ensures consumers leave actually knowing how to use their new device. With the watch, users can order coffee, buy plane tickets, call the ride-hailing company Uber, chat with Siri, and more.

“The nightmare would be having people not knowing the functions of the watch,” said Sarah Kahn, industry analyst at research company IBISWorld. Presumably this could lead to a flurry of bad reviews.

So why not simply watch a how-to video?

Carolina Milanesi, chief of research at international consumer knowledge company Kantar Worldpanel ComTech, feels it’s not just about the technology.

Apple clearly wants its customers to feel good about the experience. 

“It’s more about getting it right,” said Milanesi. “With anything new, customers’ experience in the store is very important. It’s the only experience you have.” 

For Apple, the wide array of choices, with all the different materials and sizes to choose from, is new territory for a company that has prided itself on creating definitive products. “At least in the beginning, people might not know which one they want,” said Milanesi.

Market Demand

One question that will soon be answered is how big the market demand is for the watch. After all, many of the watch’s functions are already available to consumers on their other iDevices, and iPhones, which are subsidized by mobile carriers, come at a significantly lower cost. Although the market might seem saturated by smartphones and tablets already, Apple’s counting on the luxury element, and the watch being its most personal product, to find a fresh market.

The Apple Watch, designed like a piece of jewelry, could appeal to consumers’ irrational, buying side, said Milanesi. Even the most expensive option in 18-karat gold will find a market, particularly in places like Russia, the United Arab Emirates, Saudi Arabia, and China where luxury and branding are highly valued.

“Many people still take a normal iPhone and have it coated in gold or covered in precious stones,” she said. “There’s definitely a market for that, a very small market.”

Sign up for appointments, and the appointments themselves, begin April 10 in nine countries, including the United States, Canada, China, and Germany.