In 1998, Steve Jobs saved Apple by releasing the iMac. Over the next ten years, Apple used marketing and psychology to build a customer base of loyal followers who are literally addicted to their products.

The extent of Apple’s unbelievable marketing success was evident on May, 22, 2008, when a group of people formed a line outside of Apple’s flagship store for no reason. Skeptics blamed the New York comedy troop Improv Everywhere “We Cause Scenes”, but the group denied involvement.

How then is it possible for a company to create this level of demand and devotion to their products?

Market Opportunity

When Apple released the iMac in 1998, the market was ripe and ready for picking. Moore’s law dictated that computers were getting faster and more capable at an exponential rate, and technology was continually being rendered obsolete. However, the exterior design of computers was evolving at a much slower rate, and the incremental upgrades in speed were really only apparent to power users. Sales of new computers were reaching unprecedented levels, but people saw little reason to upgrade often.

The unconventional iMac allowed Apple to get everybody’s attention. They had instantly rebranded themselves as a company that built fun, colorful, and easy to use computers. The all in one design had been tried before but now the iMac looked newer and more modern. The advertising was suddenly far more catchy and creative. Sales surged.

Highly Visible Product Life Cycles

When it came time to upgrade the technology in the iMac, Apple also upgraded the exterior. The new iMac had a dvd drive, leading Apple to install a more streamlined and modern looking slot loading system. The changes to the iMac G4 and soon after G5/Intel iMacs were even more drastic. The totally new designs incorporated a far more modern LCD screen and the colors were ditched for a clean looking solid white. The most recent upgrade of the Intel iMac uses a new color scheme.

The uses of midlife “facelifts,” and total case redesigns have been a powerful tool for Apple. This tactic has also been used to great effect with the iPod.

Apple’s commitment to consistent releases of new products is perhaps most apparent with the iPhone. The current first generation iPhone was released with outdated technology and the lack of high speed 3G capability, which in my opinion, is just a way to create another opportunity to release a new version of the product and force early adapters to buy a second iPhone.

So how exactly does this create a “drug like” addiction to Apple products?

The constant releases of highly hyped “new looking” computers and mp3 players has early adapters constantly buying new versions. The apparent differences in the “upgraded product” play on human emotions by creating feelings of interest, then jealousy and selfishness. Suddenly, having the newest and best product becomes a sort of social proof. Think of all the attention that YOU would be getting if you were the first to have the new version of the iPod. These marketing tactics have driven the demand for new luxury cars, designer clothing, and other consumer products for years. Apple was just the first technology company to cash in on it.

Premium Pricing

Apple products are expensive, but not so outrageously priced to be unaffordable. While high prices translate to higher contribution margins and greater profits, they also serve to strengthen brand image. While there is a minimum price a business must charge for a product to be profitable, the actual price is an arbitrary number set by a marketing team. By charging more than their competitors, Apple is able to create an illusion of value. Time is money and the more time you invest working for something, the more it is worth to you.

Demographic Targeting

When Apple released the iMac in 1998, it had already spent years targeting young people by entrenching itself in the education market. However, the new Apple has definitely “kicked it up a notch.”

The launch and mainstream adaptation of the iPod has created a generation of Apple customers who will raise the next generation while controlling the majority of purchasing decisions for years to come. The widespread appearance of MacBooks and iPods in college dormitories leads this writer to predict gains in market share for years to come.

So what does this mean for your business?

Reading what I just wrote, I make it sound like Apple’s marketing tactics are evil, but that wasn’t my intention. The company’s success has created countless jobs, while driving competition by battling Microsoft. My point is, if you are trying to strengthen the brand of your business, you can’t just worry about how good your products are. You have to take into consideration what you want to be, what you want people to think of you, and what your company’s mission is.

If your business was a person, who would it be and how would it act? Apple has excelled by playing the young and popular guy. Remember, it’s all about perception.