The Accidental Product Manager

Apple has decided to offer different products at different times
Image Credit: Matt Madd

Let’s talk about the product that you are responsible for. How many different versions of that product are you currently offering? Most of us have a big, medium, small version or perhaps a simple, better, and fancy version. When you create a new version of your product (e.g. version 2.0), what does your product development definition tell you about when to release all of the different versions of the new product? If you are like most product managers, you make them all available on the same day so that you can generate as many sales as possible. However, over at Apple they think that they’ve come up with a better way to go about doing this.

Apple’s New Product Release Strategy

So the product managers over at Apple have a bit of a challenge on their hands. When it comes time to release a new version of their very popular iPhone product, they have been coming up with multiple versions of it. As is the case with all product managers, they would like to find ways to maximize the sales that they can achieve for each variant of their product. Just to make things a bit more complicated, Apple has only recently passed the US$1,000 mark in how much they charge for a new phone. Convincing people to pay that much for a phone can be a real marketing problem.

Apple’s strategy for how they are planning on releasing their next line of products seems to have its roots based in how they released their last batch of products. Last time around, the pricey new iPhone X was released six weeks after the company rolled out two other models that were new, but priced less than the flagship iPhone X. The reason that the company didn’t release all of their phones at the same time was they they had production problems in creating the iPhone X. This time around Apple has prioritized the production of their most expensive phone models. The prices for these phones start at about $1,000. After this phone become available, less expensive new models will arrive in stores in about five weeks. The starting price for the lower cost model will be $749.

It appears as though the Apple product managers are doing this so that they will have a month during which they can focus on selling their more expensive models. During this month they won’t have any competition from their less costly models. At the same time, initially releasing only one model will allow Apple to simplify their logistics and balance retail demands. One of the key advantages of this approach is that it could help Apple to do a better job of forecasting demand and production for all three of their models for the upcoming holiday season. If the Apple product managers can get that right, then they’ll have something new to put on their product manager resume.

The Benefits Of A Staggered Release

The Apple approach has been identified as being a form of a Dutch auction. What his means is that they are starting with a high price and then lowing it until the customer accepts it. Apple understands that the people who are the most motivated will be willing to pay to get early access to their phones. After these people are taken care of, the company can go after the people who have to make a choice and who will be willing to pay $750 for a new phone.

Initially Apple restricted itself to launching only two new versions of the iPhone each year. Last year for the first time they launched three versions of their phone. When Apple released their less expensive phones in September, they ended up delaying the release of their more expensive phone until November due to production problems. This was the first time that they had released different versions of the iPhone at the same time. The result of this is that they ended up damping the sales of their less expensive phones because their customers were willing to wait until the more expensive version became available.

This time around Apple is going to take a different approach. They are ramping up production of their lower cost models in order to ensure that they’ll have enough of them when they need it. Apple believes that by offering their more expensive model first they will be able to access the early demand for it. At the same time Apple is going to be able to simplify stocking for their retail partners. The thinking is that this will allow retailers to promote the higher end models for two months before they start to promote the lower cost models.

What All Of This Means For You

Product managers who have multiple versions of the same product to sell run into an interesting question. In what order should they offer their products to the market? Does your product manager job description tell you if you should offer them all at once or one by one? Over at Apple they have run into the same problem. The latest version of their popular iPhone product now comes in three different flavors and they are going to have to decide how they want to sell it.

Apple now offers multiple versions of their iPhone and prices have climbed to just over $1,000. Last time Apple released new versions of their phones they had to delay the release of the most expensive version due to production problems. This time around Apple is planning on introducing the most expensive version first and then the less expensive versions later on. By doing this Apple will make it so they don’t have to compete with themselves and it will simplify their logistics. What Apple will be doing is a form of what is called a Dutch auction. They want to avoid doing what happened last time when people held off on buying the less expensive phone because they wanted to see the more expensive phone. Apple believes that by offering the more expensive phone first they will be able to gauge the demand for it and better prepare for the holiday season.

As product managers we’d all like to be facing the challenge of having multiple versions of our product to offer to the market. However, with the advantage of having multiple products comes the challenge of trying to determine what order we should roll them out in. Apple is facing this problem right now and they can show us how to deal with it. Making sure that we introduce our products so that the most expensive version can be snapped up by our most eager customers seems to be the best way to go. Next time you find yourself in this position, carefully manage how you introduce your products in order to maximize your profits!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: If you have multiple versions of your product should you ever introduce more than one at a time?

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What We’ll Be Talking About Next Time

When the customers for your product go looking for products online, how do they decide which one they are going to buy? As more and more of us become comfortable shopping online, we are starting to look towards people who have bought a product before to tell us if it’s any good. What this means for product managers is that those online product reviews are starting to take on more and more importance. What’s a product manager to do?

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