Why You Spend So Much Money At Apple

Apple has revolutionized technology as we know it, from its sleek, high-quality designs to friendly retail employees and hyped up launch events. The tactics are paying off. Despite the pandemic, revenue rose 6% year over year in fiscal 2020. Here's how Apple uses its ecosystem of hardware and software to keep customers hooked.

Since Steve Jobs announced the first iPhone at a MacWorld event in 2007, Apple has released more than 20 iPhone models. Over 80% of Americans had a smartphone in January 2019, and the same year, there were 900 million active iPhones in the world, according to Apple CEO Tim Cook. Yet when Apple announced the iPhone 12 on Oct. 13, an estimated 2 million people preordered the device in the first 24 hours alone.

So why, when iPhones are already ubiquitous, do fans hype and covet every new iPhone release? Here are the psychological reasons it’s hard to resist the new iPhone.

We’re attracted to ‘what’s next’
Each new iteration of the iPhone has new features: For example, the iPhone 4 in 2011 brought the first front-facing “selfie” camera, while the iPhone 5S in 2013 introduced Touch ID fingerprint scanning. The iPhone 12 boasts a larger screen, faster 5G network connection and more advanced cameras.

But even if your current iPhone functions fine without all the new bells and whistles, “people are attracted to those improvements in quality and capability,” says Kelly Goldsmith, associate professor of marketing at Vanderbilt University in the Ellen Graduate School of Management.

Each new phone, and also Apple as a brand, represent innovation and “tomorrow,” which consumers tend to hold to a high regard, says marketing consultant Katie Martell. “We really do live in a world where what’s new and what’s next is considered most valuable.”

It’s part of your identity
In 2011, Apple’s competitor Samsung debuted a commercial that parodied people in line outside of what resembles an Apple store, waiting for a new smartphone release. “If it looks the same, how will people know I upgraded?” asks one customer in line.

Having the latest and greatest phone is a status symbol, Goldsmith says. “It’s something that you carry with you all the time, so it conveys information about you to other people,” she says.

Your phone is also a strong mechanism for something called “self-signaling,” a concept in behavioral economics that has to do with how your actions influence your beliefs about yourself.

In this case, having the newest iPhone can boost your self-esteem and remind you that you’re not outdated. “Every time you look at that phone it tells you something about who you are, and it reinforces certain aspects of your own identity,” Goldsmith says.

Apple in particular tends to empower consumers with messaging about what they can do with their new iPhone, Martell says. For example, Apple encourages people to share their photos shot on the iPhone with the hashtag “ShotoniPhone,” to be included in Apple billboards and ad campaigns. This signals to consumers that, “you’ve got that power in your hands.”

There’s perceived scarcity
When a new iPhone becomes available, it’s customary to see lines snaked around Apple stores hours before they open. Apple fans want to be the first to have and use a device, and avoid having to wait for shipping delays. (Even this year amid the pandemic, people waited for the iPhone 12 outside Apple stores around the globe.)

To consumers, a line outside of a storefront signals that whatever is inside is valuable. There are two behavioral economics concepts at play here: social proof (convincing people that other people want the product) and scarcity (the fear that there may not be enough), Goldsmith says.

Research has shown that when you think an item is scarce, it heightens your arousal and makes you feel panicked to make a decision quickly. The perception of scarcity makes you less discerning and more likely to go with your favorite item, rather than research other options.

“That just makes you want to click ‘buy,’ makes you want to get the line and makes you not want to miss the boat,” she says.

“Consumers respond, almost too strongly, to these scarcity marketing tactics,” says Goldsmith.

Apple declined to comment on this story.

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Why You Spend So Much Money At Apple

[CNBCMakeIt]

What brands have you hooked? Let us know in the comments below:

[rajidselim]

For me it was never about status, the product works well. The ecosystem is great, the desktop UI is far more seamless, air drop, and iMessage is really great. I do hate overpaying though

[SimonCHulse]

Guy in video: “I’ve never been to a neighbourhood without an Apple Store.”
Me, in New Zealand: “There isn’t a single Apple Store in my entire country!”

[sankalppandya]

"It feels like everyone owns Apple products"

Me: nope, just their stock will do thanks.

[skantay]

If there is no ads, the video is an ad

[NoMercyLaVoyage]

their prices are the worst, but the ecosystem is the best

[leodevanand]

Someone : iPhone's display is the best

Samsung : thanks!!!!

[cadenwilliams]

bruh it’s a phone like not a cult. “I’d never go to a neighbourhood without an apple store.” like seriously 🤦‍♂️

[maheshleo]

Reasons i use an iPhone, which aren’t mentioned in this video:
1. Great user experience, both hw and sw
2. Average lifetime of at least 4 years
3. Security updates for over 4 years old phones
4. Great Security and Privacy options
5. Good resale/exchange value

[saracasmmd]

Not even an apple fangirl but I'm impressed with how long their products last. I like android for the customizability and the new features they add to flagship devices each year, but android products seem to age really fast like the phone you got in 2020 would feel and look old in the next year or two. My parents have their > 5 year old iPads and they still work great. My friends have their macbook they've had for close to a decade and they still work great. I have an android phone that is less than 2 years old and it's struggling to function normally. I guess you really just pay premium for apple product quality.

[fionaclinton]

Warren Buffett once said “If you don't find a way to make money while you sleep, you will work until you die.”

[Nite_coder]

I only buy one thing from apple and that's $AAPL

[kikiinthegarden]

For me, it wasn’t about status it was about convenience. With being a business owner, I need the simplicity of moving docs between products.

[VerStarr]

They JUST announced those over ear headphones too lol

[Zecos]

The fact is no matter how Apple is you can’t call it religion...
*Thats a stretch*

[happybtcazour]

It's all about marketing and neuromarketing. Product design hasn't changed much, products are becoming and more powerful on the detriment of reliability. Apple's business model is also primarily focused on pushing customers to always buy the latest products. Once warranty expires, you cannot afford to go to Genius Bar unless you wouldn't mind to be lied to and be pushed to buy a brand new item, always making it hard for independent repair shops to do their job (unconventional screws, sticking parts to the motherboard, ...etc) It's becoming clear that in today's world, having an apple product feels much more like renting it than really owning it.

[georgealex]

I’ve been an Android user for about 10 years. At some point I’ve had an iPhone 5c, it was fine but I didn’t like iOs at that point and ended up selling it (in 2 hours since posting the ad). In 2020 I’ve switched from a Samsung Galaxy S9 to iPhone 11. Then I’ve replaced my now almost useless Galaxy watch active 2 with an Apple Watch 6. People b*tch about Apple’s “planned obsoletance”, while I was never ever able to keep an Android phone for over 2 years. Never. It always ends up being complete cr*p after 2 updates, even if it’s a high-end Android phone when buying. In the meanwhile, my sister’s iPhone 8plus is still working like a charm; a friend’s iPhone XR is still working like new... When I looked at the price of the Galaxy S20, it was even more expensive than the iPhone 11... but I knew I can keep the iPhone for 4-5 years, so for me it’s worth it. I’m sick of needing to upgrade my stupid Android phone, even though I personally would keep it for more or am pleased with the design, screen, etc. Ah, yes, I couldn’t care less about the iPhone11’s “cr*ppy screen”. It’s not OLED, it won’t burn-in and I can’t ever see the pixels during use. Good enough for me. In the next years the lower resolution will mean the hardware needs to push less pixels, practically ensuring good performance and longevity. Apple lowered its prices compared to the competition, so that’s why you see the bump in sales: it’s all the haters that can now afford the iPhone....

[SuperToiboi]

"Why you spend so much at Apple"

Me sitting here with my Samsung phone, having never been to an Apple store.

[lavelleandrae]

They forgot to talk about the music. Their grip on music before Spotify really had a lot of people stuck too.

[KyudoKun]

"feels like everyone owns an Apple product"

Me: *Laughs in Nokia 3310*