How to differentiate the iPhone?

After writing the last post, I realized I had not tackled the big question:  How could Apple have practiced price discrimination that would have enabled the “big spenders” to still feel good about themselves, rather than feeling like they were robbed?

Thankfully, others have taken on this task.  Specifically, Seth Godin (you know, the “All Marketers are Liars” author! and blog) has identified several ways that Apple could have differentiated their product, making people “happy” to have paid 33% more for the same product.  As he puts it, “The key is to not give price protection to early buyers (that’s unsustainable as a business model) but to make them feel more exclusive, not less.”

Godin’s ideas include:

  • Free exclusive ringtones, commissioned from Bob Dylan and U2, only available to the people who already had a phone. (This is my favorite because it announces to your friends–every time the phone rings–that you got in early).
  • Free pass to get to the head of the line next time a new hot product comes out.
  • Ability to buy a specially colored iPod, or an iPod with limited edition music that no one else can buy.

Neat–and as he points out, they wouldn’t have cost Apple $20 Million in profit.