Member Login

Why Are Exxon Profits Criticized But Not Apple's Profits?

Thursday, March 1, 2012
The Society for the Advancement of Consulting® has asked its global members to comment on why an oil company such as Exxon is loudly critiqued for "obscene" profits, whereas Apple is lauded for doing the exact same thing. "Are we arbitrary in selecting our business heroes and goats," asks SAC® CEO Alan Weiss, PhD. "or is this a legitimate phenomenon based on objective evidence?"

"As a global business consultant and former VP of Operations of a mid-market manufacturer, I've found that nothing is more important than your brand," points out Lisa Anderson of LMA Consulting Group, Inc. in Claremont, CA. (www.lma-consultinggroup.com). "It's no wonder people become enraged at Exxon's profits but not Apple's profits (although there has been a wave of negative publicity surrounding their labor practices lately) as they see value in Apple's products. If you want to create powerful customer loyalty, tie your brand and value to what your customers' value. And then focus the 80/20 of all resources on delivering those objectives."

From Ottawa Canada, Wayne McKinnon a thought leader in altering the evolutionary course of businesses from extinct to distinct (www.WayneMcKinnon.com) suggests that people and organizations are outraged when they realize that their critical services are underpinned by a single commodity that they have no control over (as is the case with oil and gas prices).

Apple has the advantage on two fronts:

  1. The majority of the Apple customers do not see them as a commodity, but instead purchase them for their value. Price is secondary.

  2. Unlike oil and gas, Apple buyers have options. They could go back to PCs, but as any computer user who has ever thrown their unit out the window in frustration knows, the cost would be lower but so would the value.

Dr. Maynard Brusman is a San Francisco Bay Area consulting psychologist and executive coach. He is the president of Working Resources, a strategic talent management consulting firm. www.workingresources.com He offers a few insights:

Dr. Brusman notes, "Apple's success lies in its leaders' ability to inspire and be true to their core values: challenge the status quo and empower people. Company leaders communicate the reasons Apple exists, as well as their heartfelt motivation for creating new products that give customers new levels of freedom and power. Many people associate their iPhone and iPad with personal pleasure and positivity not Apple's profits.

"In contrast, many people associate Big Oil with causing them economic pain at the gas pump and environmental disasters. The Exxon Valdez oil spill was one of the most publicized and studied environmental tragedies in history. Apple creates an emotional experience of pleasure and anticipation of the joy of owning the next great product. In contrast, many people experience Big Oil profits as a negative emotional event and personal economic pain."

Roberta Guise, a small business marketing consultant and founder of San Francisco-based Guise Marketing & PR, says that by managing its image and cleverly making its products "cool" and "must-have," Apple endears itself to consumers, while Exxon makes consumers angry as it stumbles from one bad news item to another.

"People cheered when Apple recently one-upped Exxon as the wealthiest company," she says. "That's because Apple appears to care about us, and designs products we didn't know we wanted and now covet, while Exxon seems to care only about its own bottom line." She adds, "Energy companies such as Exxon would do well to take a page from Apple's PR playbook. Consumers are fickle. But if you treat them well, they'll forgive your transgressions and let you prosper without giving you too much flack."

Colleen Francis, President of Engage Selling Solutions www.engageselling.com says "The lesson for executives responsible for an organization's top line is that you need to understand what your customers value. People line up around the block and pay a premium for Apple's product because, more than anything, the brand delivers the promise of making you look cool. Lots of other products do what essentially the same thing but not in a way that makes their customers feel better about themselves.

"They love the Apple brand and don't mind paying the premium that leads to huge profits. Contrasting this is Exxon whose end-customers see no compelling value in their brand, only as a commodity supplier, and would cross the street without hesitation to save a cent a gallon. With this approach, you'd better have operating cost advantages if you want to maintain and increase margins. Instead if you can, like Apple, create value differentiation from your competitors then you can generate profits through premium pricing today and in the future with your band of loyal customers."

"It appears to us," concludes Weiss, "that the public makes judgments based on their perceptions of intent and value, which is clearly manageable if leadership believes in influencing such factors."

 
Box 746, East Greenwich, RI 02818
Fax: 401-884-5068
Phone: 800-825-6153 (401-886-4097)
info@summitconsulting.com
 
© Society for the Advancement of Consulting. All Rights Reserved. Web Site Design and Hosting by
WebEditor Design Services, Inc.