After the stock market and hopes of consumer electronics companies such as Apple were buoyed by news of a tariff reprieve on consumer electronics on Friday, they were rapidly dashed by reports that no such exception was in the offing. Instead, these categories were moved to a different “bucket.”
Businesses thrive on stability because they plan around rules of engagement — plans that entail commitments of significant time, resources, and capital expenditure. Ergo, markets perform better when businesses are confident that the rules are really the rules. When Friday’s policies are thrown out with Sunday’s brunch leftovers, companies will resort to one primary strategy: Do as little as possible and thereby do no harm.
This is exactly what we recommend in our report, Consumer Marketing, CX, And Digital Leaders: How To Thrive Through Volatility (US):
Times of extreme volatility often spawn organizationwide crises of “Everything must change, all at once” — a narrative that is both false and dangerous. Instead, keep a cool head, resist knee-jerk reactions, and fine-tune strategies precisely and creatively to adapt to only the meaningful and substantial changes in the market and business environment.
What does Apple do on Monday now that Friday’s rules don’t apply? Here’s what I predict:
Lobby the US administration hard and keep hopes alive for an exemption, for itself or the category. It’s been a successful route in the past and is really the best option in this tariff regime.
Stay put and reduce risk, avoiding significant changes and accumulating inventory, as the company has been doing, to serve as an insurance policy (and if Apple doesn’t need to use it, that’s even better).
Continue business-as-usual supply chain diversification, mostly independent of the current tariff volatility. The company has been moving production to countries such as India and Vietnam well before this administration; it can incorporate options to expedite this if the tariffs remain.
Have Plan B pricing that looks at different price elasticities by product line. Come up with the right price points and offers (such as trade-in) that do not jeopardize upgrade cycles into more expensive phones and the adoption of the lucrative Apple ecosystem.
Manage the China relationship, because the country matters not just as a supply source but as a market that is already under threat and can be a source of significant revenue pain. The trade war has added strain to the relationship, but Apple has to work hard to avoid blowback.
To better manage your brand and business through this period of uncertainty and shifting consumer behaviors, please read our report, Consumer Marketing, CX, And Digital Leaders: How To Thrive Through Volatility (US).
If you are a Forrester client, stay tuned for additional research on how CMOs can better manage uncertainty and volatility. Go to my Forrester bio and click “Follow” to be notified.
Also, as a client, you can schedule time with me for an inquiry or guidance session or talk to your account team about workshops and strategy days on planning through uncertainty.
