Down-Selling vs. the low-cost trap: Does Apple get it?
Apple is rumoured to develop a lower-cost Mac laptop, expected to launch in the first half of 2026, aimed at students and budget-conscious users who currently choose Chromebooks or entry-level Windows PCs. To keep the price below its traditional Mac lineup, the alleged new model will use a slightly smaller LCD display and an iPhone-series processor rather than the higher-performance M-series chips.
Mark Gurman
So far, so good. It's strategy 101 to expand your market upward and downward your historic positioning when you want to grow or, simply, the market gets tough.
And indeed, on paper, such a deliberately simplified product should expand Apple’s reach in education and mainstream computing, where price sensitivity has historically kept the company at a disadvantage.
Here's the rub, though...
Most companies, when trying to expand their market to customers they don't have access to yet, tend to bring out their product, which means boosting the specs and adding extra features in the hope they could sell to a more demanding market at a higher price point (and hopefully, with a higher margin). Well, most of the time this doesn't work out.
The reason is that when upselling, 'more stuff' doesn't correlate with 'more demanding customers.' The proper definition of upselling is "Enhancing the value you create for the customer with a premium offer of your main activity."
Adding value, not features, is a totally different ball game as Apple actually demonstrated in the past, removing the CD player tray from their premium laptops or even the audio jack (oh, the horror).
The same goes for down-selling.
A down-selling strategy is not synonymous with devaluing your product or service, making it cheaper, or removing features. Down-selling entails a strategic overhaul of your business operations, prompting a reassessment of how value is generated, delivered, and monetized.
The goal is to access market segments that your business model historically overlooked (certainly for good reasons at the time), which doesn't just mean "make it cheaper."
Consider this perspective: your standard offering packages your overall value for your primary market. But if you focus on the market below it, they only need a portion of that value. It can be 60-80% of it, and that would be a substantial "good enough" offer that can be provided without extensive infrastructure, unnecessary complexity, or excessive embellishment.
Down-selling is about redesigning around your core value to make it more accessible, economically efficient, and easier to manage for your business – easier once the redesign is complete, while getting there will be a subtle and quite complex process.
Think about how a typical airline in the nineties could have transformed into Ryanair... They couldn't! They would have needed to start a subsidiary on the side to rebuild their whole process, marketing, and operations from the ground up with sheer efficiency in mind.
The key opportunity of a strategic down-sell is that moving downward reduces barriers to market entry, attracting customers who were previously excluded by pricing structures that did not cater to them. It's a category shift, not just a product downgrade.
Properly executed, the benefits of this approach are evident:
- Tapping into untapped markets.
- Extending customer lifetime value.
- Boosting engagement and reducing customer turnover.
- Demonstrating adaptability and customer-centricity.
- And yes, in some cases, resolving excess inventory or outdated products without diminishing brand value.
However, there are inherent traps that most companies are generally oblivious to and that Apple seems to be falling into:
- Engaging in a race to the bottom by sacrificing value for lower prices.
- Blurring the line between premium and simplified offerings, diluting brand identity.
- Misjudging customer behavior by assuming automatic upgrades based on trust.
For regular companies trying to reposition some of their business into a lower market, the best move is undoubtedly to test the waters as much as possible. A suggested method outlined involves creating a scaled-down version of a successful offer, reducing costs and prices while maintaining a significant portion of the value, and launching it as a limited-edition product clearly targeted to a new audience to gauge customer response and preferences.
In the end, down-selling must be viewed as a strategic exercise in restructuring value delivery, not a mere cost-cutting endeavor. Approaching it as a means to enhance your value proposition into a new segment can lead to business expansion, while hastily pursuing price reductions spells disaster...
Philippe MEDA
Philippe MEDA
Philippe MEDA
