I learned two important lessons while getting my MBA:
- Marginal revenue = marginal cost.
- The students sitting behind the Apple laptops always had the right answer -- or thought they did.
The cult of Apple (Nasdaq: AAPL) is a strange but very loyal breed. I've seen Apple laptops custom fitted with oak wood, or decorated with the latest denim fad. They get names, too, like Noah or Melissa.
I know, I know, I'm just jealous because I was never able to keep up with Apple mania. Or maybe I'm just not cool (nerdy) enough to wait in line for days to be the first to own the latest iPhone release. Perhaps that's because I sold most of my Apple shares way below the stock's current price.
But I'm done fighting Steve Jobs and his minions. The latest iPhone snafu, which requires users to duct-tape their phone or hold it with tweezers to ensure that calls won't be dropped is the final straw. Apple's PR has been less than sensitive on the issue, initially telling customers to go out and buy a $30 case for the phone. Later, Apple misrepresented the problem by blaming it on a "software issue." Yet despite the hubbub, the lines and waiting lists persist. I actually saw someone put on gloves to make a phone call with the iPhone. (They were wearing skinny jeans, of course.)
In a piece yesterday, Consumer Reports refused to recommend the phone, saying, "Our findings call into question the recent claim by Apple that the iPhone 4's signal-strength issues were largely an optical illusion caused by faulty software." Yet in response, Apple afficionados refused to stop buying the iPhone.
This is the power of brand. Any company that can sell an expensive mobile phone that may or may not work is doing something right, creatring a brand loyalty that all investors should look for in the companies to which they allocate their hard-earned dollars.
Few if any companies have built this type of cult following. Companies like Nike (NYSE: NKE) and the Jordan brand made athletic shoes and apparel fashionable. Harley Davidson (NYSE: HOG) has done the same for motorcycles. I want companies like these in my portfolio.
While I may need to work on enhancing my image, I'm more worried about enhancing my portfolio. Investing in these companies may not be a bad place to start. Now, I'd better go get a new pair of tweezers and duct tape, so I can test out this iPhone myself.
Know of any similar brands with a budding cult following? Post your candidates down below in the comment box.
