Tech brands confront dying entry-level tier as prices rise

Marketers turn to preowned hardware, entertainment as chip costs reshape the funnel

Apple raised prices by hundreds of dollars on some Macs and iPads this summer and is now charging more for its latest round of iPhones, according to the Wall Street Journal’s CMO Today newsletter. WSJ reporter Asa Fitch documented the moves, which the newsletter tied to Apple’s strategy of absorbing soaring chip costs even as industry-wide smartphone and PC shipments are plummeting.

The company has also rolled out the foldable iPhone Duo, which starts at $1,999. The newsletter noted that many Apple loyalists can stomach paying more for their next iPhones, including the new foldable device.

Dell is expected to keep revenue climbing through similar price increases, the newsletter reported. The two companies are betting that their competitive and brand positions let them pass costs on to customers without losing market share. They also hope cheaper rivals will be unable to capitalize on the rising prices, because those competitors face the same chip-cost pressure and will have to raise their own prices as well.

The pricing strategy carries consumer consequences. Higher price tags encourage customers to keep existing phones and computers longer, only upgrading when they must or when a new capability proves too compelling to ignore, the newsletter reported. That adds pressure on research-and-development labs to deliver features that capture consumers’ imagination.

Apple and Dell are also gambling “that they can fend off competition from used and refurbished devices, a market that is also growing,” Fitch wrote, according to the newsletter.

Refurbished hardware as a new front door

The pricing strategy is reshaping the customer acquisition funnel. The entry-level tech tier is dying, the newsletter reported. Brands that want to keep the funnel flowing must either accept a narrower buyer base or find ways to bring younger and price-sensitive customers into their ecosystems through preowned hardware.

One option is to market preowned devices more aggressively themselves rather than leaving the field to third-party resellers like Back Market, including competing on discounts to original retail value. The alternative, the newsletter reported, is watching competitors or third-party marketplaces become the front door to a brand’s ecosystem — losing the customer relationship before it even starts.

Entertainment marketing resurges as brands shift spending

The newsletter reported that entertainment marketing is in an ascendant stage of the cycle. Procter & Gamble is making microdramas for a grocery chain’s media network, the latest sign that the last-click attribution era is giving ground to upper-funnel branding.

The last 24 hours alone brought headlines about a possible Geico holiday special, Ben Stiller’s appearance in full “Cats” costume to promote his soda brand’s arrival at Katz’s Deli, and Gap’s partnership with a boy band going on a mall tour, the newsletter noted.

Direct-to-consumer pet-food marketer Spot & Tango launched an awareness campaign after spending essentially nothing on branding last year, the newsletter reported, citing Modern Retail. Spot & Tango will keep using sales drivers such as ads with Google, Meta and TikTok, but its founders concluded that “performance marketing can only take you so far.”

Brand Finance: GLP-1 drugs threaten food brands

Brand Finance projected that the world’s top names in food could lose significant total brand value at the hands of GLP-1 drugs, according to the report cited in the newsletter. Brand Finance called Lay’s the most exposed. Brands such as Gatorade and Minute Maid could gain value as consumer behaviors shift, the report said.

Other marketing developments

South Korea’s music industry is adopting artificial intelligence and robots, but K-Pop’s devoted fans are worried about how such innovations will affect creativity and authenticity, a Wall Street Journal video report explored.

WPP said it had begun a formal search process for a successor to Chief Financial Officer Joanne Wilson, who is leaving to become CFO at Guinness maker Diageo, the newsletter reported.

Netflix revealed details of “KPop Demon Hunters: The Immersive Experience,” an interactive attraction coming to Dallas and Philadelphia in November. Children’s tickets start at $34, Variety reported, according to the newsletter.

Meta’s first-mover advantage in personal agents matters, the newsletter reported, but analysts also expect OpenAI to announce a consumer AI agent in the next week or two and for Apple to enter the space at some point.

A Beats campaign for headphones with customizable cushions features everybody in a cafe turning out to be a version of Kendall Jenner, Marketing Dive reported, according to the newsletter.

The chief marketing officer role at Ally Financial is changing to encompass AI and technology, Ad Age reported, according to the newsletter.

Target’s latest ad push features the retailer’s recognizable bags carried by shoppers throughout the day, with future elements to include “Red Bag Stories” revealing what creators say they have in their Target bags, Brand Innovators reported, according to the newsletter.

WPP opened a new AI-fueled production hub in London that combines virtual location shoots with traditional craft, Adweek reported, according to the newsletter.

A question worth asking, the newsletter noted: are the officially licensed outside characters available in “Fortnite” too out of character for their own good? Aftermath asked, according to the newsletter.

“Brands love it when consumers love them,” The Cut reported, according to the newsletter. “Then come the public breakups.”

“There’s a famine of content from brands.” — Molly Schonthal, managing director of agentic commerce at WPP Enterprise Solutions, on the need for marketers to provide more information to guide agentic search.