The Strategy Interview

Wayne ArcusVice-president, marketing, Apple CanadaWayne Arcus began his career in marketing in 1974, when he was named marketing co-ordinator for his then-employer, Saskatchewan Telecommunications. Arcus, who holds a bachelor of science with a concentration in mathematics from the University of Saskatchewan,...

Wayne Arcus

Vice-president, marketing,

Apple Canada

Wayne Arcus began his career in marketing in 1974, when he was named marketing co-ordinator for his then-employer, Saskatchewan Telecommunications.

Arcus, who holds a bachelor of science with a concentration in mathematics from the University of Saskatchewan, joined Saskatchewan Telecommunications in 1969 on the engineering side of the business.

He subsequently worked in a variety of sales and marketing positions.

In 1978, he began a four-year stint with TRW/Data Systems, first as a manager of market planning and later as a division manager.

In 1982, World Wide Product Marketing of San Antonio, Tex. acquired trw, forming a new company, Datapoint Canada.

From 1982-89, Arcus held a number of positions with Datapoint Canada, including that of marketing manager, vice-president and, lastly, president.

The next year, he moved on to become president of Canadian software manufacturer and marketer Pure Data.

In 1991, Arcus assumed his current position as vice-president of marketing with Apple Canada.

Q. A. C. Nielsen numbers for the beginning of the year show Apple’s Classic II brand pc has fallen from being the best-selling brand to the third best-selling, behind ibm’s PS1, which has taken over as No.1 and its Valuepoint brand, which is now No. 2. Does this change reflect ibm’s aggressive pc pricing strategy?

A.The decline in the Classic’s overall market share was anticipated by us. It is the result of a movement by the market to color. The cost of the competition’s entry-level color machines dropped substantially over the past year, so they began to gain share. But we introduced a product called the Color Classic at the end of February and sales have taken off dramatically in March and April.

Q. Industry observers have suggested Canadian pc sales could grow by as much as 20% in 1993 over 1992. Do you see the market experiencing that kind of growth?

A. Absolutely. We see ourselves experiencing greater growth than that. We experienced greater growth rates than that between 1991 and 1992 and our current run rates are higher than that.

Q. In the last year or so, several of your competitors have launched new pc brands targetted at specific areas of the market. For example, ibm created PS1 for the home and home office, Valuepoint for small business and PS2 for large corporations. Has Apple adopted a similar approach?

A. No. We have put together specific products for the home through specific distribution channels, effectively by adding a software element. But what we have not done is rename products for specific sets of customers.

There is an image of the person at home as a low-power, general purpose user. That’s not necessarily so. It is very difficult to segment your product line by market. What you try to do is to segment your products to avoid channel conflict.

For example, the LCIII is a basic business tool, but a lot of people buy it for the home. To meet the needs of these buyers, we have a channel structure, which includes Future Shop, where we’ve bundled in general purpose home productivity tools.

So you’ve got a different overall product, but the brand, the lc, has not changed.

In the u.s., Apple has gone in a different direction with Performa, which was introduced last year and its aimed at the home user.

Q. Do you plan to introduce the Performa brand in Canada?

A. No, the channel structures in Canada are different than in the u.s. A lot of our business resellers also operate extensive retail outlets and appeal heavily to the home. They also work extensively in the education community. So we can’t say the home user will buy only in Future Shop.

The home user also buys from a full-service, full-product-range Apple-line reseller. In both locations, he can see the lc, but in Future Shop he sees a different product proposition because application software for the home user is bundled in.

Q. In the last year, there has been a flurry of activity as the various manufacturers have expanded their distribution channels. What has Apple been doing in this area?

Lots. We started into the mass merchandisers about a year and a half ago with Future Shop. We’ve now expanded to Majestic [Sound Warehouse], Multitek [Warehouse Direct] and a couple of other regionals including Club Biz and Aventure Electronique in Quebec.

We have also been working with computer distributor EMJ [Data Systems, of Guelph, Ont.] to build our value-added reseller network.

As well, we are currently investigating the catalogue, either ours or a third party’s.

In the u.s., Apple launched a catalogue called Apple Direct six months ago and they have already come out with their second issue.

Q. The computer wars began on the price front. Where do you see them headed next?

A. The price war has moved on to the service war. Last year, price was used as the differentiating factor; now service is being used.

Remember the automobile war a few years ago with Chrysler offering warranties of up to seven years. Now the computer manufacturers are going to go through that. It’s just the next step in the commodity wars.

You get to the point at which you can’t squeak out any more dollars, so you move onto something else. Eventually, that will put some people out of business because there is a cost as you get into longer warranties, free service, free 1-800 numbers and so on.

Next issue: Bill Duron, president, Metro Toronto Convention and Visitors Association.