Apple Inc. is an American multinational company. It is a technology company that manufactures, develops and sells consumer electronics and software. The headquarters is located in Cupertino, California. It was formed by Steve Jobs and Steve Woznaik in 1976. It is world’s second largest technology company and mobile phone manufacturer (Sanchirico, n.d.). Current CEO of Apple Inc. is Timothy Cook. The products that Apple Inc. designs are I-Phone smartphones, I-Pad tablet computers, iPod media player, Mac personal computer and various computer software and online App services. The first generation iPhone was released in 2007 followed by 3G, 3GS, 4, 4S, 5, 5S, 5C, 6S, 6Splus and the latest one is iPhone SE that has been released recently on 31 Mar 2016 (Sanchirico, n.d.).
In this report, we will discuss the Marketing Strategy used by Apple iPhone before launch into the market and will survey the activities that were executed to make it a success. The company followed the same strategy before launching of all series of iPhones including current product SE and resulted in a successful product in almost all target markets (Capatina & Draghescu, 2015).
Social - After the launch of the iPhone in the market, a survey was done among prior users, of Apple products to know about the market trend. 24% of 18 - 23-year-olds owned an I-Phone and 77% owned at least one apple product and were brand loyal (Capatina & Draghescu, 2015). Target market included teenagers, businessmen, and high-end income earners.
Economical - Apple Inc. has created jobs for many people across the world thus have large effects on many countries’ economies (Capatina & Draghescu, 2015).
Political - There are certain political issues line up against Apple Inc. For example, the debate over iBookstore and the allegations put by Obama against the company.
Market and Competitor Analysis
When the iPhone was launched in the market, there were few players operating in this industry. RIM and Palm were two of them which were posing as big competitors against Apple Inc. Palm was quite settled in the market but was facing issues regarding software and product usability. One of the major features of smartphones, web browsing, was not chartered by most of the competitors (Annan, 2005). Apple Inc. took advantage of this weak point and took a hold on the market with the launch of the first iPhone in 2007 with all the basic features that a smartphone could have. It was a full frontal attack that made this product popular among the target market. Apple Inc. had always been a customer-centered organization, but it didn’t take much time to be a leader in the industry.
- Repeat, referral and loyal customers
- Brand Value
- Quality customer service
- Regular improvement of research and development team
- Limited outside software uploads on I-phones
- Update failures and product recall
- No compliance with non-Apple products
- Certain Law Suits
- New Retail stores launch
- Mobile device and media expansion
- Service stores launch in small markets
- Improvement in competitor products
- Fast changing technology
- Short product life cycle
International Market Entry Strategy
It is not easy to penetrate an already established market. The threats of entry include economies of scale in production and R&D, Capital requirement, Product Differentiation, Distribution channel access and Government policies of the target markets. With the growing industry of smartphones, there are chances of more competitors’ addition. The strategy that an iPhone introduced to enter into new markets is a high-quality product with unique features (Chen, Shen, & Chiu, 2007). It targeted only high-end market to sell higher-cost products. And the marketing strategy followed helped it to set up in new markets as a highly competitive established brand. Service centers to be opened in many countries and Apple retail stores to be introduced in new emerging markets like China and India. Future expansions in residential markets help generate more business and budget to expand in developing countries (Fletcher & Brown, 2004).
Product Attributes, Consequences of use, and personal values are the main factors that affect a consumer decision about any product. But product attributes are the reasons that may change and affect one’s decision (Chen, Shen, & Chiu, 2007). Apple Inc. introduced iPhone keeping this element in consideration. The outstanding applications, fast system, and brand name made the product popular among consumers and attracted a high volume of buyers.
Segmentation and Target Market
Demographic - Segmentation is done on the basis of age, gender, family size, income, education, and occupation, etc. are known as demographic segmentation. IPhone sales get affected by age, gender, profession, and the income of the buyer (Clapperton & Corones, 2007). The target market is medium and high-end income groups. Teenagers and businessmen are the niche market. And men constitute a major target group.
Psychographic - Social class is the base of such segmentation. People with different interests, opinions, and attitudes prefer to purchase different products. People who have an interest in high-tech products are target groups for iPhone.
Use-related Segmentation - the market can be divided as per usage rate and brand awareness also (Clapperton & Corones, 2007). Generally heavy and medium users prefer to buy iPhones to cater to their needs of a smartphone.
Benefit Segmentation - different people get benefited differentiated from the same product. Some people accept iPhone due to its simplified systems, whereas others choose to buy it to maintain social status being it a market leader.
Marketing Mix is a combination of elements that campaign altogether to promote and sell a product in the market. Companies who plan to launch a brand or a new product under an existing brand in a new or existing market need to organize the launch effectively considering Marketing Mix Strategy (Clapperton & Corones, 2007). The correct procedure and right marketing mix need to be structured before the introduction of any product or brand or it may result in failure of the product.
Apple iPhone marketing mix signifies how the company counterpart its business activities with the target market conditions ("Apple Product Mix and Marketing Mix", 2014). The marketing mix strategy allows the firm to address market conditions efficiently and cater to the competitive landscape through the correct and appropriate study of product, price, distribution place and promotional activities ("Apple Product Mix and Marketing Mix", 2014).
The target market for the I-phone remains teenagers, businessmen, and medium to high-income earners. As the segmentation has already been targeted, Apple Inc. designs iPhone keeping high standards and quality, exclusive phones with high expertise although at slightly higher prices.
The product component of the marketing mix is an item that caters to the market demands. It can be a physical item, a service or maybe a virtual contribution. A product is designed keeping in mind the needs and demands of customers regarding the product design, packaging, size, usage, features, branding, and quality (Danish & Xi, 2010). Every product should create value for the business. It should have some unique features to stand alone in the market. There should be a unique selling proposition (USP) to attract a majority. The product characteristics further follow other elements of the marketing mix.
IPhone 6 is sixth recent released product in apple smartphones series. IPhone is a modified product of earlier phones with a large screen size and internal software up gradation (Goh & Ryan, 2008). Apple does not compare iPhone with other smartphones, but is in competition with own products time to time. So, it can be said that iPhone does not enter into the competitive market based on the product. If we compare iPhone 6 with earlier phones, it can be concluded that it delivers a spacious screen, improved speed with wireless connections, better autofocus of camera, and storage capacity (Briggs, Krishnan, & Borin, 2005). All the three things required by customers in a phone: design, features and performance are fulfilled by this phone.
IPhone is a combination of a smart handheld phone and an iPod, which is designed with an internet connecting the device to surf web. IPhone features searching, web browsing, email, and maps compatible with both windows based computers and Mac. The synchronization function is automatic in this phone. It is a regular bar shaped phone available in different colors.
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The iOS operating system is the most vital obsession for people. The phone hardware designed is very compatible with the internal system that allows a smooth run of the phone with high processing speed.
Exclusive Apps of this product also attract many customers. Itunes, apple store, safari, etc. are additional features that complement the product (Debruyne & Reibstein, 2005).
Other than this, an important step to be analyzed while a product launch is the stages of its lifecycle. Any product goes through four stages.
?‚· Introduction - It is an initial growth period, which generally remains slow following product launch. But in iPhone 6 case, it was much faster. The number of phones sold in first three days of its launch surpassed the record of Samsung phone sales in first 2 months.
?‚· Growth - It is a fast growth stage in the market when the product has been established successfully. This stage is what iPhone 6 has currently (Harries, Rettie, Studley, Burchell, & Chambers, 2013).
?‚· Maturity - This is the period when sales slow down as the product becomes omnipresent. The earlier models of the iPhone such as iPhone 5 and 5S are in this stage right now.
?‚· Decline - A downward sales period as product generally becomes obsolete or other better options replace the product in the market. For example, iPhone 4 and 4S.
The pricing strategy followed by a company is the base of a marketing plan. It is the most important part as it is a support for all other elements of marketing mix strategy. This is the only element which generates an organization’s turnover. Pricing is not an easy task as it must follow demand and supply ratio (Degree Pan & Jooyoung Kwak, 2013). Costing too much or too low for a product may result in failure of the product. There are a number of pricing strategies available. But the strategy that a company adopts usually depends on upon the company’s objective.
While rolling out a product in the market, Apple chooses the pricing strategy very cleverly. IPhone is a premium product that targets high- end markets, so the company espoused Skimming Pricing strategy for this product ("Larry Ha, 2016). Under this approach, a marketer sets a high price for a product. The main objective of the company remains to earn a maximum profit before any substitute or competitive product appears in the market. Later on, the prices lower down drastically to attract the low-end buyers.
The same trend is followed by iPhone in the market. It is of very high price in comparison to other products available in the market, but the niche market of Apple is very loyal to the company. The price of iPhone is generally determined by using the demand forces (Low & Pittaway, 2008). The prices are decided in such a manner that the product dominates the market that too remaining profitable for the company. The price decreases as per product life cycle.
Another interesting fact about iPhone pricing is that it never offers any discount. The discount offers are launched under few schemes like sales promotion or exchange offer. A standard price is followed and maintained all over the market.
The place in the marketing mix is defined as the strategy adopted by an organization to make a product reach the customer. The distribution of the product to make it available to the customer is the main aim of place mix strategy. The distribution should be done at the right place at the right time with the least possible cost applicable keeping its quality intact. Effective distribution in an efficient manner is required for any organization to meet its marketing goal. If the product demand is under or over estimated, it may affect a company’s profitability.
Apple Inc. follows this stage very well. IPhone is functional in many nations and excellent service backup is also available in all of these countries. Apple Inc. aims at colossal roll out across the globe. All the major retailers online and retail phone showrooms have iPhone inventory (Maisch & Meckel, 2009). The product display remains good that ensures the unique stand of the product. IPhones move from manufacturer to wholesaler and then further to the retailer, which can either be an Apple store or a certified online or store retailer. The phones are sold directly to customers at a fixed price. A number of products distributed to retailers depend on upon the demand generated from that particular area (Maisch & Meckel, 2009). All the retailers get the product through distributors or through a carrying and forwarding agent, whereas Istores get products directly from the company. Apple also has a provision of corporate sales of iPhones. There is a separate corporate sales department that caters to these needs.
The promotion element of marketing mix means the communication with customers about a product’s features and benefits. When the product and price get finalized, the next step is to tell customers about that new product. The steps taken to inform customers and to increase product awareness in the target market are called promotional strategies (Murray, 2008). The awareness can be increased by using various modes of promotion to increase sales and to create brand loyalty. Information provided during promotional activities helps the customer to decide about the purchase. The product can be promoted through advertising it to the target market in several ways, such as print media, television, the internet, mouth publicity, and spokesperson, etc. Before deciding on the roll out of an advertisement, it is necessary to research consumer pattern and choose the correct time to target maximum audience. The product features displayed during an advertisement should meet customer’s expectations. There are different ways, by which a product can be promoted like public relations and sponsorship, personal selling, direct marketing, and sales promotions.
But the advertisement option was chosen by Apple Inc. to promote the iPhone. IPhone promotion is generally done through television advertisements, billboards, and online ads. The ad is designed considering demands of all markets. (Reder, 2009) There are sample phones available in all stores to allow customers to check and trial the phones before deciding on the purchase. The advertisement needs to be repeated at regular intervals and ensure its rolling out for a long time to ensure good sales.
Advertisement is also aired in two platforms: ATL (Above the line) and BTL (Below the line)
ATL Platform - there are various advertising methods used for iPhone promotion. Some of those are full front page advertisements for a product launch, radio and television advertisements. IPhone is displayed everywhere on each ATL platform to target the premium segment of the market. Maximum promotions are done in ATL segments (Ritter, 2014).
BTL Platform - Hoardings and Point of sale advertisements in the retail outlets are methods used by companies to promote iPhone at BTL platform. Few sale promotions and exchange offers are being offered to customers via BTL marketing.
IPhone 6S was advertised for older iPhone users through pop-up messages in the App store. This is an example of direct marketing. This product was launched with a tagline “I-Phone 6S is here and the only thing that’s changed is everything”. The TV and online advertisements include the services of celebrities also (Sigal, 2016). Ads featuring movie actor Jamie Foxx and basketball star Steph Curry expressed the power of iPhone 6S and 6S plus were displayed for quite a long time on YouTube channel. One ad demonstrated the hands-free use of Siri to make this feature familiar with customers.
One major factor about iPhone promotion strategy is that Apple does not advertise its products alone, but make the retailers and stores advertise that they are selling iPhones. Operators get benefits of stock distribution when they advertise about Apple products following the rules decided by Apple Inc.
- AT the launch of iPhone 6, economists forecasted strong demand of the product with almost 71.5 Million iPhone sales in the last quarter of 2014 and drop to 50 Million units in the first quarter of 2015 (West & Mace, 2010).
- IPhone 6S was predicted to be sold double in numbers than iPhone 6S plus
- During the maturity stage of the product currently in 2016, sales increase has been forecasted due to a decrease in product price and the introduction of promotional offers.
- Revenue of $265 to $285 million from the sale of 6S and 6S plus (West & Mace, 2010).
Implementation, Evaluation, and Control
Implementation and control are vital parts of the marketing plan. Execution of the steps as planned is very important to make the entire process a success. Starting from running ads to distribute product at right time at the right place is crucial.
The evaluation process includes a regular check of qualitative and quantitative aspects associated with strategy and implementation. To check the data and make sure that the company has achieved its objective results in a successful product (Edwards, 2010).
Control is important to process evaluation. Control set up during marketing plan introduction decides how to evaluate plans to achieve company’s goals. Marketing budget and shares are included in the control process.
Apple Inc. is a successful company and there are separate teams to keep track of proper evaluation during implementation and control process.
Action Plan and Budget
- Total operating expenses, including selling, administrative, research and development, and other general expenses are increasing by 18% every year.
- Net sales are increased by 5%-10% every year
- IPhone sales are increasing 12%-20% every year
- Advertising expenses for FY 2014 are approx $ 1.2 Billion
Monitoring and Control Mechanism
Marketing activities need to be checked several times to determine if they will yield desired results or not. Any particular plan should repeat at regular intervals to check its success and should be analyzed properly before canceling or introducing a new plan (Evens, 2005). Few things should be considered before taking any decision:
External factors - Economic shifts, competitor moves, economy dips etc.
Cost Benefits - Calculate internal costs and take calculative risks
Feedback - reliable feedback mechanism, effectiveness measures
Long-term Perspective - Calculate and forecast long-term profitability
In this report, we have studied in details about a market plan that needs to be analyzed, evaluate and implement before the launch of any new product of an existing brand. We have taken iPhone as our target product and have studied about factors that influence any new product, market and competitor analysis, and SWOT analysis. Other than this, we have discussed various segmentation and target market strategies. The marketing mix strategy was main motive of this report. Implementation of strategy has also been described considering the evaluation and control mechanisms. Budget and forecasting have also been done.
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