Reason For The Success Of IPhone In America Essay

Questions:

1. Main reason for the success of iPhone in America.
2. Success of iPhone in Europe as compared to success in America from the existing competitors like Nokia, HTC and BlackBerry.
3. Formulating strategy for Apple and a marketing plan in Europe.
4. Focusing on Apple’s pricing policy to analyze whether it helps in achieving significant market share or not, Analyzing whether dropping the price was a good strategy or not.

Answers:

1. Main reason for the success of iPhone in America

It can be stated that the main reason behind the success of Apple is innovation. This giant organization was the first to develop the finger print lock in their iPhone 5s. Apart from that, it can be stated that Apple has always shed focus on simplicity and they are the only brand that never compromise with their quality. Most importantly, it can be stated that all the products of Apple are easy to use and they offer great customer service as well as in-store experiences to their valuable customers. From the products details, it can be seen that Apple stays at least two years in advance of its contestants and this is one of their unique natures that grab attention of the customers worldwide (Brown, 2012). In this regards, a general question arise that why do the Americans overwhelmingly prefer iPhone when the rest of the globe has overwhelmingly embraced android? If focus is shed on the statistics, it can be seen that worldwide, android has 75% market share and on the other hand, Apple has only 15%. CIRP reports have stated that as predictable whole of 94 million iPhones were in use in the United States at the last part of April, taking into account 38 million iPhone 6 and iPhone 6s units. However, this 38 million is made up of 25 million iPhone 6 units and 13 million iPhone 6s models as per the estimate of the organization (Capatina & Draghescu, 2015).

For particularly the US market, Apple had entered into the two year agreement with AT&T and the iPhones could only be used with the AT&T network system. In this case, it can be seen that before launching this product into the US market, Jobs announced some beneficial service plans for the customers. This was one of the unique marketing strategies of Apple and this helped the company to have huge number of customers in the US market. Apart from that, it can be stated that the unparallel launch of this new product was another reason of huge acceptance among the consumers. The buzz that surrounded the launch of the iPhone was referred to as “Jesus Phone” by the bloggers, was extremely extraordinary as far as the electronic products were apprehensive. Therefore, it is highly appreciated the way the marketing team of the company had created the buzz regarding the product with the help of its low key but highly effective marketing effort (Chaffey et al., 2012).

At the time of launching the new product in the existing market, the company at the American market had adopted product differentiation through product advantage. Apart from that, it is highly necessary to mention that the marketing team of the company has a strong marketplace orientation through an elevated level of marketplace acquaintance. Apart from that, it is believed that the brand name itself matters a lot to the customers of America and this is one of the major success stories of Apple (Chen, 2012).

2. Success of iPhone in Europe as compared to success in America from the existing competitors like Nokia, HTC and BlackBerry

From the market position of Apple in UK and US, it can be seen that Apple products are highly popular in the places like the United States because the carriers like AT&T would have a contact with the customers in which they give the customers an iPhone at a huge discounted rate. This is applicable in America and thus the American customers are highly attracted towards this leading global brand. However, some market researchers have stated that it is never a high-quality thought to purchase a US iPhone as an alternative of a UK model because of several reasons like it is not that much cheaper there (Duhigg & Bradsher, 2012).

Market researchers have stated that the iPhone 6 Plus would be obtainable in the UK for the recommended retail price of ?619 for the 16GB model and ?789 for the new 128 GB model. On the other hand, in the US Apple, it is offering an off-contract iPhone 6Plus for $749. This is equivalent to the pre-VAT price of ?459 or ?550 in total. However, this was not at all far from the ?619 starting price in the UK. If focus is shed on European market, it can be seen that there are some stiff competitors of Apple iPhone here like Vodafone, HTC and BlackBerry (Haslam et al., 2013). Whereas, in America, demand of iPhone is always high among the customers and the existence of the competitors are less there as well. In order to get huge customer attention, the company in the European market planned to launch its iPhone in European markets like Italy through Telecom Italia and Vodafone. However, this scheme was not as successful as in America and thus it can be stated that Apple was more successful in America rather than Europe to some extent (Fifield, 2012).

Another major important thing that is required to mention here is that there were some differences in the iPhone models of UK and US. Market research says that the iPhone 6 being sold unlocked in the US is slightly dissimilar model and the iPhone 6s and iPhone 6s Plus being advertised in the UK market are different slightly. Now the question comes that what is the difference and the answer is networks and this is because of the fact that different iPhone models support different networks. This dissimilarity has definitely raised some questions against the users of Apple iPhone in US and UK. Besides all these points, it is important to mention that the customers are highly satisfied with iPhones and this is their success factor. A mounting apprehension for Apple was the continuation of the grey market in the mobile phone market. In February, 2008, it was estimated that Apple sold around 3.7 million units of the iPhones and this was because of the collaboration with AT&T. The market researchers have stated that the share of market grew largely during the second half in different parts of Europe along with China, Australia and Japan. Unfortunately, this was drastically down in the US market (Hjorth et al., 2012).

Along with these issues, it can be stated that environmental challenge was another stiff challenge in front of Apple at the time of expanding the business in UK market. Job’s company faced several challenges in the form of allegations and acquisitions from the environment protection group. This leading company was accused for using hazardous materials in their iPhone. Reports state that in October, 2007, the company received a warning letter from CEH, i.e. Centre for Environmental Health that they have to stop using polyvinyl chloride (PVCs) and Brominated Flame Retardants (BFRs) in its iPhone. If focus is shed on smart phones, then it can be seen that iPhones falls in different genre, though they produce the same smart phones in the market. However, it is required to mention that despite initial hiccups as well as issues faced by Apple in Europe, the iPhone succeeded in some markets like England. Therefore, it can be concluded that the Apple was successful in both Europe and America, though there were some strong competitors like Nokia, BlackBerry and ITC in the global market (Hollensen, 2015).

3. Formulating strategy for Apple and a marketing plan in Europe

In a research, it is found that Apple’s strategy is Europe is faltering. Growing evidences prove that the organization will have to renovate its approach to the European market if it wants to gain a strong position in the European markets. Some unique strategies that Apple can adopt are hereby mentioned below,

Apple must discard their elite agreements with mobile network operators and minimize their cut of ongoing revenue (Challagalla et al., 2014). It is expected that the net result will be more valuable for the organization as it will gain revenue that the organization is losing because people unlock iPhones to use on a network of their choice.

The organization can offer prepaid iPhones. European people already understand that they need to pay for a phone if they want to use it on a prepaid tariff. There is a propagation of higher-class prepaid phones in Europe and people are becoming cautious of signing or two-year contracts. That is why; it would be a great opportunity (Lindgreen et al., 2012). The chances are also high that the organization will experience less number of unlocked iPhones.

The company can also abandon the iPod touch in order to create a single connected flagship iPod. This approach will help the organization to discontinue their current generation of iPhone and iPod touch and altering it with some products. Those all products will include mobile phone capability. Customers will be able to select whether they will sign up for cellular services or will use the device with Wi-Fi only (Picard, 2014). Customers who will sign up for cellular services will gain a rebate or they could be tempted to “upgrade” to cellular service by a special tariff. The strategy of Apple will not affect the headline price of iPhone and will protect Apple’s iPod business. Tis method is already adopted in PC markets.

If Apple wants to improve their marketing plans in Europe, then they will have to overcome some critical hurdles. At first, the company will have to loosen some of its exclusive distribution deals with O2, T-Mobile and Orange.

Apple must build its own Google. Apple is known for unable to build services that reply on analyzing huge amount of data stored online. The organization is continuously hiring and acquiring talent to hide their issue. However, the organization is not considering it as an existential danger. Higher authority of the organization will have to open their wallet in order to fix this issue.

Apple can also scale up their production capabilities. Every time a new gadget is released from Apple, most of the customers cannot get it in the first place. This happens because of the organization’s just-in-time manufacturing system. The organization never manufactures products devices that it will sell. As a result, it ramps up production in lock step with demand. However, it is true that this process of Apple saves a lot of inventory cost that helps them to boost their profit. On the other hand, it is also true that it limits the number of customer the organization can gain.

4. Focusing on Apple’s pricing policy to analyze whether it helps in achieving significant market share or not

From the case study, it has been found that Apple in the November, 2007 launched its iPhone in three big European markets like Germany, France and UK. Initially the company received a good response from the European customers but just after some times the sales slumped due to several reasons. High price of the iPhones was the major reason in this case along with lack of 3G capability and carrier exclusively. In an attempt to successfully control its declining sales, the company reduced the price of the iPhone by almost ?100 in April 2008. The iPhone was launched with such frenzy that even its premium price did not prove a deterrent to many of their customers. It can be seen that the Apple priced its 4GB version of the iPhone at US$499 at the time of launching the phone in the year 2007. Apart from that, the consumers were supposed to enter into the two year contract with AT&T. This raised some serious questions to the users of iPhones. Therefore, it can be stated that it was never a wise option for Apple to make this two years contract with AT&T (Hongyuan & Meiyan, 2013).

In order to handle this situation, Steve Jobs declared a steep price cut fir this newly launched product just after one week. The price was reduced almost one third of the initial price and thus the people were shocked to hear this news. It can be stated that a common question came to the minds of the consumers that whether the quality of the products are genuine or not. Not surprisingly, the news of price cut infuriated those customers particularly who had bought the iPhone at the initial price, which was high indeed. At that point, many customers started protesting against the price cut and these customers are those who waited for a long time in the queue to buy the product. From the case study, it can be found that discontented as well as annoyed customers took some serious legal steps against Apple and AT&T. Therefore, it can be stated that the customers were highly disappointed with the pricing decision of this leading smart phone company. However, it can be said that Apple declared that they do not have any hidden reasons behind this change in price of their newly launched iPhones. Another market research stated that the company declared that Apple had to reduce the price for the iPhone, as it was not enough for the company to earn profit by selling only iPod Touch (Kotler et al., 2015).

Analyzing whether dropping the price was a good strategy or not

There is a clear dilemma that whether the drop in price was successful for the organization or not. Among the American consumers, the bandwagon effect can be highly observed, where people do something primarily because other people are doing that in the society. From the news as well as the case study, it has been seen that there was a hype regarding the launch of Apple phones in the market. Expectations from the products as well were high among them and thus the reduced price of the iPhones raised question marks against the quality of the products. Therefore, it can be stated that the marketing and management team of Apple could have done more thorough market research for determining the price of iPhones. Effect of price drop could also be analyzed earlier, so that the team can be prepared to handle such type of situation (Snickars, 2012).

The marketing team must be well aware of bandwagon effect, which is common in consumer behavior and this could have been helped Apple to manage the drop in price. On the other hand to bandwagon effect, snob effect is another major part that is required to keep in mind at the time of making any decision of dropping the price of newly launched products. Verstraete (2014) has stated that snob effect is such a phenomena that refers to such situation where the demand of some certain goods of the higher income group is inversely proportionate to the demand of the goods by the peoples of lower income level. From the price of the iPhones, it is clearly understood that it was not for all the consumers in the market and the cut down of price ignited the snob effects among the iPhone users. Therefore, the reduction of price was not at all accepted among the customers at the initial level and this affected the market reputation of the organization (Westwood, 2013).

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