Environmental Factors and Their Impact, Importance of Segmentation, Targeting - Essay Example

?Introduction Today is the era of smart phones. For the first time in the Western European market, smart phone sales exceeded the sales of simple feature phones. Smart phone sales accounted for 52% of the sales of the total mobile phone markets in the region. (Arthur and Garside, 2011) This change in the trend is the beginning of a huge makeover in the entire mobile handsets markets. A finding by Mintel report shows that there is tremendous growth in the smart phone sales in all major markets. “In the US, sales of smartphones grew 82% from 2008 to 2010. In the UK, 28% of consumers own a smartphone and by 2015 iPhones will make up 11% of all total devices used in the UK.” (Mintel, 2010) The trend in sales has proved that customers are now looking at mobile phone as a device beyond a small instrument that helps to make phone calls. In fact, making calls have become just small of the many functions of mobile phones. Mobile phones are now a total communication and mobility solution. This trend in the industry was driven by the smart phone of iPhone, Nokia, Samsung, Blackberry and other players. This report will discuss the macro and micro environmental changes in the industry and its impacts on the marketing activities of smart phone companies. The report will be discussed with particular reference to Apple iPhone and RIM Blackberry. Mobile phone industry is one of the fastest growing and fastest changing industries in the world. The products become outdated very quickly than in any other domain. Innovation in products, services and marketing activities are most common in the industry. Smart phones are the power houses of mobile phone market. Globally, “Feature phones still represent the majority of mobile phone shipments, even though they are under increasing pressure from smartphones.” (Wauters, 2011) IPhone and Blackberry are among the leading smart phone makers of the world though Blackberry’s market share is slowly being taken over by Samsung. This report will deal primarily with the environmental factors affecting the smart phone industry. The report will also deal with the importance of market segmentation, targeting and positioning in the industry. The later part of the report will discuss the importance of adopting a right marketing mix for the smart phone industry. Environmental Factors and their Impact The major macro environmental factors that affect marketing in the mobile phone market are technology, economic factors, education and employment levels and social factors. (Zain Books, 2011) Technology is the primary factor that drives the handset industry. Recent developments in the market have shown that Apple has come up with the software called ‘siri’ which is expected to take the market by storm. Such developments will force Blackberry to introduce similar technology or any other differentiating factor on its further models and marketing. Economic condition is the next major factor that impacts the marketing. A slowing economy will usually dent the demand for handsets in the market. A slow economy is usually followed by low disposable income in the hands of the consumers. Therefore, the companies will mostly reduce their marketing spending in order to reduce cost and improve margin. Education and employment levels determine whether the consumers will have enough knowledge and disposable income to purchase mobile phones. Companies like Apple and Blackberry will have to decide on the pricing and product features based on the educational and employment level of the customers. The next macro environmental factor that has an impact on the marketing decisions of handset companies are social factors. The social set up and reference groups create a huge impact on the purchasing decisions of consumers. (Tutor2u, 2011) Therefore, the marketing activities of a company in one region are entirely different from that of the other region. For instance, the theme of iPhone advertisement in United States will be different from what it is in India. The main reason is the difference between social and cultural behaviour. The social set up of India is different from what it is in United States. The micro environmental factors affecting the marketing of mobile phones are customers, competitors and media. “This micro marketing environment that surrounds organisations can be complex by nature, however the company has an element of control over how it operates within this environment.” (Studiowide, 2011) Customers play an important role in deciding the marketing activities of a company. Apple or RIM will have to do a thorough consumer analysis before a smart phone is being launched in the market. If the handsets are not up to the expectations of the consumers, it will just fail in the market. Similarly, the marketing activities of the companies should also be based on the customer perceptions. Competitors play an important role in the marketing of mobile handsets. There are considerably large numbers of competitors in the industry. The product and strategy of one company will impact the product and marketing strategy of its competitors. Any new launch by Blackberry will be followed by the launch of another challenging model by Apple iPhone. This is the way the whole industry keeps going. The third major factor that impacts the marketing and product decisions of Apple and RIM are the media. With the advent of internet, several new marketing avenues have been opened. Internet is one media where several kinds of ads can be placed by companies. How well this media is utilized by companies determine the success of the companies. YouTube is one of the most popular advertisement media on internet. Apple and Rim has effectively utilized YouTube for their marketing activities. The third most influencing micro factor is competitors. The product of any handset maker is launched with an intention of competing with the model of another producer. Blackberry is already facing problems of stiff competition from Apple and Samsung. In order to withstand competition, the company had recently launched BBM Music and two new handsets. (The Telegraph, 2011) Importance of Segmentation, Targeting and Positioning Mobile handset industry is a good example for the importance of segmentation, targeting and positioning. Segmentation refers to aggregating the total customer groups based on the needs and requirements of the specific groups. The main intention of segmentation is design the product and marketing strategy based on the needs of each group. Apple segments the consumer category based on application, convenience, and mobility. In other terms they segment the market based on user experiences. (Sigal, 2010) Advertisements and other marketing activities of Apple are based mainly on these three customer segmentation principles. Similar is the case with Blackberry. Blackberry also segments its products and marketing strategies based on consumer experiences. But unlike Apple, Blackberry has given least attention to applications. Mobility was the core attention of Blackberry. But due to stiff competition from Apple and Samsung, Blackberry has started focussing on the application segment of user experience. The company has launched its model Storm by incorporating this strategy. Targeting has a major role to play when it comes to product launch and marketing. Targeting refers to aiming at a particular group of customers based on the market segments which were identified within them. Targeting helps a company to market their products to the customers they are intended to. For years, Blackberry’s target market was corporate customers. Even now, majority of the customers of Blackberry are customers who look for business solutions. IPhone was entirely different in this case. The main target group of iPhone are customers who are music and application freaks. Therefore, the company does not have an edge over the corporate customers. But the recent developments in the market have shown that due to competition both the companies are rethinking their targeting strategy. IPhone is targeting more corporate customers and Blackberry is targeting more fun loving customers. The recent marketing activities of Blackberry for its playbook has shown that a product and marketing activity cannot be successful if the company fails to have a proper targeted customers. “RIM's foray into a new market, tablet computers, has been disappointing. It shipped just 200,000 PlayBooks in the three months ended in August.” (Dvorak et. al., 2011) But the immense success of Apple’s iPad has shown that the targeting worked properly for the company. Ipad helped the company to attract more corporate customers who were not their traditional target segments. Positioning is the activity that determines how a product is perceived by customers after it is being launched. The positioning strategy helps to create an image for the product. “A product or service may be positioned on the basis of an attitude or benefit, use or application, user, class, price, or level of quality.” (Berry, 2011) The success of a positioning strategy will determine the success of the product in the market. Apple has positioned iPhone in the minds of customers as an application and fun oriented handset. As iPod was the inspiring product from Apple’s stable, iPhone too had more focus on music. It embedded music and application store with the iPhone so that the customers can use their iPhone both as an iPod and phone. At the same time, Blackberry has positioned their handsets in the minds of the customers as a pure business phone. But both the companies had to change their positioning strategies based on the changes in customer preferences. A development in Blackberry has shown that the company has thought of changing the positioning strategy for it playbook. To compete with the iPad 2, the company decided to launch 10inch version of the playbook. (Athow, 2011) Marketing Mix and Competitive Advantage Marketing mix refers to the main components that aid the success of the products of a company. The elements of a marketing mix are Product, Price, Place and Promotion. A product can be successful only if each of these elements synchronises in the same proportion. A company’s marketing mix decision depends primarily on the expectations and desires of the customers. “You just need to create a product that a particularly group of people want, put it on sale some place that those same people visit regularly, and price it at a level which matches the value they feel they get out of it; and do all that at a time they want to buy.” (Mind Tools, 2011) Product is the primary element in a marketing mix. Apple’s iPhone was a product that was designed purely based on a need in the market. Before that the market had smart phones from Blackberry and Nokia. Apple clearly identified the gap in the market at that stage. In other words, the company identified the areas where the existing players did not have any edge. Apple capitalized on this need of the customers and launched iPhone that catered to the needs of such customers. IPhone was unique as it offered many features which many other players did not. (Marketing Teacher, 2011) The right product helped Apple to gain a good share of smart phone market. Now, when Apple identified that customers want their handsets to act as their personal assistant, the company acquired the software Siri and introduced it in their new iPhone 4 S. This is how a right product can reap benefits to the company. Similar is the case with Blackberry. It was Blackberry that identified the need of business class customers to have quick and protected email facility on the move. The Blackberry handsets stand out in the market even now with their unique Black Berry Messenger (BBM) Price is the next major element in the product mix. Price plays an important role when it comes to the class of customers. It can be seen that both iPhone and Blackberry has priced their products at a premium making it affordable only to the high end customers. Majority of the customers of Blackberry are business class customers who can afford to buy its comparatively expensive handsets. Similar is the case with Apple. Apple has priced their products at a premium. For both the companies, the aesthetic values of the products are protected by the premium pricing they have adopted. Even with such premium price, both the companies have good sales worldwide. Place in a marketing mix refer to the availability of the products to the customers at the place where they require it. While taking the case of Apple it can be seen that the company is aggressively expanding its distribution network in order to make their products available to a large group of customers. Apple sells their products along with the network service providers. Through this, the company is utilizing the wide network of service providers for making their products available in the market. Apple also has tie up with other major companies in order to use the Apple brand to open retail stores. In India, Apple has tie up with Reliance Retail and sells Apple product through Reliance iStore. Compared to Apple, the distribution strategy of Blackberry is not very appreciable. But still the Blackberry handsets are available in all major markets through service providers and other distribution channels. The company has also begun distribution through partner programs. (RIM, 2011) “In the context of the marketing mix, promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response.” (NetMBA, 2011) This is one element that both Apple and Blackberry had used at their best. Both the companies used all available media for effective communication of the product features and services to the prospective customers. Both companies stood unique in their marketing activities. (Wilcox, 2011) The promotional activities of Blackberry were intended primarily for the corporate customers while that of Apple’s iPhone were focussed on a large group of smart phone customers. Conclusion The report clearly shows the various factors behind the marketing strategies of a company and their contribution to the company’s success. Smart Phone market is the most lucrative segments for mobile handset companies. The potential of the market is immense compared to any other sub segment. The success of iPhone and Blackberry shows the importance of identification of the customer needs in the market and designing products based on that. Sometimes, a need may not really exist in the market. It is up to the company to create a need in such cases. The various stages both the companies have undergone shows that the marketing environment is never stagnant. It keeps on changing due to various reasons. As a result of this, the marketing strategies of companies should be dynamic and adjustable to the changes in market. References Arthur, C., Garside, J, 2011. Smartphones take lead in European mobile phone market. [Online] Available at: < http://www.guardian.co.uk/technology/2011/sep/08/smartphones-take-lead-in-mobile-phone-market> [Accessed 10 December 2011] Mintel, 2010. Mintel Reveals Customer Trends for 2011. [Online] Available at: [Accessed 10 December 2011] Wauters, R, 2011. 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