IPod Marketing Strategies - Case Study Example

a) What were the most important functional differences between iPod and MP3 that were on the market before iPod was launched And how can these differences explain iPods success Functionally an iPOD is an MP3 player to all intents and purposes. There are a few different ways of compressing music files to fit on a pocket player and there are a few different ways of storing these music files once compressed. MP3 is a popular way of compressing music and an iPOD is a popular way of storing and replaying compressed music buy only if it is compressed using iTunes software. By using iTunes Music Store the consumer can get both a portable music player and legally downloadable music so this is the basic difference which explains the iPods success. But the reason that iPod succeeded was not only the technical characteristics. It was also due to the fine marketing strategy that Apple followed i.e clearly defined target customer and based on that it created a technically advanced product having a nice design, priced carefully, with an extensive distribution network and an innovative promotion campaign. B) Analyze what was "point of parity" and "point of difference" for iPod at the time when iPod was launched to the market. Points of difference (PODs) are attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand (Kotler p. 312-13). Points of difference for iPod were that the product was appearing as cool ,the consumer could listen music whenever and wherever s/he wanted and with the addition of the new features (video, photo and phone) it changed the way people interact with these media. Points of parity (POPs), on the other hand, are associations that are not necessarily unique to the brand but may in fact be shared with other brands. These types of associations come in two basic forms: category and competitive (Kotler p.313). When iPod was launched we would say that it followed a category point of parity and a competitive point of parity. Category points-of-parity are associations consumers view as essential to be a legitimate and credible offering within a certain product or service category (Kotler p. 313). The connections between different genres of music and that the consumer could listen to the DJ sets without commercial interruption created the category points-of parity. Competitive points-of - parity are associations designed to negate competitors' points-of- difference (Kotler p.313). Apple has managed it making the iPod "the Walkman of the 21st century". C) How did "point of parity" change for MP3's from the day iPod was introduced to the market and up till today And how has this influenced the brand iPod attractiveness. In the beginning the iPod was thought to be just a portable device for listening shuffled music. Today with its enhanced features, it replaced radio broadcasts without commercial interruption and it added new features of video, photo and phone which changed the way people interact. So this has definitely influenced iPod attractiveness since it makes it unique and it is also addressed to people that want to have the above features in a single device. Sony and iRiver have reacted by making larger storage devices, in particular iRiver is not tied to a software such as iTunes, it provides good sound and is durable beyond anything Apple can manage. However, although there are these technical differences, Apple reacted by having a decent device, strong advertising and focusing on this competitive advantage which is style. Question 2 A) Why did Apple change their distribution strategy from just selling iPod at their Apple stores to also including independent distributors And what kind of economic effects has such an expansion in general and what kind of economic effects had such an expansion for Apple's iPod Apple in the beginning was selling directly to the consumers through its retail shops but then it added some "mass electronic" retailers. This change was due to the marketing strategy that Apple wanted to follow i.e. it wanted to reach not only Mac fans but also people that had not used Apple products before. So, it wanted to reach a larger number of people since it wanted to expand the market by acquiring new customers and also to penetrate the market by offering a new product to its already existing clientele (Kotler p. 350). This expansion has as a result that the Apple's existing channels were increased from 4,000 outlets to 21,000 i.e. Apple products were easily found by consumers and consequently their sales were increased. This "push" strategy had also as a result the increase of sales of Apple's iPod. B) What are the main elements in Apple's "pull strategy" for iPod, and what positive and negative effects have such a strategy in general, and what positive and negative effects has such a strategy for iPod especially A pull strategy involves the manufacturer using advertising and promotion to persuade consumers to ask intermediaries for the product, thus inducing the intermediaries to order it. Pull strategy is appropriate when there is high brand loyalty and high involvement in the category, when people perceive differences between brands, and when people choose the brand before they go to the store. (Kotler, p. 468) The pull strategy of iPod was consisted of a campaign with an easy to remember message presenting iPod as cool but not so cool. The campaign was integrated i.e. it included print ads, billboards, posters, bus posters and TV commercials. In addition it had strong PR and word of mouth. The positive effect of such strategy is that it is suitable for companies that have developed a high brand loyalty something that Apple already has since it has Mac fans and that at the same time it "makes" the consumers ask for the product from the retailers. So it needs a very careful design and it cannot be done without first implementing a "push" strategy to the stores otherwise it will be detrimental for the brand. The positive effect for iPod is that it created a momentum, it helped creating a brand with positive associations (cool, modern, revolution in music) so achieving brand loyalty. The negative effect could be that as a product it was positioned mainly for cool, modern people so it would not reach the more conservative looking parts of the society mainly people who had not used Apple products in the past so this part of Apple's target group was not reached effectively. C) What type of conflict is it reasonable to assume that Apple will have with the independent distributors, and what are the most likely causes, and how can Apple handle the best Channel conflict is generated when one channel member's actions prevent the channel from achieving its goal. (Kotler p. 491). Vertical channel conflict means conflict between different levels within the same channel.(Kotler p. 491). So, in this case we would assume that Apple would have a vertical channel conflict with its independent distributors. There are various reasons for channel conflict. These are: goal incompatibility, unclear roles and responsibilities, differences in perception and the intermediaries' dependence on the manufacturer (Kotler p. 491,492). We would assume that the reasons for Apple were goal incompatibility and differences in perception. We cannot say if there was intermediaries' dependence because we do not have any data i.e. we do not know if these intermediaries were exclusive or not. The goal incompatibility could have been since Apple wanted a rapid market penetration and this is usually done with the manufacturer following a lower price strategy and having dealers on the other side preferring to work with high margins. Differences in perception could be another reason since Apple wanted by having exclusive stores to offer the best quality of service to its customers by providing them with in-store product presentations and specialists giving technical support, something that Apple believed that its already existing customers could not offer. References Iyer R., Munch J.A., The Role of Brand Parity in Developing Loyal Customers, Journal of Advertising Research, Vol. 46, No.2, June 2005, pp. 222-228. Keller K.L., Tybout A., The principle of positioning, Issue 19, Winter 2002, pp.65 Kotler P., Keller K.L., Marketing Management 12e, Pearson Prentice Hall, New Jersey,2006. Smith J., Flanagan W., Creating Competitive Advantage: Give customers a reason to choose you over your competitors, Random House, 2006. Read More