Improving Market Size and Profitability of iPhone - Case Study Example

Improving Market Size and Profitability of iPhone Apple’s philosophy in marketing is very straightforward: Find an opportunity for the product, makeit extremely easy to use, and serve it up with excellent design and packaging (Sinha, 2007). The marketing competitive advantage of the company is in their excellence in finding an opportunity. They introduced the world to a simple personal computer with the launching of Macintosh. Then, they legitimized and legalized selling songs at a nominal cost on the Internet instead of people swapping tunes for free when they promoted iPod. Now, with the introduction of iPhone, they changed the way people perceived smart phones – phones that exploit the benefits of what the Internet can offer with their easy to use web applications. The AppStores for iPhone products has created a new market for software programmers, from office applications to modern day games and video softwares. In order for iPhone to increase its market size and improve their profitability, this paper will focus on recommendations of marketing programmes that the company would need. The paper is centred on the Lauterborn’s 4C’s of marketing instead of the traditional McCarthy’s 4P’s. The traditional marketing programmes are concentrated on product, pricing, promotional and place strategies. With Lauterborn’s 4C’s, the marketing programmes will be motivated by consumers, costs, convenience and communication. Consumer wants and needs Forget product. Apple must focus on consumer wants and needs. In today’s highly connected world, a company cannot sell whatever they can make any more. A successful company can only sell what a customer specifically wants to buy. Apple must need to lure each customer one by one and offer something in particular that each customer wants. Mobile phones, nowadays, are seen as a fashion item rather than a functional device. Most of the current mobile phones in the market offer similar features and functionalities. Apple can improve their market share by making iPhone available in different range of colours and features. Each customer must have an option to customize the physical aesthetics of the phone in order to suit their character and mood. A customized mobile phone would give the customer a feeling of ownership and uniqueness. Several designs of phone’s front and back covers should be made available in market in order to lure them to customize their own iPhone. Also, it is recommended that the company would create a suite of Internet based services that delivers email, contacts and calendars that can be linked and synchronized with other Internet webmail services. The trend in today’s Internet world is to be connected whenever, wherever. A mobile phone that provides Internet communication services would be an instant hit for consumers especially when the company would partner with different social networking websites such as Facebook or Twitter. Consumer costs Forget price. The company should understand the consumer’s cost to satisfy that want or need. Price is becoming irrelevant because money spent is only part of cost. What youre selling against if youre selling hamburgers is not just another burger for a few cents more or less. Its the cost of time to drive to your place, the cost of conscience to eat meat at all, versus perhaps the cost of guilt for not treating the kids. Value is no longer the biggest burger for the cheapest price. The Apple’s iPhone can never be the cheapest mobile phone in the market. The added value of the product does not lie on the price of the product but instead it lies on the cost of acquiring the product. An iPhone is a smart phone that can be used as a phone, a music device, a video gadget and a personal computer. iPhone combines a mobile phone, a widescreen iPod with touch controls, and an Internet communications device in a single handheld product. Based on the company’s Multi Touch user interface, iPhone features desktop-class email, web browsing, searching, and maps and is compatible with both Macs and Windows-based computers. iPhone automatically syncs content from users’ iTunes libraries, as well as contacts, bookmarks, and email accounts. iPhone allows users to wirelessly access the iTunes Store to purchase and/or download audio and video content as well as thousands of applications. The launching of the App Store allows a user to browse, search for, or purchase third-party applications through either a Mac or Windows-based computer or by wirelessly downloading directly to an iPhone or iPod touch. (Apple, Inc, 2009) Apple iPhone’s ability to compete successfully depends heavily on its ability to ensure a continuing and timely introduction of innovative new products and technologies to the marketplace in mobile communications. The company must maintain its uniqueness in that it designs and develops nearly the entire solution for mobile communication devices, including the hardware, operating system, numerous software applications, and related services. As a result, the company must make significant investments in research and development. By contrast, many of the Apple’s competitors seek to compete primarily through aggressive pricing and very low cost structures. If the iPhone is unable to continue to develop and sell innovative new products with attractive margins, the company’s ability to maintain a competitive advantage could be negatively affected and its financial condition and operating results could be materially adversely affected. Consumer convenience Forget place. The company should think of customer’s convenience to buy the product. People dont have to go anyplace anymore, in this era of catalogues, credit cards and phones in every room. On the other hand, when they do decide to go somewhere, its no longer only to a specific location or a leading distributor. The company’s marketers must think beyond those nice, neat distribution channels they have set up over the years. They must know how each sub-segment of the market prefers to buy, and be ubiquitous. For iPhone, it is important the product is available everywhere. Currently, the company collaborates with major telecommunications providers in a country in order to promote their product and increase sales. This paper recommends that the company would make the iPhone available to all mobile communications provider in the country. Different customers have different preference on the type of service that they require with their provider. With Apple partnering to a specific service provider, the marketability of the iPhone products would be limited to the number of customer that are existing in the provider as well as the number of new customers acquired. With a move to open up the distribution of the product, Apple would tap other service providers with a different customer base. This strategy would make the iPhone product more attractive to customers because they will not be tied to the provisions of partner service provider. Furthermore, creating more distribution channels would benefit the company in the long run. The greater the number of distributors, the greater would be the sales of Apple for its iPhone products because each provider would compete with one another to increase their own customer base with the added value of iPhone. Consumer communication Forget promotion. The word is communication. All good advertising creates a dialogue. Promotion is out because it is manipulative and has been used since the 1960s. Communication is from the buyer; it is in because it is cooperative and focuses on the preferences and buying behaviour of customers. Communication may be the formula for success as we leave the second millennium. The company competes in highly competitive global markets characterized by aggressive price cutting, with resulting downward pressure on gross margins. The market has frequent introduction of new products, short product life cycles. It plays in an evolving industry standards, continual improvement in product price/performance characteristics, rapid adoption of technological and product advancements by competitors, and price sensitivity on the part of consumers (Apple, Inc, 2009). Traditional promotion strategies may not suffice with the hyper competitive market. Communication would not just include promotions, advertising and sponsorships. Communication encompasses customer relationship with the company as well as the characteristic behaviour of the way customers buy a product. A communication strategy would go beyond the tri-media advertising by exploiting the wide customer database on buying behaviour and preferences in the Internet as well as direct mail/email catalogues. Attracting the attention of the media will require more than just a simple product announcement. Apple must market the iPhone as something entirely new and innovative; of which the customers have never seen. The paper recommends focusing on a select few “killer features” that will demonstrate to the consumers that the iPhone is a new wave of mobile technology – the next generation of mobile communications. By focusing on iPhone applications, Apple can immediately differentiate itself from the iPhone clones which are unable to run iPhone applications. Furthermore, the paper recommends that Apple market the iPhone as a gaming platform as casual gaming is incredibly popular in region. In relation to Advertising & Public Relations, this recommends that Apple adopts a holistic control method such that advertising spend is greatest when publicity is lowest. Similarly, advertising budgets should be reduced when PR is high. By adopting this strategy, Apple will appear to be constantly “in the press” and will make it very difficult for competitors to capture consumer attention and improve market share. References Apple, Inc. (2009). Annual Report. California: Apple, Inc. Sinha, A. (2007). Sweet Spot: How to Maximize Marketing for Business Growth. New Jersey: John Wiley & Sons, Inc. Read More