Marketing Concepts and Planning of Apple iPods - Term Paper Example

APPLE iPODS BY YOU YOUR SCHOOL INFO HERE Apple iPods Marketing Plan Overview Apple is currently experiencing significant growth in stock value, the most witnessed in the company in many years, at a current price of $224.75. Though not all of these gains are attributed to the iPod sales, opportunities to expand this growth is available through further iPod sales. The marketing plan for the iPod, somewhat to the disadvantage of the company, is mass market-based, therefore targeting ideal customer groups is often a challenge. Availability of the products in the online environment and through various retail stores is the most logical choice for this product which is based on a proven track record of recent successes and raised consumer interest. Features and benefits have long been the idea of improving sales and through promotional materials, however in today’s market pricing should be given much more emphasis by making it much more transparent to consumers in a variety of ways. This report identifies these proposed changes. Company’s mission and objectives The company’s mission is simple: Apple “recognizes that by integrating sound environmental health and safety management practices into all aspects of our business, we can offer innovative technological products and services while conserving and enhancing resources for future generations” (Lee, 2008, p.5). The objectives are to improve sales volumes through creative promotion, effective distribution, and to build consumer interest in mass market groups. SWOT Analysis The strengths of the iPod are in areas of innovation by remaining a step ahead of competition by updating features, memory and other important benefits for consumers. Research and development talent is an internal strength. Fortunately for Apple, competition is considerably weak and this is a major strength for the business! Weaknesses include, though not a fault of Apple, weakened economic conditions both domestically and internationally, posing a potential risk for future iPod (and iPad) sales. Additionally, minimal television advertising, despite the potential cost and time investment, is another weakness in regards to reaching more mass market customers. Opportunities include, but are not limited to, ongoing promotion of the resale value of used iPods and opportunities to use promotion for innovation in design aesthetic upgrades to improve sales. Threats to the iPod include the sudden resurgence of consumer use of auction websites such as eBay, creating a form of self-competition for budget-minded, mass market buyers as well as failure of retail partners to be more interactive in the sales/promotion process. These are external failures, however they definitely impact sales volume in certain market territories. Segmentation, targeting and positioning As identified, segmentation for the iPod begins with identifying specific groups with homogenous characteristics likely to respond similarly to the firm’s four P’s. As an international product, this is often challenging as each international market has unique characteristics that are unpredictable and ever-changing. Demographic segmentation is often the strategy of choice based on market characteristics, personal incomes, and regional telecommunications developments. Targeting strategies have generally been the active user and embracer of new technologies, those with proven loyalties to Apple branded products, and youth-based consumers most likely between the ages of 16 and 40. Multisegment targeting is the general concept for Apple in their long-term strategy. In terms of positioning, benefits and features place Apple near high quality in relation to its few competitors; with competitive pricing reflected in its current position. Marketing objectives Apple has difficulty, as an international marketer, in finding cooperation with international regulatory authorities in areas of intellectual property and various taxation demands that limit Apple’s exposure in its desired markets. Sales of accessories or additional services related to these products are often affected by this. Thus, one notable marketing objective is to improve “a competitive environment that allows innovation to thrive, protects intellectual property, and allows consumers to decide which products are successful” (Keegan and Green, 2008, p.589). Though not true for all market environments, this poses a limitation to meeting marketing objectives due to bureaucratic red tape that plagues both new market entry and expansion of existing markets for the iPod. The current marketing objective is to improve sales of this product on a global scale by adding more emphasis (or reducing emphasis where appropriate) to areas of the marketing mix. Marketing mix decisions Product – Though out of the launch phase, the product is innovative and tends to speak for itself by its function which should be able to keep the iPod in the growth phase for another couple of years. Place – There is little difficulty in distribution as pre-existing networks developed by Apple sustain new market entry and ensuring that the product reaches its intended destinations. Growth in global Internet usage, also, makes the online environment ideal for securing iPod sales. Price – Though the iPod has many different varieties and storage capabilities, there is not enough emphasis, currently, on pricing as a competitive tool. In today’s difficult international economic environment, consumers are price-conscious in a variety of markets and often base their decisions on perceived value related to the final retail price tag. Reverting back to old promotions where price is emphasized through color or interesting, spinning graphics will definitely appeal to these mass market groups that value pricing as a primary decision-making aspect. In the online sales environment, this should be an animated feature designed by website experts that brings more transparency to pricing as a competitive tool to guarantee more consumer interest. Promotion – Television, television, television! Using this same pricing strategy, the iPod can appeal to different target groups, such as the active homemaker (or any desired target group already identified through Apple research that needs more emphasis) by using pricing as the primary selling advantage. Brilliant, flashing or churning price animations, incorporated into interesting promotional materials, will gain much higher mass market interest. Price as a value-based tool would be even more effective than the current in-store materials being used at retailers. Getting consumers interested in taking a trip to the retail partners is the key to driving iPod sales upwards and this is currently lacking for this product that is already out of the launch phase. Using this strategy, especially for the iPod Nano aimed at homemakers looking for a technological thrill, will boost Nano sales exponentially, especially if the ad content itself is creative. A recent advertisement for Kohler, in which a consumer smashes pots and pans into the kitchen sink to show durability, is the BEST method for gaining this market’s attention quickly! Radical promotions such as these are highly effective for this consumer mindset, thus reaching the female (and some male) over-35 groups. One online retail seller, ipodsales.org (2010) depicts the iPod on its website homepage, showing the interesting color combinations available for different iPod models. The company currently does not have enough emphasis in promotion for this feature (innovation) that would be highly attractive to youth buyers and the over-35 female group as well if given more emphasis. Plan evaluation Promotion is the most important area for the iPod that should be considered and evaluated. The color combinations identify with different psychographic characteristics of buyers, such as pink reflecting the tender youth buyer whilst black identifies with the risk-taker mentality; and so forth. Apple does not capitalize on this consumer aspect in nearly the proportion that it should. Retail partners, such as the big box retailers or other electronic stores, should also be provided training packets and in-store materials that essentially bring color to life. The development of a chart, included as an in-store promotional material, that gives a name to consumer characteristics, will help waffling consumers find self-identify through the iPod. For instance, Green represents Envy (see appendix for suggestions). These small changes to promotional strategy can build much more interest in target groups that are not necessarily technologically-minded or savvy and would not generally, otherwise look to purchase an iPod. Far beyond features and benefits is a psychographic profile in the 16-35 group that needs psychological motivation to gain their interest and have them ask retail sellers more questions about these features to make a final purchase decision. Competitions’ products, to the advantage of Apple, are largely priced higher than the iPod, as many of them add a unique feature (that is virtually meaningless to the consumer) and they attempt to over-promote it to compete with Apple. The 16GB iPod Nano is priced at approximately $179 in most markets (Malik, 2010), which is affordable on most household budgets with a household income over $40,000. If the company is willing to invest the cost for on-air promotions illustrating price as the primary tool for improved sales, markets that had never believed they needed an iPod will reconsider remaining in the proverbial technological stone age and actively seek making a purchase. Apple will need to consider the budget expenditures available for mass market advertisements such as this, with the idea of an expected increase in all iPod products of between 30 and 50 percent during periods that are not peak, such as the holiday season which recently experienced a near 100 percent increase (Burrows, 2010). This is the expected ROI for this investment if Apple were to choose to move in this direction. Adding a further incentive, such as offering a free iPod accessory by visiting the Apple website (especially in the face of the upcoming launch of the iPad) can be a powerful motivational tool for the iPod. Illustrating consumers, in promotional materials, smashing a device that looks similar to competition (at risk of IP issues) in favor of reaching for the iPod is the type of advertising that gains attention of female over-35 markets. Coupled with price, it is a sure sales winner. Competition such as the Zune HD (Taylor, 2010) has features not suited for most mass market groups at the psychological level. Apple should consider these suggestions and remember from which they emerged. References Burrows, P. (2010). All I want for Christmas…., Business Week, Iss. 4162, p.22. Lee, C. (2008). Apple Inc. Case Study 1: iPod. http://www.plu.edu/~webbms/doc/apple-inc-2.doc Ipodsales.org. (2010). Welcome to my shop! Welcome to my iPod shop. http://www.ipodsales.org/ (accessed 21 Mar 2009). Keegan, W. and Green, M. (2008). Global Marketing, 5th ed. Pearson Prentice Hall. Malik, N. (2010). Our gadget of the week: Thin as film, Barron’s, 90(1), p.23. Taylor, P. (2010). Its competitors still cannot touch the iPod. FT.com, London, Jan 21. Appendix What is YOUR iPod type?! GREEN Envious :-O PINK Playful! :-P~ BLACK Mammoth! :-c YELLOW Carefree  Orange Reserved :-x Etc….. Read More