IPhones Marketing Plan - Term Paper Example

IPhone’s Marketing Plan TABLE OF CONTENT Executive Summary…………………………………………………………………..4 2. Current Marketing Situation…………………………………………………………4 2.1. 5-year Financial overview……………………………………………………4 2.2. Market description……………………………………………………………5 2.3. Product review……………………………………………………………….7 2.4. Competitive review…………………………………………………………..8 2.5. Channels and logistics review………………………………………………...8 3. SWOT Analysis………………………………………………………………………9 3.1. Strengths……………………………………………………………………..9 3.2. Weakness……………………………………………………………………10 3.3. Opportunity………………………………………………………………….11 3.4. Threat………………………………………………………………………..12 4. Objectives and Issues…………………………………………………………………13 4.1. First-year Objective…………………………………………………………..13 4.2. Second year Objective………………………………………………………..13 4.3. Issues…………………………………………………………………………13 5. Marketing strategy…………………………………………………………………….13 5.1. Positioning…………………………………………………………………….13 5.2. Product strategy………………………………………………………………14 5.3. Pricing…………………………………………………………………………14 5.4. Distribution strategy……………………………………………………………14 5.5. Marketing communication strategy…………………………………………….15 5.6. Marketing research……………………………………………………………..15 6. Action programs…………………………………………………………………………16 6.1. First month……………………………………………………………………….16 6.2. Second month……………………………………………………………………16 7. Budgets…………………………………………………………………………………..16 8. Controls…………………………………………………………………………………17 9. Conclusion…………………………………………………………………………..17 10. Works cited…………………………………………………………………………18 1. Executive Summary Established in 1976, Apple Inc. has evolved through the continuous great design developments in electronic products. In the past five years alone, Apple Inc. has managed to record an impressive 330% increase in electronic manufacture. A detailed account of Apple’s past reveal that between 1984 and 1995, lots of experimentations were done to identify consumer target products. The experiment used cameras, TV appliances, portable CD players, and video consoles. Out of this, the company, in 2001 managed to launch the iPod portable digital audio player that recorded massive sales of up to 90 million units in five years. After the change of its name from Apple Computer Incorporated to Apple Inc., the most fascinating phone model; iPhone was introduced in the market. The future indicates how the efforts expressed through globalization flexibility make sense. The iPhone 5C has been aligned in relation to market demand and customer buying behavior. While it is a good idea for Apple Inc. to use the vertical marketing control, it is important that opens up its software and hardware for easy access to the outside market. Failure to do so gives applications like Android and Windows a chance to enjoy a huge market share. 2. Current Marketing Situation 2.1. Financial overview 2013 2012 2011 2010 2009 Revenue 101.25 million 87.33 million 84.21 million 83.98 million 84.02 million Profit 68.45 million 70.88 million 65.12 million 57.56 million 62. 94 million Profit Margin 65.44% 65.89% 67.47% 57.66% 58.35% Growth Rate 0.82% 15.54% 30.23% -0.90% N/A Stock Price 30.26 27.76 25.02 24.90 20.18 For the last five years, Apple Inc. constantly increased its revenue from 84.02 million to 101.25 million. The profits recorded a steady growth from 62.94 million to 68.45 million with the profit margin growing from 58.35% in 2009 to a almost constant rate of 65% in 2012 and 2013. However, the growth rate was highest in 2011 with 30.23% after recording the lowest growth rate in 2010 with a -0.90%. Thereafter, the growth rate recorded a sharp decrease in 2012, double the previous year to 15.54% and further dropped in 2013 to 0.82%. There has been a steady rise in the company’s stock price since the iPhone’s launch in 2009. It kicked off at $20.18 and increased at an increasing rate to $24.90 in 2010. The same was evident until it hit the high knot in 2013 with a $30.26 growth. 2.2. Market description The table below gives an overview of market description through segmentation. Target segment Consumer need Corresponding benefits professionals Trace and stay connected to their professional duties Keep records track of every activity they carry out for efficiency Real time messaging capabilities, email and email notifications, voice calls Mac OS X is efficient in note taking and keeping records students Handle a variety of tasks at the same time without relying on several gadgets Style and uniqueness Video, music, and camera applications, internet capabilities and PDA The Apple design is a sense of fashion and thus its brand is associated with uniqueness. Corporate users Analysis, integration and access to large volumes of data Applications that can analyze data like Mac OS X makes it easy to record and accurately distinguish data. In addition, it is compatible with most data software Business owners Give updates on contract progress, clearly schedule contract activities and assess the returns Instant connections to calendars, physical address books to enable entrepreneurs check upcoming appointments and contracts in progress. Medical users Instant updates, easy access and effective exchange of medical records Safe and secure access to physical address records to reduce paperwork and improve on efficiency of patient handling. From the above understanding about market segments and how to position its brand, the company summarized the iPhone’s marketing capability as flexible and convenient even for professional use because of its value added features. This makes everything easy because Apple Inc. is already an established brand since it always produces the most effective and technologically advanced gadgets (Robert Mohns). As an added advantage, the company has little time focusing on its brand and thus gets enough time to drill the iPhone in the market. It has already done this by making sure that its device corresponds and satisfy customer needs; one device for communication, entertainment, internet access, and emotional goodness. 2.3. Product review First-class quality IPhone series depicts the quality that every customer looks for in an electronic device. The quality is not only evident in the hardware but also in software. The phone is water proof and made of non-breakable glass to enable full protection should it fall on hard surfaces or water. Color IPhone comes in a variety of attractive colors. Black, white, grey, red, and blue are the major colors. This means customers have a chance to choose their preferred color without paying for any extra charge. Features Apple Inc. made a smart move after identifying that most people were after touch screen mobile devices. In response to this, the company came up with a perfect type; just as the market had demanded and named it Apple iPhone. This made it easy for the marketing department to sell the devices because of the touch screen feature; something new and captivating. Other unique features in iPhone include powerful music and video playback capabilities, strong website browsers, intelligent voice calling, and camera (Capon& Rashi 13). Myhealth is a new feature included in the phone. It has the capability to track and trace the body normal functioning. This is essential in helping people understand their own bodies before it is late. 2.2. Competitive review Samsung and Android are the key competitors for Apple. These two rivals have ganged up to make sure Apple is denied a chance to penetrate the market. In 2011, Apple accused Samsung for infringing with its copyrights by dubbing the features found in Apple phones. Through the battle, even though Apple won the case and compensated, Samsung has used that chance to come up with new, high quality, cheap, and affordable devices. Most customers who cannot afford or meet the price tags on Apple’s commodities opt for Samsung devices, which serve the same purpose. To most people, Apple’s operating system is incompatible with most devices in the world, especially those running on Windows App. Android, using this as a chance has made sure it conforms to the compatibility complex to ensure customers enjoy using devices. In collaboration with many phone manufacturers, other than Samsung, it has changed customers’ perceptions. 2.3. Channels and Logistics Review Vertical marketing system works well with Apple Inc. through this, it is in a position to take a lead in the distribution channel. It has very few reliable retailers because it has to maintain its price tag. Therefore, it has opened up stores all over the world to support its vertical distribution style. Through this strategy, Apple Inc. can effectively reach out to all customers, offer technical support, and penetrate virgin markets. The desirable channel level for the company is 0-level; meaning product come directly from the manufacturer and distributed to the customers without the use of intermediaries. 3. SWOT Analysis 3.1. Strengths Innovative The company is best known for its unique touch screen, hardware and software design, and features. This means it satisfies a customer’s needs because of the already summarized applications. The iPhone has a very powerful Operating System that is flexible, effective, and of high speed. This makes the user interface very attractive and worth using. According to reviews from customers, it is true that once you start using an iPhone, the addiction increases and keeps rising. Compatibility iPhone phones are compatible with a number of devices thus making it easy for use. Having understood that Android and Windows operating systems give Apple OS a great challenge, the iPhone is compatible with all these operating systems thus making it easy for users to enjoy diversified information exchange. Consumer loyalty This is the greatest strength in Apple Inc. People value iPhones and their increased urge to get access to most of the Apple products has increased. It is said that a satisfied customer always comes back with a friend. This actually happens after every purchase of an iPhone. Customers come back because they are satisfied with the products and the technical assistance. Through an established brand, new customers are easily absorbed in, thus making it simple to turn them into loyal customers. Strong distribution channels Being home for the world’s famous company, the U.S. has the largest market for the iPhone. In response to this, Apple Inc. has developed effective distribution channels all over U.S. in a clever way; it uses vertical integration to reach out to its customers. This means it has its own stores as compared to using retailers and intermediaries. Such mechanisms enable the company in understanding the buying behavior, customer preferences, and sensitivity to changes. 3.2. Weaknesses High prices IPhones are among the world’s most expensive phones in the world. Due to the high price, Samsung battled its way up by pirating Apple’s application features. This gave Samsung an easy entry into the market, which accepted the products at a cheap price. This is a pure challenge to iPhone’s marketability since high class people, who can only be found in developed countries have a chance to own the gadget. People who, even though willing to own iPhones, are locked out due to high prices, thus risking out and secluding potential market segments. The rival companies, in a smart way capitalize on this by penetrating in such abandoned markets (Armstrong & Kotler 78). It is therefore difficult for Apple to be accepted should it venture into certain markets in future. Even though people identify the brand, people are negatively attracted to it because of the price positioning mechanisms. Restrictions IPhones have got lots of inbuilt restrictions that deny users the freedom to enjoy free and easy access. As already explained, the phones rely heavily on wireless connection for video streaming. This is a clear indicator that places with weak or absence of wireless connections cannot help users in enjoying and exploiting the surroundings. Another restriction is lack of connectivity applications like Bluetooth; something relied upon by many people in the world. In addition, the mobile phones have a non removable battery. This may annoy most customers who may want to change the battery over time. 3.3. Opportunities Potential market for smart phones People increasingly prefer smart phones over the typical button covered phones. This gives the Apple iPhone a good chance to get noticed since people are after such types of phones. Ever-growing technology Very few phone producers have shown an outstanding technological growth like Apple. After every five years or less, the company successfully advances its technological arena. This gives customers a new dimension on the suitability of the company. For this reason, people anxiously wait for upcoming gadgets from Apple. Geographical expansion At its conception, an iPhone was majorly concentrated in the U.S. urban market. However, there are many opportunities even in the upcountry, third world nations and the Middle East, which had rejected American materials. Accessories With such a high dependency on digitalized lifestyles, it is evident that the accessories market keeps on growing. This gives Apple an opportunity to manufacture many accessories, which in turn boosts its profits. 3.4. Threats Competition Jurevicius refers to Android operating system as one of the major threats that Apple faces. Most phones in the world use Android. This means it is a common operating system among people. The worst part is that while Android is compatible with other operating systems like Windows, Apple’s Operating system does not give such an allowance. This threatens its existence as people may opt for the already and most efficient operating system. Another potential and already established threat is Samsung. There have been many battles between Samsung and Apple. It has been an argument over infringement of privacy and copyrights. Even after Apple won the case, Samsung has already used this avenue to establish itself. It offers the same features but at a cheaper price as compared to Apple. To make it a good rival, Samsung uses Android operating system even in its camera. In addition, it has a variety of brands, which come in various shapes and designs. 4. Objectives and Issues 4.1. First year objective The major target during the operational first year is to attain 20% share in the electronic market. This will be a huge achievement given the fact that there are so many companies striving to get a 1% share. This will mean the company has to sell one million units and above. 4.2. Second-Year Objectives Basing on the first year sales, the marketing department will be tasked to increase its sales volume by 25%. This will be essential in maintaining the company’s growth and keeping off unnecessary competition. 4.3. Issues High prices are a major barrier to customers who really want to be part of the Apple family. This is a major concern since potential customers shy off. Competitors like Samsung have used this as avenue to influence customers by providing them with an option of buying a phone containing similar features, but at a cheap price. 5. Marketing strategy 5.1. Positioning To make its marketing effective and easy, the company has combined the features from earlier versions, with the aim of improving performance. The features include a large storage capacity, slim and light mechanism, long life battery, 4G enabled devices, high quality 3D camera, and GPS enabled capabilities. iPhone 5C, for instance has an awesome fingerprint scanner that feels nice on the hand. 5.2. Product strategy The company, having known that people have different tastes for color and shape; it has found it necessary to give every customer a chance to enjoy. In addition, it has made user-friendly features that help in promoting health and conserving the environment. 5.3. Pricing The strategy revolves around major pricing strategies. In this case, Apple uses customer value-based pricing because it effectively attaches emotions, satisfaction and quality to the iPhone. This means, it looks at the overall benefits in the present and future that customers would rip from. Through such analysis, the company strategically prices the iPhone basic selling price at $349, with an advanced one retailing at $399. 5.4. Distribution strategy Apple has established a strong marketing system, which other companies, in their conquest to imitate them have failed. It has managed to effectively use the vertical marketing system. Through this, it strategically relies on a level-one channel; direct marketing. This is because it believes in dealing with customers to get first hand feedbacks (Trebitowski & Allen, pp. 13). Since Apple Inc. does not put any value in intermediaries, it uses exclusive distribution in that only one intermediary is allowed to help the company in worldwide transactions. For this reason, it incorporates selective distribution strategy since its products are high value goods, which require strict and careful handling. 5.5. Marketing communication strategy Apple Inc. incorporates both personal and impersonal communications for it to be effective; the company has carries out trade shows, electronic interactions, sales literature and tele-marketing. Advertising has become a common requirement in any business promotion strategy. However, it is important for the company to effectively target and deliver the message in a nice way. Apple Inc. is known for its rib-cracking, attractive and professional adverts. This makes it easy for the company to bring out other strategies especially in direct marketing; something heavily relied upon option by most customers. The company brings out the communication strategy through public relations. This is because advertising alone cannot propel and get people talking about the company’s product. It promotes the personal feeling in customers. This in turn stimulates sales through sales promotion and personalized selling. 5.6. Marketing research It is a well laid out design, combined analysis, and identification and reporting of findings in a particular market segment to establish and answer a situation in a company. Apple Inc. conducts its marketing research through market surveys to establish product-preference test and sales forecasts to evaluate its advertising efforts in each segment. Since it is a big company, it has established its own marketing research department, while understanding that it can cost up to 2% of company sales (Trebitowski & Allen, pp. 132). To understand what customers really want, the company carries out surveys; telephone, mail, online, and in-person surveys for easy and private responses. It also relies on observations, which result from sales, market trends, and customer behavior. 6. Action programs The launching of iPhone 5c will be introduced in December. The first and second months are full of activities that are critical for product success. 6.1. First month This will involve heavy familiarization of the product to the customers. It will be through the use of bloggers, websites, movies, videos, and magazines. This will make it easy for customers to give their feedbacks and give their personal reviews about the product. The official Apple Inc. stores will be tasked with displaying the iPhone strategically for viewing, testing and pre-order by customers. 6.2. Second month This will be a determinant of how powerful the launching will be effective. The company will make good use of advertising and public relations. Media is a very good platform of driving the point home. Through mass advertisements, the company will bring in promotion to encourage customers to purchase the iPhone before the market prices take effect. 7. Budget The company’s break-even point uses the assumption that the wholesale revenue is estimated at $500 per unit, with the variable cost being $250 per unit. The estimated fixed cost is at $50 million. Using the mentioned assumptions, Breakeven= ($50 million/$500) - $250 = 200, 000 units. Through the break-even calculations, it is possible that Apple can only realize profits if it sales more than 200,000 units, failure to which, it will experience losses or no profit at all. After the first year of selling iPhones, the company is expected to make a profit of $1.25 billion subtracted $50 million. Therefore, the recommended price will therefore be at $350, with a markup of 40%. The prediction reveals that sales volume will shoot to 60% thus decreasing the negative impact of fixed costs. This will give room for new opportunities that will propel production thus increasing profits. Control-to-Plan is a strategy used by Apple, where the marketing department meets regularly with the top management that is once in a month, to review the outcomes, findings, and proposals on how to improve on weak areas. 8. Controls Apple Inc. is an established company with a good reputation. By limiting the number of intermediaries, the company is in a good position to protect its pricing strategy from being manipulated. Competition is all over the world, because every phone company seems to be rivaling Apple. To protect the iPhone’s quality, the company has to make sure the partnering companies in China do not leak out any information on how to design the hardware. China is a potential threat because it is known for mastering and producing fake products that take the world by storm. By establishing strong copyright laws, Apple can evade such threats. 9. Conclusion Apple Inc is a well established company. The iPhone dream came true, with the introduction of iPhone 4S in 2010. It was received with huge applauses, because it had unique and attractive features. Even though the main rivals; Samsung and Android have persisted in denying Apple a chance to effectively establish itself, it is very the objectives differ. This could be the reason why people still prefer Apple over the rival companies. While they base on increasing sales, Apple takes time to listen to what customers want. In return, they come up with something so unique that completely satisfies customers. It therefore makes it easy for the company to effectively use the pricing strategy because customers are less worried about price. They are willing to pay a high price in exchange of quality and satisfaction. Through the marketing plan, it is easy for the company to understand the situations that either hinder or promote its success. This incorporates the SWOT analysis, which gives a true reflection of how the company has to align itself in business. 9. Works cited Armstrong, G & Kotler, P. Marketing: An Introduction, 11th Ed. New York: Person. 2011. Print. Arvisdon, Erik. The Product Strategies for the iPhone. Hearst Newspaper. ND. 2010. Web. Capon, Noel, and Rashi Glazer. "Marketing and technology: a strategic coalignment." The Journal of Marketing (2007): 1-14. Ferrell, Odies C., and Michael Hartline. Marketing Strategy, Text and Cases. Cengage Learning, 2012. Hughes, Jeffrey. iPhone and iPad apps marketing: secrets to selling your iPhone and iPad apps. Que Publishing, 2011. Jurevicius Ovidijus. Apple SWOT Analysis 2014. Strategic Management Insight. 16 Feb 2014. Web. 9 Sep 2014. Levere, Jane L. "Choosing a Marketing Plan: Traditional or Social Media?." New York Times (2010). Macworld. Apple’s ‘budget’ iPhone 5C costs over $700 in China. 10 Sep 2013.Web. 8 Dec 2014. Plunkett, J. W. A Brief History of Deregulation. Telecommunications Industry. Plunkettresearchonline. April 2011. Web. 5 Dec 2014. Trebitowski, B., & Allen, C. iPhone and iPad in Action: An Introduction to SDK Development. New York: Manning Publications. 2014. Print. Read More