Market Analysis: iPhone - Case Study Example

Market analysis: iPhone Product- iPhone™ is a super brand associated on par with such big s as Microsoft and McDonald’s. In June 2008, the Apple Company for the first time announced and then launched iPhone™ 3G. This is a second-generation iPhone that integrates into a single handheld gadget a three-in-one super technology. It is a mobile phone plus a web browsing communicator and above all that it’s a widescreen iPod with touch screen controls. The iPhone has a desktop email facility, a web browser and a host of maps. Its versatile technology extends to the compatibility mode with Macs and Windows-based computers (Ballard, 2007).The iPhone invariably synchronizes e-content from the user’s iTunes libraries bookmarks, e-mail accounts and contacts. The user interface of the device is based on Apple’s unique Multi-Touch Display that permits users to control the phone with a touch screen. The iPhone 3G integrates some of the characteristics of the original that was launched in June 2007. Thus in addition to the above features the modern gadget has 3G networking facility, a built-in global positioning system (GPS), and the original iPhone 2.0 software. The iPhone 2.0 software includes some new enterprise characteristics such as user support for Microsoft Exchange ActiveSync and the Cisco IP-sec Virtual Private Network (VPN). The current iPhone is a quad-band GSM device that boasts of 3G super technology, EDGE facility, the Wi-Fi wireless technology for data transmission, Bluetooth, a built-in camera (2.0 megapixel) and a touch screen of 3.5 inches with 480-by-320 resolution at a faster pace of 163 pixels per inch (Funk, 2002). The iPhone 3G facilitates up to 10 hours of talking on 2G networks and five hours of talking on 3G networks. It also permits up to six hours of browsing and seven hours of video playback. It is being marketed in 8GB and 16GB capacities. Price range of the iPhone 8GB - $ 99 16GB - $1991 32GB - $2991 Place The Company has placed its product, the iPhone in market segments where there is a burgeoning demand for superior technology. These market segments include students at universities and colleges, government and private enterprises, budding markets abroad where there is a lot of demand potential arising from emerging market trends. Its marketing network includes both retailers and wholesalers. Resellers, cataloguers and national and regional retailers have been involved in the marketing effort with much better results in comparison to its nearest rivals like the Nokia, Motorola and Sony Ericson. Above all it has relied on its own sales force to reach the potential customer. The most interesting fact about its product placement strategy is that no individual customer accounted for net sales above 10% during the years 2006, 2007 and 2008( www.apple.com/ iphone.). Major markets were targeted during the three year period though it was the iPhone 3G introduced in 2008 that revolutionized its sales campaign. Apple’s own on-line stores were utilized to reach out to the internet-based customer with sales in the last quarter of 2008 and the first quarter of 2009 making bigger gains against rivals like Nokia. Nokia’s N-Series, another 3G marvel didn’t match up to the iPhone’s success though. Simultaneous 3G launches by other rivals like Motorola and Sony Ericson failed to dent the market share of the iPhone. These competitors were more or less affected by a poor marketing campaign and wrong footing by clever strategic initiatives of Apple’s. Promotion The Company’s promotion drive included both strategic marketing and advertising. In addition to sales promotion through credit card aligned purchases at certain stores across the US and Europe, the Company went onto advertise by erecting huge billboards at nexus points in big cities. This effort was further enhanced by advertising in glossy magazines. The promotion drive of the Company nearly reflected the earlier efforts by Nike and L’Oreal. While competitors were trying to match the promotion drive of Apple with similar more smart offers to the potential online customer, the Apple’s own strategic strength lay in its ability to manipulate the mood of the customer (Kotler, & Armstrong,2009). It was around this time that the management of the company realized the relative significance of a strategic shift in its brand management and value creation approaches. Coupled with a mammoth advertising campaign, the company sought convincingly to introduce innovation, value for money, smartness and classlessness as the new dynamic concepts in a customer-oriented promotion campaign. This strategic shift in company’s brand equity policy approach worked to such an extent that soon its rivals began to copy some of its fundamental principles. The customer loyalty management program of the Company was probably the best strategic tactic that paid handsome dividends later on (Dushinski, 2009). People Unlike its rivals, Apple began to innovate with both adverting and loyalty management. For instance its iTunes advertising slogan appealed to people across class and social barriers because it focused on the dynamic value proposition. Thus with the highly acclaimed technology empowered interface the customer was enabled to interact with his communicators at ease and a lesser cost. This new dimension caught up with the new customer. The Company had almost 32,000 full time employees in 2008. Thus in order to establish proper and regular customer relations the Company has invested so much in its labor force (Lindholm, & Keinonen, 2003). This was followed by the loyalty management programs that further boosted the image of the iPhone. Thus value creation propositions were adopted one after the other by the company in response not so much to the level of competition but as a strategic policy shift from being mere spectator to unfolding events to a proactive strategy-centric initiator. “Mass customization” or “individualized marketing” approach began here. The customer is told that he is the carrier of a smart technology gadget. This is a class of people that has a distinct identity and above all a high value-driven existence vis-à-vis the rest of the community. Competition Therefore it’s feasible to consider the question how best its competitors have been basically depending on a central marketing campaign to achieve organizational success. Apple’s highly decentralized region-based operational structure has put it ahead of its rivals in every sphere of competition. In fact its various personnel head different divisions at the Head Office and make frequent visits to regional offices and facilities. Technology-based innovation matters here. The company has been affected by this environment of intense competition in the same way. Its corporate strategy and sustainability programs have been influenced by these outcomes. Rivals have been tracking its operations in different parts of the world to follow its marketing efforts closely. Above all its European operations to a larger extent and North American operations to a lesser extent have been affected by the kind of regulatory environments. EU regulations have been refined over and over again and such regulatory regimes have such a big impact on the organizational structure as much it has an impact on the culture. Nokia is the market leader in many new brands and 3G phones have just come out with a newer face on them. SWOT Analysis of iPhone related environment at Apple 1.Strengths 1.1.Strong portfolio of brands Its current strengths are based on aspects related to a very strong portfolio of well known brands like iPhone, iTunes, iPods and Macs. Apple has a strong and ideal portfolio of brands to penetrate and occupy new markets all over the world. For the attraction and retention of loyal customers, strong brand equity and product portfolio can be utilized. Meanwhile strong brands lead to product development as well as new business opportunities. 1.2. Technology advantage and Strong R&D Next it has a very strong tradition of R&D which has been considered to be on par with any bigger rivals like Nokia and Motorola. Even though these positive synergies have been achieved at a fairly rising cost they have been the revenue drivers of the company so that rivals have been forced into countervailing advertising efforts. Such advertising costs incurred by competitors involve regular expenditures that would act as an inhibitor on cash flows. Apple’s own strategy of wrong-footing rivals has been very successful because the latter would not know when and where new products would be launched by the Company. Above all its well calculated moves in Mergers & Acquisitions (M&A) in the recent past have outdone the rivals. In fact a series of positive synergies achieved through these acquisitions have had a desirable impact on its global strategic operations ranging from North America to Europe. In fact it makes 65% of its total sales are generated outside the US. Along with the expanding global demand for 3G mobiles, competition has also been growing. Thus exponential growth figures in demand have not exclusively favored Apple only. They have equally well favored its rivals as well. Such outcomes produce a complex SWOT environment that in turn is underlined by organizational leadership, culture and structure (Lehu, 2009). 2.Weaknesses 2.1. Falling margins Apple has been faced with falling margins due to ever rising competition. Size entails more costs through its mammoth network of stores. When number of subdivisions increases with many director level positions the decision making process would be delayed. This is already apparent in its unwieldy network of stores that operate with a degree of independence though. The organizational structure needs to be a strength by way of its formation to enable staff to interact effectively so that organizational goals would be achieved. Thus there is a difficulty in identifying which cost center is more ineffective as against which cost center is effective etc. 2.2. Slow revenue growth Next weakness is the almost static revenue growth. During the last few years its net revenue growth has been affected by a number of factors including the current global recession and a falling demand. Its other weaknesses include a near total dependency on advertising to generate sales which is increasingly becoming an expensive exercise and seeking to penetrate captured markets at any cost. The latter perspective has been critically analyzed by market watchers who argue that Apple has paid much less attention to its strategic marketing plans while in progress. When competitors come to realize the extent of per capita advertising expenditure per sale, it’s as if the code were found out. The strategically dynamic global market environment for beauty products presupposes the existence of an oligopolistic market structure that in turn assumes a set of far dynamic characteristics. 2.2. External analysis 2.2.1. Opportunities Opportunities that are literally available to Apple in the international market place are many and varied. In the first instance many of its opportunities arise from the very nature of the competitive environment. According to current estimates the mobile phone market for 3Gs is growing at twice the pace in comparison to the period 2006 to end of 2007 for ordinary mobiles. 2.2.1.A. Emerging markets Emerging markets in Asia such as China and India present the biggest opportunity to Apple’s products, especially to iPhone. 3G mobile phone sales in these two countries have been rising at over 15% annually. 2.2.2.B. Popular demand for music file sharing Unlike rivals, Apple has the technology advantage in winning over youthful customers to its ever popular i-Tunes. Music file sharing facilitated through a hand held mobile device is perhaps the biggest technological breakthrough for a mobile phone company like Apple. Its iPhone technology has got just that capability. Threats usually come from the technological innovations of rivals. REFERENCES 1. Apple Inc. Annual Report. (2008). Retrieved October 15, 2009 from www.apple.com/ iphone. 2. Ballard, B. (2007). Designing the Mobile User Experience. West Sussex: Wiley. 3. Dushinski, K. (2009). The Mobile Marketing Handbook: A Step-by-Step Guide to Creating Dynamic Mobile Marketing Campaigns. New Jersey: CyberAge Books. 4. Funk, J. L. (2002). Global Competition Between and Within Standards: The Case of Mobile Phones. New York: Palgrave Macmillan. 5. Kotler, P., & Armstrong, G. (Ed.). (2009). Principles of Marketing. New Jersey: Prentice Hall. 6. Lindholm, C., & Keinonen, T. (2003). Mobile Usability: How Nokia Changed the Face of the Mobile Phone. New York: McGraw-Hill Professional. 7. Lehu, J. M. (2009). Branded Entertainment: Product Placement & Brand Strategy in the Entertainment Business. London: Kogan Page. Read More