IPhone Marketing Programmes - Case Study Example

iPhone Marketing Programmes Product Positioning The goal of positioning strategy is to create a product-price position that is attractive to the target customers and creates a good source of revenues for the company (Best, 1997). The key success factor of a marketing program is achieving a certain level of market share which is dependent on the company’s product positioning and marketing efforts. A business needs product positioning as well as marketing efforts in order to be successful. Thus, a weak product position with a strong marketing effort will fail to achieve the desired market share. So much so with an attractive product position that is supported with a weak marketing effort. Fortunately, iPhone product has both strong product position and strong marketing efforts from Apple. According to McCarthy’s 4Ps marketing mix, the product element can be considered as a collection of features and benefits that provide customer satisfaction (Groucutt, Leadley, & Forsyth, 2004). Product positioning involves product line strategies, branding strategies and new product developments. A strong brand is a competitive advantage for any company. The brand name provides potential benefits to customers such as adding social status and assurance it gives to customers in terms of benefits such as class and quality (Blackett, 2003). The iPhone is a combination of Apple’s successful iPod music player and a smart phone that is designed to surf the Internet. The product is positioned for high-end, tech-savvy consumers who are business users. The phone features a 3.5 inch, touch sensitive screen that users can utilise in order to make calls, navigate their music collection, and write messages on a virtual onscreen keyboard (Wingfield & Yuan, 2007). These features were considered as innovative attributes for the product during the time of its launch in 2007. The product competencies also include synchronisation between the iTunes, AppStore and other Apple devices as well as user interface of consumer gadgets and computing devices. Marketing a new product in a highly competitive market requires unique features that differentiate from the existing products in the market (Best, 1997). Apple has taken advantage of its strong brand reputation as well as its success of iPod product in the market when they decided to enter the mobile phone market. Apple is a widely recognised brand in the global market of computing and technology. On the other hand, iPod has been highly accepted by consumers who love music. The product has a reputation of a quality product in music technology that is equipped with extensive benefits for every user (Emerald Insight, 2008). Banking on these star achievements, Apple enters into the mobile phone competition with positive outlooks on gaining a market share. The company employs a blue ocean strategy by reinventing a category through the fusion of a phone and iPod with the added bonus of providing full Internet capabilities in the palm of the customer’s hand (Kim & Mauborgne, 2005). With ease of navigation and a simple user interface that is attractive to tech-savvy consumers and new users, Apple’s iPhone earned a top mark for customer satisfaction. The touch screen feature, intuitive design, self-discoverable, easy-to-use and easy-to-understand AppStore, the iPhone garnered a score of 791 points out of 1000 points in J.D. Power’s Wireless Consumer Smartphone Customer Satisfaction Survey. Apple shined on the operation, operating system and features of their product. (Baar, 2009) In June 2009, the company announced iPhone 3GS, the third-generation iPhone. It combines the features of iPhone 3G, which was released in July 2008, with a built-in three megapixel auto-focus camera, video recording and hands free voice control. iPhone 3GS is a quad-band GSM phone featuring 3G, EDGE and Wi-Fi wireless technologies for data networking, Bluetooth 2.1, and a 3.5-inch touch widescreen with 480-by-320 resolution at 163 pixels per inch. iPhone 3GS provides up to 12 hours of talk time on 2G networks and five hours using 3G networks, up to nine hours of web browsing, up to ten hours of video playback, or up to 30 hours of audio playback. It is available in 8GB, 16GB and 32GB configurations. (Apple, Inc, 2009) Pricing Strategy The iPhone was initially intended for high income business people as their primary target segment. The product was priced at $499 to $599 for 4GB and 8GB model, respectively, when it was launched, which was quite high for the industry category. However, Apple has managed to build a product that lives up to its hype (Greengart, 2007). According to Michael Porter, a well differentiated product that provides a unique value proposition to consumers can demand a premium price in the market (Porter, 1980). Many customers are not seeking the lowest price and many are willing to pay a higher price for products that deliver important customer benefits (Kim & Mauborgne, 2005). Since the benefits of the iPhone experience are highly valued by the target customers, the company charges a premium price relative to its competition. Placement – Distribution Channels According to McCarthy’s 4Ps of marketing mix, place include location, distribution channels and logistics (Groucutt, Leadley, & Forsyth, 2004). The channel distribution strategy creates an effective marketing system that reaches the target customers’ desired point of purchase, with service level sought by target customers. The strategy even produces an effective sales opportunity for the business in a cost-efficient manner (Cespedes & Corey, 1990). The iPhones are available worldwide through the Apple Stores or Apple website. However, Apple also made an agreement with telecommunications providers in the US, UK and other parts of the world as a way of distributing their product. Customers will sign a contract Apple’s partners as their service providers. As an added advantage to Apple, the contract will sway away customer complaints with network problems and focus on state-of-the-art hardware and software design (Mickalowski, Mickelson, & Keltgen, 2008). The iPhone customers in the US are required to commit to a two-year wireless agreement with AT&T to make calls or use the phone’s data communications features. In France, the Apple tapped the resources of France Telecom’s mobile subsidiary, Orange, to become the exclusive carrier in the country (Woyke, 2007). In the UK, the company struck a deal with Telefonica’s mobile subsidiary, O2, as the exclusive carrier. With the rest of the world, the company had followed the US strategy of partnering with telecommunication service providers. The company has signed multi-year agreements with various cellular network carriers authorizing them to distribute and provide cellular network services for iPhones. These agreements are generally not exclusive with a specific carrier, except in the U.S., Germany, Spain, Ireland, and certain other countries. In addition to the company’s own iPhone accessories, third-party iPhone compatible products, including headsets, cables and docks, power supplies, and carrying cases, are available through the company’s online and retail stores or from third parties. (Apple, Inc, 2009) Promotional Strategy Marketing promotion is a strategy that companies uses to coordinate its many communications channels in order to provide information about their products in a clear, consistent and compelling message. The goal of each message is to inform, persuade and reinforce the consumers’ behaviours, perceptions and attitudes (Kotler, 1991). Here, the full range of marketing communication activities are considered including advertising, direct-marketing, face-to-face selling, public relations, sales promotions, sponsorships, e-marketing and word of mouth. Advertising is an effective way to build awareness, comprehension and interest in the company’s products in order to create customer response (Bemmaor & Mouchoux, 1991). Apple had invested approximately $400 million in publicity and advertising since its initial announcement in January 2007 where the company has coverage by traditional business publications like the Wall Street Journal and Time to online analysts like Gizmodo. (Grossman, 2007). The company has also invested in tri-media advertising through television, web-based and print ads which were designed to brag the disappearing and reappearing touch keypad. These features were the main focus during its launching in the MacWorld and repeated TV spots of “how-to” ads. The first TV advertisement for iPhone was entitle “Hello” and was aired during the 79th Academy Awards in February 25, 2007. The ad featured clips from dozens of notable films and television shows over the last 70 years, showing iconic characters answering phones. The iPhone is shown at the end with the caption: "Hello. Coming in June." (Mickalowski, Mickelson, & Keltgen, 2008) To enhance market coverage, the company employed non-traditional creative promotion strategies that would help market the iPhone. Z to A Marketing, a partner of Apple in online marketing, launched a website, www.freeiphone.com, in order to stimulate the online communities and spread the several benefits that iPhone offers. The website introduced a spread the word campaign that rewards consumers with a free iPhone for their most unique reason of wanting an iPhone. Z to A Marketing has made use of the Internet, word of mouth marketing, user generated content, innovative contests and using the latest technology in promoting the product. (Z to A Marketing, 2007) Three months after the product was launched in June 2007, Apple’s iPhone advertising had aired nine new TV ads and more than 1,500 media stories. The advertising strategies of the company appear to reinforce the presence of iPhone in the media and give consumers the perception that iPhone is a constant product in the popular media. The company has achieved its marketing goal of brand recognition, customer traffic and information dissemination (Kim, Han, & Schultz, 2004). Bibliography Apple, Inc. (2009). Annual Report. California: Apple, Inc. Baar, A. (2009, April 30). J.D. Power: iPhone Tops In Customer Satisfaction. Retrieved November 25, 2009, from Media Post News: Marketing Daily: http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=105192 Bemmaor, A., & Mouchoux, D. (1991, May). Measuring the short-term effect of in-store promotion and retail advertising on brand sales. Journal of Marketing Research , 202-214. Best, R. J. (1997). Market-based Management: Strategies for Growing Customer Value and Profitability. New Jersey: Prentice Hall, Inc. Blackett, T. (2003). What is a Brand. In R. Clifton, & J. 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