Marketing Strategy for Mobile Phone Company: Apple Inc - Case Study Example

 Marketing Strategy for Mobile Phone Company: Apple Inc. 1. Introduction Apple Inc. is considered to be one of the top innovators in the technology sector, being one of the first companies to develop the personal home computer, the laptop, and the recent development and launch of the iPad technology for improving mobile communications. This report identifies a new product development concept for penetration into the United States market. It further describes why new product development is important for businesses, such as Apple, driven by competitive and consumer demands from the external environment. The targeting, segmentation and positioning strategies of Apple are discussed along with an indication of Apple’s corporate objectives related to a new product launch. 2. New product development In order to capture further market share in technology, Apple Inc. will be launching the iSpeaker, a revolutionary new device that allows for voice interface for surfing the Internet. The product’s function: Using voice interface in a small headset device, this interface will allow users to browse the Internet using mobile technology on their existing iPad, iPhone that responds by reading data audibly regarding their site of preference. Rather than using hands to browse, the interface allows the user to concentrate on other activities with a convenient web-based service. 2.1 Why NPD? Apple is attempting to seize more than its current 10 percent share of the technology market and requires further innovative products to capture consumer attention. Consumers have been awaiting the launch of the iPad and even placed advanced purchase orders prior to launch. Capitalizing on this current consumer trend toward embracing Apple products, and riding on the heels of current promotional strategy and buzz, this new product can add a better convenience feature to existing Apple (or other) technologies. Because of the lack of predictability in many market segments today, “a faster, more innovative, more rigorous, meticulous, and flexible model is necessary” (advantage-dev.com, 2010, p.1). Apple has always benefitted from its innovations, however in order to meet the corporate goal of increased market share in a very competitive environment, faster-to-market times are required. While the brand has a positive viewpoint from consumers, moving this product to market quickly would have significant brand and sales advantages. Apple should consider using an experimental approach to new product development by using resources to develop a full-scale beta prototype prior to launch. This is a design experiment that involves full features for internal and external testing by customers and by technology support specialists at the business (npd-solutions.com, 2009). Because customer behaviour is unpredictable in many technology markets and there is uncertainty (Corp, 2008), such a prototype would allow the product to be tested in a real-time consumer environment, using a focus group if possible, to recognize potential flaws or consumer opinion about the new design and technology. Features and benefits can be tested with a beta prototype. Apple also has a functional business structure. This means that all divisions of the company are inter-linked to provide support and knowledge expertise. New product development can piggyback on these existing organisational structure elements to provide ingenuity and rapid launch of the product without having to transform the existing organisational structure. Strategy and the business’ functional structure have a direct impact on innovation management (Ortt & ven der Duin, 2008). The functional structure at Apple is a major strength and can provide numerous supports from HR, research and development, support teams, project teams, and senior management. New products must identify with market needs, requiring the marketer to segment in categories of which buyer segments have the most similar characteristics or a need for the product. 3. Segmentation of Market Market segmentation is the process of identifying specific, homogenous groups that are most likely to have the values and needs associated with a new product and will mark the groups most likely to buy the product. It breaks down the entire market into separate groups that share similar characteristics. Apple’s iSpeaker will need to use multi-segment approaches to reach its strategic goal and gain more consumer interest. This approach to identify several key market opportunities helps the company to find efficiency and effectiveness in motivating, attracting and retaining customers (Moroko & Uncles, 2009). Segmentation will avoid demographic-based strategies because in technology, this is not usually effective due to wide differences in consumer behaviour related to technology products (Trinh, Dawes & Lockshin, 2009). Geographic segmentation is not appropriate as the United States is a large territory marked by many different rural and urban regions scattered across the country. Instead, Apple Inc. will use three strategies of segmentation to identify with key market lifestyles or personal values, benefit segmentation to identify key potential users that would benefit from voice interfaces (such as government or business buyers), and purchase occasion segmentation for current Apple loyalists. Because this technology will be desirable in both the business and the consumer markets, multi-segment approaches are most appropriate to gain interest and improve total sales from customers that are geographically dispersed across the U.S. It will also have a psychographic impact on buyers that are attracted to new technologies simply because they are unique and innovative and identify with those key markets that might seek making a purchase for the enhancement to career or personal communications the iSpeaker can provide. The first step is to create a measurable strategy for segmentation which begins with identifying certain demographic trends in particular regions, such as income. Generic secondary research efforts can provide these results on this data. Apple will then need to review its current sales statistics that show what types of customers have been making the most purchases in order to create any kind of measurable targeting strategy. The research necessary is achievable through data mining in corporate databases looking for sales trends and ages of buyers and is achievable through the efforts of its functional organisational structure that links many different talents in a centralised environment. These support professionals will achieve the goals of gathering and reporting their findings to management and the development team. These goals of finding key segmentation information are significant as the necessary information provides the basis for identifying key potential customers. As previously reported, each segment has homogenous values and key predictable behaviours that are most likely to demand the iSpeaker technology. 4. Target market Targeting is taking the identified segments and then developing an appropriate promotional scheme that is best to fit their personal needs and aspirations. The goal is to improve customer satisfaction with current Apple loyalists whilst also appealing to new customers that would appreciate a hands-free Internet browsing device with voice interface capability. In order to gain the attention of the three identified segments, the iSpeaker will be promoted and priced using a differentiated marketing campaign. Differentiated means focusing on aspects of the product, pricing, or its benefits (or some key aspect of the device) and then targeting these multiple segments with promotional materials that are most likely to be related to their needs or demands related to new innovative technologies such as the iSpeaker. Though the costs for this effort sometimes are higher in areas of production and in the cost to produce promotional materials, Apple must perform this differentiated strategy in targeting in order to build sales in its three key market segments. For the consumer currently loyal to Apple, there should be little need for a concentrated, targeted promotional campaign only a product-focused marketing strategy that might focus on price advantages. This segment has the loyalty to the Apple name needed to ensure sales and interest. This segment should need little reinforcement or persuasion. The other market segment, the lifestyle-oriented benefits-minded consumer, is an appropriate target market because of benefits segmentation related to their professional and personal needs for Internet use. Once target markets have been identified, the company must differentiate its products or position the company in a way that creates higher value, especially useful in areas of promotion. 5. Differentiation and positioning Apple has a large advantage over any potential competitors due to this being such a revolutionary and innovative product concept. Differentiation, other than through targeting desired segments, is not really necessary since competitive behaviours will not be a major concern until another technology manufacturer is able to create a similar product with voice interface ability. It is differentiated simply by its innovation. The company does need to remain aware, through basic environmental scanning and analysis, about what other companies might be trying to develop with similar voice activation features so that they can counter these efforts with new product upgrades or totally new innovations to stay competitive and keep their high market share. With a lack of competing products, the iSpeaker could have a life cycle lasting well over five years, which is something difficult to achieve in the technology sector with many different expert development teams working to reproduce other firms’ technologies without infringement on intellectual property rights. The key for the iSpeaker is to position it properly on the technology market. Positioning is placing a product in a certain location in the minds of prospective purchasers. It “means to own a place in the consumers’ minds, like a bookmark” (Trout, 2008, p.2). Positioning is essentially assigning the product a specific value or idea, sometimes related to price, the product class or the quality of the new product, and then getting customers to see the product in this same light proposed by the company. In this case, innovation is linked directly with product and features, therefore the position will be in terms of quality and the functionality of the object as one that can improve many target market lifestyles. Even Apple loyalists will appreciate innovation quality as the key positioning strategy. The launch of the new iSpeaker is geared toward fulfilling specific objectives related to profit and public relations as described in the next section. 6. Marketing objective The main corporate objective is to provide technology solutions in a way that sustains resources for future generations. It strives for continuous improvement in Apple products. New product development is then linked to specific brand objectives. The specific marketing objective is to bring the company an additional 50 million USD in sales annually in year one, with an increase to 100 million on the iSpeaker in year two as a product or promotion and positioning. This is a systematic goal of doubling sales increases through concentrated marketing efforts. It is achievable through promotional efforts, the support efforts of the cross-functional sales teams, and through word-of-mouth created by satisfied customers. These sales objectives can be measured every three months by examining sales records in the database related to the product and by the buzz created about the product by assigning research teams to scour the internet looking for public relations opportunities. The goal adheres to a one to two year timeline and is a reliable figure considering the many advantages this will have to the professional buyer and the consumer groups identified as well. This is where emphasis begins on the marketing mix, or the four Ps of marketing. 7. Marketing Mix Product – Little focus needed in this area of the marketing mix. The iSpeaker’s ingenuity and innovation as a support tool for lifestyle and business tends to sell it. The new product is designed to satisfy consumer needs for hands-free Internet surfing and make communications easy in the social network environment. Price – Pricing will be an issue and, even though certain targets have different price flexibility, it should be priced uniformly in all identified target groups. There are going to be sales from consumers not identified in the segmentation efforts simply because of its innovation in hands-free Web application. Pricing should not be given too much focus as it could be risky in an economy that is struggling to rebound from recession. Pricing determinations are made on Apple loyalists’ buying frequency and price sensitivity already understood through previous relationships. The secondary target group, the lifestyle group, must receive consistent pricing to avoid creating misconceptions from segment to segment. Place – Distribution already is available in many retail stores and technology outlets in the U.S., therefore distribution is not a major concern in this programme. Key markets loyal to Apple have channels set-up to handle ongoing retail sales and any further sales can be outlined on websites with partners for further sales support. Place, too, is not a major concern in the United States with the presence of many large retail supporters. Promotion – The iSpeaker will need two distinct campaigns for the business buyer looking for benefits and for the consumer needing convenience as identified in the segmentation strategy. It will consist of in-store promotional materials that highlight innovation and clearly show the Apple brand logos and other identifiable marks on the store materials. Television advertisements have much value in the United States and the functional organisation will assist in using their talents to come up with ads important to key target markets. Apple loyalists will need no promotional coercion until the sales begin to decline as it moves toward maturity in the life cycle. Quality, minor emphasis on price, and innovation will be the focus of all promotional materials created and they will be coordinated with key target markets in mind when determining ad space online, on television, and in-store at key retail channels. An integrated marketing campaign is concerned with all four elements of the marketing mix. Focus should provide solutions, value, information and access to information. Source: marketingholistics.com. 2009. http://www.marketingholistics.com/extras.html Success in aspects of the marketing mix requires proper budget awareness and capacity to ensure new product launch. 8. Indication of cost Development costs for this type of technology are not inexpensive, however Apple already has the manufacturing capacity and functional team know-how to make research, prototyping, promotional materials, and eventual launch happen within a fairly short period of time in order to get the product launched before competition begins working on their own voice interface Web products. Cost-control, even in a functional structure used to working collaborative, is necessary to achieve profit expectations and guarantee no losses occur on each product sold. Controls need to be put in place at the HR level and at the management level to ensure efficiency in production, development project teams, such as allowing groups a corporately-loaded spending card that cannot exceed its balance without senior approvals. The following sales forecast is an estimate of return on investment after launch. Sales Forecast   FY 2011 FY 2012 FY 2013 Unit Sales       iSpeaker 145,000 120,000 120,000 Total Unit Sales 145,000 120,000 120,000         Unit Prices FY 2011 FY 2012 FY 2013 iSpeaker £350.00 £350.00 £350.00         Sales       iSpeaker £50,750,000 £42,000,000 £42,000,000 Total Sales £50,750,000 £42,000,000 £42,000,000         Direct Unit Costs FY 2011 FY 2012 FY 2013 iSpeaker £105.00 £105.00 £105.00         Direct Cost of Sales       iSpeaker £15,225,000 £12,600,000 £12,600,000 Total Profit £35,525,000 £29,400,000 £29,400,000 9. Conclusion The iSpeaker has many positive benefits for Apple in improving its market share and competitive position. If the product can successfully use a blend of cross-functional team knowledge and promotional strategy, sales might even exceed corporate goals and the projected figures based on current market trends and the revolutionary benefits of the product. Having no competitors with Web voice services in this type of technology format is large competitive advantage and should extend the life cycle for a long period of time. 10. References Advantage-dev.com. (2010). Announcing the release of advantage product development cores. Accelerating your product development and lowering your cost, Advantage Electronic Development, Inc. http://advantage-dev.com/services/new-product-development.html (Viewed April 2, 2010). Corp, Sarah. (2008). 2008 New product development study: consumers continue to drive innovation, New Products Magazine. http://www.clearseasresearch.com/CSR/Home/Files/PDF/NParticle- (viewed April 1, 2010). Moroko, L. & Uncles, M. (2009). Employer branding and market segmentation, Journal of Brand Management, London, 17(3), pp.181-197. Ortt, J. & van der Duin, P.A. (2008). The evolution of innovation management towards contextual innovation, European Journal of Innovation Management, 11(4), p.522. Trinh, G., Dawes, J. & Lockshim, L. (2009). Do product variants appeal to different segments of buyers within a category?, The Journal of Product and Brand Management, 18(2), p.95. Trout, J. (2008). The New Positioning: The Latest on the World’s #1 Business Strategy. Genii Group book review. http://www.genii-group.com/pdf/Book_Review_The_New_Positioning.pdf (viewed April 1, 2010). Read More