Integrated Marketing Strategy - Report Example

Integrated marketing strategy Contents Introduction 3 Main Body 4 Price 4 Product 7 Place 11 Promotion 14 Conclusion 15 Reference 17 Introduction Apple has been a one of the dominating player in the technology market. Apple has revolutionized the technology market for a long time. It designs and develops well known hardware products like Mac computers, iPhone Smart phones, iPod music player and the iPad tablet computer. It has also developed soft wares like iOS Operating systems, Safari web browser and iTunes media browser. The company ranked 2nd position in largest information technology companies in terms of revenue followed by Samsung Electronics. The current head is Tim Cook. In this report we will take consider Apple iPad as our product. Apple iPad was introduced in the market on January 27, 2010. Apple iPad is used for reading magazines, newspaper, eBooks photos, textbooks, videos, movies etc. People can see TV shows, use word processing documents, spreadsheets, and power point presentations and play video games. It can also be used for browsing and listening to music from iTunes Library and can access different applications form App store. Then again Apple introduced the modified version of iPad as iPad 2 on March 2, 2011. Following it Apple launched third-generation iPad as “the new iPad” on March 7, 2012. On October 23, 2012 Apple came out with fourth generation iPad known as “iPad with Retina display”. Finally on October 22, 2013 Apple launched the fourth generation iPad which was marketed as “iPad Air”. Hence it can be seen that Apple has been quite innovative on its iPad series and plans to make the product capture much of the iPad market around the world. Since its launch, iPad users have downloaded around three billion apps worldwide. This shows the popularity of the product and the acceptance among general public. The response that this product received led to Apple continuously trying to innovate and add new features to its new versions. In this report we will first analyse the marketing mix of iPad, which is the four key elements of marketing, Product, Price, Place, and Promotion. We will see what are the integrated strategies adopted by Apple for its iPad product and see if there’s any deficiency in their marketing mix. Finally in the conclusion we will take a look at the suggested strategy that Apple should take to overcome its deficiency. Main Body Here we will take a look at all the Marketing Mix of Apple iPad and consequently whether the strategies followed by Apple with respect to the four Ps are effective or not. Price Apple has always used a marketing strategy where it wants their products to have a mass appeal. It wants to gather the business customers and the entrainment customers both for their product. Price is perhaps the most important factor among the four Ps of marketing. It is important form the point of view of revenue which the company earns. We need to understand that as a product moves along its product life cycle the pricing strategy adopted by the company usually changes. Of the many strategies which a company can adopt, “price skimming” is one of them. Here the initial price of the product is set high to targeted creamy segment of the market to skim revenues from the market layer-by-layer. Apple gas used this strategy of pricing for its iPad product. The process of Price skimming involves charging relatively high price for the product for a short period of time when a new, innovative product or new improved version of it is launched in the market. The main objective of the price skimming strategy is to “skim” off the customers who are willing to pay more for owning a product sooner than the others (Huimin, and Hernandez, 2011, p. 390). Later when the demand falls a little then the prices are lowered and the late adopters then accept the product. Figure 1: Product Life cycle. Generic Graphic The success of this pricing strategy is dependent on the inelasticity of demand for the product by the market segment or by the market as a whole. Such high prices can be enjoyed by a company when the demand is relatively inelastic. Hence the supplier in the short term benefits from the monopoly profits. But such a strategy can’t be used for long period of time since the competing suppliers will join the market to get a share of the profit and this lead to fall in the price with increased competition. The main objective of using this strategy is to benefit from high short term profits. With the launching of iPad there was a big segment of customers who were willing to acquire this device. It was seen that the as we move along the product life cycle of iPad, the price elasticity of demand was low. Hence the innovators and early adopters took a liking for the product. They were fewer prices sensitive and were influenced by factors like status, brand empathy, fashion, position and other technological changes and competitive utility. The price of iPad was kept high because of the research and development costs involved in developing the product was high. Again high cost was involved in promotion and advertisement of iPad. Thus by charging high prices initially, Apple wanted to keep its high-quality image of its products intact. By charring high prices initially, Apple can have the luxury of reducing the price as the threat from new competitors rises. In contrast to this if the price of the product is set low initially the risk of loss of sales volume increases (Gillispie, 2012, p. 123). Through this strategy, Apple was able to segment the market for iPad. The price of iPad can be reduced to suit the needs of each segment and hence the demand for the segment can be satisfied. For example business executives can opt to buy iPad at high price since they need them for their business presentations. Again the same product may be used by students for their regular classes or reading eBooks online or listening to music or watching movies. Hence they would like to but iPad when the price gets reasonable. Apple also has a well distributed logistics support for the retail stores. With such high price of the product the retailers are benefitted as well. With high price set initially the retailer s has the liberty to lower the prices so that the sales volume in the stores increases. Apple has positioned its products such that the buyer so Apple iPad are more prestige conscious than the price conscious. Such expensive goods easily attain the tag of being luxury items (Smith, 2011, p. 75). When Apple unveiled their newest tablets, iPad Mini with Retina Display and iPad Air, it priced the former at $399 when its predecessor was priced at $329. Hence it is simple that Apple doesn’t care about low end customers. But such a strategy has disadvantages for the product. It works only when the product faces an inelastic demand curve. Hence in the long run if the demand curves turns elastic hence then the market equilibrium is attained by quantity changes as opposed to price changes. Gain such strategy attracts competitors. Hence the process of lowering of price of the iPad should be done at an appropriate time. If the price is lowered too early then the early adopters will feel as if they were cheated. They will feel that if they could have waited a little more for the product they would have gotten a better deal. Hence the company along with the brand name could suffer. It is possible for Apple to move from Price Skimming strategy to Optional-Product pricing strategy. Product The Tablet market faces tons of competition and the sales are declining despite a fast-growing market. Apple has a long list of primary product line in its iPad business. Apple has a range of product line which meets the expectation of the consumers (Bowman and Gatignon, 2010, p. 61). Like Apple iPad is a Multi touch Tablet with supports multimedia formats like magazines, newspaper, eBooks, textbooks, photos, videos, TV shows, word processing documents, spreadsheets, video games, surfing internet, apps. The user can surf the internet using their browser known as Safari through which they can access App Store, iBook store, iTunes Library etc. The user can download online content via the Wi-Fi facility and there is an option of opting for 3G service or getting the iPad synced with a computer (Rosenzweig, 2013, p. 211). This iPad had beautiful touch-screen with the potential to change the portable computing profoundly and as a result it can challenge the primacy of the laptop. Many users found that their iPad was the best portable computer which they can afford. Its multi touch screen was bright and responsive which made navigating through software easier. But there were certainly room for improvement like it failed to stand up in comparison to netbooks and laptops in content creation. It also lacked DVD drive, ports etc. Figure 2: First iPad On March 2, 2011, Apple came out with improved version of its iPad named iPad 2. It had faster processor and a camera in the front as well as in the back. It also supported 3G service which was optional (Apple, 2013, p. 1). The Battery life was a strong point as compared to its earlier model. IT supported 10 hours of battery life though it had dual core processor. It also supported toms of applications. By that time the Apple Store was more developed to meet the expectations of the consumers. The Apps was categorized into various groups ranging from entertainment to students to games etc. This difference made the Apple iPad 2 impressive as compared to Google’s Android Honey. Again the iPad 2 was a lot slimmer, with the weight also getting reduced to 601g. The indoor performance of the screen was also great with colours vivid ideal for gaming, photos and videos. It also came with a new iOS 4.3 Operating system. iPad 2 allowed streaming the content to other media devices like widescreen TV. But it also had many disadvantages. It needed iTunes to set up manually. There were no standards slots or connectors. It supported limited video formats, and had to flash. It didn’t supported 4G connections. Figure 3: Apple iPad 2 On March 7, 2012 Apple launched its third generation iPad named “the new iPad”. It upgraded the processor to A5X along with a Retina display (2048 by 1536 resolution). It also added the LTE service provided by AT&T or Verizon. Though the form was unchanged it was a fraction thinner than its previous model. On October 23, 2012, Apple launched the fourth-generation iPad named “iPad with Retina display”. The processor was upgraded to A6X processor. It introduced 30-pin dock connector. It also had a reduced 7.9 inch display. It had the much-needed Retina screen with improved battery size. Figure 4: iPad mini with Retina Display Finally on October 22, 2013, Apple launched the fifth generation iPad as “iPad Air”. The new tablet is 28% lighter than its previous version. It includes new 64 bit Apple-A7 processor. Figure 5: Apple Air This shows that the iPad was perfectly able to place its product across different segments with new and improved features. Place Apple has a strong global distribution for it iPad. It distributes its products through Apple stores, network of resellers, carrier partners including any third-party outlets like Wal-Mart, Best Buy, carrier stores and also through third-party websites like Amazon.com. Previously Apple had been protective over the image of iPad and third party availability (Shanklin and Ryans, 1987, p. 66). It was only in the year of 2010 that Apple allowed selling the iPad to the customers for the very first time. Apple’s store is presently one of the most successful brick and mortar shops which generate more revenue per square foot as compared to other retailer in United States. Apples’ CFO, Peter Oppenheimer in 2012 told that Apples’ 372 stores had yielded $4.1 billion revenue. This might suggest that Apple sells most of its product through its own stores. From December 2011 to August 2012, Consumer Intelligence Research Partners (CIRP) surveyed around 1300 US consumers who bought Apples’ iPad and other products found that most of its iPad was sold online. Figure 6: Apple Product Sales by Channel and Outlet Source: Consumer Intelligence Research Partners. The above figure shows that 40% of the iPad was sold though Apple stores. Apple sold 26% of the iPad through Best Buy. Hence the maximum number of iPad was sold clearly through Apple Store followed by Best Buy and Amazon. Figure 7: iPad Sales by Outlet Source: Consumer Intelligence Research Partners. This is shows that Apple stores are much more productive on per unit basis as compared to other channels of distribution. But Apple has relatively low store count and hence they have to be dependent upon carriers and Best Buy to sell their product. The Distribution strategy of Apple has some short comings. They clearly have eager percentage of sales through their Apple retain stores. People throng outside their stores to buy new products for 1 to 2 days. These shows that people are eager to buy product first hand from the retail store as they are not available online initially. Those who want to buy online have to wait for it. Normally early adopters they would hope to purchase iPad and own it first among the circle of friends. This clearly indicates that Apple needs to increase their retail store presence worldwide. They don’t have adequate strong presence of retail store networks. The Marketing strategy of Apple for iPad makes Apple to concentrate its resources on their core competency so that their sales increase and can achieve sustainable competitive advantage. They have achieved this on the basis of the key concept of customer satisfaction. Figure 8: iPad Segmentation and Target Market The segmentation done by Apple is based on Age, Income and Geographic criteria. According to age, iPad is targeted at Youth and people of medium age. They are mainly targeted for entertainment and business utility in the product. According to income iPad is targeted to those individual who has medium to high income. iPad is concentrated on markets like Europe, North America and in some Asian countries. Promotion Apple did an amazing job in promoting their iPad. Apple had made several videos regarding the promotional activities of their iPad which is spread around the web (Corsi and Dulieu, 2013, p. 119). They also air commercials on TV and Radio. Apple uses different ads to target different class of consumers. For example they aired and commercial where an entrepreneur talks about the importance of iPad for running his business successfully. This commercial was targeted at business class people who need such products. Similarly Apple had created several ads targeted specifically for the teenagers, teachers, senior citizens etc. These ads they showed how iPad can be useful, fun and intuitive to everyone. Apple sent out several iPads to renowned technology reviewers to promote the iPad. Every employee in an Apple store carries an iPad which carriers a powerful message of the utility of iPad. The customers who come to the store sees live demo of how the employees are using the iPad in their daily lives. This makes them realise how they can use the device in their real life to improve their productivity in personal and business life. Figure 9: Steve Jobs displaying iPad The above figure shows Steve Jobs taking about how stylish the iPad looks and powerful at the same time. He wanted iPad to replace laptops and position the product as portable computers. Apple focused on temporary promotion in sales so earn revenue. Apple typically made the product customer centric so that long-term Customer relationship is built. Conclusion We have seen the overview of the Marketing mix of iPad. Due to brand loyalty which Apple had acquired over the years, the company has been able to take advantage of the market opportunities and adapt to the environmental threats. Apple is successful on two of the marketing mix i.e. price, product. Apple still has to work on its other two marketing mix which are promotion and distribution. It had been seen that only 22% of the top 50 retailers in United States have an iPad app. But iPad is the fastest-growing consumer computing device on the planet. Clearly everyone hasn’t embraced iPad. There are some hurdles which the brand needs to address. People are more interested in things which really matters to them. This means that Apple should target the audiences based on their specific needs. Apple shouldn’t create a one-size fits all app. It is just filled with loads of irrelevant content. Instead Apple should plan to segment on the basis of their needs, interest and wants. Apple invests in the right user experience. It is of no use to create fantastic content, if the users have bad application experience. With the launch of iPad on 2010, the company made use of good use of its core competency i.e. innovation. They have been able to turn ordinary into something beautiful. PC fans wanted something which is as powerful as a PC but portable. Apple understood the need and created iPad with new features to meet their increasing demand. They can offer accessories along with iPad like adapters, chargers, cables, cases etc. Apple have made iPad a household name so that they everyone knows about the product. On an overall basis Apple has achieved a successful integrated marketing strategy with still rooms for improvement as discussed above. Reference Apple. 2013. iPad. Retrieved from: http://www.apple.com/ipad/. [Accessed on: 5 December 2013]. Bowman, D. and Gatignon, H. 2010. Market Response and Marketing Mix Models: Trends and Research Opportunities. Boston: now publishers. Corsi, P. and Dulieu, M. 2013. The Marketing of Technology Intensive Products and Services: Driving Innovations for Non-Marketers. New Jersey: John Wiley & Sons. Gillispie, M.D. 2012. From Notepad to iPad. New York: Routledge. Huimin, M. and Hernandez, J.A. 2011. Price Skimming on a Successful Marketing Strategy: Study of Ipad Launching as Apple’s Innovative Product. Retrieved from: http://www.pucsp.br/icim/ingles/downloads/papers_2011/part_3/part_3_proc_36.pdf. [Accessed on: 5 December 2013]. Rosenzweig, G. 2013. My iPad (covers iOS 7 for iPad 2, iPad 3rd/4th generation and iPad mini). New York: Que Publishing. Shanklin, W.L. and Ryans, J.K. 1987. Essentials of Marketing High Technology. New York: Lexington Books. New York: Lexington Books. Smith, T.J. 2011. Pricing Strategy: Setting Price Levels, Managing Price Discounts and Establishing Price Structures: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures. Mason: Cengage Learning. Read More