Designing a Marketing Strategy for a New Product over Time - Report Example

Designing a marketing strategy for a new product over time Contents Introduction 3 Part A 3 Brief profile of your organisation 3 Products 3 Marketsegments 4 Market Size and value 5 2) New growth market segments to be targeted  7 3) Product Life cycle 7 Part B 7 4) New Product Development 7 5) Marketing mix 9 a) Product-related 9 b) Price-related 10 c) Distribution 11 d) Promotion 12 Conclusion 12 References 14 Appendices 16 Introduction Apple is involved in designing, manufacturing, marketing mobile communication and other devices in the whole world based on geographic segmentation of the market. Americas segment includes the North and the South America. Europe Segment includes the European countries, India, Middle East and Africa. Australia and rest of Asia are included in the Rest of Asia Pacific segment. The results of the retail segment is considered separately and not included in the geographic segments. The new product that is focussed on to be introduced in the market is the Apple watch. The product Apple Watch is thought to be launched in the same product segment and the target customers are the same as the one who use the iPhone or iPad. Part A 1) Brief profile of your organisation Apple as a company is involved in the design, manufacturing and marketing mobile communication and media devices, personal computers and portable digital music players. Products The primary products of the Apple are iPhone, iPad, Mac, iPod, iTunes and iTunes store, Mac App Store, iCloud, Apple pay and iOS. The operating system software that is made by the company is iOS and OS X. The application software are iLife, iWork etc. and accessories is Apple TV. (Source: Apple Inc, 2014) Figure 1: Sales by products and by operating segments Market segments The company segments its market based on geographical basis. The company has settled on its reportable operating sections which are based on nature and location of the customers of the company. The operating segments of the company are Greater China, Americas, Japan, Europe and Rest of Asia Pacific (Apple Inc, 2014). Market Size and value Figure 2Market share by Apple smart phone with respect to the market (Chuck, 2015. ) Figure 3 Apples earnings, performance, profit margin growth, market capitalization, Apples percentage in S&P 500 as of 2012. Apple’s market capitalization as shown in figure is $ 0.475 trillion out of $ 2.8 trillion of total market capitalization of NASDAQ. Over the years Apple has outperformed and grown by 500% over the years. Apple’s iPhone also has a major market share as compared to other players in the smart phone market. 2) New growth market segments to be targeted  A new growth market and segment that can be targeted by the company is Apple Watch. Apple watch is a growing market segment and the company can effectively target this market with all its resources at its disposal as the segment will drive future growth of the company. 3) Product Life cycle The product life cycle of the Apple watch is shown in the figure in the Appendix. The PLC will include a development phase to start with followed by introduction, growth, maturity and decline (Grieves, 2006). Part B 4) New Product Development The appendix shows the new product development stages of the company. The new product development shows the steps that are involved in the new product development that is the steps that are involved in the development of the apple watch. The new product development that is the development of Apple watches follows the following stages. The stages of new product development are Idea generation, Screening and Evaluation, Business analysis, development, Market testing and commercialization. Idea generation The first step is the generation of the new idea. The idea of an Apple watch has emerged from and can be said as the natural progression of an apple mobile phone. The idea to build an apple watch as it might be called emerges from the idea of bringing in more simplicity and convenience in the life of the customers and target market segment. The idea is going to be particularly liked by the youth segment and the business class people who do not have much time. The watch will be used to perform all the basic functions of a watch. In addition to it the watch will be used to connect with the mobile phone that is being marketed by the company. The watch will be in fact marketed along with the phone of Apple as an additional accessory for convenience. Through the watch the customer will be able to receive any incoming calls or end a call. The customers will also be able to turn on the music or control other functions of the mobile through the watch. Screening and Evaluation The idea is screened to see if it will meet with success or failure and to access the potential demand of the watch in the market. Business analysis The business analysis of the watch shows that the watch is likely to be acquired by the customers of iPhone and iPad. The total sale of the iPad and iPhone in the last year that is in 2015 has been 237196. After the introduction of the new watch by Apple it is going to be accepted by at least 5% of these customers in the initial year of launch and based on their feedback others will likely adopt the same. Market testing After the business analysis and probable identification of the target market the next step would be to provide some initial customers who are already using the iPhone and iPad some free samples of the new product that is going to be developed and marketed. The feedback they provide after using the watch will be used to further develop the product. Commercialization The product will be initially tested in the American market and best on the test results the product will be commercialized for the launch in worldwide market and exhibited along with the phone by the company. 5) Marketing mix a) Product-related The product is likely to be sold in an attractive package. The dimension of the package is likely to be 126*96*75. All dimensions are in mm. the outer packaging of the product will feature the brand logo of the apple so that it can be easily distinguished from other packages of smart watches available in the market. The product packaging will be a good one that will involve the watch being available in a leather case and the charging cords will be fixed to it from side as shown in figure. That is for the persons who will purchase the Watch there will be no need to purchase or carry an additional charger. The distinguishing feature of the watch will also be found in the clasp of the watch which will feature a button for ease in attaching and removing at the same time providing a firm grip on the risk. The product may come in other variants too specially targeted for the upper segments of the market. The product that will be targeted to the upper class of the customer segment may be built in gold or other precious metals. The product might be launched along with the launch of an iPhone and the product may be marketed along with the iPhone stating that the two products are made for each other. The product can be marketed with iPhone and the two products can be showed to be made for each other through cohesive marketing strategy. The products will have several features that are associated with the product. The features are time that will be shown, health benefits that will be apt for the company, and telephone calls that will be able to receive for the company. b) Price-related (i) Introduction At the launch of the new watch by Apple the pricing strategy to be followed by the company is likely to be skimming pricing strategy (Kotler, Keller, Brady, Goodman and Hansen, 2012). In the skimming pricing strategy that is likely to be used by the company such as Apple or any other technology company for that matter (Kotler, and Keller, 2009). This will be done so as to take advantage of the initial buzz and hype with respect to product and gain maximum hype till the point the buzz for the new product exists among the customers of the company. At its initial launch the watch will be priced likely in the range of 349$ in US at the minimum levels and £299 for the UK market (Apple Inc, 2015). The price will be at slightly higher level than other smart watches that are currently present in the market (Brewis, 2015). The price of a typical smart watch in the UK market starts from a price range that is below £100. However Apple already has a brand name that is associated with premium class products that are targeted towards the affluent customers. So taking this picture into view the products will be priced based on the premium pricing strategy (Mills, 2002). Thus it is clear that in the 1st year of its launch the product will be priced a little higher and it is estimated that it is likely to be sold out in the first year. (ii) Post-launch prices After the likely success in the launch year that is likely to be received by the new Watch which the customers of iPhone and iPad are likely to purchase, the success is likely to be followed in the 2nd year too as it will be growth phase of the watch. However with increasing competition and with the buzz dying down the company is likely to lose the customer base of the initial version. Considering that no other features are added to the watch the product is likely to slowly enter into the maturity and the decline phases as shown in the Product life cycle in the appendix and the data of the sales figure year on year. Although the easiest strategy would be to cut the prices of the product to increase the revenue and cover the reduced sales figures, the best strategy would be to not indulge in too much price cuts as this may have a negative impact on the brand and the customers psyche (Wreden, 2002). A little bit of price cuts and keeping the prices at psychological pricing level will be the best strategy to follow. c) Distribution The distribution channels and the strategy of distributing the phones that is likely to be followed by Apple will be similar in line with the distribution channels that are used to sell the iPhone. There are several distribution channels that are found in the current market. The channels of distribution may include direct selling of the product by the company to the customer. This channel of distribution is used by the company to sell the product through the company website or its own stores. Other channels of distribution, that are commonly found relates to the company selling to the wholesaler to retailer and finally to the customers. The apple as a company does implement this distribution channel by selling the products of the company to the third party wholesaler who in turn sales the same to the retailer and finally to the customers (Etzel, Walker, and Stanton, 2004). Apple may also follow the channel of distribution whereby it sells the products of the company to the retailers who in turn sells the same to the customers. The company may additionally use the sales force to sell the products to the retail stores who in turn sells the same to the customers (Peppers, and Rogers, 2004). It is best for the apple watch to be sold through any of the above or all of the distribution channels as the product’s customers are likely to be the same people who are familiar with the brand name or are the owners of the apple product. So the current customer base of Apple products or new customer base apple iPhone and the iPad are like to be the buyers and the distribution channel should be aimed at targeting those people. d) Promotion Apple’s promotional strategy has always focussed on not revealing much about the company and keeping and maintaining as much suspense as is possible so that the company is able to create and maintain an aura of suspense and illusiveness about the company. This aura of illusiveness that Apple creates and maintains is helpful for the company as the customers only get a tantalizing hint of what they might expect in the product and accordingly are very excited to own the product. This is the reason that most of the products are sold by Apple on the launch dates of the product or in the introduction phase. In line with this promotional strategy the company needs to create and sustain that same buzz of illusiveness about the product and gain maximum profits that it can through the initial year or two. The effectiveness of the initial promotional strategy will depend on how much hype is generated and is sustained about the product in its initial period before the product is launched. So before the product is launched the product needs to be advertised in the form of displaying some key features of the product, throwing up tantalizing hints about the product through reviews by reputed tech magazines, etc. In the 2nd year the company can continue to promote the product through advertisements and other promotional mix. Through years 3-5 the focus is reduce the spending on advertisements as the sales and the revenue will fall and the expenditure in advertisements will not be easy to sustain. It is also expected that the product will have reached the customer base and recognition by that time. Conclusion The company Apple in this particular case is slates to launch a product, in this case the Apple watch. Over the above course of discussion the various factors that might have an impact on the new product development and the various factors that forms part of the marketing mix of the product is discussed. It is found that the Apple watch will probably target the same customer base that currently uses Apple phone or Apple iPad. The marketing mix will involve promoting the product to the customers so that maximum sales are generated in the initial years and that can be used to cover the loss of revenue in later years. References Apple Inc, 2014. Form 10-K. [online] Available at: < http://investor.apple.com/secfiling.cfm?filingid=1193125-14-383437&cik > [Accessed 11 April 2015]. Apple Inc, 2015. Watch Sport. [online] Available at: < http://store.apple.com/us/buy-watch/apple-watch-sport > [Accessed 11 April 2015]. Brewis, M., 2015. Apple Watch release date, price, specs and features UK: When is the Apple Watch coming out? Pre-order Apple Watch now. [online] Available at: < http://www.pcadvisor.co.uk/new-product/apple/3443668/apple-iwatch-release-date-price-specs-uk-features-launch-preorder/ > [Accessed 11 April 2015]. Chuck, J., 2015. Apples iPhone Market Share Leveling Off In Some Countries. [online] Available at: < http://www.forbes.com/sites/chuckjones/2015/02/08/apples-iphone-market-share-leveling-off-in-some-countries/ > [Accessed 14 April 2015]. Etzel, M.J., Walker, B.J. and Stanton, W.J., 2004. Channel of distribution. Boston, Mass.: McGraw-Hill/Irwin. Grieves, M., 2006. Product Lifecycle Management. New Delhi: Tata McGraw-Hill Education. Kotler, P., and Keller, K., 2009. Marketing Management. London: Prentice Hall. Kotler, P., Keller, K., Brady, M., Goodman, M. and Hansen, T., 2012. Marketing Management. London: Prentice Hall. Mills, G., 2002. Retail Pricing Strategies and Market Power. Melbourne: Melbourne Univ. Publishing. Peppers, D., and Rogers, M., 2004. Managing customer relations: A strategic framework. New Jersey: John Wiley & Sons. Wreden, N., 2002. How to Think About Pricing Strategies in a Downturn - Your Best Downturn Strategy? Think Twice About Price Cuts. [online] Available at: < http://hbswk.hbs.edu/archive/2884.html > [Accessed 11 April 2015]. Appendices Appendix 1 Figure 4 Product life cycle Appendix 2 Figure 5 New product development stages Appendix 3 96mm 75mm 126mm Figure 6 Packet of an apple Watch Figure 7 Apple watch with the box after removing from the cartoon Figure 8 Apple watch Appendix 4 Total target market 237196           1st year 2nd year 3rd year 4th year 5th year Sales of Apple Watch 11860 16604 7116 4744 4744 Price $349 $348 $340 $330 $300 Sales Revenue $4,139,070 $5,778,095 $2,419,399 $1,565,494 $1,423,176 Read More