Apple Marketing Analysis - Case Study Example

Apple iPhone: A marketing case study Executive Summary Apple is a unique product, which combines the features of the iconic iPod along with the capabilities of smart phones. The touch screen sensitivity and navigation features offered by the phone put it in a niche category of smart phones. Being the first in the market of high-end touch phones, the brand was able to generate enough buzz around the product by leveraging the brand value of the apple brand name. Further, through iPhone. Apple created a product that could provide an enhanced consumer experience with the integration of a wide range of features in one handset. It created an aspiration for the product by developing a personality for iPhone that would suit the lifestyle of its target audience: the college students, executives, business owners etc. It launched the product in the US by co-branding with leading telecom carrier AT&T, which gave it a readily available telecom subscriber base as well. With regards to its communication strategy, the company used the pull and push strategy to promote the product. It used various marketing communication channels as well as advertised iPhone through its select and exclusive distributors as well. The company also utilized digital media in an optimal manner through email marketing, display ads, social media, blogs, corporate site, online communities, search engine marketing and opinion leaders. Table of Contents 1 Apple iPhone: 1 A marketing case study 1 Executive Summary 2 Table of Contents 3 The product and target market 4 Market share and size 5 Branding strategy 7 Brand positioning 9 Marketing mix strategy 10 Marketing communication 12 Marketing Mix used over the years 13 Communication strategy 14 Promotional outlays 15 Conclusion 16 Reference 17 The product and target market A product is defined as anything that helps in satisfying the needs of a consumer, whereas a brand provides a distinct identity to a product by creating a name and design for the product. Strong brand names are important in the contemporary market as consumer preferences and perceptions are often influenced by brand names. These brands enjoy higher market share, brand loyalty and profits. Further, a strong brand name helps in creating trust and quality certification among the target audience (Brassington and Pettitt, 2006). The iPhone, a completely different cellular phone brand launched by Apple was a combination of the iPod and smart phone, which could help users to surf the internet. The touch screen sensitivity and the 3.5 inch screen added value and gave new user experience. The consumers were able to make calls, or navigate through the music and send messages or emails by using Wi-Fi (Wingfield and Yuan, 2007). In order to create a successful brand it is important to build the brand through superior quality, positioning the brand appropriately, re-positioning an existing brand, being the first to launch the product in the market, creating long-term perspective and developing well-rounded communications (Jobber, 2009). Apple rightly employed these tactics while launching the innovative iPhone and being the first in the market to launch a high-end touch phone with superior quality. The company while announcing the innovation in the wireless segment also claimed that the user experience from the phone would be far more superior to any of the phones that they have been using in the past. With the success of the iPod, the launch of iPhone was only a step forward to make unparallel competition in the market with music-storing and music playing facilities offered in one system (Bulik and Cuneo, 2007). The benefits offered to the customer also came with a price tag, wherein, 4GB model was priced at $499 while the 8GB model was made available at $599. This was aimed for the net savvy consumers who could also use this phone for their business use, which was later also opened for the general public (Yuan and Bryan-Low, 2007). Pricing of a product is done in a manner wherein the brand or product could be placed in the market on a long-term basis and helps in achieving the marketing and corporate objectives. The price range could be determined by accessing the pricing objectives, demand for the product, creating pricing policies and strategies, setting the price range and adjusting the prices. For a new product, the companies might adopt either of the two pricing strategies: place the product at a lower price to gain volume and penetrate the market or set a high price for the product to attract premium customers (Jobber, 2009). In case of iPhone, the company initiated the sale with a higher price tag to get premium consumers and later reduced the prices to open the product for general public as well, after creating an aspiration value for it (Yuan and Bryan-Low, 2007). Market share and size Market share is defined as the percentage or portion of sales or revenue earned by a particular service or product in a geography where a company operates. Most businesses use market share to understand their position in the market, in comparison to their competitors in the same sector (Kotler and Kevin, 2006). The response of the iphone to the market was manifold, with users ready to lay their hands on one of the handsets. Per the reports released by IDC, Apple had 16.1% of the market in the smart phone section in the first quarter of 2010, which was a surge of 10.9% in comparison to the last year (Dignan, 2010a). The gain in the revenue was also because of the launch of the instrument in the international market such as China. With the international customer also buying the handset exponentially, this led to the revenue surge for the company, which was a surprising factor for the company (Diaz, 2010a). In one of the interview, operating chief of Apple, Tim Cook opined that, in terms of the places or geographies, the growth for the section has been staggering. And in case of Asia Pacific, iPhone units saw a whopping 474% year-on-year growth. In Japan, the growth was 183%. While in Europe, the growth was 133% (Dignan, 2010a). Thus, the demand for the handset has been incredible throughout the world. On an overall basis, the smartphone vendors were able to ship around 54.7 million units in the first quarter itself which was 56.7 percent higher in comparison to the last year. Also, smartphones were able to account for 18.8 % of the market in the first quarter of 2010, witnessing a jump of 14.4 % over the last year (Dignan, 2010a). Some of the other players in the marker may have been affected with the launch by Apple. Nokia which was considered to be the world leader in the handset business and even with the launch of handsets like C3 and E5 was not able to add to the revenue per the vision set. Due to the pricing pressure, they had to either lower the prices of the handsets or only got restricted audience (Dignan, 2010b) Research in Motion or RIM remained at the number two slot, which was basically trying to follow the footprint of Apple (Hiner, 2010). On the other hand, HTC’s market share saw an increase with the launch of various handsets that was on Android operating model (Diaz, 2010b). Although, Motorola which had captured the global scenario with the Motor razar, it was only able to add little value with the Droid system (Dignan, 2010c). Branding strategy As per Kotler (1996), marketing is defined as a managerial and social process wherein groups and individuals get their requirements and wants by exchanging and creating products and value with others. Thus, marketing means to provide customers what they require and not to sell the products by using ticks, gimmicks or ploys (Kotler, 1996). In such a competitive market, Apple Inc. was able to create its niche in the market by providing the audience with personal instrument that could be modulated per their usage. With the personal computer being replaced by handsets, iPhone was another step to make the audience get hook with the instrument. Also, the brand was known to keep the users tied up with various applications available with which they were able to conduct their task without any hassles (Mossberg and Boehret, 2007). Thus, Apple aptly used the process of marketing to understand and anticipate the requirements of the customers, which helped it in fulfilling the customer requirements in a profitable manner. The concept of marketing has evolved through the years. It started with production orientation, wherein the companies focused on production and assembly line refinement to earn profits through production controls. It progressed to sales orientation, wherein the marketing people pushed for sale through promotion and earned short-term gains and profits by increasing sales figures (Brassington and Pettitt, 2006). Marketing orientation however focused on creating integrated customer satisfaction and earning long-term profits. A marketing oriented business is driven by the market and looks after the concerns and preferences of the customers closely. It is able to understand and identify the customer choice and create the right marketing mix to sell the product in the market. It also segments the product as per the targeted customer. Such businesses invest in conducting market research to understand the customer mindset and current market trend. They are open to changes and regard marketing spend as investment. They are innovative, fast, efficient and effective and have competitive edge in the market (Jobber, 2009). Apple also used a marketing oriented approach to promote its brand. Apple’s ideology is to create innovative products and services that could change the whole experience of the users. All the instruments such as personal digital assistant, digital video, camera and cellular phone coupled with the music station are provided to the consumer all in one handset. Focused on touching the emotions of the users, the personality and the lifestyle are basically used to define the entire brand (Eisenmann et al., 2006). The brand is placed as an imaginative product, or innovative, passionate, dreamer, aspiring, and gives power to the people to showcase their desire through technology. The brand is projected being simple, removed complexity and a self driven design, which helped the company in connecting to the customers instantly (Rosmarin and Greenberg, 2007). One of the promises made by the brand was to present Apple as a next generation mobile that could make the end users life easier and simple. Such beautifully-designed, innovative and ergonomic and technology became the drivers for Apple (Rosmarin and Greenberg, 2007). Brand positioning Brand positioning involves the concepts of brand values, personality, reflection, assets, heritage and domain. Brand reflection means that consumers often buy brand that reflect their identity and project it to others (Jobber, 2009). The target audience of the iphone was the people who needed to store information as well communicate and could keep all the entertainment related files with them. The target audience was professionals, corporate users, students, health care people, and entrepreneurs. At the present time, the users in the section are very small but growing. Some users like to get the Internet, or PDA features and video as well but were reluctant to pay the price. Although, the smart phone market is comparatively small, but has been rapidly growing due to decreasing price points and offering greater technology with the same (Grossman, 2007). Some of the primary customers are upper income professionals who can use the instrument for coordinating their busy schedules and keep in touch with colleagues and friends at the same time. Some of the other audience includes high school, graduate students or college students who like to get a portable device that has multifunction (Wingfield & Yuan, 2007). Some of the secondary target includes mid-size corporations who would like their managers or employees to access and keep in touch with the critical data on the run. The total market segment consisted of companies who had more than $10-$50 million as annual sales (Wingfield & Yuan, 2007). Thus, Apple used iPhone to create a brand value, brand personality and brand perception for the product based on the aspirations and utility of the target audience. Further, Apple also leveraged the concept of brand extension to promote its new product. Such a strategy has many advantages. It helps in associating the new brand with the core brand in a positive manner and awareness and popularity of the core brand helps in reducing the costs associated with branding the product in the market. Further, consumers already have perceptions regarding the brand and the company can leverage on the same through brand extension (Abramson et al., 2005). As Apple already had a huge user base because of its Macintosh products and the immensely successful iPod, it built on the reputation of the brand to promote iPhone to its existing customer base. The company also used the concept of co-branding by partnering with various telecom carriers. It in fact launched iPhone through an exclusive partnership with leading service provider AT&T, wherein the consumers had to commit themselves for a two-year agreement with the provider while buying iPhone (Sharma and Wingfield, 2007). Later, the company also partnered with some of the large telecom carriers such as Sprint, Verizon and Cellular One. Marketing mix strategy In order to create effective marketing campaigns to reach to the target audience, businesses use the marketing mix strategy. This strategy comprises of the four Ps of marketing famously coined by Kotler (1996). These four Ps are product, price, place and promotion, which were also employed by Apple. Product: The product was offered with the full year warranty with optional three-year apple care warranty as well. This gave the users some get some trust with the brands and products. With the special edition that was launched, which was a Beatles edition, celebrated the 40th anniversary of the singer. One of the other strategies was to launch one of the cheaper versions in the year 2008 that had only limited features added with advanced version that could be used by the professionals. Some of the features that was added to the iphone was large disk capacity, lighter in weight, was device, had a long battery life, it was also 4G wireless enabled and had improved camera (Grossman, 2007). Price: At the launch of the product, the 4GB model was priced at $499 while the 8GB model was made available at $599. Later, the price was tagged at $349 and the advanced was made available for $399. The company lowered the price to establish its market dominance in a shorter span of time (Dalrymple, 2007). Place: The massive rollout of the instrument was done in the global arena with the reputed retailers. Some of the rollouts were also made through Internet shopping website, showrooms and mobile retailers. All the Apple Stores and the website were dedicated to sell iPhones. Some places were given eye catching displays that were found in the most of the physical stores that featured iPhone in order to catch the customers’ eye and become a top of the mind recall. Apple Stores also displayed the full features of the cell phone iPhone for months before its release worldwide (Grossman, 2007). Promotion: The company integrated Apple message with the revolutionary communications and also combined visual/audio experience along with the media advertisements. It also differentiated the iPhone with other phones in the market. It emphasizing the Apple brand prominently and associated the already popular iPod with iPhone in order to gain by the lineage. Television campaigns were planned, which were massive was done before launching iPhone that featured some of the legendary talk shows that gave the peek to the handset (Wingfield and Yuan, 2007). Marketing communication The process of managing and organizing the analysis, creation, implementation and control of media, promotional activities and messages disseminated to the target audience, is known as integrated marketing communications. Promotional mix consists of advertising, personal selling, sales promotion, direct marketing and public relations (Jobber, 2009). Apple with its iPhone launch integrated the messaging with the communication around revolutionary messaging. The communication also featured some of the differentiating factor of the product against other handsets in the market with the screen functionality. Also, emphasizing the brand with iPod’s was also planned to get the groundbreaking lineage (Yuan and Bryan-Low, 2007). The advertisements were designed to be innovative. Some of the research around the media consumption of the targeted audience was also conducted by the advertising agency for choosing the appropriate media and the time at which the product could be introduced. One of the massive TV campaign was also planned in the month of June that featured legendary ad, which reminded the customer about Apple’s 1984 Super Bowl, this generated more attention (Wingfield and Yuan, 2007). Also, ads were telecasted on a regular basis for maintaining public awareness. Marketing Mix used over the years In the month of June 2007, the market rollout of iPhone with AT&T along with Apple stores began with the college students. Along with this, Apple.com was made available for the academic institutions and some of the retail chains that had well laid out plan (Sharma and Wingfield, 2007). The company rolled out various ground breaking ads just like its 1984 Apple advertisement that introduced the Macintosh for building curiosity and anticipation about iPhone. The ads were made to appear on the rated shows. Print ads were put selectively in the high end, also in the famous magazines for emphasizing the innovations. The company introduced Beatle’s Edition rollouts out in select numbers. Also, the CEO was made to appear in many channels and also at the Apple stores around the country for ramping up the curiousness of the people (Sharma and Wingfield, 2007). By August 2007, in the school, a 100-dollar rebate was given for purchasing any new MacBook with the iPhone handset. Availability was expanded across the vendors such as Best Buy, Amazon.com etc. One of the brand new advertising campaigns was also initiated for refreshing the consumers about the product (Rosmarin and Greenberg, 2007). In November 2007, one of the new ad campaigns in the holiday season was launched. The ads remained focused to improve the profitability and offered no discounts to the users. By the early 2008, the buzz around the next generation iPhone was established in the Macworld. This came with the announcement of the cheaper iPhones (Rosmarin and Greenberg, 2007). In the year 2008, iPhone with the 2nd generation was also released along with the new ad campaign that emphasized about the feature of the phone. With the low cost, and a smaller version and limited features iPhone Nano was released. The high-end phone which was targeted for the professional was named as iPhone Pro was released. This instrument had higher memory, more battery time, it could do video conferencing and supported most of the professional application. Original iPhone was given some incremental up gradation. This was promoted aggressively during the Olympics in Beijing to get international presence (Laugesen, 2010). In 2009, the instrument was given major upgradation with regards to technology. It had advanced 3D abilities with some host other capabilities envisioned. By 2010, some of the advanced features were introduced in the iphone to gain nearly 50 % of the market share (Laugesen, 2010). Communication strategy Apple uses the pull and push communication strategy to promote its brands in the market. The company not only advertises and promotes the product through the use of various marketing communication channels but also rely on its select and exclusive distributors to advertise about iPhone in the region. Therefore, the customer is not only approached through the multi-media and common media platforms but also through selective direct initiatives that adds value to the product services and provide it an edge over the competitors (Laugesen, 2010). Before the launch of iPhone, the company adopted a pre-launch strategy wherein it advertised about the product through blogs, creating buzz about the product by providing sneak peeks and tech specs through viral marketing. Further, it employed a PR agency to create a strong brand perception about the product. The launch strategy of iPhone focused on advertising about the product on the corporate website, Apple.com, besides using the print, television and outdoor media for promotions. It also relied heavily on social media to launch the product as its target audience was a tech-savvy generation with high aspirational values. Post the launch of the product, the company advertised through independent review websites, paid online listings, apple.com and digital campaigns (Laugesen, 2010). The company utilized digital media in an optimal manner through email marketing, display ads, social media, blogs, corporate site, online communities, search engine marketing and opinion leaders. The company sent emails to all the Apple customers informing about the launch of the product. It displayed ad banners and interactive ads in various websites. Further, the company advertised about the product on various social media sites such as Facebook and MySpace. It also posted information about iPhone on industry blogs, forums and discussion boards. The company used the corporate site Apple.com extensively to introduce the product and for aiding customers to purchase iPhone applications. It initiated discussions on various online communities and blog sites. The company also provided iPhone free of cost to various opinion leaders for review as well (Laugesen, 2010). Promotional outlays Per David Yoffie, a professor at Harvard Business, Apple was able to garner $400 million approximately through publicity after the announcement in the year 2007, January. Some of the coverage done by the traditional media such as the Wall Street Journal and Internet pundits such as Gizmodo gave added advantage (Grossman, 2007). The company also supported the instrument in television commercials, print and web ads which were designed for showcasing reappearing and disappearing touch keypad. One of the first advertisements, titled "Hello," was aired at the 79th Academy Awards, February 25, 2007. The ad had clips from various films and also television shows for more than 70 years and showed some great characters who were answering the phones. The ad ended with the caption: "Hello. Coming in June" (Grossman, 2007). When the iPhone was launched, nearly 1,547 articles or stories were printed in the media, in comparison to 206 in mid August. The advertising schedule was made to re-run for reinforcing the iPhone's presence. The combination of free and paid media gave the consumers, impression that the handset was constantly present in the media. Further, the Advertising Age in the year 2007 also selected Apple as a runner-up in the annual Marketer Year award (Bulik and Cuneo, 2007). Per Andrew McMains of the Adweek, the estimated global account for marketing was around $250 million in 2006 which was given to TBWA Worldwide (2006). Also, some of the analyst and pundits opined that Apple spend approximately $20 million in the launch of iPhone in Europe and should surpassed the figure the U.S. in the summer of 2007 (Bulik and Cuneo, 2007). Conclusion Apple was able to create strong marketing strategy for the mobile phone and was able to manage the aspect and the feature of the iPhone’s very effectively. Apple developed a unique product for catering to the needs of the tech-savvy consumers who were interested in getting a combination of music player and smart phone. They made the customers aware about the product by managing the marketing efforts very effectively. The mobile is able to exemplify Apple’s capability of creating excitement within the customer about the product with the loyal customer and also focused on creating new audience with the high-quality product. Apple was also able to build partnership with AT&T and also gave benefits for the overseas suppliers. The efforts really boosted the company’s stock and further help garner positive relationship with the consumer for years to come. Reference Abramson C., Currim, L. S. and Sarin, R. 2005, ‘An Experimental Investigation of the Impact of Information on Competitive Decision Making, Management Science, 51 (2), 195-207. Brassington, F. and Pettitt, S. 2006, Principles of Marketing 4th Ed, Financial Times Press. Bulik, B.S. and Cuneo, A.Z. 2007, October 15, ‘APPLE’, Advertising Age, Vol. 78, Issue 41. Dalrymple, J. 2007, September, 11, ‘Lessons learned from the iPhone price cuts’, PCWorld. 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