Strategic International Marketing Plan: US iPhone Market - Assignment Example

Strategic international marketing plan Table of contents Letter of Transmittal 1.0 Introduction 2.0 Background 3.0 Environmental analysis 3.1 Legal factors 3.2 Political factors 3.3 Economic analysis 3.4 Socio-cultural factors 3.5 Cultural factors 3.6 Technological factors 4.0 Conclusions 5.0 References LETTER OF TRANSMITTAL Operations manager ABC Corporations Tel; Email: Website: Distribution manager Apple Inc. Dear Mr., ABC Corporations is a leading Australian phone company dealing with modern technology cell phones and accessories. Currently, we have been having an interest in the US market and with your request of a report highlighting the reason for the interest to establish iPhone business in the USA, please confirm the receipt of this transmittal letter and the report. The report provides a background of Apple Inc., describing why the company is ideal together with its product, iPhone. It explains the reasons for choosing the product and possible reasons why it will perform well in the country’s market. It also analyses the US environment as a target country, highlighting factors that may affect the business. Apple Inc. is a well known company with good product reputation, specifically iPhones. In the report, find a comprehensive analysis of economic, legal, socio-cultural, political, technological and cultural factors that may affect us during operations in the US. We look forward to hearing from you. Please contact us for any questions and approval. Sincerely Strategic International market plan (Apple Company) 1.0 Introduction Technology has made trade become global today. Globalization of markets and competition has made it easy for countries to offer products and services in foreign countries with minimal expenses. This change in the global scope is attributed to technological improvement of infrastructure leading to improvement in communication and transportation. Trade agreements monitor and promote global trade with the help of organizations like the World Trade organizations. They also ensure fair competition from global companies. This report provides a comprehensive structure and explanation of the international marketing plan of iPhones in America, through Apple Inc. Cell phones have become important gadgets in people’s lives, making it almost impossible to live without one. As technology advances, the types of phones we use also advance, adding more features to previous models of phones. The iPhone is a unique type of phone, which has gained popularity worldwide, especially among the business class population. The phone undergoes generational changes to fit customer-changing needs and keep up with new designs and technologies. This report also addresses other factors relating to international markets. The focus is on Apple Inc, the company that designs and markets iPhones and the United State of America, which is the target market. It also explains useful factors that may affect ABC operations in the U.S, like the economy, population, politics and religion. The report covers the environment analysis of the U.S in relation to the foreign businesses, especially the iPhone, and finally, the recommendations and conclusions for both companies. 2.0 Background Apple Inc. released this type of Smartphone in 2007, and has since improved it through five generational changes. The phone has unique functions compared to ordinary phones, which makes it a popular and appealing to cell phone users. Its functions include email facilities, text messaging, videophone, portable media player, internet browsing, and 3G and Wi-Fi connectivity. The iPhone, unlike many phones, has a virtual keyboard. This phone has gone through four-dimensional generational changes, moving from the original GSM iPhone, to the 3G, then 3GS and finally the iPhone 4. The iPhone 3G added a A-GPS location together with a 3G cellular network facility while the 3GS improved it with a compass, high resolution camera and a faster processor. iPhone 4 was released in 2010. Its unique features include a higher-resolution display and a Face Time video. Currently, there is iPhone 5, which is an improvement of iPhone 4. These products appeals to many cell phone users because of their unique features, usability, aesthetic value and fair prices. Having a standard iPhone offers you many functions like camera and video use. This product has a wide customer preference in America, making it an ideal product to sell. It also has fewer competitors, which makes it easier to advertise and market. Apple Inc. is an international company based in America that deals with the design and marketing of personal computers, consumer electronics and computer software. Apple Inc. was established in 1976, with a focus on personal computers. However, in 2007 the company expanded its products to include consumer electronics, as explained by O’Grady (2008). The popularity of Apple Inc. lies in quality products such as iPhone, iPad and the Macintosh computers. The company also specializes in software such iTunes, iWork, Aperture, Safari, iLife, iOS and Final Cut Studio. Apple is a large company with over three hundred stores in ten countries. In additional to the retail stores, the company hosts an online store which sells both software and hardware products. Apple has a wide employee base, with two thousand eight hundred worldwide casual employees and 46,600 full time employees. The company has an excellent reputation in the electronic industry, which boosts consumer confidence in its products. Because of this, it records annual sales of $65.23 billion. This company has gained American consumer trust in electronics, making it ideal for selling purposes. Its expansion and good performance is attributed to continued customer satisfaction and efforts at improving original products. It is also easy for distributors to distribute Apple Inc. products, as the market base is relatively large and available. Choosing a less known company would involve consideration of other expenses such as extensive advertising and evaluation of customer preferences. The major reason or choosing Apple Inc. is because it is one of the leading companies in computers and electrical consumables including telephones. This makes it easy to advertise, market, and sell the products (Cealster, 1998, p.76). USA is a federal country located in central North America, consisting of a federal district and fifty states. United States is one of the world’s most diverse countries in terms of ethnicity and culture, with the largest national economy. Hosting a population of 308,745,538 residents, the U.S market is flooded by a huge number of consumers for local and international products. In 2009, the country had a GDP of $14.3 trillion with a twenty percent of global GDP purchasing power parity. The U.S is an ideal marketplace for iPhones because of the available markets. With this high population, iPhones are increasingly in high demand, making it easier for distributers and retail sellers to make profits. Other factors making the U.S a favorable marketing destination is the country’s political stability, high power purchase ability, and easy access to legal systems, good infrastructure and the country’s diverse multi-culture. IPhones have a stable market in the USA. Bahareth (2010) observes that currently, the product grabs 27% of the phone market in the country, with over 270,000 iPhones sold in USA daily. With competition becoming tougher from other mobile phones such as Android, marketing and improving iPhones is a strategy all iPhone dealers must consider. However, these statistics still show that iPhones have a stable and good preference from mobile users. 3.0 Environmental analysis Under environmental analysis, we shall discuss these factors and explain their potential impact on iPhones. Legal Factors -access to legal system for addressing issues) Political influences- government stability Culture – language and the buying culture Social-cultural factors- family decision making style, social values, Government restrictions and lifestyles Environmental factors- environmental safety, government regulation of environmental use Technological factors- infrastructure, media and communication 3.1 Legal factors Jain (2007) describes the legal environment as the rules, laws and policies of a country where the multinational corporation exists. They also argue that international trade is affected by international rules and regulations, which are framed by organizations such as the World Trade Organization and the United Nations Commissions on International Trade Law. Legal factors also encompass the access to legal systems in case of a need. Apple Inc., being an American international company is governed by the American and international business laws. The US legal systems are comprehensive and friendly to foreign businesses. By following all the legal requirements, ABC Corporations should have no legal irregularities in the U.S. The requirements to observe include obtaining the necessary documents and licenses, observing tax payments and remaining faithful to employee legal rights. 3.2 Political stability and international relations The USA has a very stable government, evidenced by the long years of peaceful government transitions and lack of war in the country. This enables investments in the country and offers security to foreign businesses. It is a member of the United Nations Security council and thus, exercises global economic, military and political influence. Similarly, the country is a member of the G20 and the G8. It also enhances its foreign and military relations by maintaining close relationships through diplomatic missions. These relationships are evidenced by the presence of embassies in Washington D.C and consulates in other parts of the country. Because of the excellent relations that the US maintains with other countries, and especially Australia, we have faith that ABC Corporation’s operations will not be interrupted. Daft (2008) explains that politics affect the economy of a country, especially the exchange rate. He says that when the currency changes, this affects the performance of international companies. The economy of a country also depends on the political stability of a country. These two affect the currency exchange rates, which in turn determines the performance the companies. 3.3 Economic analysis These refer to the economic factors that affect the working of a business, through economic policies, economic resources, and level of income, trade cycles, and economic systems. Economic systems may be socialism, capitalism or a mixed economy. The U.S economy is a capitalist mixed economy. Goyal & Goyal (2008) describes a mixed economy as one that includes both the public and private control. US GDP of $14.87 trillion comprises twenty-four percent of the gross world products. With such an economy, ABC Corporation will have enough control of its operations to enable sufficient exploration of the US markets. Income levels are average, influences the purchase power of individuals. IPhones current market share is 270,000 phones per day. With this kind of sale, ABC Corporations is sure to increase sales through better services and advertisements. Apple products have excellent reputation from users worldwide. The iPhone experience is unique just like other Apple products, meaning that with the strong U.S economy, it will be easy for ABC Corporation to sell iPhones. 3.4 Socio-cultural factors Jain (2007, p.315) explain the list of these factors to include urbanization, education, religion, education, customs, family systems, language, tastes, preferences and traditions. These may force an international company to change the product features such as design, packaging and color. They also affect the advertising strategies of the product. Being a multi cultural country, the USA offers a dynamic market for many products, including phones. Multi culture reduces individual culture bias, leading to the formation of a unified vulture. As Such, American culture is described as a western culture, which includes all those cultures at different degrees. The harmonization of cultures allows an easy access to people without cultural barriers. In the US, most people have adopted to the Western culture, which gives minimal reservation to lifestyles. The main language is American English. The popularity of this language makes it easier to communicate to target customers during advertisements and customer care activities. Because of the unified culture, ABC Corporation will find it easy to carry out activities such as advertisements and marketing. Making advertisements unique and attractive improves the customer confidence in products. Most Americans have obtained High School education, while 2.7% having Bachelor’s degree education. This makes the public more informed and easy to communicate with, compared to countries lacking a unifying common language. However, criticism and objectivism is high, making customers more specific and empowered to demand high quality services and products (Cealster, 1998, p.65). 3.5 Cultural factors Plotnicov (1990) describes the familiar and unfamiliar aspects of the American culture, citing multi culture as a unique culture allowing diversity. Its diverse population includes white, English, Irish, African, Chinese, German and Filipino Americans. Despite the diverse culture, English is the official national language, accompanied by other languages such as Spanish and French. In addition to the culture, the country is also a secular nation, allowing free exercise of religion. The constitution forbids any restrictions on religion. Despite this, the popular religions include Christianity (Roman Catholics and Protestants), Judaism, Islam, Buddhism and Hinduism. Protestants culture influences property purchase and affluent lifestyle, while Catholics tend to minimize much buying. Despite these, Christians are not bound by religion to buy specific items. Phones are a necessity in today’s life due to their numerous benefits. Apple Inc. has a wide customer base in the US with its years of continued customer satisfaction. With the unique iPhone features and the user’s satisfaction, ABC Corporation will find minimal cultural barriers in the U.S. This makes the company more confident that the U.S is the ideal market target. 3.6 Science and technology Presently, Science and Technology is diverse, affecting all the spheres of people’s lives. Multinational corporations are affected by the different technological development of different countries. The applications of scientific research and knowledge differ in every country, and the U.S is no different. The US has a highly developed technological environment, allowing individuals to explore the benefits of ICTs and other scientific research. The population is also well educated to maximize the use of such technologies making it easier for new technologies to thrive in the market. Another dimension to technology is the infrastructure, media, and communication. Block et al. (2001) provide the roles of the media in business. These include informing business owners of environmental practicalities such as values, norms, market philosophies, size, structure and technology. Lehman & Dufrene (2007) highlight the importance of communication and infrastructure in a business, and the role of the media. Transportation of iPhones during distribution and marketing is made easy by the developed transport system. The U.S utilizes a variety of the transport system including rail, road, and air. Communication technology is highly advanced, with a major population using telephones and the Internet for communication. Media freedom allows expressions and advertisements with minimal restrictions. The press freedom in US allows foreign business to advertise on national television, radio stations and newspapers. This makes it easier for ABC Corporation to design and launch an effective advertisement plan, which will increase sales in the market. IPhones are built from better technologies, allowing users to maximize unique phone features. This product does well in the US market because the population is receptive to new technologies (Block, et al 2001, p. 78). Computers and Internet are also common in the USA with a majority of the population owning at least one computer with internet connection. The following table summarizes the above environmental analysis. Environmental analysis Factors Implications Economic factors GDP level of income economic systems Though the GDP, mixed economic system and the purchase power of America is perfect for business, ABC have to provide excellent services to remain in business as this may drop instantly with poor performance. Social cultural factors Language religion family systems education Though language is not a barrier in the US, proper training of customer care representatives will be required to manage the empowered American population. Technological factors Science and technology advancements, applications, research media communications Use of media for advertisement is expensive compared to the Internet advertisement. Though the two will be combined, the Internet is more preferred, therefore, technological improvement of the Corporation’s website will be required Legal factors The U.S laws on foreign business International trade laws and regulations ABC Corporation will have to adhere to the laws, rules and regulations of both the US and international trade in order to remain in business. This may be costly for the business but is necessary to avoid the high penalties associated with irregularities. Political factors Political stability Government stability ensures investment from other countries and companies, which increases competition. This forces the existing and new companies to aim at perfection in their operations. Cultural factors Religion Religion does not affect the buying pattern of consumers in America though some religions buy more than others do. We have to put efforts to persuade the reserved religions like the Muslims. 4.0 Conclusion With the advancing technologies and globalization, companies are seeking international markets for business opportunities. This report carries a comprehensive analysis of the US iPhone market, through Apple Inc. Apple Inc is an American Corporation specializing in computer software, hardware, personal computers and consumer electronics. With 27% of the US Phone market, Apple Inc. has a considerable amount of profits to make in the US. IPhone remains a favorite phone among consumers because of its unique features that allow users to perform different functions with it. It also goes through generational changes, meaning customers are able to obtain current versions of the phone with better features. Factors affecting foreign business in America as discussed in this report include Socio-cultural factors, economic factors, and legal factors, technological and political factors. The economic factors identified are income level, economic systems and GDP. Legal factors include the U.S laws and regulations, international laws on foreign trade and the accessibility of the legal systems for foreign businesses, while technological factors explain the infrastructure, the Internet use, media and communication as well as scientific research and application of the research. Socio-cultural factors on the other hand, include population education, family systems, religion and language. Others include cultural and political factors. The recommendations provided help both the companies maximize their potential in the US market and improve customer satisfaction with the iPhone. Reference List Bahareth, M 2010, Isay: Kings of the Internet, New York, Trafford Publishing. Block, P et al 2001, Managing in the media, New York, Focal press. Cealster, F 1998, International Business: Text and cases, Sydney, Prentice hall. Issues of competition: The Environment of business in the U.S, Japan & Germany, 1993, New York, DIANE Publishing. Daft, LR 2008. Business and Economics. Cengage Learning: New York Jain, TR 2007, Business Environment, London, FK publications Grimwade, N 2000, International trade: new patterns of trade, productions and investment, London, Routledge Goyal, A & Goyal, M 2008, Business Environment, London, K Publications. Grady, DJ 2008, Apple Inc. New York, ABC-CLIO. Lehman, LC & Dufrene, DD 2007, Business Communication, New York, Cengage learning. Plotnicov, L 1990, American Culture: Essays on the familiar and the unfamiliar, University of Pitsburg Press. Miller, AD 2010, The U.S Economy Greenhaven, New York Shaikh, 2006, Business Environment, New York, Pearson Education Read More