Marketing Plan for Apples iPhone - Case Study Example

 Marketing Plan for Apple’s iPhone Introduction Technology is really growing very fast globally hence causing mobile phones to be a necessity in both developed and developing nations. It is estimated that in the next few years, more than half of the world population will have ownership of mobile phones. In modern world, customers expect an array of choices and needs quality products that are commensurate with their money. It is in this aspect that marketing strategic plan has significantly become critical for business organizations in marketing their products. The iPhone has therefore entered a saturated and mature market of cell phones. However, Apple has had an upper hand in the development of a revolutionary product thereby changing the paradigm in the mobile telephony market. Despite the great work done by the company, achieving worthwhile sales becomes a nightmare in the face of competition. The paper therefore discusses the marketing plan for Apple to break the barriers of sales in Europe with its trendy and state of the art iPhone. SWOT Analysis of the Apple’s iPhone Strengths Innovative The iPhone has an excellent touch screen that is unmatched by other competitors in the market. The phone has much other functionality integrated in one device. Compatibility The phone will appropriately work with iTunes as well as other Apple or Mac products such as the new Apple TV that necessitates wireless connectivity. The iPhone also has high compatibility with many Mac OS software tools. The compatibility ensures unlimited potential for iPhone upgradeability. Easy to use The brand new touch screen interface makes iPhone operations extremely amazing. It is very different from those of other PDAs or othr phones that recognise finger gestures. The application known as Mac OS X imbedded into the gadget assures consumers of easy recognition of what they can undertake. Brand awareness Apple Company has been known for making cool beneficial gadgets such as the iPods and other great technological innovations like Macintosh. Price Pricing pegged at about $350, the gadget would therefore be sold at a fair price for its value. It performance outweighs any other smart phone or PDA on the market in addition to convenience of multiple features in one device. Quality The iPhone has been considered to have one of the best scratch resistant and brightest screens offered in mobile telephone market. It has a very fine metallic casing that is light and durable. The software suite that is included in the gadget is also unrivaled owing to their resistance to viruses and ease of operation. Weaknesses Image The iPhone is not specifically made to target businessmen that most of the makers of smart phone targets. It therefore has no reputation as a gadget for the corporate world. Price The company still does not offer lower priced iPhone models for the low end customers. Opportunities Increasing expansion and demand to new market segments Apple should continue to focus on productivity marketing that meets all in one solutions of computing. As technology is advancing and pricing of smart phones going down due to competition, Apple should size the opportunity to reach for population yearning for entertainment. Apple can attract such consumers by getting iPod users upgrading to iPhones (Grant, 1991). Upgradeable Since iPhone software can be updated, it enables bringing of new exciting features that take advantage of the magnificent ability of the touch screen. Future versions of the phones are expected to be hardware upgradeable. Partnerships Apple can adequately enter into partnerships with many other reputable global mobile phone makers to make quality iPhones for different market segments thus reducing marketing costs and increase the revenue base through long-term business agreement deals. Threats Increased competition Smart phones are becoming easy to make unlike before. More companies, especially from Asia are entering the market with cheaper versions. Competitors and Apple franchises can maneuver around patents and create devices of the same nature. Price reduction pressure Currently iPhone are still marketed to target a certain clientele, which is expected to go down when other companies come with cheaper models. Difficulty in gaining foothold in Asian market There is no big interest in entering the Asian market since they have already started manufacturing cheaper versions that are more pocket friendly as opposed to iPhones from Apple. Apple’s marketing strategy Objectives The most significant objective is to extend the Apple link and brand name to some of the established vital positioning. The Company is investing a lot on the iPod brand and it is expected that it will capitalize on the same in marketing the iPhone. It is the aim of the company to extend on Apple’s innovation image, value and quality. It is the expectation of the company to measure the awareness as well as response so as to make necessary marketing adjustments (Kotler, 2002). The company therefore has set the following achievable objectives for the first two years of operations in the European market: In the first year, the company aims for a 2 percent share of the EU market through sales volume of about 700,000U. The second-year is to achieve about 10 percent market share based on volume of sales. Target markets The marketing strategy of iPhone’s is to clearly differentiate its iPhone from other PDA’s retailing in the market. One of the key customers being targeted by the brand is the middle-upper income European professional that arguably requires more than one portable gadget to manage their busy communication schedules with clients and others. The secondary customer targets are young people in high school and colleges who need more than one portable device with many applications. It is expected that this market segment will conveniently replace their cell phones and iPods with the iPhones (Day, 1994). The main business target of the company is to enter into partnerships with large and established mobile phone service providers as well as large software companies where information is deemed critical to the customers. As mentioned by Anderson (1982), secondary business target comprises of mid-to mid-size business corporations that are eager to help employees and management to have efficient communication by accessing important data as they move. The market segment is expected to consist of firms with annual sales of about $10-$50 million. These are generally small firms and entrepreneurs who need an inclusive communication device for business and leisure (Leppäniemi, 2008). Marketing positioning Using the concept of product differentiation, Apple is positioning in the market iPhone as the most convenient, versatile and value-added communication device for either professional or personal use. The iPhone marketing strategy will principally lay focus on the need and convenience of carrying around a single communication device with multiple functionalities such as pictures, music, video, and unlimited access to the Internet (iphone marketing plan, 2011). Product strategies The Company will make the device have a full one year warranty in addition an optional three-year of Apple customer care warranty. The iPhone will therefore be packaged in a tasteful manner as all other Apple products. The company will introduce some special editions iPhone such as the iPhone Beatles Edition that marks the 40th anniversary of Sergeant Pepper. As mentioned by Karjaluoto and Leppäniemi (2005), the company also expects to start selling cheaper less advanced iPhone with more advanced versions designed for professionals use with the following additional values: Relatively larger and removable storage device that will offer support for external hard drives, USB memory sticks, and digital camera memory cards. Lower in weight and slim to be able to fit into a pocket wallet and also act as a wallet with credit or debut cards features. Longer battery life to enable consumers to play music and movies for a relatively longer period. The battery will have mechanisms for easy replacement. Installation of 4G wirelesses to make the device faster in terms of speed than ever experienced on a device of that nature. This expected to offer a clear lead in regard to competition. Inclusion of GPS functionality to achieve precision in information location. It will be linked to certain software to add more functionality. Adoption of a technique referred to as peer to peer wireless exchange, which makes it easy for pictures and music sharing. Improved camera to take high quality and detailed pictures for functions such as video conferencing. Pricing of the iPhones The Company expects to set the base model 4 GB at relatively lower price of $350 dollars and larger models of 8 GB will be priced at $400. The special limited edition of Beatles iPhones will also find their way into the market once rolled out. Since they are premium versions of the device the packaging will be deluxe with preloaded catalog of re-organised Beatles iTunes. In Relation to advice by Hambrick and Fredrickson (2001) for market entry operations, the company will also lower the prices to ensure that it gets market dominance within a very short time. Financial prognosis for the first year According to Apple iphone marketing strategy (2011), the first year revenue of sales is expected to average $2.5 billion. Wholesale price for single unit is to be $520 per unit with a variable cost of about $200. Total volume of sales is to be 10 million. Fixed cost will be pegged at $50 million and the break-even of sales at about 250,000 units. The break-even analysis is in assumption of wholesale revenue of about $510 per unit with a variable cost of $200 per unit and an estimated $50 million fixed cost. Based on the financial assumptions the break-even calculation is achieved by the following formula; $50 million divided by $510 minus $250 equals 250,000 units sold. The break-even calculations therefore clearly indicate that the Company will achieve profitability when the volume of sales is in excess of 200,000. It is expected that after the first business year the Company will be able to make a profit of about 1.20 billion less the 50 million as a result of fixed costs. The recommended retail price for the iPhones will be $350, thus a markup of about 40 percent. It is predicted that the volume of sales will remarkably shoot up to about 60 percent which is expected to minimise the effect of Apple’s fixed costs and consequently improve opportunities of increasing scale of production thus in the long run contributing to profitability. Conclusion The Company is aiming at massive rollout of its products in Europe to encompass reputable major retailers both online and physical along with mobile phone providers. As discussed by Teece, Pisano and Shuen (1996), eye catching displays both online and at physical stores will feature iPhone so as to make the product uniquely stand out from the rest. References Anderson, Paul F. (1982), ‘Marketing, strategic planning and the theory of the firm’, Journal of Marketing, 46 (Spring), 15–26. Day, George (1994), ‘The capabilities of market-driven organizations’, Journal of Marketing, 58(October), 37–52. Grant, Robert M. (1991), ‘The resource-based theory of competitive advantage: implications for strategy formulation’, California Management Review, Spring, 118. Hambrick, D.C. & Fredrickson, J.W. (2001), ‘Are you sure you have a strategy?’, Academy of Management Executive, 15 (4), 48–59. Karjaluoto, H & Leppäniemi, M, (2005). “Factors influencing consumers’ willingness to accept mobile advertising: a conceptual model”, Int. J Mobile Communications, Vol 3, No. 3, p. 198. Leppäniemi, M (2008), “Mobile marketing communications in consumer markets”, Faculty of Economics and Business Administration, Department of Marketing, University of Oulu, p. 21. iphone marketing plan. Retrieved on 04 October 2011 from Read More