Marketing Strategies for Apple Inc - Case Study Example

Running Head: Strategic Marketing Plan Name Student number Name of the unit Unit coordinator Word count: 1839 Table of Contents Table of Contents 2 Executive Summary 3 Introduction 4 Relevance of the mission 4 SMART objectives 5 Hierarchy of strategies 5 Industry’s five competitive forces 6 Entry Barriers 6 Supplier Power 6 Buyer Power 7 Threat of Substitutes 7 Rivalry 7 Market and industry attractiveness 8 Relevance of marketing research 9 Significance of the overall segmentation, targeting, differentiation and positioning strategies 10 Conclusion 10 References 12 Executive Summary The iPhone belongs to the smartphones’ family that is produced and sold by Apple Inc and performs several functions including email, social networking, playing games and video shooting, among others. The main purpose of this strategic marketing plan is to increase the awareness of customers regarding the functions of an iPhone, with the aim of increasing sales and market share and extending brand name and image. This plan will provide the business’ SMART objectives and hierarchy of strategies in relation to the marketing of the iPhone. The strategic marketing plan will also present an analysis of the smartphones’ industry based on Porter’s five forces, as well as macro and micro level analyses to asses the industry’s attractiveness. Moreover, it will discuss the relevance of marketing research to the business’ marketing decisions. Lastly, it will talk about the significance of the overall segmentation, targeting, positioning and differentiation strategies to the business. Introduction The iPhone denotes a series of smartphones that are manufactured and promoted by Apple Inc. They initially used to run the iPhone operating system, but currently use iPhone operating system 4, which was released in June 2010. The first series of the iPhone was launched in 2007, while the latest iPhone 5 was released in September 2012. An iPhone can perform a number of functions including shooting video, taking photos, sending and receiving emails, playing music, sending texts, playing games, social networking and GPS Navigation. In other words, it combines the services of a cell phone, internet and email with a video and music player, which increases its usability. As the functions, soft-ware system and speed keep on upgrading, the growth of iPhone globally is rapid (Kubasiak, Varsalone, & Morrissey, 2009). This paper will provide a strategic marketing plan for an iPhone. Relevance of the mission Blokdijk (2008) maintains that, the promotion of iPhones had really changed the way mobile phones ought to be made, as well as set a yardstick for other types of mobile phones to trail. The mission of the marketing plan is to create more awareness of the iPhone among customers, especially in relation to its functions. Despite the rapid growth of the iPhone across the globe, there are many people who still do not know how to use an iPhone, or the services that an iPhone can offer over the ordinary mobile phones. The mission of the strategic marketing plan is crucial in the marketing of the iPhone, since increased awareness will open opportunities for drawing new customers. SMART objectives The strategic marketing plan for the iPhone consists of a number of objectives. To start with, the plan aims at increasing the current iPhone market share in the Australian smartphones’ industry by 5 percent in the next twelve months. In addition, the plan intends to attain a 15 percent increase in the sales of iPhones in the coming two years. Another objective of the plan is to extend the brand name of the business, as well as its image regarding quality, value and innovation, which are all engraved in the latest series of the iPhone. The current strategic marketing plan is also intended to assess the current awareness of the iPhone and customers’ responses so as to make the necessary adjustments in future marketing campaigns for the product. Hierarchy of strategies According to Saee (2007), strategies for organizations that deal in various products or services fall under three main groups including corporate, business and functional strategies. Corporate strategy revolves around an organization’s scope along with its deployment of resources. Business-level strategy focuses on the continuous competitive advantage of an organization. Function-level strategy relates to how a firm accomplishes its objectives in a given product market. Under corporate strategy, the business has in place adequate financial and human resources for effectively executing the strategic marketing plan. At the business level, provision of high quality services to customers will form the business’ basis of differentiation, which in turn will present it with a competitive advantage. The business will attain the above SMART objectives by ensuring sufficient deployment of resources. Industry’s five competitive forces The iPhone will compete in the smartphones’ industry. Porter (1980) explained the five forces that influence an industry’s operations and which are entry barriers, supplier power, buyer power, threat of substitutes and rivalry. Entry Barriers According to Song (2010), barriers to enter the smartphones’ industry are so many. First, firms require huge capital for manufacturing and R&D to participate in the industry. There is also a constant pressure to innovate and introduce new products. Additionally, there is a high fixed cost and thus firms have to achieve economies of scale in order to augment profit margins. In terms of distribution channel, smartphones are retailed through mobile operators who exert additional bargaining power. Collaboration with operators of mobile phones is a vital aspect for a firm to succeed in the smartphones’ industry. Furthermore, all top players including Apple, Samsung and RIM, are competing fiercely to augment their market share, thus there is an intense retaliation against new entrants. Supplier Power In general, the supplier power in the smartphones’ industry is low. In terms of software, there are numerous open sources, providers of mobile operating systems, alternatives are plenty and thus, software providers’ bargaining power is low. Moreover, there are many suppliers of hardware components, such as Intel, TI and Qualcomm, and thus, hardware providers’ bargaining power is low (Song, 2010). Buyer Power The bargaining power of buyers in the smartphones’ industry is high due to a number of reasons. First, there are many varieties of smartphones that have limited differentiation, and which serve similar purposes. In addition, the demand for smartphones is very sensitive to economic conditions; hence buyers may delay purchasing new models. There is less asymmetric information in the industry since buyers can access the information they require. Moreover, switching costs are low, but vary with region and the kind of mobile plans offered to buyers by service providers (Song, 2010). Threat of Substitutes Song (2010) maintains that, the smartphones industry has a moderate threat of substitutes, which is actually dependent on the effect of the substitute products. Smartphones do a wide array of functions, thus any product that does one of smartphones’ individual functions, such as mobile phones, may be considered a substitute. Other substitute products for iPhones include notebooks, tablet PCs and PDAs. Rivalry There is intense rivalry in the industry among the existing participants. Although there is no much differentiation regarding product features, participants distinguish their products on the basis of services as well as applications offered. Exit barriers ought to be assessed in relation to value chain analysis. The barriers are less for manufacturers who occupy a small portion of the chain compared to those who occupy a bigger part of the chain (Song, 2010). Drawing from Isoherranen & Kess (2011), a prospector strategy usually encompasses active methods to exploit new markets, as well as stimulate new business opportunities. A defender strategy involves establishing and upholding a relatively stable and secure market. Analyzers are at the middle of prospector and defender. They are less devoted to stability compared to defenders but, make fewer mistakes and assume less risk compared to a prospector. A reactor does not have a proactive strategy; usually respond to incidents as they happen, and only when pressures in the macro environment force them (Bamford & West, 2010). The conditions for attaining a strategic fit of analyser/defender/ prospector/reactor strategies include intense product differentiation, continuous innovation and numerous suppliers for software and hardware. Other conditions include targeting a niche market that is less sensitive to economic conditions and introducing new functions for the iPhone that cannot be easily substituted. Market and industry attractiveness A macro and micro level analysis of the industry and market for iPhones reveals the strengths, weaknesses, opportunities and threats in the internal and external environment. In terms of strengths, iPhone is a strong brand name which stems from the reputation of its manufacturer, Apple Inc. This presents the business with a competitive advantage. The ability of an iPhone to perform numerous functions constitutes an additional strength. The main weakness on the part of the business is that, some of the functions performed by an iPhone can be substituted by notebooks, tablets, mobile phones and PDAs. Hence, customers can easily be lured into buying the substitutes especially those who are price-sensitive (Carew & Virki, 2012). Accordingly, intense marketing to enhance awareness on the usability of the iPhone will be necessary. Due to changing lifestyles and technology, current professionals and even students prefer a gadget that can cater for all their needs, such as email, social networking, video and music playing and texting, among others. This presents the business with a great opportunity to market its iPhone to this niche market. On the contrary, competition is very stiff in the smartphones’ industry, which poses a big threat to the business. Moreover, technology keeps on changing hence, the iPhone’s operating system is at risk of becoming obsolete (Mourdoukoutas, 2013). To address these threats, the business needs to ensure constant innovation to avoid obsolescence and intense differentiation to beat competition. Relevance of marketing research According to Bradley (2007), marketing research refers to the process that connects the marketer to consumer through information. The information is used to spot and define problems and opportunities in the market, assess marketing actions and check market performance. In the business’ strategic decision-making, marketing research is relevant in that it will provide management with accurate, valid, current and reliable information. Such information will guide decisions regarding selection of target market, potential opportunities, market segmentation, formulating and executing marketing programs, performance of marketing and control. Product, distribution, promotion and pricing policies will influence marketing decisions in several ways. First, product policies will direct the kind of product and its corresponding features to present to the customers. Additionally, distribution policies will influence the channels to be used to avail the product to the customer. Pricing policies will establish how much to sell the product and the objective of setting that price. Lastly, promotion policies will define the ideal ways of making the customer aware of the business’ product (Ferrell & Hartline, 2013). Significance of the overall segmentation, targeting, differentiation and positioning strategies The overall segmentation, differentiation, targeting and positioning strategies will be very beneficial to the business. Segmentation will help the business to divide the iPhone market into different groups of customers with different characteristics, behaviours or needs for easy selection of the group to focus on (Armstrong et al., 2012). Moreover, targeting will direct the business in choosing the most attractive segment for marketing its iPhone, whose needs can be effectively met by the iPhone’s various functions. Rivalry in the iPhone market is a bit stiff and thus, differentiation strategies constitute the ideal way for the business to survive the competition. Whatever basis of differentiation that the business chooses, it is essential since it will give it a competitive advantage. Lastly, positioning will help the firm to maintain its current customers and attract new ones by giving them a concrete reason why they should buy from it, and not from its competitors (Armstrong et al., 2012). Conclusion The business’ mission is to increase awareness about the uses of an iPhone, while its objectives include increasing market share and sales, extending brand name and image and assessing the current awareness. Based on Michael Porter’s five forces industry analysis of the smartphones’ industry, entry barriers are high, supply power is low, buyer power is high, threat of substitutes is moderate and rivalry is intense. The industry and market is attractive since it presents the business with a new opportunity for marketing its product, but technology changes and competition pose a threat to the business. Marketing research is relevant in marketing decisions because it provides the required information to the management. Generally, segmentation, targeting, positioning and differentiation will guide the business in choosing the group of customers to aim at effectively satisfying their needs. References Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2012). 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Competitive strategy. New York: The free press. Saee, J. (2007). Contemporary Corporate Strategy: Global Perspectives. London: Routledge. Song, H.-C. (2010). Analysis of the global smartphone market and the strategies of its major players. Retrieved July 25, 2013, from http://jgbc.fiu.edu/index.php?journal=JGBC&page=article&op=viewFile&path[]=36&path[]=12 Read More