Huge Amount of Buzz around the Launch of the iPhone - Essay Example

Marketing the iPhone: Case Study What, according to you, was the reason for such a huge amount of buzz being generated around the launch of iPhoneDiscuss the advantages and disadvantages of the strategies adopted by Apple in launching iPhone Today we are living in a globalized world, with the producers and manufacturers chasing the customer and making all out efforts to convince him or her. If we take a look at the world around us, we can easily figure out the distinctive emphasis on marketing communication, public relations or advertising techniques in reaching out to the customer. Traditionally 4Ps were considered as cornerstone of any marketing activity. Product, price, place and promotion formed the marketing mix. While each component had its role in forming the marketing strategy, promotion essentially meant reaching out to the customer through advertising and media campaigns. The marketing campaign is in fact considered successful, if the company is able to create a genuine buzz around its product/s and able to raise the curiosity levels of the prospective customers. In today's world 'promotion' field has been further widened by renaming it as marketing communication. Such a communication now forms a crucial part of the managerial activities. Creating a buzz becomes all the more crucial if the company is coming out with a product for the first time, which is outside its core business. A renowned company known for its computer brands would certainly make sure that it doesn't end up with a deep dent in its reputation and huge financial losses after entering into a product category, where cut-throat competition keeps the reputed brands always on their toes. It is under these circumstances that Apple Inc. decided to create the buzz around the iPhone. It certainly goes to the credit of Apple Inc that it not only created a decent buzz around iPhone, but it also retained the faith of its millions of customers. It is worthwhile here to mention that the marketing communication strategy adopted by Apple Inc was unique in many ways. While on the surface it appeared to be a low key, the blogger community, the media, the corporate circles, the office going community, the college going students etc. kept debating and discussing 'what the iPhone could be like' While on the one hand Apple Inc. did not spend too much on its advertising campaigns, the company was also able to put on display a mature appearance. Apple, having entered in the mobile field in collaboration with Motorola, in the recent past had some experience of the stiff competition in the mobile world. With brand names like Nokia, Ericson, Motorola etc. tracking the moves of new entrants, Apple Inc. was bound to think about a campaign which goes well beyond the launch of just another phone from existing mobile phone makers. At the same time, managers at Apple were equally concerned about any loose ends, which might adversely impact its reputation and other established brands. Apple wanted to make sure that while the campaign doesn't look like too glittery and gaudy, yet the message reaches out to the common man. In addition, company also realized that people may not be ready to go for 'just another phone', because with the advent of powerful technologies like Wimax31 and HSOPA32 (High Speed OFDM Packet Access), the mobile phone is no more being used as a phone, instead it has become an important tool for entertainment and mobile computing in this convergence era. Therefore, Apple Inc. was bound to pack the iPhone with a host of feature, including some of the features of its own stronghold gadget iPod. Prior to the official launch of the iPhone, Apple came out with a teaser ad campaign that did not even mention the brand name. This ad campaign called 'Hello' was started during the Academy Awards. And the long queues before the iPhone stores, use of terms like 'Jesus Phone' for the iPhone are a testimony of the successful buzz around the launch. Advantages of such a strategy are; i. The company, while able to raise the curiosity levels around the product, is able to retain a halo around its brands. ii. The company is able to save lots of money which otherwise could've been spent on advertising in mainstream media. iii. The company was able to create the hype in such a manner that people in general started discussing about the features and facilities that might come with it. This helped the company as well in getting feel of people's expectations. iv. The campaign strategy can at best be termed as 'low key yet highly effective'. It provided the company some breathing space and in case of some adverse circumstances, the company could have postponed the launch date. Of course, the media would've been talking about the failure of the company in meeting the deadline, yet the feeling amongst general people would have been that 'their waiting time has just gone bit longer'. v. Apple had to make sure that the buzz created around the iPhone not only remains till the launch of the product, but it also remains for a longer time in order to translate the buzz into sales. The low key buzz provided ample time and opportunity to the company to keep working on its launch while packing the phone with features and finalizing the pricing strategies for prospective markets. vi. By adopting such a strategy, Apple Inc. certainly 'did not allow the advertising get in the way of the product'. Company was fully aware that they are coming out with an innovative concept and product and what they required is to generate a healthy buzz around it. But, at the same time, in today's media driven society, there were a number of disadvantages associated with such a strategy. i. After creating such a buzz around a product, it becomes a challenging task for the company to match the hype with the performance. This aspect becomes all the more crucial because in the recent past, Apple Inc. had a brush with Motorola's Rockr, which cannot be termed as a successful experience by any standards. ii. Apple's forte is computers and computing gadgets. Of course, with the successful launch of iPod, company was also able to establish itself in the entertainment world, but the Mobile phone market was a totally new terrain for the company, and Apple intended to enter this terrain for the first time. It was therefore very risky for the company to put such high stakes for the first time product in a new category. iii. With such a buzz around the product, in these times of corporate rivalries, it could've provided an opportunity to another mobile major to counter the product and come out with its own variants. Though, the success or failure of such a move would've depended on a range of factors including the federal laws etc. but the risk was always there. iv. Though in these days, diversification in a number of product categories is not an unknown issue, but with such a hype around a non-core product category, the company also ran the risk of diverting the attention of its customers from its core products. The existing and prospective customers might have though that Apple is planning to abandon its core category business and entering into a new arena. 2. Prepare a note on what should be Apple's strategy for iPhone in Europe and Asia (except Japan), considering that Europe is a relatively mature market for mobile phones and Asia is largely an emerging market. Today's highly competitive world, with maximum attention being paid towards satisfying the customer needs and maintaining quality standards has helped in making the corporate environment more consumer centric than ever before. Kotler (1974) termed marketing as a set of human activities directed at facilitating and consummating exchanges. While on the one hand the competition helps the consumer in getting worth of the spending, and consumer has a range of alternatives to chose from, companies too have come out with innovative ideas to reach out to the consumer with their products and brands. Therefore Apple to needs to prepare strategies to attract customers not only in the European region, but in the other parts of the world as well. Indeed Apple need to prepare different strategies for Europe and the vast Asian market dominated by billions of Chinese and Indian consumers. Having created a buzz around the iPhone and sold over 1,389,000 units in just about three months of its launch, Apple has established itself as a potential contender for tapping the mobile phone market as well. With reach of internet and electronic media in homes around the remotest corners of the world, the buzz and following reports have certainly reached all continents of the world. Europe being the home continent, Apple had the home advantage and could easily assess the needs and paying capacities of the mobile users. Therefore, the company must adopt two pronged strategies for Europe and Asia. Though Japan is also a part of the Asian continent, but it could be termed as a relatively mature market. In any case, the number of consumer's in China and India far outnumber those in Japan. But the strategies need to differ depending upon the marketing communication as well as pricing strategies. For Europe, The per capita income in most of the European nations is at decent levels; therefore the paying capacity of prospective customers of iPhone is this part of the world quite high. Moreover, it is observed that the European customer wont' mind going for a change of the mobile handset, when it finds the new set packed with more features and handy. The European customer may not feel distinctively attached to his/ her 'old set'. The pre-launch advertising campaign of the iPhone took place with an eye on the European market and most of the models appearing for the buzz creating advertisements too were from European region only. Therefore, Apple did not have to think of an alternative strategy in the aftermath of the launch, but in case of the Asian region market, the company will have to think out of the box and prepare a new set of strategies. By all accounts Apple has set for itself an ambitious sales target of 10 million iPhone units by the end of year 2008. The strategy adopted so far appears to have paid off as Apple has reported in the fourth quarterly results of the year that so far the company has already sold 6.9 million iPhones1. It is quite clear that the pricing strategy in Europe and other developed countries has paid off quite well. Apple priced the two variants at US$499 for 4GB and US$599 for 8GB. But the loyal customers did not let the company down, and lapped up the phone. This segment has shown that they are least bothered about the prices, what they want is a latest power packed gadget, with a renowned brand. For Asian Region Impressive GDP growth, improvement in economic indicators, increasing income levels of an average Asian are some of the factors determining the consumer habits in this part of the world. China and India are the two driving elements of the consumerism race for a range of products. With MNCs queuing up to enter this market, the level of competition in this region is on the higher side. But at the same time what needs to be emphasized here is that the per capita income levels in these countries may not be at par with those prevailing in the European region. But with the IT revolution and this region becoming the hub of outsourcing and IT enabled services, the average earning potential of the youth in this region has considerably gone up. Countries like India, China, Philippines, Malaysia, Thailand, Singapore etc. have become the hub of IT enabled services at far lower costs. This has added to the prosperity of the region. But even then, the market is quite 'price sensitive'. Having its presence in the field of computers and iPods in these markets will certainly help the company in convincing the customers. The mobile phone market in the Asian subcontinent is dotted mainly with international brands. Many of the brands have tied up with local telecom operators and offer packaged deal to customers, which includes talk time together with handsets. This helps the customers in going for the branded mobile phone sets. Therefore while planning the pricing strategy for the potential markets in the Asian subcontinent, Apple will have to enter into strategic alliances with the telecom operators or other related companies. In addition, Apple will have to make sure that it should not price the iPhone at the levels it has done in the mature markets. No doubt, it being a premium product, Apple can very well think of placing it in the premium category to fulfill the prestige needs of the some of the premium customers. But, with the mobile technology changing so fast, and reputed brands already trying to come out with instruments having features better than the iPhone. Samsung has already come out2 with 'Omnia' a new product in the category, where the touch screen variant might give tough competition to iPhone, particularly in the Asian subcontinents, because Samsung already has in impressive presence in the Asian region and its pricing strategy too appears quite impressive for the price sensitive markets. It is therefore amply clear that in order to get into the hearts of millions or billions of customers in the Asian region, Apple will have to adopt penetrative pricing strategy. One very aspect, which needs to be taken care of is, the usage of the iPhone. It is a feature packed mobile instrument. But there must be the availability of 3G spectrum in areas where iPhone is being released. It will be an exaggeration to say that a customer will buy a product just because it comes out of Apple Inc or just because it is a hot property in Europe. The customer must be able to use the main features of the iPhone for him or her to get attracted to the phone. Conclusion Taking a look at the marketing communication strategy adopted by Apple Inc and the performance of iPhone, it can be said for sure that Apple has been able to make fullest use of its USP i.e. delighting its customers with innovative gadgets. In these times of completion, when companies try to drum beat about their forthcoming product at every available opportunity, Apple tried to maintain a studied silence about the features and launch of iPhone. This seems to have gone down well with the customers and the company has been able to do well in the developed markets. But, Apple needs to be extra cautious, as far launching its products in developing markets are concerned. while everyone might be awed by the performance of the iPhone, not having adequate spare money in their pockets will hinder their plans for purchasing a highly priced gadget. Therefore, Apple needs to accord high priority to pricing strategies in this part of the world. References: 1. Apple Inc. (2008). Available online at http://www.apple.com/ (December 17, 2008) 2. Kotler, Phillip (1974). Marketing Management: Analysis, Planning and Control. Prentice Hall, NY. 3. Samsung (2008). Samsung Mobile. Available online at http://omnia.samsungmobile.com/ (Dec 17, 2008) Read More