The New Apple I-Pod Nano - Case Study Example

Introduction Apple Computer Inc. has already sold 22 million iPods since 2001 (11 million units in just the first six months of 2005), thus capturing75 percent of the overall portable digital audio player market. There were a few surprise reactions when Apple announced that it would replace its existing Mini with a new iPod Nano. The move, aimed at maintaining its leadership stance, was nevertheless, backed by some great engineering and promotional feats. While the new product is a wonder of technology (it’s 1/3 the size of the Mini and weighs only 1.5 ounces), it has also been accompanied by one of the biggest promotional campaigns of all times. From its high-flung launch by Steve Jobs at the Apple headquarters in Cupertino, Calif., (where Madonna too appeared on a live video-link from London to converse with the audience) to the massive Billboards highlighting the sleek and trendy new product – everything synced well to create an image of the product that goes beyond a music player. Apple’s endeavor to make the customers emotionally relate to iPod Nano apparently seems to be paying off - the reaction induced among the customers is almost hysteric – as can be seen from the frequent sell-outs of the product at almost all the stores. The following pages will present a comprehensive analysis of Apple’s Promotional Activities vis-à-vis iPod Nano, and analyze their effectiveness as far as the communication and marketing objectives are concerned. The findings of a consumer research, conducted by the author, are also presented to elaborate the above points. Pro-forma A Purpose of Promotional Activity Name of Company  Apple Computer Inc. Name/ description of promoted Product/ Service Apple iPod Nano: This is a portable music player from Apple, and will replace the iPod Mini. It is one-third the size of the Mini, weighs only 1.5 ounces and comes in 2 models – 4GB and 2-GB. The 4-GB model, which holds up to 1,000 songs, is priced at £179, and the 2-GB version that holds 500 songs is priced at £ 139. The Nanos LCD screen is slightly smaller than the Minis screen, but because it displays color, the Nano can show CD album covers. The Nanos also store a digital photo collection (up to 25,000 pictures in the 4-GB model). Is this a new or existing product/ service?  iPod Nano will be replacing the iPod Mini What are the key product and or service attributes?   iPod Nano is being marketed as a sleek, hip and trendy offering that also gives the best performance. Its key product features include a very small size (3.5" x 1.6" x 0.27" and 1.5 ounces), and the storage capacity of 500 to 1,000 songs. Its attractive features include a Click Wheel for browsing and using the menu; iPod Nano’s sync with iTunes, and the provision of adding present and future accessories to iPod nano via the Dock connector. Type of Marketing communications tool used (may be more than one) The organization is using a mix of promotional activities including ads in diverse medias like TV, Billboards, Magazines and Newspapers. The launching of the product was done at Apple headquarters in Cupertino, Calif., in a big way. Steve Jobs addressed an audience that included Al Gore, Yo Yo Ma and Kanye West -- Jobs asked, "You ever wondered what this pocket is for? Well, now we know." And he slipped the iPod Nano out of his Jeans’ change-pocket. Simultaneously, the day the device hit the streets, the old iPod ads were switched with the new ones. In place of the cartoonish, multi-colored billboards touting the iPod shuffle, there was a new, sleeker ad campaign. From: http://www.variety.com/article/VR1117929136?categoryid=1979&cs=1 The billboards and magazines including Entertainment Weekly, MacWorld, Wired, and Newsweek, were flooded with new, silhouetted ads of people on bright backgrounds using their iPod. (Appendix C, and Appendix D) Evangelistic customers George Masters (a school teacher) responded by making a homemade ad for iPod Nano. Masters 60-second animated ad features flying iPods, pulsing hearts and swirling 70s psychedelia and is set to the beat of "Tiny Machine" by 80s pop band, Darling Buds. (See Appendix E) From: http://www.ipodhacks.com/article.php?sid=1675 Apples Website holds an elaborate illustration for iPod Nano accompanied by its Tag line “Impossibly Small, 1000 Songs” See: http://www.apple.com/ipodnano/   Key message of promotion   Evidence  The key message as derived from the ads and other promotional activities appears that Apple is targeting at an Emotional Positioning of the iPod Nano. The highlight is the oomph factor - owning an iPod Nano is the trendy or the done-thing! The focus being on the appearance (extremely thin and attractive) is to direct attention towards the feel-good factor, or give the owner a feeling of being very up-to-date with the latest available toys. Too much emphasis is not placed on rational positioning of the product – it says nothing about being competitively priced, and very less about the product features (since it has no photo pan or zoom, and no FM tuner or voice recording.) The message is simple and clear – you got to own it or you are obsolete!   Media Chosen (may be more than one)    TV, Internet (company’s website as well as homemade ads), billboards, magazine ads. Assumed Customer segment(s) addressed   Evidence The price (£139-£179) and the market positioning (hip, trendy) point out that the targeted market is made up of people who have sufficient amounts of disposable income, are young, are interested in spending on latest technological innovations, and who consider themselves as youthful, energetic and having a taste for good things in life. As the promotional activities are making the iPod Nano appear like a Lifestyle Product, the potential customer will be someone who has a disposable income and is interested in affecting a good life.   Pro-forma B Effectiveness of promotional activity Assumed required Marcoms outcome (summary from form A) The outcomes from the communication strategy employed were highly positive – the product was seen as a lifestyle accessory, a statement of the owner’s attitude. Assumed required Marketing outcome (summary from form A) The sales data indicate that the Marketing outcome too was successful - people, both the first time users and those switching over from other brands, were buying the new offering. Type of research undertaken (brief description)  (A) The research undertaken was of quantitative type, with the survey instrument having both open-end and multiple-choice items. The sample was drawn from the population of California county, and included 160 respondents from different age and income groups. The data collected through the instrument was consolidated into tables and analyzed using graphs and charts. (B) A literature review was also done to approach the issue from a different perspective. The trend in sales, consumer testimonials and competitor’s responses and sales were analyzed to see the performance of the product.     Purpose of research The Consumer Research was conducted to evaluate the effectiveness of the promotion activities per se, and also to analyze if the communication objective and the Marketing objectives are being achieved due to the promotional activities. A minor concern was to evaluate the individual components of the promotional plan (that included TV ads, Magazine Ads, Billboards etc.) and to establish which activity is making more impact. The Literature Survey was conducted to get a wider perspective on the issue. To collect information on sales, customers’ testimonials, and to get the opinion of Market Research firms about the promotional activities and their impact.   Conclusions drawn from research       (A) The consumer research concluded that the communication objective (that is iPod Nano is a lifestyle product, and that its sexy, sleek image could rub-off on to the owner) was successfully put across through the promotional activities, especially the TV ads. (B) The literature review was also done to assess the trend in sales and consumer testimonials, to see the performance of the product. The literature survey also pointed out that the hype created by the promotional activities was being translated into Marketing Objectives – sales. (A) The highlights from the Consumer Research are listed below: (Also, see Appendix A) 1. The survey revealed that an overwhelming 87.5 % of the 160 respondents thought that iPod Nano was sexy and cool. (Appendix A, Question No. 7; Appendix B, Table 1a and Fig 1b). 2. Majority Of the respondents had seen the TV ad, followed by Billboard ads. (Appendix A, Question No. 6; Appendix B Table 2a, Fig 2b). 3. The Respondents Rated iPod Nano as the most sleek and sexy model and also best Value-For-Money option, while Sony’s NW-E507 was rated as having better quality and easy to handle. (Appendix A Question No. 8; Appendix B Table 3a). 4. 65% of those interviewed were planning to buy the new product (Appendix A Question No. 9; Appendix B, Table 4a). 5. Of those who displayed purchasing intent, 54.80 % were in the ages of between 15 and 35 years, and had a monthly income of over £1500. They also owned more than three technology related products. (Appendix B, Fig 5a and 5b). (B) 1. According to the research company Terapeak (Terapeak was started by a couple of eBay sellers for making research data available to the users), in the month of December alone over $3.6 million worth of iPod Nanos were sold on eBay. (http://www.nonstopmac.com/2006/01/ebay_statistics_on_ipod_nano_s.htm) 2. The promotional activities for iPod Nano inspired school teacher George Masters to develop a homemade ad for Apple Computers iPod Nano. This ad has already been watched more than 37,000 times, and is constantly being brought up over blogs and e-mail. (You can watch George Masters homemade iPod ad here.) 3. Gene Munster (Analysts with Piper Jaffray Co.) thinks that iPod Nano will be an even bigger hit than the Mini. A reported survey by Piper Jaffray of 20 Apple retail stores in the week after the launch, stated that the surveyors did not find one single store that had the black 4-GB Nano in stock. They also said that one store had sold out all its stock of black iPod Nano within the first three hours, and of the white 4-GB version within a day. http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/09/19/BUGBPEO73N1.DTL&feed=rss.news 4. “Apples black iPod Nano with 2 gigabytes of storage was the sixth best-selling electronic gadget on Amazon.coms list of most popular items, which is updated hourly. The white version was No. 10 on the list.” http://msnbc.msn.com/id/10217090/from/RL.5/     Post research review         As the sample was selected only in California, and only people in schools/colleges and offices were asked, the research cannot be qualified as having a large scope. Product features were not stressed upon; instead the research was focused upon eliciting the perception of iPod Nano created in the minds of the consumers. A wider scope of the research could have been by increasing the sample size, and including questions regarding post-purchase satisfaction. Similarly, the literature review too focused on initial sales data, and the hype that was created by the promotional campaign. For a better perspective, some I\research can be done regarding the problems that could be associated with handling such a small product, and tapping the customers problems with it’s screen and other hardware problems.     Pro-forma C The impact on the Organisations Operations as a result of the promotional activity   Sales activities High Impact The sales data reveal that in the month of December alone over $3.6 million worth of iPod Nanos were sold on eBay, and it was among the top-selling electronic items on Amazon.com. Cupertino, California-based Apple store performed excellently on the Standard and Poor’s Index during the time. From: http://msnbc.msn.com/id/10217090/from/RL.5/ Such sales activity was made possible by keeping additional/shift staff at the stores, and invigorating them with incentives and pay-benefits. Accounts, billing and receivables Low Impact Some changes had to be made to the accounting system as the new product replaces an existing one. There is a change in price as well. Hence the accounting system had to be adequately updated. Customer/materials/information processing operation  Medium Impact For iPod Nano, as the product was targeted as a replacement of iPod Mini, it was expected that not only those who are buying the MP3 Player for the first time will come, but also the existing users of iPod Mini will like to update. To keep track of the buyers’ status (first time vs iPod Mini vs those switching over from competitor’s brands), Apple collected this information at the retail level. This info was consolidated and integrated with the sales data.   Procurement of goods/services and distribution of the same High Impact Traditional Distribution channels were employed for the sale of iPod Nano. However, the demand created due to the aggressive marketing and advertising played a heavy burden on the channels to keep up with the order requests.  Retail stock and stores management  High Impact The promotional activities and the consolidated PR efforts have ensured that the launch of the product is met by buying enthusiasm. The customer’s rush to be the first to own the iPod Nano made it impossible for the stores to keep up the stock for sales. Repeated and frantic re-ordering by retailers became a regular feature. Many late customers were disappointed to find the product out of stock. Extra staff had to be deployed to manage orders and keep track of order requests and the supply situation. Also, the staff had to be trained about the new product’s feature to assist the customers and also to handle their complaints. Recruitment of additional/temporary resources  High Impact Though iPod Nano will be sold through the existing business channels through the regular stores that keep other Apple products, the demand for the product required that the Apple stores employ additional staff to handle the order requests, and to update the stocking and availability data. Help-desks and help lines too were made operational to meet the customer queries. Design (for example; new product, new service, new process, new job) Medium Impact Apple had to maintain additional staff to coordinate the supply and demand between its various stores. Also, MIS was monitored more vigorously to tap the benefits of the promotional strategy. Order fulfilment Low Impact  The product is being sold through retail outlets, and it follows the same pattern of procurement – sales as other ipods. Thus there is little or no impact on the order fulfilment. Customer service support High Impact The iPod Nano comes with a universal adopter, the use of which is however a little difficult to comprehend. Apple counters this by saying that he adopter will provide compatibility with all future accessories. However, this is one point that the customers need constant clearance and reassurance. Apple had designed and packaged the product to facilitate easy assembly - but the adopter remains a bottleneck problem for the users. For this, the company’s website carries instructions on use, battery requirements etc. Also, additional and trained staff had to be used to disseminate information at the point of purchase. Help-desks and help-lines had to be set up to resolve hardware issues.   Analysis Apple’s decision to replace iPod Mini with the latest iPod Nano was grounded in a well thought-out strategy, especially at the marketing and the promotional level. The launch of the product received wall-to-wall press coverage, and was also available as a download from the homepage of the Apple Web site. A coordinated media buy made possible by OMD, Apple’s hired Ad Agency, resulted in a simultaneous replacement of the old iPod ads with the new ones. These new ads were positioning iPod Nano as a Lifestyle Product, a hip, sexy product the attributes of which could rub off on to the owner. The tagline states “1000 Songs, Impossibly Small” and the product too is so engineered that it appears appealing – in sleek black and white versions. The normal reaction sought is to evoke an emotional response, and a desire to own it. The Billboards and magazines including Entertainment Weekly, MacWorld, Wired, and Newsweek were flooded with new, silhouetted ads of people on bright backgrounds using their iPod. The focus was directed on the appearance (extremely thin and attractive) and aimed at giving the owner a feeling of being very up-to-date with the latest available toys. The consumer research undertaken by the author states that the promotional activities by Apple have been very effective in creating awareness about the product, in positioning it as a lifestyle product, and in generating purchasing intent. The Literature Survey too reveals that the promotional stance has resulted into consumer’s crave for possessing iPod Nano, not only because they need it for palying their music, but also because that’s the done thing! (See Pro-Forma B and Appendix B). The impact on the organization was two fold. On one hand the hype created for the product stressed the retailers and suppliers to their limits to keep up with the demand, while on the other, the technical aspects of the new products had to be supported with information dissemination and problem-solving. Customers’ problems with the adopter and the screen, their complaints regarding the delicate and easily scratch-able screen, and numerous other hardware glitches, had to be countered. All this placed tremendous pressure on the after sales activities of the company. However the sales are still rising, and it can be safely concluded that the Promotional Campaign has delivered for iPod Nano, with consumers going agog over its small size and sleek appearance. Conclusion The Emotional Positioning of iPod Nano was done using an integrated mix of promotional activities – TV Ads, Billboards, Website, Magazine Ads, Launch with much fanfare. Coupled with the attractive and user-friendly design, the strategy to place iPod Nano as a trendy lifestyle product did make a considerable impact on the psyche of the consumers. The Consumer Research as well as the Literature Review done for the present paper, have pointed towards the effectiveness of the Promotional Strategy undertaken by Apple. The heavy impact on supply and retail stock management and the need for providing technical support to the consumers, placed quite a burden on the organization – not that they are complaining! Apple is all set to make a hit with iPod Nano. Appendix A: Questionnaire to test the effectiveness of the Promotional Activities: 1. Age: a) 15 – 25 b) 25 – 35 c) 35-40 2. Monthly Household Income: a) £800-£1500 b) £1500-£2000 c) £2000-£3000 d) > £3000 3. Tick all those that you possess a) Computer b) laptop c) video games d) music system e) iPod f) mobile phone 4. Have you ever owned an iPod? a) Yes b) No 5. Are you aware of the new apple iPod Nano? a) Yes b) No 6. Please state where have you seen or read about iPod Nano. a) TV Ad b) Billboard c) Magazine d) Radio e) Website f) In-store Display/Banners 7. What do you remember from that ad? a) iPod Nano is incredibly small and hence sleek and sexy b) iPod Nano is just another portable music player from Apple c) iPod Nano is the best quality product currently available in the market. 8. Rate the following products on the given criteria iPod Nano Sony NW-E507 Creative Zen Nano Plus Sexy and Sleek appearance Quality Ease of handling Value For Money 9. Are you planning to buy an iPod Nano? a) Yes b) No Appendix B: Research Findings Sample Design: The respondents were selected on the basis of their monthly incomes and age groups, and the sample was so formed as to include equal representation from the following 4 age groups and Monthly incomes. Monthly Income/ Age Group 15-25 25-35 35-45 > 45 Total £800-£1500 10 10 10 10 40 £1500-£2000 10 10 10 10 40 £2000-£3000 10 10 10 10 40 £3000 10 10 10 10 40 Total 40 40 40 40 160 Research Findings 1. The survey revealed that an overwhelming 87.5 % of the 160 respondents thought that iPod Nano was sexy and cool. (Question No. 7. Appendix A ) Appendix B: Table 1a. Respondents Think That iPod Nano Is: No. Of Respondents - Incredibly small and hence sleek and sexy 140 - Just another portable music player from Apple 12 - The best quality product currently available in the market 08 Appendix A: Fig 1b. 2. Majority Of the respondents had seen the TV ad, followed by Billboard ads. (Appendix A, Question No. 6) Appendix B: Table 2a. Respondents Had Seen - No. Of Respondents * TV Ad 141 Billboard 138 Magazine 85 Radio 49 Website 50 In-store Display/Banners 100 * The Total will be more than 160, as these numbers greatly overlap; e.g., those who stated having seen the TV Ad also said they had seen Billboards and In-store Display/Banners etc. Almost all (157) reported that they were aware of iPod Nano and have seen it’s promotion in one place or another. Appendix B: Fig 2b. 3. The Respondents Rated iPod Nano as the most sleek and sexy model and also best Value-For-Money option, while Sony’s NW-E507 was rated as having better quality and easy to handle. (Appendix A, Question No. 8) Appendix B: Table 3a. iPod Nano Sony NW-E507 Creative Zen Nano Plus Sexy and Sleek appearance 129 19 12 Quality 45 95 20 Ease of handling 35 75 50 Value For Money 75 50 35 4. 65% of those interviewed were planning to buy the new product (Appendix A, Question No. 9) Appendix B: Table 4a. Monthly Income/ Age Group 15-25 25-35 35-45 > 45 Total £800-£1500 5 9 2 1 17 £1500-£2000 8 9 5 0 22 £2000-£3000 10 10 8 4 32 £3000 10 10 7 6 33 Total 33 38 22 11 104 5. Of those who displayed purchasing intent, 54.80 % were in the ages of between 15 and 35 years, and had a monthly income of over £1500. Appendix B: Fig 5a. Appendix B: Fig 5b. Appendix C: Billboard in San Francisco Appendix D 1: In MacWorld Magazine Appendix D2: In Wired Magazine Appendix E: Link to George Masters home-made ad: Watch George Masters homemade iPod ad. References 1. Variety.com, http://www.variety.com/article/VR1117929136?categoryid=1979&cs=1 2. iPod Hacks, viewed on 1-Feb-2006, at http://www.ipodhacks.com/article.php?sid=1675 3. Apple.com, at http://www.apple.com/ipodnano/ 4. NonStopMac.com, e-bay statistics on iPod Nano Sales, http://www.nonstopmac.com/2006/01/ebay_statistics_on_ipod_nano_s.htm 5. SFGate.com, Benny Evangelista, Chronicle Staff Writer on iPod Nano, at http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/09/19/BUGBPEO73N1.DTL&feed=rss.news 6. Apples iPod nano a holiday hit - Tech News & Reviews - MSNBC.com at http://msnbc.msn.com/id/10217090/from/RL.5/ Claim Number: 3383FAE Read More