Apple Inc Marketing Plan - Free Essay Example

Apple is involved in the design, development and marketing of personal computers (PC) and related software, peripherals, network solutions, portable digital music players, and associated accessories. The company’s portfolio of offerings comprises Mac computing systems, iPods, iPhones, and servers . The company’s software applications include Mac OS,iLife , iWork, and internet applications like Safari and QuickTime, among others. The company mainly operates in the US. It is head quartered in Cupertino, California and employs 32,000 employees. The blue colour in the below figure depicting the iPhone presence around the world. Figure: 1. 1 [pic] Source: https://upload. wikimedia. org/wikipedia/commons/thumb/a/a1/IPhone_3G_Availability. svg/800px-IPhone_3G_Availability. svg. png The objective of the assignment is to enhance my marketing plan concepts which I learned in the classroom with practical application of Apple iPhone marketing plan especially its market penetrati on in areas like U. S and India. Please see Appendix for company’s information. The objective of the assignment is: ? To critically analyse the marketing strategy of Apple iPhone. To assess the marketing plan and various factors like marketing audits, Marketing mix and different kinds of analysis with respect to the industry in the world of mobile market. ? To report PESTEL and SWOT analysis of Apple iPhone. ? To look deeply into the facts that made iPhone a huge success and also suggest some viable recommendations to help Apple iPhone to make further inroads in the mobile market. ? To discuss the failure of iPhone market penetration in Indian market and the steps for gaining market share in India. ? To discuss the mistakes made by Apple in marketing iPhone. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings. I en joyed quote from Tim Cook of Apple regarding Apples business philosophy, please find it in Appendix. Figure: 4. 1 [pic] Source: www. learnmarket. net This can be classified into Macro environment and Micro environment. 4. 1 Macro Environment Analysis: The macro environment is a set of forces that affect the company and have an impact on the purchasing power of the consumers. According to Jobber the constituents of macro environment that moves the industry are Political factors, Economic factors, Social/ cultural factors and Technological factors. The analysis of all these factors is determined by PEST analysis: Political Environment: †¢ Taxation is something that governments put and Apple should be study this as country by country case to forestall profitability, and pricing strategy. †¢ Importing laws in the world with GATT are in favor of trading environment. †¢ Countries are very variable in stability, so we should study each country case by case. Table 4. 1 |Factor |Impact with respect to iPhone | |Economic environment: |Far be it from Apple to let a pesky recession stand in the way of | |The economic environment depends on the purchasing power of the |a strong sales performance. On Apr. 22 the consumer electronics | |people in a country. As per Armstrong Kotler(2005), the |company reported earnings of $1. 21 billion, or $1. 3 a share, on | |spending patterns and purchasing power of the public play a vital|sales of $8. 16 billion in the fiscal second quarter. That bested | |role. The factors such as disposable income of the people, |the average forecast of analysts surveyed by Firstcall, who | |availability of credit to purchase, prices of the competing |expected Apple to report earnings of $1. 09 a share on sales of | |industries all have an impact in buying power. In case of a weak |$7. 96 billion. | |economy the sales is expected to come down. Results for the period that ended on Mar. 28 were bolstered by | | |sales of the iPhone, especially overseas, and a | | |better-than-forecast margin performance. Strength in Apples | | |handset and music player businesses offset declines in sales of | | |Macintosh computers. | |Sales was also affected by the disposable income of the consumers. | | |Like in U. S where disposable income is high consumers never | | |reluctant to pay 800 USD to buy a iPhone but in places like India | | |where disposable income is low were reluctant to pay 750 USD , so | | |sales were not so great in India. | |Economical growth world wide is in a big recession which need | | |careful manipulation. | | |Potentiality of the market is decreasing but it is higher than any| | |others in the Telecom sector. |Social/cultural environment: |Impact with respect to Apple iPhone: | |The Social/cultural environment comprises of things such as |Population growth leading to expansion of the sector needs for | |demography, consumerism and cultural forces. |cell phones. | |The demography determines things su ch as distribution in the |People depend more on mobile communication everywhere. | |market like younger generation, older generation the kind of |There is educational growth in the world. |families in a locality such as low income group, high income |Culture’s perception of the technological devices is positive | |group etc. The purchasing power varies according to the |worldwide. | |demography. For example the younger generation may wish to buy |Literacy illiteracy level is not affecting using cell phones but| |stylish items and goods are expected to move fast in areas near |affecting high technological cell phones, this fact needs to be | |the bus stand and railway stations. The cultural factors are |considered. | |connected with certain values, beliefs and norms that a |Acceptance of imported products in some countries are less if | |particular group of people follow which also impacts the sale of |there is local provider | |products. The consumerism is something conn ected with the |There are different social views that may affect product should be| |preference of consumers and the way to establish their rights. |considered (e. g. Boycotting American products in the Islamic | | |world) | | | | | | | | | | |Technological environment: |Impact with respect to Apple: | |For any industry to sustain the competition and keep itself up in|They have huge and extensive R D facilities whose main aim is to| |the market they should have strong R D facilities. This will |create innovative and latest products to meet up the growing | |help the companies to come up with new products and cope up with |customer demands around the world. They are investing more in | |the latest innovations. Technology update will help to improve |equipping themselves with sophisticated technologies and enhanced | |the efficiency and effectiveness of the firm and create a brand |testing capabilities. |value in a territory as well globally. |Level of technology in the world is inc reasing. | | |Internet level of awareness usage for individuals industrial | | |aspect are increasing worldwide | | |Fixed phone lines capacity and development attempts. | | |New technologies in the cell phones are increasing. | | |Future plans for echnological linkage between cities, | | |universities, colleges, hospitals and other institutes are | | |increasing and can be connected to cell phones | | |Level of usage of the E- Technology (online bidding, billing, | | |complaints, blogging etc) are high and trendy. | The Future – Apple plans on focusing on filling personal consumer demands rather than merely fulfilling a demographic requirement as well as, improving performance and stability rather than introducing new features when releasing new versions of any product of its product. Recently Apple has come up with one more tremendous product i. iPad with this it targets the left out market between phone and laptop. Ecological environment: †¢ The global concern of th e Global Warming issue other pollution effects regarding the packaging material and radiation of the cell phones . The demand of the international environmental approvals is a essential (if there is any). 4. 2 Micro Environment Analysis: According to Michael Porter the micro-environment is best described as the â€Å"structural determinants of the intensity of competition†. They are better known as five forces model of Porter. As per Porter and Jobber there are certain challenges in the micro-environment which an organisation has to see. Here the microenvironment analysis of Apple iPhone. Entry barriers: Apple not only had to face a number of barriers to entry in the development of the iPhone but they must also worry about potential competitors (Google, Microsoft) overcoming them as well. 1. Economies of Scale Apple already had pre-existing experience in manufacturing mass-market consumer electronics devices, many of which portion components of the iPhone; so Apple was no t adversely affected by this barrier. New entrants, however, may not have that luxury and the cell phone market is almost defined by its mass-market (which requires mass production and consumption) environment. 2. Product Differentiation Overall this attribute sides favourably for Apple (right now) because the iPhone is significantly different than its nearest competitors. Apple also has a certain amount of guard through the strength of its brand identity. But this product differentiation can be matched, to a certain degree. Cell phones, in general, are pretty uniform in functionality and use and thus not excessively differentiated between each other. 3. Capital Requirements Apple enjoys a small advantage here, though it’s an advantage that may be quickly lost. The other cell phone manufacturers have a lot of experience making cell phones, but not necessarily software. So, to most effectively compete with the iPhone they will need to invest significantly in convinced areas . And Apple also has a lot of experience making hardware, which gives them a head start on some other potential entrants into the cell phone market whose experience lies largely in the software territory. In this sense, Apple itself did not face much resistance with this barrier because of their experience creating both software and hardware. Future entrants looking to enter the cell phone arena are less likely to have that advantage. 4. Cost Disadvantages Independent of Size Apple has a number of manufacturing resources and channels available to it and was able to minimize the impact of this attribute; though this would be a significant barrier to an aspiring entrant who did not have these assets. Apple has, however, invested heavily in knowledge and experience which will take time for competitors to be able to outdo. Furthermore, Apple is in control of at least one patent for the iPhone, which will give them short-term monopoly rights on some of its technology. 5. Access to Distribution Channels While Apple was successful in gaining access to a distribution channel, they also tied themselves solely to a single cell phone network. Furthermore, the iPhone will be only available at Apple and Cingular stores and it is only reinforced by the Cingular network. Not only are they not able to sell to the cell phone market in its entirety but they are making it tough for people to even purchase the phone. A future entrant into the market may be able to make their product available for numerous carriers and multiple retailers. Even in India iPhone is available with operators like Airtel and Vodafone but not as a separate piece. 6. Government Policy Two factors may work to keep competitors from entering this market: the forte of current players’ patents and the regulatory obligations and approval requirements of the FCC, which governs communication technologies (radio, television, wire, satellite and cable) in the United States. Apple applied and was gra nted a patent for the iPhone, which may help keep competitors to compete with their phone too closely, and are currently in the process of receiving FCC approval for the iPhone. Supplier Bargaining Power: Opportunely for Apple the iPhone is more than the sum of its parts. Arguably, the parts themselves are not that interesting as they are readily obtainable from a number of sources and alternatives exist for most of the parts. What gives the iPhone its appeal is really the software that brings all these parts together and allows the user to interact with the phone in a captivating way. And Apple, of course, developed and owns the software. Further, given the barriers to entry outlined above, Apple has little to apprehension about forward integration from its suppliers. So, in this sense, Apple is not beholden to the impulses of powerful suppliers. Buyer’s Bargaining Power: The buyers of the iPhone are somewhat more potent, though. Broadly speaking the consumers as a gro up can be considered the principle purchasers of the iPhone, a claim that gains more acceptance given the fact that no large resellers will be selling the phone. And consumers tend to be vulnerable to price sensitivity and alternative choices. Given the relatively high price of the iPhone it remains to be seen whether consumers will pay a premium for Apple status and technological convergence when their needs may be equally met by cheaper alternatives. This is the main reason why iPhone was not hugely successful in Indian market. Industry Rivalry: Eventually the iPhone is going to face the most competition from imitators who can sell a similar or comparable device at a lower price. Most of these threats are going to come from established players in the cell phone industry (such as LG and Samsung) rather than companies trying to enter the cell phone market afresh. This is not to say, however, that new entrants may not be round the corner. Software companies such as Google and Micr osoft may pose a credible threat at entering the cell phone market and trying to whittle a niche out for themselves. Microsoft currently has a lot of experience creating software precisely for mobile devices. It remains to be seen, however, if company will take the initiative to enter into the cell phone device market directly rather than content themselves with making licensing software for cell phones. Google already entered into the market with its Android phone though the sales figures are far less than iPhone ,it seems to be potential customer in future. Substitutes: The iPhone mainly differentiates itself from competitors over its user interface which is driven by a multi-touch screen. Apple privileges various patents relating to this technology. However, it is still likely that other players in the market will soon be able to bring similar products. Synaptics, LG and RIM(Black Berry) have already revealed details of coming products which feature touch-screen interfaces, as well. 4. 2. 1 Market growth: Apples smartphone market share growth over 1 year has been 10 folds that of any other of its competitors. However, Apple is still only third in line when counting the number of units sold by each main smartphone manufacturer. Nokia is first, selling a whopping 18,441,000 in the 2nd quarter of 2009, and RIM (Blackberry) is 2nd with 7,678,900 units sold. Apple trails in third, but with the help of this infographic , we can tell that Apple is still besetting up the most profit 32%. The graphic below parallels the total units sold and the market share of the top smart phone manufacturers worldwide: †¢ Nokia †¢ RIM (Blackberry) †¢ Apple †¢ HTC †¢ Fujitsu †¢ Others (includes Motorola, Sony, and everyone else) Fig 4. 2 [pic] 4. 2. Competitor analysis: Fig 4. 3 [pic] Source: https://www. macobserver. com/imgs/tmo_articles/20100105smartphone1. jpg Of course, the intents of a small group of technical users has nothing much to do with the overall smartphone market share. The Android market share growth may be at a (spectacular) high rate, yet as in the example above, the absolute numbers can remain small. Lets take a look at the absolute numbers from several sources, including SAI itself. Fig 4. 4 [pic] Source: https://www. macobserver. com/imgs/tmo_articles/20100105smartphone2. jpg The story there was that Apples iPhone user base has exceeded Microsofts Windows Mobile. The chart also gives a feel for the installed base of Smartphone users in the U. S. and the rate of growth. As of October, Google persisted small in absolute terms. Fig 4. 5 [pic] Source: https://www. macobserver. com/imgs/tmo_articles/20100105smartphone3a. jpg All this isnt to say that Googles Android smartphone OS isnt gaining in popularity. It is. But when one looks at market share numbers for the present time, Windows Mobile is still and Apple and RIM are growing in market share and fighting for leading market share in the U. S. Androi d still has a ways yet to go. 5. 1 Operating results: Apple has posted an operating income of 11. 74 billion USD . Fig 5. 1 [pic] Source:https://fortunebrainstormtech. files. wordpress. com/2010/03/chart_ws_stock_appleinc-03. png? w=220=170 Fig 5. 2 [pic] Source:https://www. 9to5mac. com/files/apple-revenue-by-segment. jpg iPhone sales quarter wise: Fig 5. 3 [pic] Source:https://upload. wikimedia. org/wikipedia/commons/thumb/d/d9/IPhone_sales_per_quarter_siple. svg/800px-IPhone_sales_per_quarter_simple. svg. png 5. 2 Strategic Issues Analysis: Strategic Issues : AT has contractual rights for the distribution and sales of iPhone in the US leading to contractual buyer negotiating power , restrictive customer base decreasing overall profits and market share †¢ Apple needs to address the iPhone’s technical flaws which include but are not limited to its 3G response and non–user replaceable battery. KEY ISSUE: †¢ Apple must get iPhone 3G beyond the youthful t echnophiles and into the hands of ordinary users. This group of customers is great for launching a product, but there aren’t sufficient of them to create sustained growth. The biggest question about the future of the iPhone is whether Apple can reach beyond the early adopters to generate substantial amounts of mainstream demand for the iPhone. Market research: †¢ Four age groups will be targeted: 15-20 years, 20-25 years, 25-45 years, and 45 years and up †¢ High School and College aged people will reveal social uses The 25-45 years group will be used to determine business application and social/personal use †¢ The 45 years and above will give us a plan to market to more senior well-refined group 5. 3 Marketing Mix Effectiveness: Marketing mix effectiveness refers to the 4 P’s of marketing which are Product, Place, Price and Promotion. Table 5. 1 |Product |Price | |Full year warranty along with an optional three-year Apple Care |Set the base model at a ch eap price of $349 | |warranty |A more advanced model for 399 | |Same taste as all other Apple products |Special limited edition Beatles iPhone for special prices | |Special edition version to be launched (including the iPhone Beatles|Generally lower our prices to ensure we establish market dominance | |edition celebrating their 40th anniversary) |in as short of time as possible | |Launching a cheaper version in 2008 with less advanced features | | |along with a more | | |advanced version for professional use. | |Adding the following features to the iphone (large disk storage | | |capacity, lower weight, thinner device, long battery life, 4G | | |wireless, GPS and improved camera) | | |Place |Promotion | |Massive rollout worldwide at all reputable major retailers |Integrate Apple message of revolutionary communications and | |Massive rollout Online, Showrooms and in all cell phone providers |audio/visual experience together in all media advertisements | |All Apple Stores the Apple we bsite will dedicate themselves to the | | |iPhone |Differentiate the iPhone against others is the touch screen | |Eye catching displays will be found at all physical stores featuring|functionality | |the iPhone to make the product stand out from the pack . Emphasize Apple brand prominently and associate the iPhone with the | |Apple Stores will have the iPhone on display a full month before |iPod’s groundbreaking lineage | |its worldwide release . |Original but tasteful advertisements at the same time | | |A massive TV campaign is planned before launching the iPhone | | |featuring a soon to be legendary ad to be the talk of the country. | | |Advertising will be appearing on a regular basis to maintain general| | |public awareness . | 5. 4 Marketing structure and systems: Apples 3-Tiered Marketing Model While listening to This Week in Technology a few days ago, the masterfulness of Apples marketing dawned on me. Heres a look at the 3-tiered structure. Whether this structure is intentional or not, and whether it would work for any company is arguable. Table 5. 2 |Tier One: The Rumor Sites | |The first level is purely a result of Apples tight-lipped policies and the secrecy that surrounds everything the company does. Because | |of this secrecy and the dearth of any official knowledge, information becomes a valuable asset on which rumor sites capitalize. There are| |several prominent rumor sites that start buzz around Apple products, long before they are officially announced and sometimes months | |before they are launched and ready to ship. | |Tier Two: Mainstream Media | |The second level is the result of exclusivity. Apple doesnt always hand out information freely. Instead, they rely on a few large | |mainstream media outlets such as Walt Mosberg at the Wall Street Journal and David Pogue at the New York Times. By giving these outlets | |information first, not only does Apple ensure that mainstream media provides controlled coverage but it is arguab le that the exclusivity | |helps appease the writers and color their opinion in Apples favor. | |Tier Three: Enthusiasts | |Once mainstream media has all the relevant information, this information then trickles down to enthusiast sites such as Engadget and | |Gizmodo. Not to be outdone by mainstream media and to ensure that their audience gets the information it is looking for, these enthusiast| |sites is where the most detailed and critical analysis happens and the definitive judgment on the products is given. | Though it can be contended that this marketing structure is a product of chance, I think it is more a result of the secrecy that Apple is masked in and the exclusivity of any information coming out of the company; and it shows us how sometimes limited revelation can lead to much more exposure. With respect to the current market set up of Apple its strengths, weaknesses, threats and opportunities can be analysed. Fig 6. 1 [pic] Table 6. 1 |A. Strengths |B. Weaknesses | |The iPhone has several features that add to the strength of the |Like every new product, there are is a set of weaknesses. The iPhone is | |product. These include its unique look and feel accompanied by a |not a 3G device and will not work in technologically advanced countries | |mobile operating system. It has phone sensors that work with the |such as Japan and Korea. All of their phones are 3G compliant. Several | |multi-touch screen, which is a new patented technology. These new |of the iPhone features are also not particularly impressive. These | |features are presented to a large and loyal user base that Apple has |include the fact that it has a sub par camera, standing at about 2 | |accrued over the years. Additionally, marketing was given support from|megapixels as well as its memory not being removable. The phone is | |all over the internet, saving the company over 400 million in |priced around 500 to 600 dollars and surveys have shown that 52% of | |advertising fees. Finally, the fact that the company is first to |consumers are happy with their current mobile device; essentially, this | |deliver in this arena of computer phones is one of its greatest |phone is geared towards the high end consumers. Apple’s choice of | |strengths |distribution channel has also been construed as a weakness as they’re | | |limiting it to only Cingular and Apple retailers. Finally, its purpose | | |is to be questioned – does the phone fulfill corporate duties or is it | | |just an entertainment system | |C. Opportunities |D. Threats | |There is quite a demand for a better mobile computing experience. The |The majority of threats come from other companies including Nokia, Sony, | |iPhone tries to combine both powerful computing as well as |and Google with their respective products. Smart phones are one popular | |entertainment into one system. People have also noted that the Mac OS |example that stands to compete against the iPhone. The fact that these | |applications for desktop can be seamlessly adapted for the iPhone. phones run on the 3G network also puts iPhone behind in the speed race. | |Also, this is the first step towards an Internet Protocol-based |Although the economy is no longer in its volatile stages, the release of | |network. The emergence of Wi-Fi networks is pushing for there to be |the iPhone is still in a time where people are cautious of spending | |visitor fees instead of having a provider lock in users. It is very |money. The last threat is the Cisco vs. Apple trademark-infringement | |likely for the device fees and pay-per-view system to take flight, |lawsuit that may or may not have taken away from the product launch | |eliminating the month to month subscription fee. |steam. | For an organisation to focus on its growth strategy and to achieve its marketing objectives by means of refining marketing activities Ansoff’s matrix will be very useful. It analyses on the existing products m arkets and new products markets which can be valuable for any industry to plan its strategy based on that. Figure: 7. 1 Ansoff Matrix [pic] Source: https://tutor2u. net/business/images/Ansoff%20Matrix%20w500. gif Marketing objectives: Based on the above matrix our main marketing objective is comes under the product development ( though I discussed market penetration of iPhone in not so successful Indian market). †¢ Extend on the Apple brand name and link to the established meaningful positioning. †¢ Extend on Apples image of innovation, quality, and value. Measure the awareness and response in order to make adjustments to the marketing campaigns as necessary. Target Market †¢ Differentiate the iPhone from other PDA’s on the market. †¢ Primary customer targets is the middle-upper income professional to coordinate their busy schedules and communicate with colleagues, friends and family. †¢ Secondary consumer targets are high school, college and grad uate students who need one portable multifunction device. †¢ Primary business target is to partner with : †¢ large cell phone service providers, AT, Verizon, Sprint and Cellular One †¢ large enterprise software firms where information is critical to the end user. Secondary business target is mid-to mid-size corporations that want to help managers and employees stay in communication or access critical data on the go. †¢ Market segment will consist of companies with $10-$50 million in annual sales. Positioning †¢ Using product differentiation, positioning the iPhone as the versatile, convenient, value-added device for personal and professional use. †¢ Focus on the convenience of having one device for communication, but also music, pictures, and video, and full Internet access. The iPhone will be promoted as both professional and hip. Fig 8. 1 [pic] To bring the iPhone to the front of the business world it is important to research different ways to grow th e 15-25 year old group into business uses of the product Brand awareness will be an vital tool in taking the Apple brand from social cool to business cool. †¢ Asking for feedback on iPhone features, and instrument those changes most important to the end user in the next generation iPhone. †¢ Allowing users themselves to design their own ideal iPhone on-line and use any useful ideas to further refine future iPhone models . †¢ Continuously scouring the Apple fan websites to understand what the Mac faithful are saying, as they are our best customers. 8. 1 Competitive advantage: The mobile devices industry is a competitive market conquered by key firms like Nokia Corporation, Samsung Electronics Company, and Motorola, Inc. These companies, which have extensive product lines, capture a large share of consumers in the mobile devices industry. However, the release of Apple, Inc. ’s iPhone, in June of 2007, positioned the company as a direct competitor in the indust ry as the iPhone offered a variety of unparalleled features. Although the product has challenged various problems since the unveiling, Apple has done well to identify key internal and external threats that challenge the success of the iPhone. Conceptual frameworks, such as Porter’s fives forces model and VRIO analysis (Value, Rarity, Imitability, Organization) found Apple’s resources and capabilities and identify the organization’s positioning within the market. The analysis also provides an understanding of Apple’s current competitive advantage and delivers information necessary for strategic planning. From these studies, it is apparent that the iPhone has had marvellous success per volume of sales. However, with Apple’s severely limited product line, little product diversification capabilities, and the recent release of similar alternatives, such as the T-Mobile G1 by Google and the Dare by LG, the iPhone’s competitive advantage seems t ransitory. New strategy and direction is related to the continued success of Apple’s iPhone. After having marketing objectives and strategy marketing mix decisions has been postulated. Table 9. 1 Product: A cheaper less advanced iPhone along more advanced version of the iPhone for professionals with these additional features| |will attract extra consumers: | |Larger, removable disk storage capacity – support for USB memory sticks, digital camera memory cards, external hard drives. | |Lower weight and thinness – should fit into a wallet or become the wallet (with features to act as a credit or debit card). | |Significantly longer battery life – should play movies for twice as long; battery should be easily replaceable. | |4G wirelesses – even faster, more incredible speeds than ever offered on this sort of device. This will leapfrog the competition. |GPS functionality – more precise information on location. Can link with software to add even more functionality. | |Peer to peer wireless exchange – Zune has this. Lets us easily share your music and pictures. | |Improved camera – For more detailed pictures and high quality video conferencing. | |Pricing: It has to lower prices to ensure we establish market dominance in as short of time as possible. | | | |Distribution: It has to sell their phones without any tie-ups with operator in the markets like India where number portability is| |not exist, then only consumers can shift to new mobile without changing their old number. | | |Marketing and Communication: Marketing should focus regional base rather than depending only on operator promotional | |advertisements, this will attract new customers especially markets like India where operator and mobile device is entirely a | |separate thing. | †¢ Apple iPhone’s break-even analysis assumes wholesale revenue of $500 per unit variable cost of $250 per unit and established fixed cost of $50 million. Based on these molds the break-even calculation is $50 million divided by $500 minus $250 equals 200,000 units sold. Break-even calculations indicate that Apple will become profitable after the sales volume exceeds 200k. After the first year Apple will make a profit of 1. 25 billion minus 50 million in fixed costs. †¢ Suggested price is $350. The markup is 40 percent. †¢ It is foretold that sales volume will increase at least 60 percent from this change; this will decrease the impact of fixed costs and improve opportunities to increase Apple’s production scale, which will further progress profits in the long run . Compensation system †¢ workers $5 incentive pay for every non reject phone they produce †¢ $10 per phone six sigma quality program †¢ On each worker $5000 each year for best practice training Feedback: Uses control measures to closely observe quality and customer service satisfaction consumers can contact the main headquarters about any possibl e technical problems – by using Apple Customer Service Bar and a customer service phone number stored in the phone book In case of slow sales : †¢ Offer iPhone to customers who have purchased other Apple products which will lead to: †¢ Determine the product for consumers, it will promote synergy and lure buyers. †¢ Develop deep relationships with two very different sectors: those who have it and those who aspire. To plan the strategy apple team meets monthly with the board of Apple, present their information, and make a proposal for continual marketing efforts. Before each meeting their team will meet in private, with each person presenting their own proposal based on the information they have cultured. After the initial proposals, they will vote on the best one or come to a conciliation. The final proposal sent beforehand Apple is the result of that meeting. Apple has not seen success in India (which has highest growth in mobile market) as seen in the other parts of the world. The position of iPhone in Indian mobile market is 22nd. Wharton marketing professor Peter Fader is inclined to believe that Apple may have a smarter strategy for its Indian iPhone launch than is immediately apparent. If you compare [the iPhones] U. S. aunch to the India launch, it is a beautiful example of the distinction between a penetration strategy and a skim strategy,' he says. Here in the U. S. , Apple basically wanted to bust the market open all at once. So, they had all these people lined up all around the block, and when they flipped the switch boom! the market existed. In India, its almost like they are doing a test market. The other reasons for slow pace of Apple iPhone in India is of technological advancements , like 3G service( which is USP of iPhone) is yet to come in India . I am providing primary data which I collected through a survey of 180 members to support my recommendation. Fig 13. 1[pic] G service increases usage of internet , and major ity wants to use internet on their mobile. Fig 13. 2 [pic] There is no number portability among operators( So users are unwilling to change to operator tied up phone like iPhone) . Fig 13. 3[pic] Indian customers are accustomed to GSM services and they frequently change their SIM cards which gives better deals, so most of customers are reluctant to buy operator linked phones. Fig 13. 4 [pic] To improve market share , Apple needs to address price sensitivity of Indian consumer who are not willing to buy a phone for 700 USD (other competitor mobiles like Nokia,LG and Samsung can buy at half of this price) more analysis given regarding this in reflexive account. Fig 13. 5 [pic] The other improvements that Apple should consider are message forwarding and MMS service which are important now a days, and also Apple does not provide regional dynamic product but consumers always wants to have some extra Apps like color splash and mobile money( these are some of the findings of the my surv ey). So in addition technological advancements like 3G and number portability which are on the roads, if Apple considers other factors which I mentioned in the above then it will definitely encourage consumers to buy this great product. When it comes to the already successful markets like U. S, in order to gain more market Apple should introduce iPhone with different models and designs as mobile is identity every body wants it to be different from others. I have always had admiration for Apple C. E. O Steve jobs so as for Apple products which made me to choose Apple iPhone as my product and prepare marketing plan for it. I have used Apple iPhone and have experienced the quality of the product and I though it will make more sense for me to choose this product as I can apply my real time experiences also in this. Though I had flair for this industry the details that I collected throughout the process of documenting this assignment made it more fascinating. The Macro and Micro envir onment analysis required extraordinary research as different aspects of information has to be collected regarding different markets like U. S ,India etc and its past policies, present scenario were also to be compared. Porter’s five forces analysis had extended my understanding of the facts regarding buyers, suppliers, entry barriers etc and how an industry should handle itself in these situations. The SWOT analysis preparation provided me a detailed picture regarding the company’s strengths, weaknesses, opportunities and threats. They were carefully depicted in the assignment so as to avoid any wrong information being scattered. While preparing the marketing mix my abilities were ignited in terms of visualising the facts. It needed in depth research of the company’s marketing strategy and my suggestions as a Apple fan to improvise the sales of the industry. I was able to apply myself as a responsible marketer and bring out the hidden talents in me to make my product a huge success. I was able to come out with creative ideas and learning from theories and research has actually broadened my views as a marketer with confident perception. There are lot of things that I have learnt from this coursework. I was able to first understand the role of a marketer and the advantage of a marketing plan. The pros and cons that have to be examined while promoting and selling the product. The brand value though speaks it is the competence of the marketer to make the product success. The concept of target sector taught me that all sorts of people should be targeted. Right from the common man to rich people the product should be accessible. The role of a marketer is not simple and he should be unceasingly aware of the trends and be ethically responsible for the sale of his company’s products. Thus I found this coursework to be extremely useful for enhancing my skills and views as a marketer and self-reliant that this will stand in good stead for my future as a marketer. Marketing mistakes by Apple: Table 14. 1 |Mistake #1 The iPhone Pricing at market launch. | | | |Apple made a big marketing mistake in 2007, by reducing the iPhone retail price from $599 to $399 a 33% rebate after only 3 months | |from the initial product launch. This way the iPhone early adopters and Apple most faithful costumers have rightfully felt being | |betrayed and exploited. | | | |A great company must not do so serious and bad mistakes, betraying their most faithful customer base. | | | |They had other 3 better options: | |They could have waited 6 more months before reducing the price of the iPhone, or they could have delayed the iPhone launch for 3 months, | |or they could have decided to price the iPhone at $399 since the initial launch. nd since July 2008, the iPhone 3G is sold at $199, 50% | |less than the September 2007 price, 66% less than the launch price of just one year earlier. | | | |Mistake #2 Forcing costumers in signing w ith AT as exclusive carrier and the revenue sharing business model. | | | |It has been a greedy and wrong marketing strategy on the side of Apple. Result: slowing down the sales of the iPhone. 3. 3 million iPhones| |were sold in the US between June andl December 2007, but only 2 million contracts were signed with AT. Were did the remaining 1. 3 | |million iPhones go? | | |Mistake #3 the Apple iPhone and the Europe markets | | | |The US makes 300 million inhabitants. | |Western Europe makes 350 million inhabitants, more than the whole US. | | | |On June 29, 2007 the iPhone was launched in the US. Only in November 2007 the iPhone was launched in some European countries. To be | |precise only in 3 countries: UK, Germany and France. In each of these country with the same stupid and self hammering business model used| |in the US, and in each country with a different carrier: O2 in the UK, T-Mobile in Germany, Orange in France. | | |Only on July 11, 2008, one full year later, the iPhone has been launched in several other European countries, as Italy, Spain, | |Switzerland, Austria, Ireland, Denmark, Norway, Sweden, Finland, Netherlands, Belgium. Why so late? | | | | | |It gets interesting to see the jam and confusion of prices, terms and monthly fees charged by the many different carriers in Europe: O2 | |in the UK, T-Mobile in Germany, Austria and Netherlands, Orange in France, Swisscom in Switzerland, Vodafone in Italy, Telia Sonera in | |Denmark, Norway, Sweden, Finland. The iPhone 3G Price in Europe | | | |On July 11, 2008 the iPhone has been launched also in other key countries worldwide: Australia, New Zealand, Canada, Japan, Mexico, | |Brasil. | | | |In conclusion: a great lesson from Apple on how to undermine a great product adopting a stupid, greedy and self hammering marketing | |strategy. | |Mistake #4 iPhone failure in Indian market.. | |Everybody was anticipated iPhone’s success in India including me, but that was not the case. I found out so me interesting reasons or | |factors which might caused the low penetration level of iPhone in India. | |Unlike the initial argument that it was the steep price tag that queered the pitch for iPhone in India,there is more to the debacle than | |just the pricing. Besides a very high price tag, one main reason behind iPhone’s failure in India is that there was a very weak link as | |far as consumer confidence was concerned. | | | |Apple’s rivals in India, industry observers and analysts say that a flawed sales and distribution model and communication failure were | |the biggest reasons behind iPhone’s debacle. The company failed to strike a connect with Indian consumers. | | | |India not a priority market? | |Selling huge numbers in India was not even Apple’s game plan, it seems. Around the time of its launch, the company had said it hoped to | |sell 10 million units | | | |Not good enough: | |While Airtel ran commercials outsourced from Apple for fou r weeks on a few TV channels,Vodafone used the envelopes of the mobile phone | |bills sent to its customers to apprise them ofiPhone’s launch in India. Globally by December, whereas in India, it would ship 100,000 | |phones by December 2009. Clearly, Apple wasn’t expecting big sales from the market. | | | |Yet, what is surprising is that the company didn’t even manage to achieve this target. Apple had imported around 50,000 phones at the | |time of the launch but had only managed to sell around 11,000 units so far. |Analysts argue that by downplaying India, the world’s second largest and fastest growing telecom and handsets market, Apple may have | |missed not only a big opportunity to sell one of its blockbuster brands but also to lay the ground for its future products. â€Å"Around 120 | |million handsets are soldin India every year and, of these, almost 4% to 5% are smartphones. Nokia has around 60-70% share of this | |market. | | | |Clearly, Apple ha d a big opportunity to establish itself in this market and, if not break market leader Nokia India’s monopoly, then at | |least give it a tough fight. It’s anopportunity that is now being assiduously chased by rivals such as Samsung Electronics Co. Ltd and | |Research in Motion Ltd, or RIM, the makers of BlackBerry. | | | |It’s not about price | |IPhone’s comedown in India has been described as a pricing failure by most. But on the face of it, it doesn’t seem logical. Priced at | |Rs34,999, Nokia N96 costs around Rs4,000 more than iPhone’s 8GB handset and Rs1,000 less than its 16GB model. IPhone’s other rivals, such| |as Samsung’s Omnia and BlackBerry Bold, are priced even more steeply . More than the price, it was the pricing communication that | |hurtiPhone in India. | | | |Apple CEO Steve Jobs had made a public announcement that iPhone would be priced at $199 globally (about Rs9,490). This built a false hope | |in the min ds of those consumers who wanted to buy it and turned away those who could have actually bought it. | | | |IPhone is being sold at $199 in the US and at similar rates in several other markets, yet Apple couldn’t have offered Indian consumers | |the same price because the market dynamics here are very different. | | |The US is predominantly a post-paid market where consumers buy the handsets from service providers under different deals. Carriers such | |as AT Inc. can afford to sell the phone at $199 because they can recover the real cost by raising call charges or through some other | |options. AndApple doesn’t get hit in the process because carriers give it the actual price. | | | |This, however, is not possible in India because it is mainly a pre-paid market. Here, most consumers change their handsets, and even | |service providers, quite frequently in favour of cheaper options. Also, handsets have never been traditionally sold by service providers. | | | | | |App le had to tag the product with its real price because its licence holders in India, Bharti Airtel Ltd and Vodafone Essar Ltd, couldn’t| |have subsidized the price. â€Å"The reason why the price of an iPhone seems so high (in India) is because it is not sold on a contract. This | |selling process has not yet caught on here. | | |The two service providers, however, are providing finance options for as low as Rs2,600 a month to make it easier for those who want the | |product. But this hasn’t helped much. | | | |Some market observers argue that Apple’s distribution and sales strategy in India was flawed from the word go. To begin with, the company| |licensed the iPhone to two service providers (Airtel and Vodafone) who didn’t have any experience in the retail selling of handsets, | |which is a complex business in India involving different strategies for different income groups. | | |Second, these service providers decided to sell the handset only at their outlets, thereby limiting its availability. Also, they | |antagonized the big organized retailers in the process (the Top 10 organized retailers are estimated to have a 50% share in total sales). | |Third, selling not being their core area of expertise, these companies couldn’t pitch it to the potential consumers aggressively. | | | |The service providers’ strategy to sell it with a lock-in clause may not have gone down well with consumers. This meant iPhone buyers | |cannot retain their handset should they wish to switch operators despite having paid the cost of the handset upfront. This condition was | |a big dampener, especially because from next year, Indian consumers will have the freedom to changeservice providers without having to | |change their number or handset. | | | |The other most evident flaw was its inability to strike a connect with consumers. Unlike in the US, where a month-long marketing and | |advertising blitz preceded the debut of the iPhone, Ap ple didn’t run any of its own campaigns in India. All the marketing communication | |was left to the two licence holders. What consumers saw was a round of print advertisements on the launch date that announced the arrival| |ofiPhone and a few billboards in key cities. | | |While Airtel ran commercials outsourced from Apple for four weeks on a few TV channels, Vodafone used the envelopes of the mobile phone | |bills sent to customers to tell them aboutiPhone’s entry into India. | | | |Even if you’re selling a niche product, the communication needs to be there on what’s on offer and to get (make) people curious. | |Otherwise buyers won’t be enthused. | | | |People who buy high-end products buy them either for their technological advantage or to enhance their status. So, marketers promoting a | |high-end product must bring out the technology and exclusivity factors in a vibrant manner. | | |Ambiguous positioning | |Some advertisers say iPhone’ s positioning in the market was ambiguous. â€Å"IPhone was positioned as a lifestyle product but in India, the | |company or its licence holders did nothing to make it seem aspirational. | |On the contrary, Nokia did a smart thing by positioning N96 as a convergence product. It immediately struck a connect with its target | |consumer for the communication was focused on its attributes. | | | |Airtel spent only around Rs3-4 crore on iPhone’s advertising. On average, they spend around Rs14-15 crore on their new launches. The | |licence holders, however, argue that they were discreet in advertising for strategic reasons. | | | |Apple’s strategy was not to sell a million phones in India. It only wanted to establish a presence in the country. Customers who were | |interested in buying iPhone were already aware about iPhone’s launch in India. | |To be sure, some of iPhone’s rivals also went for a low-key entry into the market at the time of their launch bu t now, with the market | |heating up, they are pulling up their socks. | | | |Its own failure notwithstanding, iPhone managed to stir the smartphone market in India quite successfully. To pre-empt its success, Nokia| |launched its N96 series, Samsung came out with its own version of the iPhone, and RIM is set to launch its BlackBerry Storm model soon. | |Google Inc. has also come out with its Android mobile phone software that can help Apple’s competitors better many of the iPhone | |features. | 1. Ablett. J et al, 2007, Mckinsey Global Institute, The Bird of Gold: Rise of India’s Consumer Market. 2. Jobber, D. (2007). Principles and Practice of Marketing (5th edition). Published by McGraw-Hill Education. 3. Jobber. D. , 2010, Principles practices of Marketing, 6th edition, McGraw hill education. 4. Kotler, P. (2000). Marketing Management (11 edition). Pearson Education, India. 5. Kotler. P, Keller. K, Koshy. A, Jha. M, 2009, Marketing Management, A South Asian Perspective, 13th edition, Pearsons Prentice hall. 6. Porter E. M, 2008, On Competition, 2nd edition, Harvard Business Press, NY. 7. Performance report of Apple available at https://www. apple. com/pr/library/2010/01/25results. html. [Accessed 2nd April 2010]. 8. The organisation structure of Apple available at https://www. stern. nyu. edu/mgt/private_file/mo/rfreedma_ca/apple. pdf. [Accessed 31st March 2010]. 9. Company Analysis of Apple available at https://www. appleinsider. com [Accessed 2nd April 2009] 10. Competitor Analysis of Apple iPhone available at https://www. pf. com/marketResearchPDInd. asp? repId=515 . [Accessed 3rd April 2010]. 11. Market Details of Apple iPhone available at https://www. tuaw. com/2009/01/02/apple-market-share-tops-10-windows-share-lowest-since-tracking/ [Accessed 4th April 2009]. 12. Company history and profile available at https://apple-history. com/ . [Accessed 4 April 2010]. 13. Macro- environment analysis overview available at https://www. ou p. com/uk/orc/bin/9780199296378/01student/additional/page_12. htm. [Accessed 5th April 2010]. 14. Survey has been done through www. surveymonkey. com 15. https://knowledge. wharton. upenn. edu/ 16. 1 About the company: The Apple Computer was incorporated in 1977. It was co-founded by Steven Wozniak and Steve Jobs. They introduced the first Apple I computer in 1976. The Apple I was a failure but Apple II launched in 1980 was successful. The company offered its IPO in the year 1980. In the early eighties, competition from the PC market and internal difficulties led to critical management changes. By 1983, Apple Computer encountered danger with the entry of IBM into the PC market, and the failure of its Apple III version computer. Apple Computer introduced its first mouse driven computer, the Macintosh in 1984. By 1990, the market was flooded with cheap PC clones and Microsoft had launched Windows 3. 0. In 1994, the company launched the PowerPC chip based PowerMac. This new chip allowed Macs to compete with the speed of Intel’s PC processors. Apple Computer still had problems though and in 1995, the company had a $1 billion order backlog. These problems were compounded by the launch of Windows 95. The company’s performance nosedived in 1995-1996 when it lost $68 million. In 1996, Apple Computer acquired NeXT, and NeXT’s operating system, Rhapsody became Apple Computer’s next-generation operating system. By 1997, Apple Computer had incurred huge losses running in millions of dollars. Steve Jobs, the original co-founder returned as interim Chief Executive Officer. Under his leadership, Apple Computer reorganized to concentrate on its more profitable competencies. Apple Computer divested its unsuccessful spin offs, including Newton, its personal digital assistant line of products during this period. Soon after Steve Jobs returned, an agreement was made with Microsoft, and was subsequently followed with the appearance of MS Office on Mac PCs. In 2001, the company acquired PowerSchool, one of the providers of web-based student information systems for K-12 schools and school districts. The company acquired Spruce Technologies, a privately held company involved in developing and marketing DVD authoring products, in the same year. In the following year, Apple Computer, Ericsson and Sun Microsystems formed an alliance to create a standard format for delivering multimedia content to wireless devices, such as smart phones and PDAs. The alliance combined Apple Computer’s QuickTime video creation software, Sun’s content distribution software and hardware, and Ericsson’s mobile infrastructure and services expertise. Apple Computer pursued a number of acquisitions during 2002. The company acquired Prismo Graphics, Silicon Grail and certain assets of Zayante, and also acquired the German based specialist music software manufacturer, Emagic, which became a wholly owned division of Apple Computer. Additionally, in the second quarter of 2002, the company acquired certain assets of Nothing Real,a privately held company engaged in the development of high performance tools designed for the digital image creation market. 16. 2 Apple business mission : I enjoyed this quote from Tim Cook of Apple regarding Apples business philosophy: There is an extraordinary breadth and depth and tenure among the Apple executive team, and these executives lead over 35,000 employees that I would call all wicked smart. And thats in all areas of the company, from engineering to marketing to operations and sales and all the rest. And the values of our company are extremely well entrenched. We believe that were on the face of the Earth to make great products, and thats not changing. Were constantly focusing on innovating. We believe in the simple, not the complex. We believe that we need to own and control the primary technologies behind the products we make, and participate only in markets where we can make a significant contribution. We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we dont settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when were wrong and the courage to change. And I think, regardless of who is in what job, those values are so embedded in this company that Apple will do extremely well. 16. Indian mobile market leaders : Apple’s iPhone position is 22nd. [pic] Source: https://images. betanews. com/media/3908. png 16. 4 Apple iPhone questionnaire for Indian market. 1. Do you prefer buying iPhone in India if prices are slashed to Rs 17000? |[pic][pic]YES |[pic][pic]NO | 2. Do you prefer buying iPhone with service provider( Airtel, Vodafone) or buying as a separate piece? |[pic][pic]YES |[pic][pic]NO | 3. Would you consider buying iPhone if 3G service starts i