IPhone Product Marketing Plan

📄 Words:	4079
📝 Subject:	Marketing Planning
📑 Pages:	15
💼 Companies:	Apple

Executive Summary

The purpose of report is to prepare a marketing plan of iPhone and it focuses on some specific issues like product description, pricing strategy, promotional activities, distribution channel, market position, external and internal factors of the products, action plan of the company, marketing control, organizational chart, and so on.

Company Profile

Apple Inc is the pioneer of computing, communicating and entertainment device design, develop, and marketing including their relevant software, accessories and networking way out to ensure highest customer satisfaction. Including a huge variety of own product line, the company third party value added services through Apple’s web based App stores through its strong ecommerce backbone. Rather than the global presence online, the Company has physical appearance with reportable working segments of the Europe, Japan and USA and even emerging Asian markets both for wholesale and retailing for computer system, communication, and entertainment devices where iPhone is the hottest globally later than the iPod and iTunes Store.

Apple is deeply concerned with the patents and copyrights of its products like iPhone, ipods and iTunes and applied for trademark registration in the US market including a number of overseas markets to protect them from any manipulation. Starting for California in 1977, Apple Inc is a listed company of NASDAQ with a market capitalization of US$ 331,255 million with 23. 7% return on assets, 36.8% return on equity and Price/Earnings ratio is 20.0 in the current year and 49400 employees (The Morningstar 2).

Summary of the Plan

In order to sustain in this competitive market, it is essential for Apple to enhance its marketing strategies and come up with its own chipsets, rather than buying those from companies like Intel at high price, which increases the annual expenditures of the company. Allocating a good amount of budget in the R&D of Iphone and emphasizing on renovating the product into a mini computer so that it can get beyond the competitions with other Smartphones and compete with products like laptops and PCs will prove to be profitable for the company by increasing sales and lowering costs of buying chipsets from others.

Current Market situation and market description

Apple is well-organized company and re-engineering ability in upgrading iPhone product categories, which brings success in the international market as iPhone sales revenue increased by 266% in 2009 (Apple Inc 42). According the annual report 2009, it sales iPhone in more than 80 countries by its direct distribution channels, its cellular network carriers’, and some third-party retailers; so in 2009, its sales revenue from iPhone and related products were $6,754 million while this figure was only $1,844 in the fiscal year 2008 (Apple Inc 36). On the other hand, Diaz (1) pointed out that its net profit from iPhone was nearly $1.50 billion in 2010 due to increase sales revenue in Europe and Asia Pacific, which was 90% greater than previous year.

However, Apple’s main target market for its iPhone 5 is upscale and middle-earner customers who have enough financial capability to purchase this product at higher price. However, Apple should try to increase customer base by adding features with reduced price for all range of customers.

4 Ps of iPhone

The Product

I-Phone is a communication device innovated by Apple integrating GSM¹ technology and Information Technology where the most popular i-pod functions are added and the users are facilitated to telecommunication and internet applications. Apple has bring this product in the market in 2008, with multi touch user boundary based on both Windows and Mac platform backed by private cellular operators and the uses enjoy most of the computing opportunities including mailing, browsing, download, iTunes online purchase high regulation camera and video opportunities. In the succeeding year of introduction, Apple has added more features in iPhone like Wi-Fi wireless operation and networking facilities including higher regulation screen, Bluetooth, iPhone 3.2 software and features of Genius technology impressed customers and created high market demand (Apple, 10).

Price

From the introduction, Apple has emphasized to maintain affordable and competitive price for its iPhone in relation to the existing mobile phones market though the raising demand of this product is considerably privileged than the supply all over the world. To maintain its pricing strategy, Apple used only its own Agents for distribution and it has demonstrated that the high market demand has forced the company to boost price and depending on the location, the price varies from US$ 725 to US$ 1153 for across-the-board. For instance, the US wholesalers get iPhone at US$ 760 while the European wholesalers trade it at US$951 but the Asian Agents are offering from US$ 1153 for different assortments of models (Quinn 1).

Place

For iPhone, the Apple has engaged to utilize both digital and real-time distribution channels globally while the target consumers are primarily in SME sector, students, enterprises, governmental officials and the vendors of creative markets. Apple distributes its iPhone through Apple’s web based App stores including the real-time distribution channels of wholesalers, a large number of resellers, along with national and local retailers while none of the individual distributors has contributed more than 10% of the sales during the first three years of iPhone introduction due to digital distribution. Apple keeps its effort to reach the customers directly through its online sales force at online stores together with its products and resells certain third-party products in most of its major markets other products directly to end users through its own sales force at online stores including other manufacturers products by ensuring high quality after sales service (Apple AR, 10).

Promotion

Taking into account of market trend the marketing campaign for iPhone has aimed to be sophisticated complying with its marketing strategy that ultimately eager to achieving the goals of the product promotion systematically while marketing plan has taken into account of elevated traffic of content management, keywords research and accomplishment, and search engine optimization for the target audiences. The promotional campaign of iPhone would be an ongoing process starting through a press conference for greater than before media coverage to the product while Apple has its own gateway to advertise in huge technology based websites. Such campaign would draw the attention of users that ultimately result as an elevated sale for iPhone.

Competitive Review

Apple is one of the strong competitors in the mobile phone industry as its iPhone has captured significant shares in the global market. However, Apple has to face high competition as multinational companies like Microsoft Corporation sells window phone, and Nokia sells Nokia N97, which has serve similar services to the customers. According to the annual report 2009 of Apple,

Nokia

Chen (9) pointed out that the physical and multimedia features of Nokia’s N97 are similar to the features of Apple’s iPhone. However, the following figure shows these similarities –

Physical and multimedia features

RIM

RIM’s lightweight Blackberry is one of most popular product as it has captured the second position than 27.4% share of the US smart phone market;

Motorola

Though Motorola Droid Smart phones and Droid X is two well-known product of market giant Motorola but it lost its market share in the US market to RIM and Apple due to introduction of some new features;

Samsung

Chen (1) addressed the positive side of Samsung’s F700. In addition, its product named “Omnia” is also similar to the iPhone.

Porter Five Forces Analysis:

Competitive Rivalry

There are many competitors in the global market those offer similar products, for instance -Packard, IBM, Nokia, Gateway, Acer, Sony, Motorola, Fujitsu-Slemens, Legend, Sun-Micro-systems, Nortel etc. but the relationship is not always rivalry.

Threat of Substitute

threat of substitute for Apple’s iPhone product is very high because many firms in the industry try to introduce new upgrade substitute products like Nokia introduced Nokia N97.

Threat of New Entrants

Threat of new entreat is comparatively low for Apple’s iPhone, as new entrants must need advance technological support, knowledge, and huge investment to sustain this competitive market, which is difficult for the new company. However, the risk of new entrants would be high, if any large mobile phone company intend to introduce this iPhone with more innovative features;

Bargaining Power of Suppliers

Bargaining power of suppliers is high because Apple has to contract with suppliers because it needs to collect raw materials like certain liquid crystal displays, microprocessors, dynamic random access memory, flash memory, and so on from single or limited suppliers;

Bargaining Power of Buyers

The bargaining power of customer is moderate as competitors provide similar iPhone with advance technology at lower price, so, loyal customer of Apple may become IBM’s customer if IBM offer same high quality product at lower price.

SWOT Analysis of Apple Inc

Strength

Innovative combination of widescreen iPod with touch controls, mobile phone, and an Internet communications device is the main strongest point of this product;
In addition, strongest market stability and brand awareness of Apple Inc also have positive impact on sales as Apple is famous for iPods and the original Macintosh;
Apple distributes iPhone in more than 80 countries and the company would like to distribute rest of the world;
Chen, et al (10) pointed out that the quality of the Apple’s iPhone is outstanding in terms of brightness, scratch resistant screens, well metallic finish, and resistance system to computer viruses.
It has expert, experienced, brilliant, and dynamic employees to develop new version of this product with some other special features;
Administrative control is another important factor for success of the company, so, Apple maintains the standards of the PCAOB² to process their audit reports;
However, Apple has about 34,300 full-time permanent workers and more than 2500 full-time temporary workers, who are working hard for the development of the company as well as its product iPhone.

Weakness

The economic position of resellers is not always good enough to carry on business with high confidence;
The confidence level of the purchaser has reduced because of global financial crisis. As a result, Apple’s export market share has reduced;
Many companies in the US market like Hewlett Packard, Dell, IBM, and Compaq have strong customer base;
As price is one of the most important factors to customers, so, target market range is not too wide for this product due to high price;
The success rate in Asian market is not good enough;
However, touch screen system may create gorilla arm disease.

Opportunities

As the market demand of iPhone is too high in global market, the marketer of Apple collaborate with powerful multinational mobile companies as Joint venture, merger, and acquisitions with renowned companies give the opportunity to enlarge its business quickly. As a result, Apple and IBM formed a joint venture, named Taligent, with the goal of creating a revolutionary new operating system;
Apple has opportunity to include more feature in single devise by using the advance technology and research outcomes;
In addition, Apple creates a new dimension in the communication industry, which gives the opportunity to the company to spread out its business operation all over the world.

Threats

Intense competition in the global market is the main threat for Apple because competitors can change the scenario of market environment, for instance, its competitive position changed dramatically in 1981 while IBM entered in the PC market with innovative products at lower price;
Many large and small companies produced similar products without patents and ask lower price of iPhone, which really great threat for the company to increase sales of its iPhone. As a result, Apple has to reduce the price of its iPhone to hold market leading position;
The profitability of iPhone may hamper if its operating system depends on the performance of distributors, staffs and other retailers;
On the other hand, some positive initiatives of the competitors may affect on the operation of Apple like joint venture, merger and acquisition between competitors may create hindrance.

Objectives and Issues

Short term Objectives

For iPhone-5 people are eager to welcome this product due to the marking campaign and the short term objectives of this marketing plan is to earn an annual rate of return on investment at 30% over the next three years;
To strengthening the core business of iPhone with an investment of US$ 300 million for research and development within the next three years;
Apple In has targeted a growth of net financial return for increase annual turnover 26% by next three years;
One of the most important objectives of the Apple Inc is to start its operation in the Asian emerging market by 2011 and achieve the market leader position in this market by capturing 25% market share within next three years while it has also targeted a more10% growth in the US and European market;

Long-Term Objectives

Apple Inc has targeted to boost its annual profit from global operation of iPhone of 20 % of the corporate within next five years;
It has aimed to spread out customer awareness about the product and services of Apple Inc brand from 25% to 30% within next five years;
Tippling the budget for R&D in order to conduct huge research works to get competitive advantage over the competitors within next five years;
Boost up the budget for promotional works by 80% with 2016 to amplify the brand awareness of Apple Inc for global operation.

Marketing strategy

Positioning

According to the report of Android Tapp (1), Apple iPhone OS holds the market leading position by capturing 27.90 percent shares, RIM holds the second position and Android OS occupies third position. However, the following figure demonstrates the market position of Smartphone in the US market more elaborately and shows the customers awareness of the relative brand versus competing products on important buying decision.

*Figure 4: Market position of Smartphone.*

However, the market position of Apple iPhone is not same in the international market because there are many companies those have no patents but manufacture similar products and sell these items at very lower price. As a result, this marketing plan would suggest differentiating its functions and appearance by including most of the features of personal computer in the iPhone and add versatile, convenient, value-added device to attract young generation particularly to the students. Moreover, it must provide touch screen facilities with less buttons, and give full Internet access and visual voicemail, which must help the company to increase customer as all sorts of customer would like to take the opportunity of visual voicemail.

Product Strategy

Apple plans to make further multifaceted versions of iPhone for professionals with additional features like 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, like a mini-computer or become the wallet), and significantly longer battery life (should play movies for twice as long). Moreover the company will be undertaking strategies to spend more on R&D and come up with its own CPU chipsets, together with even faster, more incredible speeds than ever offered, more precise information on location; capacity to link with software to add even more functionality; peer to peer wireless exchange, improved camera for more high quality video conferencing, etc.