This paper presents a comprehensive product development process for the Apple i7 mobile handset as summarized in figure 1 below.
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The product development process of the Apple i7 mobile handset is based on the market pull strategy. Basically the market pull strategy involves market research, market requirement assessment, research and prototype development, marketing, and eventual product sale. The product development process for the Apple i7 mobile handset suits the pull strategy since it fulfills the need for handset functionality and ease of use by customers.
The road map for the Apple i7 mobile handset development was to increasing sales and attracting more customers to the Apple brand through several adjustments on the previous model. The Apple i7 mobile handset is positioned as the ideal handset that is user friendly. The targeted audiences are Apple customers who want user friendly mobile handset. The ideas for the improvements of the previous model into the Apple i7 mobile handset were gathered from different online surveys carried out by Apple Company.
The product incorporated software (SW) such as swipe, modifiable applications, and remote offline network. There is a reinforced cover as the main hardware (HW) integrated in the Apple i7 mobile handset. The product is self-made by the technical team at the Apple production plant. These aspects are summarized in table 1 below.
|Strategic factors||Market research |
Market requirement assessment
Marketing and product launch
|Road map||Increasing sales and attracting more customers to the Apple brand|
|Product positioning||The ideal handset that is user friendly|
|Target audience||Customers who want gadgets that are user friendly|
Idea Generation and Screening
In the last decade, the Apple’s products have become a household name in the dynamic global PC industry. At present, the company sells more than 500 million mobile handsets annually across the globe. Several concerns were raised by customers who felt that the company should improve the durability of the functionality of the mobile handsets and increase more features. This modification was imminent since other competitors were planning to make adjustments to their handsets (Bowden 69).
Therefore, Apple Company created a product process for transforming the i6 mobile handset into the trendy i7 handset, which was launched about a year ago. Since the company has an active research and development team, the task of developing the proposed adjustment was assigned to the department. Besides, the research and development was allocated $100 million to support the development of the Apple i7 mobile handset.
The stage of concept development for the Apple i7 mobile handset involved proactive research on the available technology that could support incorporation of more features and redesigning the shape of the handset. In order to achieve this, the Apple’s research and development department recruited technology specialists from companies that supported similar projects with the US military and Alticor was enlisted to improve the software aspect.
The Alticor was ideal in facilitating product development and necessary testing the proposed approaches for creating the new product. In order to ensure that there is a flow in the coordination of activities within this stage, the Apple i7 mobile handset product development approach was integrated within the production line of the previous handset generation (Cheverton 45).
During this stage, the Apple Company started engaging customers about the proposal as a strategy for getting further feedbacks that were incorporated in the final Apple i7 mobile handset product. This stage involved using sales focusing before and introduction of the product in the market. Based on customer feedback, the focusing team established that the company would gain by introducing the Apple i7 mobile handset through increased sales since many customers were interested in buying the new product once it was released in the market.
As was expected, Apple realized an increase in sales volume by 15% for the handset product segment in the first year of introducing the Apple i7 mobile handset (Osmond 34). With an investment of less than $20million in the actual modification activities, Apple was able to recover the cost in less than a year because of increased revenues from sales of the Apple i7 mobile handset. This stage was handled by the research and development department at the Apple Company.
Beta Testing and Marketing
Before final approval, the Apple i7 mobile handset was piloted within the company to get the general customer feedback on any improvements and value addition. Apparently, feedback indicated that the improvement on the previous generation handset into the Apple i7 mobile handset increased the usability of the gadget and friendliness to the end user (Kotler and Keller 56). This feedback enabled the product engineering team to align the Apple i7 mobile handset to the customer demands to guarantee product acceptance in the market. This stage was handled by the marketing departments since there was a need to generate data on the actual impacts of the introducing the Apple i7 mobile handset on the company’s competitiveness in the market.
This stage in the product development involved balancing the aspects of product engineering, planning, supply chain, and logistics management to guarantee a smooth transition of the Apple i7 mobile handset into the market. After the approval of the design, the proposed modification on the mobile handset were passed through mass production and integrated within the current manufacturing line to create the Apple i7 mobile handset.
Meanwhile, the supply chain department was assigned with the duty of making necessary modifications in the current network to ensure that the finished product was evenly distributed in the targeted market. The marketing team designed the packaging and slogans that accompanied the Apple i7 mobile handset product in the market after production.
Since the modification did not involve major changes to the previous generation mobile handset, the Apple Company decided to minimize the price increase for the Apple i7 mobile handset. However, there was a need for slight increment in the price of the mobile handset after its modification to take care of the costs and gain from value addition on the side of the customers. The selling price for the Apple i7 mobile handset was determined using Cost-Plus markup strategy, which prices a product at a predetermined margin over the product’s estimated production costs.
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Since Apple deals in a single market product, Cost-plus pricing was ideal because it is easy to calculate and has provisions for adjustment of prices when the cost of production goes up (Vithala 49). In this case, the hypothetical rate was set at 25% as the extra cost incurred in developing the Apple i7 mobile handset. This means that the production cost for 2000 units was $ 961,950.
The cost per unit = $961, 950/2000 = $480.975
The makeup = 25% of $480.975 = $120.244
The selling price of the Apple i7 mobile handset before taxes was calculated as follows:
Selling price = cost price + Makeup.
= $480.975+ $120.244 = $601.219
This means that the price of the Apple mobile handset increased from $600 to $601.219 following the introduction of the Apple i7 mobile handset. During its launch, Apple indicated that its revenues from the sale of the Apple i7 mobile handset would increase by 10% in first year, 15% in the second year, and 20% in the third year.
The breakeven analysis for the Apple i7 mobile handset is summarized in below.
|Selling price per unit||$601.219|
The calculation for the break-even number of units and sales are presented below.
Total revenue (P * Q) = total cost [Variable (VC * Q) + fixed cost]
$601.21 * Q = $350 * Q + 20,000,000
601.21Q = 350Q + 20,000,000
601.21Q – 350Q = 20,000,000
251.21Q = 20,000,000
Q = 79,614.15 units
Break-even sales = break-even unit * price
= 79,614.15 * 601.219
Launching a product into a new market is often challenging, in terms of balancing demand and product expectations. Before launching the Apple i7 mobile handset, the company made several adjustments in the supply chain to have a soft landing in the dynamic market (Mariotti 23). The launch of the Apple i7 mobile handset was done after an aggressive publicity to make the product an instant hit in the market. The Apple Company used its previous product launch platform to guarantee success in the market. The Apple i7 mobile handset is currently retailed in the company stores across the world.
Bowden, John. “The Process of Customer Engagement: A Conceptual Framework.” Journal of Marketing Theory & Practice, 17.1 (2009): 63-74. Print.
Cheverton, Philip. Key Marketing Skills: Strategies, Tools, and Techniques for Marketing Success, London: Kogan Page, 2004. Print.
Kotler, Philip, and Kevin Keller. Marketing management, New Jersey: Pearson Prentice Hall, 2012. Print.
Mariotti, Steve. Entrepreneurship: Starting and Operating a Small Business, New York: Prentice Hall, 2007. Print.
Osmond, Vitez. Advantages & Disadvantages of Process Costing Under Accounting, Publishing, 2009. Print.
Vithala, Rao. Handbook of Pricing Research in Marketing, London: Edward Elgar.