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Marketing Report: iPhone Report

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Brief History

The initial name of Apple, Inc. was Apple Computer and it was created on April 1, 1976 by Steve Jobs and Steve Wozniak. The company was incorporated on January 3, 1977, in Cupertino, California. Initially, the company was engaged in the manufacture of personal computers. In the year 1985, Steve Jobs was ousted from the company.

In the year 1996, Apple bought Steve Job’s company neXT and made him the Chief Executive Officer. Apple introduced the iPod music player in 2001 and within the last few years, more products were added like iPhone, iPod Touch and iPad. Today Apple is of the largest technology firms in the world, with annual revenues of more than $60 billion.

Introduction

As Marketing Manager of Apple’s mobile phone division, I have been assigned the task of researching the marketing programme and environment of the company. One of our core products is the iPhone. It was launched on January 9, 2007 at San Francisco. It is a three-in-one device that includes a mobile phone, an iPod and web surfing.

According to a press release of Apple, “iPhone introduces an entirely new user interface based on a large multi-touch display and pioneering new software… iPhone also ushers in an era of software power and sophistication never before seen in a mobile device, which completely redefines what users can do on their mobile phones” (Kerris 2007, para. 1).

Macro and Competitive Environments

Macro Environment

Macro environment consists of such factors that affect an organization but the organization doesn’t have any control on them. It is obvious that there is always competition in the market and moreover, if the product is being marketed globally, the level of competition increases. In such circumstances, organizations have to be more careful about new companies entering the market.

Certain audits have to be done in order to know the macro and competitive environments of any company. Actually there are two kinds of audits that are usually done namely, the external audit and the internal audit. The external audit is done on variables that the organization cannot control. The internal audit is done on the variables that can be controlled by the organization.

As far as environmental audit is concerned, it is again external as well as internal. According to the Confederation of British Industry, Environment audit is explained as, “The systematic examination of the interaction between any business operation and its surrounding.

This includes all emissions to air, land and water legal constraints; the effects on the neighbouring community, landscape and ecology; and the public’s perception of the operating company in the local area” (CBI, 1990). Strategic audits are normally conducted to enable the management to establish a match between internal operations of the firm and the business environment it operates in (Porter 1996, pp. 61-78).

External Audit

The external environmental audit can be better understood with the help of the PESTEL analysis. PESTEL means the Political, Economic, Social, Technological, Environmental, and Legal factors that can affect a business. Following is a representation of a typical PESTEL analysis.

PESTEL Analysis

Figure 1: PESTEL Analysis

Political: Apple’s success is co-related to the policies that help the company in creating a healthy business environment. Apple participates in the political process in the greater interests of the company as well its stakeholders. Apple has a policy that pertains to the political expenditures. The company follows and adheres to all prevalent laws and also declares the political expenses incurred.

Economic: Due to the recent global recession, the purchasing power of people decreased to a great extent. This had a severe impact on the sales of Apple products. But the situation is improving now and the company is optimistic of better sales in the current financial year. The pricing of iPhone has been done in a manner that people can afford the device. There are several schemes available in the markets that allow people to buy iPhone on credit.

Social: The social and cultural aspects have a great effect on the performance of any organization. Products should be designed keeping in view the society and their culture. Building a brand name is very crucial. Apple has a worldwide image of providing best products at reasonable prices.

Technological: In order to be at the top and different, organizations need to adopt the latest technological inventions and developments to make their products world-class. Apple has always believed in this principle and has always come out with innovative devices. The latest iPhone is a revolutionary mobile device that also has an inbuilt iPod and web-surfing facility. Today’s generation is always on the lookout for new and stylish mobile handsets. iPhone is the best option available for such people.

Environmental: Apple uses ample precautions to minimise the greenhouse gas emissions from its facilities. It was observed that only 2% of such emissions were from the facilities. The balance 98% was related to the products. Ever since, it has been Apple’s endeavour to minimise the greenhouse emissions. The measures taken in this regard are using less material in manufacturing the product, using material that is toxic-free, using recyclable material, using smaller packaging for shipping, and being energy efficient.

“Apple is perfectly positioned to be the first company to create a Congo conflict-free phone, using minerals from the Congo that further stabilize the economic development and don’t use slave labour or fund mass atrocities” (Sesete 2011). “ Clearly Apple is assuming that its customers have many iPhone compatible leads lying around…so has kept things minimal, and of course saved packaging, and therefore penguins and polar bears, in doing so” (Beavis 2011).

Legal: The legal aspects of any organization also have an impact on the performance of the organization. Unfavourable rulings of legal cases may hamper the organization’s image. Presently, there are several patent infringement cases, pertaining to Apple, under consideration.

Competitive Environment

Due to the free market policy prevailing worldwide, any company can launch its products freely. There are very less entry barriers and as such, every company wants to enter the market and take whatever possible share for its products. Due to this, there is saturation in the market and each company gets only a small share.

Apple also has some big competitors like Alcatel, Blackberry, HTC, LG, Motorola, Nokia, Samsung, and Sony Ericsson. Even though Apple’s iPhone is a device with different features but the company has to keep its prices lower in order to sustain the competition.

The irony is that Apple purchases high quality components that are costly and as such, the cost of iPhone is on the higher side. Moreover, the company cannot reduce the price of iPhone after a certain limit. This acts as a hurdle in gaining greater share in the market of mobile phones.

It is notable that there was a time when Apple was dominant in the mobile and iPod market but due to its inability to cope up with the reducing prices due to competition, in 2001, Apple’s share in the market was a mere 3%.

Marketing Programme Elements

Steve Jobs pioneered the idea of iPhone and today the mobile handset is one of the most desired by customers all over the world. This has been possible due to the innovative and imaginative thinking of Steve Jobs. Other factors responsible for iPhone’s popularity are the new style and design, new and latest features, and the marketing strategy. Apple’s overall success can be credited to iPhone and iPod.

During the years 2003 to 2008, Apple’s stock prices witnessed a twenty five times increase. From $7 per share, the price rose to $180 per share. Owing to this increase, Apple’s stock market capitalization, in July 2008, was $160 billion. Despite the US Financial Crisis, the stock price per share of Apple rose to $210 by January 2010.

With the launch of iPhone in 2007, Apple added yet another feather to its cap of innovations. Despite the fierce competition in the mobile market, iPhone has been able to carve a niche for itself. It will not be off the mark to say that iPhone is five years ahead as far as technology is concerned.

Its competitors have to go a long way to be at par with the innovative features that are installed in iPhone. As mentioned earlier, Apple is always on the path of innovation and keeping up its tradition, the company launched iPhone 3G in 2008 and iPhone 3GS, a third generation mobile phone in the year 2009.

iPhone is a true work of genius and is way ahead from its competitors as far as technology is concerned. It has been designed by Jonathan Ive, who has brought a masterpiece and revolutionary product in the field of mobile phones. In fact iPhone is a mix of a mobile phone and a mini computer.

Owing to its features, iPhone has surpassed the category of smart phones. The iPhone has become the major piece of technology that allows the users to perform multiple functions with their portable mobile phone. It has a variety of user-friendly services, from basic communication to entertainment, GPRS, internet, camera and touchpad.

Mistakes Committed by the Management

The introductory price of iPhone in 2007 was $599. But within three months of its launch, the price of iPhone was slashed by 33% to $399. This was a big mistake and bad decision on the part of the management and marketing team. The result was that the early buyers and the faithful customers got a wrong message that they were betrayed and utilized.

As a result of Apple’s profit sharing pact with AT&T, the customers were required to sign in with AT&T. This arrangement was not approved by majority of the customers.

It is noteworthy to mention that Apple could have done better if it would not have ignored the European market while making its marketing strategy. Due to this mistake, Apple lost on sales in the European countries. It is estimated that had Apple concentrated on the European market, it could have made 300 times more revenue during the years. The following table depicts the number of stores that Apple had in the US and the European countries in 2005 and 2008.

Country Apple Stores in 2005
US 110
UK 1
France 0
Germany 0
Switzerland 0
Italy 0
Netherlands 0
Spain 0

Source: . Web.

Country Apple Stores in 2008
US 150
UK 15
France 0
Germany 0
Switzerland 0
Italy 1
Netherlands 0
Spain 0

Source: . Web.

It is evident from the figures that as compared to the stores in the US, the number of stores in the European countries is negligible. Up to 2005, the main concentration of Apple was on the US market. Even in 2008, apart from the UK and Italy, none of the European countries had Apple stores. Apply also paid less attention as far as advertisement is concerned in the European countries.

iPhone Marketing Mix

iPhone is a brand of Apple, Inc. Later upgraded models are iPhone 3G and iPhone 3GS.

Basic Features

iPhone: The iPhone has a 2 megapixel camera. Video recording is not available.

iPhone 3G: The iPhone 3G has a 3.15 megapixel autofocus camera with video recording and editing options. It has built-in GPRS and the internet connection is based on 7.2 Mbps HSDPA.

iPhone 3GS: The iPhone 3GS has a 3 megapixel auto-focus camera with video-recording and editing features. It has voice control and a long-life battery. The internet connection is based on 7.2 Mbps HSDPA. The speed of iPhone 3GS is double than that of iPhone 3G.

Target Market

iPhone models have a vast worldwide market. The main customers are in the age group of 12 plus. Those people who are on the look-out for latest technology and don’t mind paying a little more, are the main target customers of iPhone. The ‘paying little more’ phrase has been added because there are other phones available in the market that are cheaper but don’t have the special features that iPhone has. With the help of iPhone, people can remain connected to the world through 24X7 internet connection.

Price

Presently, the price of iPhone starts from $319 and fluctuates a little bit, depending on the market.

Sales Data

14.1 million iPhones were sold in the last quarter of 2010. The first quarter of 2011 witnessed an increase in the sales and as a result, 16.24 million iPhones were sold in this quarter. The sales figures of iPhone for the second quarter of 2011 are quite amazing but encouraging for the Apple team. In the second quarter alone, Apple sold 18.65 million iPhones. As compared to the same quarter in 2010, there was a growth of 113% in the sales figures. These sales figures are the combined sales figures of iPhone 3G and iPhone 3Gs.

“Analysts have lately been revising their predictions for holiday iPhone sales upward in light of this strong performance. Predictions for how many iPhones apple will ship during the current quarter range from 28 million to 31 million units” (Etherington 2011)

Promotional strategy

iPhones are sold through Apple’s own sales outlets, leading supermarkets and electronic retailers. The phone is also sold through online shopping companies. Promotional campaign of iPhone is done through TV commercials, billboards, online advertising and advertisements in the print media.

Physical Verification

Information about iPhone can be found on Apple Inc’s official website at apple.com

Recommendations

In my opinion, the following methods can be helpful in increasing the sales of iPhones.

More concentration on the European market

As discussed earlier, we understand that Apple has ignored the European market. The management should give proper importance to this market. It can help the company to boost the sales of iPhone to a great extent. According to Mario (2004), “market segmentation has many benefits…enabling an organization to serve a more homogeneous and tightly defined set of customers, identify opportunities, and improve customer satisfaction.”

Re-structuring of prices

It’s a fact that the prices of iPhones are on the higher side and more than other brands. The company has a genuine reason for the high prices. As we have discussed earlier, costly parts are used in iPhone. But it should be understood that not all customers buy this reason. Most of them are not concerned about the manufacturing process. The only thing that matters is the end product and its price. So the management should try and source some alternate materials to be used in iPhone.

Once the prices are lowered, there ought to be a boost in the sales because then iPhone will have an upper edge due to its latest technology. There is another side of the story as well. What if the one of the competitors comes out with a similar product with a lesser price tag? So this aspect should also be taken into consideration.

Introducing vibrant colour models

At present there are not many colour choices that customers have in iPhone. The new generation people expect vibrant colour phones to suit their style and mood. More than the features, appearance of their phone is more important to them. So if they get the features and the look in a single phone, they will definitely go for it. It’s true that one can find various colours back covers for his/her iPhone but that is just an accessory.

New model with new features

Apple should come out with more models having newer features. This will create a feeling of anxiety among the customers and they will definitely want to buy an iPhone and try out the features. This will be a bonus sale for the company.

Frequent advertisements

Advertisements do have an impact on the public. The management of Apple should resort to more frequent advertisements. We see that today all major companies advertise for their products in all sorts of media. In order to create a long-lasting impact on the minds of people, Apple should do more and more advertisements so that it is always in the minds of people. All the main features should be highlighted in the advertisements. If the advertisements are on and off, people will not pay that much attention. It’s true that out of sight is out of mind.

Highlight the features that are not available in other phone brands

The company should identify such features of iPhone that are not there in other phones available in the market. This will create a curiosity and people will want to try it out.

Catchy tag-lines in advertisements

The print media, the electronic media and the billboards should have advertisements with some catchy tag-lines that people won’t forget that easily. Something like “when iphone is on, others are gone” can be helpful.

Free offer with iPhone

People are nowadays looking for free offers with anything that they buy. It has become human tendency to seek free gifts. In order to promote the brand, iPhone should also come with some sort of free offer. Something like a free memory card or free internet connection for a limited period or even a scratch and win card will serve the purpose. The cost doesn’t matter. What matters is that it will be complimentary.

Compatibility with software

It has been noticed and experienced that iPhone is not compatible with software of some companies. This is a technical fault that the management should tackle immediately. “One of the biggest complaints iPhone users have had since the device launched in 2007 is its dependency on iTunes. Although Apple enabled us to download apps and games directly to our phones many moons ago, you still need to plug your iPhone into your PC to install updates and back up existing downloads” (McFerran 2011).

Further enhance the brand image

Even though iPhone is a well known and trusted brand, there is always scope for improvement. The company should improve its sales and after sales services. The procedure to be followed if a person wants to get his/her phone repaired should be simplified. A strong brand remains invaluable in enhancing competitive advantage and seeking close association with customers.

Within this subtext, a brand will refer to an iPhone, a product designed in such a way that it meets the diverse social and communication demands of the customers (Chermatony and McDonald, 2002). This forms the main reason behind the need for heavy investment in promotional activities that enhances product recognition. The building of a strong brand will entail maximizing on the strong value provision to the customers in a more efficient manner.

More service centres

The company should open more service centres for iPhone across countries. If the people see that there is a good network of after sales service, they will be assured that if they face any problem with their iPhone, they have a service centre in their locality or in the vicinity.

Such service centres should be equipped with all the required appliances, instruments and software to solve the customers’ problems without delay. It is evident, according to the market research and theory that customers choose the services of institutions who offer reputable series under experience, knowledge and equipment (Nicholson, Clarke, and Blakemore, 2002).

Assumptions

The company should be able to make assumptions on how the market trend will be in future. This can be done by conducting surveys with a set of questionnaire that has questions about people’s views on their expectations from a mobile handset. Assumptions are critical in any marketing plan as they function to standardize the planning environment (McDonald & Keegan, 2002).

Enhance credibility

There are many unsatisfied customers of iPhone who can hamper the image of the brand. “We all know that the iPhone is a fantastic invention, but that doesn’t mean that it is not without its problems. From low battery life to ridiculous predictive text alterations, there are times when we just want to smash it against the wall, but we can’t because its screen is just so breakable” (Harfield 2011).

References

Beavis, G. 2011, . Web.

CBI 1990, Narrowing the Gap: Environmental Auditing Guidelines for Businesses, CBI, London.

Chermatony, L. & McDonald, M. 2002, Creating Powerful Brands: in Consumer, Service and Industrial Markets. Oxford: Butterworth-Heinemann.

Etherington, D. 2011, Apple’s iPhone tops UK holiday smart phone shopping. Web.

Harfield, D. 2011, 10 Most annoying iPhone problems (And how to solve them). Web.

Kerris, N. 2007, Apple reinvents the phone with iPhone, press release.

Mario, O. 2004, The Chain of Effects from Brand Trust and Brand Affect to Brand. New York: John Wiley and Sons.

McDonald, M. & Keegan, W. 2002, Marketing Plans that Work. 2nd ed. Woburn, MA: Butterworth-Heinemann.

McFerran, D. 2011, Apple iPhone 4 review. Web.

Nicholson, J. Clarke, G. and Blakemore, Y. 2002, Going to market: Distribution Performance: The Role of Brand Loyalty. Journal of Marketing, 65: 81-89.

Porter, M. 1996, What is Strategy? Harvard Business Review, vol. 1, no. 1, pp.61-78.

Sesete, D. 2011, . Web.

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