Borislav Kiprin

iPhone Marketing Strategy Analysis

Fundamentals of Marl:eting Management Course Work

Course Leader: Maria Lopez Escorial

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Table of Contents PRODUCT DESCRIPTION ................................................................................................................................ 3

MARKET AND COMPETITORS ANAL YSIS ....................................................................................................... 4

TARGET. POSITIONING AND MAIN DIFFERENTIAL ATTRIBUTES .................................................................... 5

PRICE STRATEGY ............................................................................................................................................ 6

DISTRIBUTION STRATEGY ............................................................................................................................... 7

UNIQUE SELLING PROPOSITION .................................................................................................................... 8

COMMUNICATION STRATEGY AND PLAN (INCL. DIGITAL MARKETING) ................................................... 9

MAIN MEDIA PLAN ...................................................................................................................................... 10

MAIN RECOMMENDATIONS FOR SUCCESS WITH ITS SPECIFIC ACTIONS ................................................ 11

Disclaimer

All inforrnotion provided in this document is reseorched online. Relotive resources ore mentioned whenever found needed os o footnote. Opinions ore stoted on o sutjective bosis by the outhor ond should not be token os o pure truth. Should question~ comments ond opinions be roised p/eose contoct me ot bkiprin .mdmk20 J O@olumno.ie. edu.

Due to spoce limitotion~ some of the findings ore orgonized in tob/e like formots. Those 9rophicol contents ore either bosed on reseorch or represent my own perception of the events thot occurred.

Boris av K"pnn IE MDMK09

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PRODUCT DESCRIPTION

For yeors Apple Inc. was considered as o computer monufoclurer aiming at the "different. hip and imagina tive" individual as o customer. With the retum or Steve Jobs as o CEO or the company in21996. things changed tremendously and Apple Inc. b

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MARKET AND COMPETITORS ANALYSIS

Al the time Apple Computers recognized the need for o hondheld mobile device the morket players were a few and mainly business users. This explains the strong market share RIM hod. Palm on its hand also was also somewhat popular but having limitations in terms or usabi6ty and software. deprived the bland from gaining significant position. Most or the devices p resent at the market in 2005-2007 were more reatu.-ed towards personal organizing. emailing and computing. rather than web browsing or customized application usage.

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.1 .1~1~ ~ J ~t $500

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PRICE STRATEGY

The iPhone was released in lwo different versions - 4GB and 8GB model. In the United States both requi'ed a lwo-year contract with Cingula r /a unit of AT&T).3As you can see below. the same approach with the difference between the 4Gb and the 8Gb models was kept in the other countries. Init ially this action plan has raised numerous acts of discontent among the consumers who failed to see why the German user had ta pay more tha t the American one. for example. In that sense Apple was going clearly far the geagra phi cal pricing module.

4Gb 8Gb

USA $499 $599

Germany E399 E499

UK 257 309

Japan 70000' 80000

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"''" "'"

$000 0 $600 !l -

$)0 -~ $200 "' $0

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iPhone Pricing Worldwide al Launch in 2007

USA

$699 $559

Gmony UK Jopon

As discussed in Market and Competit ion Analysis chapter the iPhone was set at a price much higher than the ones of the competitor's smartphones. Apple Inc. seems to have counted much on the new technology and the huge fan base that allowed them to adopt the maximum market skimming objective. The market research clearly showed that there is a huge potential specifically in the smartphone sector with an expected fou

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DISTRIBUTION STRATEGY

Disl ribul ion or l he iPhone is set only to exclusive mobile ca rriers in each counlry lhe iPhone was launched. In lhe Unil ed States lhe iPhone was launched fr st and lhen olher counlries followed unronunalely much lalet lhan expecled. This was due mainly la lhe stralegic decision made lo patlnet wilh a mobile communica lion service provider. The technological l ime la sel lhe paramelers or lhe agreement was lhe main reason for lhe delay. For example lhe iPhone up lo Augusl 2009 is sl ill not launched in lhe biggest market for mobile hondhelds - China.

China based Various suppliers One assembfing unrt

Production Setting

Apple Inc.

Logistic center Regional logistic centers

SuppoRetal Distribution Regional wa ehousing and storage

Service Provider

Customer

Service Plan Unlocked iPhone

Apple Inc. hos chosen a hybrid distribut ion channel involving its online store. physical outlets and the retail points or the exclusive mobile setvice provider.

Apple Store

Test driving the iPhone Selecting the ro te plan Signing the contract Picking up the iPhone t ight away

Apple Online Store

Creating an apple account Selecting a rate plan Purchasing the phone Having ii delivered to a prefleted adress

Service Provider Outlet

Test driving the iPhane Selecting the to te pion Signing the contract Picking up the iPhone t ight away

Below you will find the main reason lot Apple Inc. to choose Cingula r over Sprint as an exclusive partner in the United States.

utilizing Cingular's Customer Base

7

Cingulor customers -58m

Cingulor subscribers wi th

iPod - 303

Cingulo r subscribers wi th

iPod - I 7.4m

1 Source: htto://www.sildeshore.net/rcastanon/iphonefor-latam

Uptake ro te from Cingvlor iPod

customers in I sl year -

503fassumplion)

Est. up! oke by Cingulor iPod

customers in I sl yea r - 8.lm

Boris av Kpnn IE MDMK09

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U NIQUE SELLING PROPOSITION

The unique selling point/proposition or Apple's iPhone was not in the message but rather in the diffAs usual Apple was rela ting the message that they offer something cool and different.

Innovation Urc: or ver"i or'J_) I

l~lJ''Or'S - jL.,S ' r_J lr_)~e 'ouc:r sc:eer

Connectivity Wi-Fi GSM

ln~ored Bluelool h

Storage Enough lo gel you around for as long as !he battery lasts

Innovation - g roundb

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COMMUNICATION STRATEGY AND PLAN (INCL. DIGITAL MARKETING)

Apple Inc. used bolh lhe pull and lhe push strategy in its communicat ion with the customer. One was the company advertising. p romoting the product by itself employing the full spectrum or the marketing communica tion mix channels and the other is relying on the selected exclusive distributor region wise to advertise the iPhone. In tha t sense the customer was approached from two different sources crea ting differentiat ion from the competitors and delivering the product message with added value service or application.

Pre Launch Stralegy

Launch Strategy

Post Launch Strategy

Digital Marketing Strategy Break Up

Email Marketing

A mes.sage sent to every Apple Customer few weeks before launch

Apple.com

Extensive introduction to the advantages the use of iPhone gives

Hosting iPhone Apps pU'chasing center

Display Ads

Banner Ads Interactive Ads

C rowdsourcing & Online Communities

WOgs

PR Biogs Opinion Leaden 8.Specia i zed Sttes

Sneak Peaks on R&D info Buzz&. V i"a l Markell AppJe.com Printed Media TV Outdoor Media Socia l Media Carrier handeld advertisement Apple.com Independent review Websites Paind Onfine listings Di 101 Cam ai njn

Social Media Advertisement

Facebook MySpace

Search Engine Marketing

PPC Affii ated Makefing Other paid list ings

lndusoy Biogs Forums Discuss.ion Boads

Opinion leaders

Handing free iPhone for review Supplying access to ilunes iPhone apps section for free

As you one can see Apple has empSoyed almost all digtal channels known in 2007 and making business sense to use for hosting its communtc:afional message to the consumer and targeted audience.

BO

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MAIN MEDIA PLAN

II is difficult to determine which media was more important to Apple for advertising its iPhone. since the company hos invested in almost every possible channel to b

l l

MAIN RECOMMENDATIONS FOR Success WITH ITS SPECIFIC ACTIONS

Broadening the Distribution Channels

Heavier Employ of Digital Marketing

Promoting the iPhone

Price Offering

Improving Initial Technologlcal Offering

Simuttaneous lauch of the iPhone in USA. UK. Germany. France. Italy. Spain. Russia &. China

Stock avaiabity in the Apple's North America. European and Asian logistic centers

Better demand anticipation through reseach

Fostering vi rd campaigning on drtfi'e nt video soc ial networks (Youfubbe.com and a fike)

Enabling ''Share" button on AppSe.com Fostering User Generated Content advert~me nt & best practices

Free MobileMe signup for 1 year with every iPhone purchased

Speciaized \AJOrkshops for corporate CTO's introducing the iPhone as a corporate smartphone

Giving for free iPhones to Trend Setters (TV & Movie . Music and Spa Launching the iPhone at a 103 at Seast Sower price for acqUring bigger share from competition & new comers to smart phones.

Rebate for ilunesStore . "With the ptxchase of iPhone you wiN get 50 USD credit for your ifunes account"

Introduc ing the same price rege>naly as a equivatent to the USO offer in the Unrted States.

3G c apabity Recording Video capabilrty Preinsfdl regional GPS map PDF and Microsoft Officer suit fasfe compatib iity Buif in e Book reader

Boris av K"p nn IE MDMK09

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