As the team of marketing consultants hired by Apple Corporation, we have been asked to review their current target markets and marketing mix’s to come up with possible suggestions for improving the overall effectiveness of the organizations marketing efforts. Our main focus will be specifically to cover the already successful iPhone, and not the other wide range of products and services that Apple has to offer such as: computers, software bundles, iPods, and the iTunes store.
The iTunes store in its self provides everything from music, movies, shows and even applications which are all compatible with the iPhone. First we will have to identify the target market and address the 4P’s (place, price, product, and promotion) to find the strengths and possible weaknesses for areas of improvement. We will also be covering market segmentation, showing specifically how they decided to subdivide the market and what Apple is aiming to achieve for each market segment.
When the iPhone was first released out in to the public in June of 2007, it was an instant hit, but Apple is always looking to increase its market share in the smart phone industry. The smart phone industry is such a competitive market that innovation and consistent improvement are a must. As the iPhone’s product life cycle continues to move forward, Apple will need to stay on top of their marketing strategies to remain successful, especially as the product reaches maturity. ————————————————- Target Market Profile
Apple has a very unique target market consisting of two major targets which include; consumer targets and business targets. With the consumer market category, Apple has two sub targets. Their primary target being middle to upper class income individuals who need to coordinate their busy schedules while still being able to communicate with colleagues, friends and family. While the Secondary consumer target market consists of high school, college and graduate students, who need one portable multifunction device to satisfy their own unique daily needs.
Target Segment| Consumer Need| Corresponding Feature/Benefit| Professionals| * Stay in touch while on the go. * Record information while on the go. | * Email, instant messaging, and phone. * Applications from Mac OS X for notes and record keeping. | Students| * Perform many functions without carrying multiple gadgets. * Style and individuality. | * Music, phone, video and TV shows. * Apple branding as fashion statement. | The chart above shows that Apple uses a demographic strategy, psychographic strategy and benefit sought strategy to segment the consumer market into more specific areas.
This helps Apple’s marketing team to better define what the customer needs and wants are so that they can focus on meeting the customer values. Demographic segmentation shows that iPhones are marketed to a specific group of individuals based on age, income, and family life cycle. For example, since the iPhone is a premium product, Apple is able to charge more for their phones than their competitors, but by doing this, Apple is forced to target markets that are capable of purchasing their product at such a high cost.
However, in the past year the cost of the iPhone has dropped a significant amount, to a more consumer friendly price. Apple also segments the market based on psychographics segmentation, showing personality, motives, and lifestyles; for example, having over 100,000 apps, to give the consumer the power to personalize their phone to their exact needs and wants. Apple’s intention is to simplify making changes to the iPhone and to adapt to changes in customer expectations according to the benefits they seek such as instant messaging, fast internet access and applications.
On the other hand, Apples main business target is to partner with all cell phone providers worldwide to expand their market share of the smart phone industry and eventually be the number one option for consumers looking to purchase a Smartphone. Apple’s secondary target market is medium to large corporations who need a simple solution to stay in communication or access vital data on the go for managers and their employees. By segmenting the smart phone industry, Apple was able to see a new opening in the onsumer market and showing regular consumers how a Smartphone can make their lives easier, and not just how they are beneficial to a business user, giving them a competitive advantage over other smart phone companies that were targeting only the business market, which are already developed. However, now that Apple has peaked in the consumer market and made an image for themselves, they are now considering the business market to take full market share of the entire smart phone industry. The chart below shows different business segmentations and how each segmented portion will be able to utilize the iPhone.
Target Segment| Consumer Need| Corresponding Feature/Benefit| Corporate Users| * Input and access critical data on the go. | * Applications from Mac OS X for notes and record-keeping. * Compatible with widely available software. | Entrepreneurs| * Organize contracts, access contracts, and schedule details. | * Wireless access to calendar and address book to easily check appointments and contracts. | Medical Users| * Update, access and exchange medical records. | * Wireless access to calendar and address book to reduce paperwork, and increase productivity. | ————————————————-
Marketing Mix ————————————————- Product A successful marketing mix is an important asset every company needs to effectively sell as much of their product as possible. In the case of Apple, their team of market researchers do an exceptional job of researching both the consumer and business markets in order to find out exactly what people want, and how to get their point across to everyone. The product in this case, the iPhone, is a very complex product to promote due to the huge increase in demand around the world for smart phones in the consumer market.
Apple uses many different strategies to reach both consumer and business markets, especially with outlining the key features of the product. Apple, having patented their touch screen technology, dominates the market with unmatched features and touch screen capabilities that no other company can duplicate. Before the iPhone, touch screen phones needed a stylus to operate, with the introduction of the iPhone however; they have revolutionized how handheld touch screen products operate. The whole operating system in the iPhone is based on thumb touch, as opposed to using a separate, awkward stylus.
Along with the iPhone’s amazing touch screen features comes its built in accelerometer. When the iPhone is rotated from portrait to landscape, the accelerometer detects the movement and changes the display appropriately. This is a key feature for some of the apps you can download for the iPhone, such as games. Sensors within the iPhone’s display help to maximize battery life by automatically dimming the display when you lift the phone to your ear, or if you are in sunlight as opposed to a dim light.
The display also features a multi-touch screen feature, which allows the user to easily zoom in and out, as well as use other capabilities built into several apps. With these features put into the iPhone by Apple, the phone really sells itself solely on its features. ————————————————- Promotion Due to the ease of use and functionality of the Apple iPhone it is a easy product to sell however, without promoting the product, consumers would have no idea of the benefits the iPhone can provide them. That is where Apples genius promotion strategies come into play.
Apple promotes their product literally on every level possible, including television ads, radio, billboards and even at public events. In 2008, Apple released an app that was solely dedicated to The Beatles. This app, in itself made the iPhone a much more sellable product to an older generation of people. This app includes a full discography of The Beatles as well as a full biography, music samples and trivia. Along with an interest in gaining a larger market base, Apple still focuses mainly on the younger generation of people such as young teens all the way up to college students and grads.
They effectively reach this target market with advertising in which younger people can easily relate to, such as humor and new and exciting designs. The most recent iPhone ads are incredibly effective due to the fact that they inform you of features such as its touch capabilities, you can watch movies and listen to music on it, you can browse the internet, it knows where you are, and it makes decisions for you all within a comfortable 30 seconds, without rushing it. Along with the advertising aspects of the iPhones promotion, comes all the sales promotions that Apple implements along with its carriers.
Now with the introduction of the newest iPhone, the iPhone 3G S, the basic iPhones price has been dropped significantly, which leads into Apples latest marketing approach. With Rogers, you can purchase the 8GB iPhone on a three year contract for just $99. In Apples words, “ At $99, every pocket can have one. ” However for only another $100, the iPhone 3G S comes with a price tag of $199 on a three year contract, with the slogan, “What every pocket wants. ” ————————————————- Price
With such a large demand lately in the market for smart phones, the prices of the iPhone have had to drop from when they initially came out in order for Apple to stay on the top of the market. When the iPhone first came out in June 2007, it had a hefty price tag of $599 (US) for the 8GB model and $499 (US) for the 4GB model. In just over 2 years, the price of the iPhone has dropped a whopping 83%, from $599 all the way down to $99. With this huge drop in price, Apple has been able to stay on top of the game and bring their customers top of the line products at competitive prices, all while still making a profit.
This is a huge feat for a company because this means that as they grow as a company, their client base will grow with them. With the iPhone currently sitting at $99, this price even competes with some of the regular cell phones on the market that do not have nearly the same amount of features and options that the iPhone has. With this being common knowledge for someone who is in the market looking for a new cell phone, they are much more inclined to look into purchasing an iPhone rather than a basic cell phone due to the fact that they can get much more product for their dollar.
This is a very good example of Apple utilizing a value based pricing technique to draw in customers away from the competing cell phone companies. A customer will be able to look at a regular cell phone for $99 and see a list of features that come with that phone; they will then look at an iPhone and see the endless list of features with $99 tagged at the end of it. At this point, anyone in the right mind is going to instantly choose the iPhone over the ordinary cell phone, simply because of what you can do with an iPhone, and what it can do for you, all with an attractive price stamped on it. ———————————————— Place With the Apple iPhone now available through Rogers, Bell, Fido and Telus in Canada alone, the availability of the iPhone has gone through the roof, creating a much higher number in sales over the last few months. Since its release, Apple has sold over 30 million iPhones worldwide; this number will continue to grow as they come out with new models and available features. Apple has released the iPhone worldwide, however sales in Europe didn’t hit as hard as expected, quite possibly due to the very late release date.
However, in the UK they have sold well over 1 million iPhones as of today, and are still selling. The convenience of the iPhone makes it so easy to use no matter where you are. If your iPhone needs an update of any kind you do not need to plug it into the computer, you can simply do it right from the palm of your hand. A main selling point of the iPhone is the available apps you can download onto it without plugging it into anything. With in between 60,000 to 80,000 available apps, the iPhone can provide you with pretty much any service imaginable, anywhere on the planet.
With Apple marketing the fact that you can literally do anything with this phone, no matter where you are, customers have just been jumping on the band wagon left right and center. A large percentage of the apps you can download are free, however there are also many that cost money. On average an app costs anywhere from $0. 99 anywhere up to $100 and more, a huge benefit is that 30% of all sales from Apps go to Apple even if they had nothing to do with the development of that App as it is a part of the contract with all developers and Apple.
Since the iPhones release, Apple has generated over 1 billion dollars in sales just from the apps alone, showing the power they have in the market when it comes to making their product available, no matter where in the world you are. With the iPhone currently available through over 120 carriers world-wide and in 89 countries, it can only grow from here. Apple has come this far with the iPhone and if they keep up the way they have been effectively marketing it around the world, marketshare should hit 30% by the end of 2010. ———————————————— Recommendations for Improvement The iPhones marketing team has done a phenomenal job in marketing the Apple iPhone, as well as advertising it to their select target markets. However, on a global scale, Apple did not release the iPhone quite early enough in Europe, possibly deterring potential buyers from the phone (due to the wait). In the U. S. the iPhone was released in June 2007, in Nov of 2007 it was released in the UK, Germany and France.
However, not until June of 2008 was the iPhone released to the rest of the European market, a whole year after the original release date. Simply by releasing the phone worldwide all in one big shot could have made much more of a splash in the smart phone market all around the world, this resulting in possibly hundreds of thousands of extra sales. You could however argue that by delaying the release date in Europe, Apple had created a whole lot of hype around the product, leaving some customers just waiting until the day they could get their hands on their very own iPhone.
Still, this issue left a sour taste in the mouths of many anticipated fans across the sea. A huge portion of the smart phone market is reliant on businesses. Apple has quite flawlessly mastered their promotions and marketing mix’s directed towards a consumer market. However, they have not yet been able to grasp as much of the business industry as they wish. Blackberrys have taken the business market by storm with their Blackberry Messaging service, allowing any Blackberry user to instantly converse with another or a group of others, with no extra fees tacked on.
Another issue being is a Blackberry is still the email king with your e-mails being “pushed” to your phone while with an iPhone they are “pulled” causing up to a 15 minute delay for e-mails to come in, for a regular consumer that’s not a big deal but for the business man who is dealing with clients all over the world involving millions of dollars 15 minutes could be the difference between closing or breaking the deal. When you consider those two advantages the Blackberry has in the business world ou have to consider if Apple could come up with a way to deal with those advantages it could persuade companies to switch over to the iPhone platform. Another thing that Apple needs to consider regarding their iPhone on the business side of the market is the camera, it is a huge deal for some companies developing new products that all phones in the offices must not have cameras on them, RIM offers this option for its business consumers simple fact is Apple needs to as well.
Once these issues are dealt with and the iPhone then feature wise seems more appealing to businesses putting proper marketing out there saying “Hey I’m a business user and I have an iPhone” will be key to build the same type of hype on the business level as they have already created on the consumer level. Finally the providers come in to play, a $99 iPhone without a contract actually costs $599. 99 to buy outright so a carrier such as Rogers has to eat $500 of subsidized costs to initially get the customer to purchase the phone and then must hope that they make all that money back with service costs they will charge that customer.
In Rogers’ case that doesn’t seem to be a big issue but with many companies in Europe it is because many cellphone providers are reporting that the iPhone has been a money hole for them now and they don’t see that changing. With Apple’s strict pricing rules and absolutely no discount policy if the iPhone doesn’t prove to carriers that it is a revenue generator they may eventually choose to drop the iPhone completely from their lineup of smartphones.
Thus causing less market availability resulting in lost sales Apple needs to work with their carriers in a more two-way manner as right now they know the iPhone is in huge demand and carriers can’t afford to not be able to offer it so they accept “Apple’s way or no way policy” but if demand slows down then Apple will obviously have to then adjust their approach. With the structure Apple currently has on the consumer side of the market, it is hard to knock them for anything, the iPhone being no exception.
They have done a remarkable job promoting their product and will continue to grow as a company as their technology does, competing in the smart phone market as one of the top leaders of innovation and available services. On the business side though they obviously have a lot of room for improvement and with what has been discussed, a few extra features, a few adjustments and a great marketing campaign and Apple should see a huge increase in sales for their business consumers.