Abstract The Apple iPhone revolutionized the smart phone market. It is the first device to feature three in one integration of a mobile phone, internet surfing and digital music player capabilities. In addition, the device features a great design, has few competitors, and addresses consumers’ desires to be constantly connected in a convenient and flexible manner. Apple has continuously improved upon its original model, and has become a large international player in the saturated mobile phone market.Apple has been successful with a focus on simplicity of design and use, and a simplistic marketing strategy of addressing consumer desires for innovation. Apple, Inc. On May 26, 2010 Wall Street valued Apple, Inc.
(Apple) at $222. 12 billion edging out Microsoft, Inc. valued at $219.
18 billion, and making Apple the highest valued publically traded technology company (Helft & Vance, 2010). This success is largely due to Apple’s unique ability to predict consumer demands, and meet them with innovative technology products.Apple employs 46,600 full time employees, and posted total revenues in 2010 of $65. 225 billion, with 56% resulting from international sales (Apple, Inc.
, 2010, p. 34). The company’s revenue is derived primarily from its popular technology products including Mac desktop and laptop computers, the iPod digital music player, the iPad tablet computer, the iPhone, a mobile phone, computer, and music player, in one handheld device, in addition to peripherals, hardware and software that are used with Apple products. In 2010 the iPhone and related products and services brought in $25. 79 billion accounting for almost 39% of Apple’s total revenue (Apple, Inc. , 2010, p. 34). The iPhone Steve Jobs, Chief Executive Officer of Apple, Inc.
, introduced the iPhone at Macworld 2007, an annual trade show held each January that features Apple products. Jobs often introduces new products during the keynote address, and 2007 was no different. Attendees sit on the edge of their chairs in anticipation of the next big thing, and Jobs did not disappoint. The iPhone is the first handheld device that combines a phone, internet access and iPod all in one.The phone features a 3. 5 inch 160 megapixel touch screen, and a 2 megapixel camera in an ultra thin 11.
6 millimeter sleek case devoid of the typical bulky buttons. The look alone is ground-breaking, and the technology is amazing. The device comes equipped with both proximity and ambient light sensors, which not only helps to save battery life, but also enhances the user experience. The accelerometer allows one to view images in portrait or landscape mode by simply turning the device. The software features that come standard with the device are just as impressive as the hardware.
Personal contacts can be easily synced from a PC or Mac computer, and visual voice mail allows users to pick and choose which message to listen to and when. Email is delivered from both IMAP and POP accounts in rich text HTML format, providing a sharp image. Apple partnered with Yahoo! to offer push IMAP email free of charge.
In addition, the device contains weather and stock market widgets and Google Maps. The Google maps application offers maps, directions, and satellite imagery. The iPhone is truly a revolutionary product, and it is marketed in a revolutionary way.
Micro-Marketing Environment Apple enters a saturated and competitive cell phone marketing environment. “According to the CTIA wireless association, an amazing 250-million Americans are now [in 2007] subscribers to some sort of cell phone plan. That’s a massive 82. 4 percent of the U. S.
population” (Stevens, 2007). The company has several things in its favor. Apple is well known as an excellent employer attracting top talent in the software and hardware development, and has strong leadership in place. The company also maintains strong alliances with third party suppliers.
However, Apple took a considerable risk, and potentially diminished its revenue, by signing an exclusive distribution contract with, AT&T wireless, while competing products are distributed by a wide variety of carriers. According to MobileWack (2007), the top ten phones of 2007 included phones by Samsung, Motorola, LG, Palm, RIM (Blackberry), Helio, Nokia, Sony Ericsson, and HTC in addition to Apple’s iPhone. With such a crowded market, and Apple offering only one mobile phone product, it had to differentiate the iPhone from its competitors, to attract buyers.Fortunately, the company has a strong public image, and a cult-like following to draw upon. Macro-Marketing Environment Apple initially focused on the American market, and while the population is aging, 50 percent of Apple customers are under the age of 30 (Rubicon, 2008, p. 29). Apple must to find a way to attract older consumers in order to grow market share. In addition, the Rubicon survey indicates that the iPhone users are more technically advanced and have a higher average income (Rubicon, 2008, p.
30-32).This makes sense considering that it is the first integrated product introduced, and the introduction price was rather high at $599. 00. The pricy phone hit the market in June 2007, just a few months before the financial crisis became obvious. However, according to Steve Alexander (2008), smart phone sales went from 5 percent to 10 percent of mobile phone sales during the period from October 2007 to October 2008, and the iPhone was the top selling handset.
In addition to its great features, iPhone attracts individuals who are concerned about the environment.Peter Suciu (2008) points out that “according to Greenpeace’s September 2008 Guide to Green Electronics, which includes an environmental evaluation of consumer technology companies the House that Steve Jobs built only scored a 4. 1 on a 10-point scale”. Apple sells products internationally, with a very large presence in the United States, an increasingly environmentally conscience country. The company should work to improve this score, as this area is a potential threat for the company. The technological environment was almost perfect for consumers to give the iPhone a warm reception.The Motorola Razr, first gave consumers a taste of a multi-function phone, and then Blackberry allowed email access.
The three in one iPhone was much anticipated and enthusiastically welcomed as worldwide dependence on technology is ever increasing. In fact, Darren Murph (2009) points out that “according to a wide-ranging United Nations report, around six in ten people across the globe now use mobile phones”. Apple has a strategy to respond to this culture, and seems to fit into everyday lifestyles in many parts of the world.
Marketing Strategy Apple has successful positioned itself and differentiated itself by offering simple, but ingenious products. Everything about the iPhone on the surface seems simple: an uncluttered sleek design, one touch access to information and/or features, an intuitive easy to use interface. Underneath, the product is ingenious, and includes many first to market technologies. Apple’s promotion of the iPhone is equally simple using primarily internet and television promotions.Television ads and online videos provide an onscreen demonstration to viewers with a simple, upbeat tune in the background, and a voiceover explaining what the user is doing on the phone. Apple loads its website, with large colorful photographs and videos as well as a wealth of detailed information about the iPhone and other Apple products, all displayed on a simple stark white background.
The now famous “I’m a Mac, I’m a PC” ads reveal that Apple targets a young crowd who considers themselves “hip”, and the above average price reveals its target of middle to upper income class consumers.However, Matt Asay (2010) feels that Apple targets people and not markets, and is most recently getting attention from big businesses because it has provided solutions for the individuals within the businesses. Marketing Mix The iPhone is huge for providing solutions to the consumers. The integration of mobile phone, digital music device, and internet in a handheld device provides consumers with convenience and flexibility. The product has many features and a sleek simple design that is attractive to consumers.The initial price of $599 brought in many early adaptors, however subsequent price reductions have expanded the magnetism of the iPhone. The iPhone has benefited from promotion on two ends, both Apple and AT&T vigorously promoted the product.
Product placement however, was limited to Apple and AT&T stores and websites. Geoffrey James (2010) puts the exclusive alliance at number one of the top ten marketing mistakes made by Apple over the past several years, stating that signing with multiple carriers would have increased sales and discouraged development of competing platforms such as Android. International MarketStan Schroeder (2009) noted that “Apple was, until recent years, a very US-centric company”, then cited an AdMob study, in June 2009 42% of iPod Touch and iPhone sales came from countries other than North America.
While Apple has gotten a slow start in the international arena, the iPhone and iPod Touch can help the company gain market share for other products. The international market is an enormous opportunity for the company. Competition At the time of the initial debut of the iPhone there were numerous mobile phone manufactures, however none offered a product that successfully competed with all the features and advancements of the iPhone.However, HTC and RIM both entered the market with competing products shortly afterwards. HTC debuted the Hero which featured the Android Sense interface in October 2009, and RIM introduced the Blackberry Torch 9800 in August 2010. These devices and others introduced since have not been a real threat to the Apple’s iPhone.
However, Apple must continue its strong Research and Development investment, and the implementation of improvements and new features to keep buyers interested. SWOT Comparison Apple – iPhoneRIM – Blackberry HTC – w/Android OS StrengthsInnovation Strong Research and DevelopmentIntegration of phone, internet and iPod Strong/Stable Operating System iTunes Customer loyalty Company reputationLarge business volume Large portfolio of products Strong Research and Development High saturation of Smartphone market Wide distribution channels Great email app Alliance with IntelLarge portfolio of products Wide customers base world wide Google Alliance Loyal following WeaknessesHigh price Limited distribution channelsMature product phase Dependent on 3rd party sellers High price Slow internet service Dependent on 3rd party application software developersLimited name recognition Limited product variabilityLate to market 3rd party OS Developer (Google) High price OpportunitiesNew technological advancements in the same device High demand for Smartphone/Mini-computers Attract PC users to other Apple products Attract new customer segments, ie: Business International marketProduct/name recognition Brand loyalty First to market with Smartphone product May be seen as “old” technology by some More/better apps Increase features and improve applications Attracting non-business consumersTouch screen capabilities Attractive to the “anti-iPhone” crowd Recently announced “Facebook phone”ThreatsDependence on 3rd Party Suppliers Non-renewal of subsidies from carriers Competitors copying technology Saturated/highly developed market Specific competitors partnering to develop competing product Environmental friendliness Technological advancements by competitors Best feature, email, is less important May be viewed as “less cool” Google Android OS available on competitor products (diminishes differentiation) Market saturation Differentiation iPhone 2011 Since the market debut of the original iPhone in 2007 Apple has introduced three additional versions of the popular phone.The iPhone 3G, introduced in June 2008 gave consumers a choice between a white or black case, 8GB or 16GB, it supported 3G cellular networks, GPS location tracking, and several software improvements and a price cut to $199 for 8GB and $299 for 16GB price tag (Perenson & Strohmeyer, 2008). The 3G model received another price reduction to only $99 when the 3GS, priced at $199 for the 16 GB model and $299 for the new 32 GB model, hit the market in June 2009. The 3GS’s most impactful improvement is processing and surfing speed moving from a 412 MGZ to a 600 MGZ processor and adding a choice of a 32 GB hard drive (Lal Shimpi, 2009).The 3GS also increase battery life, added video recording, upgraded the digital camera to 3. 2 megapixels, added a compass, and volume control (Segan 2009). Apple’s latest version, the iPhone 4, debuted in June 2010 with a tag line “Thinnest Smartphone Ever” at 9.
3 millimeters. Enhancements to the product are dramatic, including Face Time video calling, Retina display-the highest resolution display available, a 5 megapixel camera with LED flash, HD Video recording, Apple’s A4 processor, a 3-axis gyro and up to 40 percent longer talk time, the iOS 4 operating system, and numerous new features (Apple, Inc. 2010b). Dalrymple (2010) said “Apple CEO Steve Jobs said the iPhone 4, which hit retail outlets Thursday, was “the most successful product launch in Apple’s history”, selling 1. 7 million devices in the first three days. Apple continued with its exclusive partnership with AT&T until February 2011 when Verizon began accepting preorders of the phone. Geller (2011) reports that Verizon iPhone sales have been less than either company expected. No matter the reason for the slower than expect Verizon sales, the iPhone 4 is a strong, one of a kind device, and will influence the future design of all Smartphones.
Consumers are already anxiously anticipating what Apple will do next with the iPhone. Conclusion Steve Jobs said it best in the January 2007 keynote address introducing the iPhone when he called it a “revolutionary mobile phone”. The device far surpasses any of its competitors, and has been a gold mine for Apple, providing not only a significant increase in profits, but also world wide exposure.
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