A Product Profile on Apple iPad Submitted To Suryadatta Institute of Management (SIMMC), Pune

Submitted By, Nirav Mistry PGDM Sem-I(12-14 Batch) (Marketing + IT)

ACKNOWLEDGEMENT Survey is an excellent tool for learning and exploration. No classroom routine can substitute which is possible while working in real situations. Application of theoretical knowledge to practical situations is the bonanzas of this survey. Without a proper combination of inspection and perspiration, its not easy to achieve anything. There is always a sense of gratitude, which we express to others for the help and the needy services they render during the different phases of our lives. I too would like to do it as I really wish to express my gratitude toward all those who have been helpful to me directly or indirectly during the development of this project. I would like to thank my professors, who were always there to help and guide me when I needed help. I am thankful to them for their encouraging and valuable support. Working under them was an extremely knowledgeable and enriching experience for me. No words can adequately express my overriding debt of gratitude to my parents whose Support helps me in all the way. Above all I shall thank my friends who constantly Encouraged and blessed me so as to enable me to do this work successfully.

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Executive Summary This report aims to present the marketing analysis of Apple iPad. The company sold 1 million units in 1 month and in last one year they have sold nearly 19 million units which made it a huge success. There are 5 business models which have been used to present a detailed understanding of the product followed by discussion, conclusion and suggested recommendations. The product no doubt is getting support of Apples brand image but the iPad has changed the way to consumer media. They have started a new consumer segment and provided a platform for media industry to develop and publish news and magazine content complimented with advertisement of brand at the same time. iPad is well received by LOreal, South Part Hotel, GE where they are using innovative apps to fulfill their customized requirement. The product has is operating under premium pricing and hybrid distribution strategy and gained 80% market share in since 2010. Though the rivalry is getting tougher but Apple iPad has used his innovative and expensive marketing strategy to reach out to young and now adult consumers. The product is also had halo effect on iPhone resulting in greater sales. The company has also used eco-friendly raw material and packaging to take care of the environment as part of their green strategy initiative. (Apple Environment Report, March 2012)

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Table of Contents Acknowledgement....................................................... ............................... 2 Executive Summary ............................... ..................................................... 3 Research Methodology . 5 Objective of study ... 6 1. Introduction to Apple Inc.......................................................... ............... 7 2. Product Profile..................................................................................... .. 7 3. Product Lifecycle ............................................................................................................. 8 4. Marketing Analysis ............................................................ ......................... 8 5. Technical Specifications.......................................................................... 12 6. Technology...................................................................................................................... 13 7. Economic Factor............................................................................................................... 13 8. Social................................................................................................................................ 13 9. Legal................................................................................................................................. 13 10. Environmental Factor..................................................................................................... 13 11. Industry Factor............................................................................................................... 15 12. SWOT Analysis............................................................................................................... 16 13. Conclusion..19 References.......................................................... ....................................... 20

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Research Methodology This chapter describes the methodology of the study. This project is based on information collected from primary and secondary sources. After the detailed study, an attempt has been made to Present comprehensive analysis of profile of Apple iPad as a product consumed by the people. The data has been used to cover various aspects like consumption, consumers preference and customers satisfaction, market analysis, competitor analysis, product life cycle, satisfaction index, sales and financial arrangements, research and development and future outlook regarding Cadbury chocolates. In the process of collecting requisite data and information regarding the topic, I visited many places of prospective importance. Information gathering methods like questionnaire, interview were applied on selective samples. Survey Design The study is a cross sectional study because the data were collected at a single point of time. For the purpose of present study a related sample of population was selected on the basis of convenience. Sample Size and Design A sample of 100 people was taken on the basis of convenience. The actual consumers were contacted on the basis of random sampling. Research Period Research work is only carried for a week. Research Instrument This work is carried out through self-administered questionnaires. The questions included were open ended, dichotomous and offered multiple choices. Data Collection The data, which is collected for the purpose of study, is divided into 2 bases: Primary Source: The primary data comprises information survey of consumer behavior towards Apple iPad. The data has been collected directly from respondent with the help of structured questionnaires. Secondary Source: The secondary data was collected from internet, References from Library.

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http://www.apple.com http://www.apple.com/ipad/ http://www.macnn.com http://www.google.com http://www.apple.com/in http://www.zdnet.com http://www.reuters.com/ http://en.wikipedia.org/wiki/IPad Data Analysis The data is analyzed on the basis of suitable tables by using mathematical techniques. The technique that I have used is bar technique. Objective Of Study This project is based on the extensive study of Apple iPad as a marketable product. Objectives of the study are: To know about the customer satisfaction level associated with the product and the customer preference level. To increase customer satisfaction and recapture the market share by fulfilling The customer needs. To study the factors affecting the consumption pattern. To increase the market share of product through a detailed marketing campaign. To target key customers, increase customer loyalty. To gain greater insight into behaviours and habits in market place. To assess customer-purchasing habits for products to understand how to position new product offerings. To analyse purchaser profiles against media profiles to better understand customers lifestyle habits and how to best reach them

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1. Introduction to Apple Inc. Apple Inc. is based in USA and been the pioneer in the development & marketing of innovative products by using innovative business methods. The company was formed in 1977 and they have developed Mac Computers to start with followed by iPod, iPhone 4 and the iPad in the tablet PC section. Not only in hardware but the company has gained a competitive edge in the software industry with the development of Mac iOS, OSX operating system which is the backbone of their hardware products along with the famous iTunes which is used to transfer data in Apple iPhone, iPad or iPod.

2. Product Profile The company has sold 85M iPad till the first quarter of 2012 and 175M iPhone & 46.5M iPod Touch till second quarter of 2012. (ZDNet Staff, 2012) So this gives a good idea how wanted the products are although they

Have lot of practical issues like problem with internet, no wide screen or no multitasking, the next section will review those aspects in the SWOT analysis.

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3. Product Lifecycle

4. Market Analysis

Figure 1
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1.Product: Ipad is using iOS operating system with weight between 601-730 grams and size of 9.5 x 7.4 x 0.5 inches. It has Wi-Fi and Bluetooth (limited to keyboard &headphone use). The main parts are assembled by Foxconn in China which is also planning to change location to Brazil. The company started taking orders for iPad from 12th Mar 2010 and there was a gap between Wi-Fi & Wi-fi + 3G versions. The company made strict policy to buy contract from AT &T with 2 contract options (unlimited data plan and 250MB per month). There are various components which are taken from different companies shown in figure 1 which reflects the management of strategic supply chain and integration of suppliers which has contributed the success of Apple iPad. (Wong, 2010) 2.Price: The company started selling iPad at $499 onwards and it was $638 (399) in UK. The company is very sensitive and adopted the same pricing strategy as they had done for iPhone. Their best fit strategy is focused on price insensitive consumers who want to use the latest product and ready to pay expensive prices. Thus products are sold using skimming and versioning pricing strategy. Even the company decided to reduce the price by $100 when the sales were low, none the less the company made good profits by launching the products after 1-2 months interval. The company sold nearly 1 million units in one month and 19 million in one year (MacAnn reporters, 2011) Although the product costs around $260 according to a report from iSuppli but it doesn't include the taxes or R &D costs. (Raphael,2010; Wong, 2010) 3.Place: The company started selling the iPad only from their retail outlets and then Apple Stores but soon they also joined hands with AT & T, Amazon, Wal-Mart outlets as show in Figure 2. They started selling in Europe (UK, Spain, Switzerland) by May 28 2010and in the south east Asia like HK, Singapore during July 23 2010. Israel denied the selling as they were concerned about the Wi-Fi issues. It is available at stores in India and require 3G service available from major service provider like Airtel, Vodafone, Idea & BSNL

Figure 2
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4. Promotion The company has been promoting the product with the help of social media campaigns and multi-channel media strategy. Some of strategic campaigns company has designed for promotion is given below.

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The company has launched no. of TV commercial & social media marketing campaigns. Currently Apple iPad has gathered nearly 2,800,617 likes on Facebook. The company is using Apple Store , retail outlets to discuss updates, happenings and business analytic reports. Company also allowing its website visitor to sign up for digital newsletters via Email & Social media websites. Faster, Thinner & Lighter were the most used keywords by Apple in iPad adverts. These adverts are made to sell iPads on the basis of functional attributes and users are shown the various features like Email, Photo sharing, Airplay & playing games on it. The iPad marketing is also helping to sell iPhone. People who have iPad but not iPhone have decided to buy iPhone as their next Smartphone according to a survey. Also apple is marketing that the users can reduce the cost of their investments as they can use same app on iPad and iPhone as well. The company is also targeting old users and quite successful in that with help of their easy life adverts. Nearly 20% of iPad users are above 55 Years and above. The company also organize special events MacWorldExpo & Apple Expo to announce updates on iPad.

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5. Technical Specifications

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6. Technology iPad is built on iOS operating system and is challenged by Android from Google along with other companies like Samsung, LG, Toshiba. The company already has over 200k apps which is the highest in the tablet category. Microsoft and Google are still fighting to get their share but now iPad is most wanted product although report says that people are quite less aware of the main features. The limitation of Bluetooth to transfer data is a major limitation along with no multitasking capability as iPad was expected to replace Laptops however it has drastically affected the sales during April 2010 and it is estimated that the sales will be over 60 million by 2011. (NAT Reports, 2010) In other new reports, Android 3.0 is rather unstable and the tablet makers like HTC, Asustek Computers are forced to delay the production after the bad review of Motorola Xoom with only 100k sales(Marshal, 2011) Apple on the other had being proactive and gave upfront cash for the key components as opposed to other manufacturers who are affected by Tsunami in Japan which limited their capability to supply. iPad has provided new platform in the health care industry where the data from electrocardiograph (ECG) will sent directly to the iPad using the new app called Airstrip Cardiology and AirStrip Cardiology is available as screenshot. This is expected to be a new platform for health care development & research and this is just the starting. (Mearian, 2011) 7. Economic Factor Apple is facing tough controversy for exploiting the consumers with their excessive pricing strategy in the tough economic conditions. The loyal customers mostly dont get exclusive treatment and still have to face the tough pricing decisions of the company. The price of iPad started at $499 but in developing countries like India its $544. This is a premium product and due to increasing purchasing power the company is targeting the high end users but the company is still facing tough challenge of low 3G service in the country which has drastically impacted the sales. 8. Social iPad is changing the way people have thought about the product, with the help of over 85 million iPad users the company is providing new opportunity for making changes in the life of the people around it. The users are in touch using social media sites is just a start but the product is well suited for the consuming media and there are many opportunities for the brands where features like iP adverts give high appeal visual & imagery presence for the users with the help of sound, touch and motion. The users can interact with the banners which are on the side of the editorial. This is a good strategy which is attract lot of publishers than even before. The CEO have been using the iPad for corporate presentations Companies like Lexus have created a virtual tour of the car which reflects the level of portability which is brought by Apple. The application is widespread even in hospitality industry where hotel like The Plaza Part South
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Hotel is using the iPads for their rooms and they can order the drinks or food at their convenience or can request wakeup calls or look at the city guides & even airlines schedules. Another company like L'Oreal is using it to show the application and usage (after and before affects) which is helping the brands and the consumers easy access & enhancement of brand building. (Young, 2011) So Apple has provided a new platform apart from web where the marketers can get targeted consumers. It is well received by media and publishing companies where Change Management can be facilitated by iPads. (Larrson, 2010) 9. Legal Fujitsu is claiming that they have launched and used the name iPad before Apple similar to iPhone controversy with Cisco. Also feature like ebook reading by Amazon Kindle faced lawsuit as they are not paying the author for reading his book. Still no issues have been noticed with iPad but time will tell if they will face legal consequences. (Shvartsman, 2011; Sullivan, 2010) 10. Environmental Factors Apple has taken great care and done full environmental impact analysis (as in figure 3) and have used environment management methods during the design and develop life cycle including the material to be used for manufacturing and significant efforts were done to reduce the energy consumption of iPad by 80%. iPad is made of recyclable glass and Aluminum and the packaging material is recyclable & the packing is efficiently done so more iPad's can go in one container. The company is not using Arsenic, PVC, Mercury as the company has started following Environmental friendly European directive and restrict the use of harmful chemicals. The company has also stared recycling programs at majority of the places where Apple iPad is sold. (Apple Environment Report, 2012)

Figure 3
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11. Industry Factors Suppliers:

Apple has high power over consumers as they have partnered with big brands and therefore using monopolistic price policies. Their product is standard and can't be customized by others. The company is taking products from so many other companies and assembling it which has helped them to decide the prices and high brand image is helping them to cash the price of advertising from the consumers. The company has changed the product and launched iPad 2 from March 2,2011 and iPad 3 from March, 2012 but still there are lot of buyers who haven't used iPad first generation yet. (Apple Annual Reports, 2012) Buyers:

The buyers have no control over iPad and they are at the mercy of the company. The buyers want to get products as soon as possible but mostly the company says 3-4 weeks for iPad to reach the consumers. Due to strong ties with the network providers the buyers have to take the products under contract otherwise they have to pay huge money to get the iPad alone. The price is $499 in US but its $ 544 in Asia but the buyers cant do anything due to low power over the supplier. The products in this category are quite high and so the switching cost is also quite high. (Shin, 2010) Threat of Substitutes:

The threat is moderate but according to the Garter reports the Tablet market will significantly affect the sale of laptop and PC (10.5 % only) and the tablets is expected growth of 100% amounting the figure to reach 54 million in 2011 alone. Apple had 80% market share last year and it is expected that LG, Motorola, RIM, HP etc. will affect the sales of Apple sales. The company has stopped the production of iPad and now iPad 2 & iPad 3 is in place. But time will tell who will be the leader. (Garter, 2011) Competitive Rivalry:

The rivalry is quite high in the Tablet industry and IT giants like Google, LG, Samsung, Toshiba, Acer and other local brands are entering the market and what to have their share of consumer markets. Although the growth of Apple is 61% and it is expected that they be the dominant player but still the competition is quite high especially due to high inflation in the countries and the products are quite expensive for normal users. Another challenge is the compulsion to use only Apple apps from Apple stores in a consumer world where everyone is getting use to freeware or low price preference due to software piracy. (Shin, 2011; Kotler,2010)

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12. SWOT Analysis Strength: The company has excellent brand awareness which is helping the iPad's to sell quickly like in just 1 year the company sold 19 ml iPads. The brand is getting leverage from iPods, iPhones and other Mac loyal customers who want to try new Apple products. The company has used innovative marketing skills to sell iPads with lot of halo effect. (MacNN Staff, 2011) The product has good battery life and when its locked it can stay for longer periods. The product is small and easy to handle, its light and portable & has changed the Document manipulations unlike Smart phones with multi-touch features. This lightweight device is making the Book Publishing easy like Amazon's Kindle as the company is managing the publishing value chain & presented a new way to consume content. (Bapun, 2010; indianic.com, 2011) The iPad software developers can embed the advertising content in the applications and it has provided a new market for software developers. Over 30000 iPhone apps can be installed on Apple iPad which give lot of choices for the users. The product has the first mover advantage and has made a strong presence. (Apple Annual Reports2010) The product is eco-friendly and the company has studied environmental impacts while developing the product which is more likely to attract environmental conscious buyers. (Apple Annual reports, 2010) Weakness: The product is facing lot of limitations which makes it difficult to sell in markets like India or China where 3G is still in the developing phase. The iPad is not having any camera and there is no multitasking, so two applications can't run in the product so the users can't download the music if they are working. The internet is only for data usage and no VOIP service like Skype can be used. Like in iPhone there is no USB port and so no external DVD drive can be used so its a challenge to transfer data. Incompatible Flash support makes it difficult to open Flash sites. The maximum storage size is 64GB as compared to normal PC's or Laptops where 300+GB is normal. Without screen protector the product is quite delicate. (Bapun, 2010) The product can only run on iOS operating system and so widespread Window Linux programs can't run on the system. Only the apps from Apple Store can run on the system which further limits the usability. (Bapun, 2010) The product is small but the price is high and with limited distribution channels its tough to get the product and if ordered from website it takes at least 2-3 weeks before they ship the product. The product
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is not so much suitable for business professionals although the company is marketing the product for business presentations. (AppleAnnual Reports, 2010;www.apple.com, 2011) Opportunities: The company can The trend of online book publishing is picking up which has given rise to new iPad publishers and developers. With millions of iPhone and iPad users, the company can earn lot of money as they always charge when the apps are downloaded and share it with the developer company. The company can sell their iTunes content more widely which will help them to sell future products to them. It cant be considered that Apple has cannibalize the PC segment as the tablet market is still underserved and has been in existence since and the product has new market of its own. Threats: The company is facing huge competition from Windows Tablet, Kindle, Google Nexus One (sold nearly 80,000 units in one month), Blackberry has launched Storm and so there are lots of competitors. Lot of users are using Windows operating system and Window 7 is a new brand competitor which is a dominant operating system and

lot of applications already exist in the market which are also free compared to iPad apps (140,000) compares to millions of other softwares which can run on Windows. (Stern, 2010) The company is offering products at a higher price in Asia and Europe compared to USA, which is discrimination and not much appreciated by consumers.
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Other products like HTC Flyer is coming with camera while Black Berry Playbook has got two cameras Other competitors include Dell Steak 10, Toshiba has got SD card slots and removable battery & 2 cameras, Acer has also launched Iconia TabA500 with 2 cameras, LG is another big challenger and has launched G-Slate with HDMI out port while Samsung Galaxy is quite cheap ($249 with contract) and has Bluetooth features and 2 cameras and lastly Motorola Xoom is expensive but is compatible with 3G & 4G technology with 2 cameras. (Shin, 2011)

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13. Conclusion
Apple iPad is a product which has made a history of tablet business domain and is a first successful product after several failures of Apple and its rival Microsoft. This has also ignited the demand for new and improved tablets from Apple and other rivals. iPad has gained competitive advantage due to first mover approach and the company has benefited from globalization which played a big roll in helping Apple to gain better profit by getting iPad assembled in China. The company is using channel partners to sell the product like they have done in iPhone and they have used the same pricing and marketing strategy as they done for earlier products making difficult to be imitated by the rivals. Apple has also proved that iOS is far better than Android which is still developing is still threat for Apple. In coming years there will be more demand for innovative products and company still need to adapt changes in iPad which they have already started in The New iPad(3rd Generation).

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References
Apple iPad Product Overview Webpage[Available at] http://www.apple.com/in/ipad/ Apple Environment Report, 2011, iPad Environment Report, [Available at] http://images.apple.com/environment/reports/docs/iPad_Product_Environmental_Report_Ma rch2012.pdf Apple Q2 Sales report, ZDNet [Available at] http://www.zdnet.com/blog/btl/apples-q2-2012-iphone-sales-dip-can-the-ipad-3-save-theday/74196 Apple iPad buyers survey[Available at] http://ipad.blorge.com/wp-content/uploads/2010/04/ipad_buyer_survey.png Apple iPad domination infographics[Available at] http://www.planetdamage.com/wp-content/uploads/2012/08/FINAL-infographics-t2c-02ipaddomination-500x662.jpg

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