EXECUTIVE SUMMARY

Samsung introduced a large screen phone (5.2) back in 2011 and carved a new market for
phablets. A phablet is a phone and tablet hybrid, well suited for people who dont want to carry two
separate devices. This not only gives freedom to the user but also increases his productivity because
of a larger screen, because this not only facilitates data consumption but also data creation.
Apple till date only offers phones with 4 screen, while its android competitors have an average
screen size of 4.8. Because of this Apple has been missing out on a major share of the market.
Apple needs to capitalize the smart phone sales in India which grew almost three-fold to over 44
million in 2013. The phablet market (5 6.99) accounted for about 20% overall market in the 4 th
quarter of 2013.
In this report we have presumed that we are a marketing research agency and have identified a
sizeable market for apple in the context of phablets. We have also suggested the launch strategy for
the same.
This report has been made keeping in mind the Indian context.

Table of Contents
Situation Analysis

Objectives 5
Segmentation and Target
Market
5
Positioning
....7
Product
8
Price
9
Placement
11
Promotion
12
References
13
Annexure
14

SWOT Analysis:
Strengths:
1. Brand Reputation- Apple has a reputation of highly innovative, well designed, and wellfunctioning products and sound business performance. Apple brand is valued at $148 billion
and it has surpassed Google to be crowned the worlds most valued brand
(http://wallstcheatsheet.com/breaking-news/apples-reputation-is-the-best-among-topbrands.html/)
2. Innovator- Apple has been chosen as the most innovative business in the world for the 5 th
time

in

2013.

(http://www.forbes.com/sites/tjmccue/2013/01/10/apple-1-google-

2/).Companys core competency of producing innovative products is the strength the

company builds upon and is able to bring the most innovative products to the market. Two
of Apple's innovations a commercially successful mouse and a graphical user interface for
the personal computer are among the most important breakthroughs in broadening access
to technology. ( http://info.astd.org/innovation-stories/)
3. Financial Credibility- The Company posted record quarterly revenue of $57.6 billion and
quarterly net profit of $13.1 billion, or $14.50 per diluted share. These results compare to
revenue of $54.5 billion and net profit of $13.1 billion, or $13.81 per diluted share, in the
year-ago quarter. Gross margin was 37.9 percent compared to 38.6 percent in the year-ago
quarter. International sales accounted for 63 percent of the quarters revenue.(
http://www.apple.com/pr/library/2014/01/27Apple-Reports-First-Quarter-Results.html)
Weaknesses:
1. High Price Deterrent- One problem facing Apple in new markets like India is price. Many
average Indians simply cant afford $600 for the 16GB version (about 40,000 Rupees) or
$800 for the 64GB version.
2. Brand Switching: Data shows that loyal apple customers are getting disillusioned and
switching to Samsung phones with larger screens. Lack of phablets, which are conceived as
3

a wise buying decision (http://www.todaysiphone.com/2014/07/data-shows-disillusionediphone-users-switching-samsungs-larger-screens/)

3. Retail and Pricing- Apple, in India, has decided to stay away from directly entering the
market to retail its products. They instead, choose distributors, who sell them at a rather
high margin. This has led to poor positioning of the Apple brand in Indian retail stores, and
so called Apple Premium Resellers. Few salesmen know much about the iPhones cool
features. Many prospective buyers leave the store ending up buying either an Android or
Windows mobile device. Consumers are left considering it a more value for money
proposition simply on hardware specs. India is one of the most expensive places to
purchase an iPhone. The iPhone 5s is sold at a whopping 53,500 or $873 for the 16GB
unlocked model, while the iPhone 5c is sold at 42,500 or nearly $688. The iPhone 4s is
sold in a similar price band as Googles latest Nexus 5.
Opportunities:
1. High demand of iPad mini and iPhone 5s: iPad mini sales will increase Apples market
share in the tablet market and, will strengthen firms competitive advantage.
2. Growth of tablet and smartphone markets: Growth of tablet and smartphone markets is a
good opportunity to expand firms share in these markets.
3. Increasing demand for cloud based services. Apple could expand its range of iCloud
services and software as the demand for cloud-based services is expanding.
Threats:
1. Android OS growth: Android OS is the main competitor for iOS in mobile device market.
The domination of Android decreases iOS power over influencing consumers to join Apple.
2. Rapid technological change: One of the most severe threats Apple and the other tech
companies are facing is rapid technological change. Companies are under the pressure to
release new products faster and faster. The one that cannot keep up with the competition
soon fails.
3. Price pressure from Samsung over key components: Samsung has already asked Apple
to pay higher price for its application processors. Due to intense competition and no viable
substitutes, Apple may be asked to pay even more.
PESTEL ANALYSIS: Currently, Indias middle class size is equal to that of US population but
Apples sales in India is only 1% of its global sales.
Political: Even though Apple has plans to open their own stores in India, they are facing constraints
from the Indian governments policies. According to Indias FDI in retail policy, any foreign retailer
4

who wants to open their own store in India should source 30% of components locally. Apple
doesnt want to change its manufacturing process just for entering into one country.
Economic: By 2013 end, India recorded its slowest economic growth of 4.4% and also currency
weakened during this period. This added to the high prices of Apple is a constraint to Apple to
market in India.
Social factors: One problem facing Apple in new markets like India is price. Many average Indians
simply cant afford $600 for the 16GB version (about 40,000 rupees) or $800 for the 64GB version.
Theres no subsidy program with wireless carriers in India where Apple can charge $200 for its
16GB iPhone 5 at Verizon Communications in exchange for a two-year contract. In contrast,
handset companies like Samsung Electronics and HTC have succeeded in making their products
more affordable in India. Roughly 7 in 10 handsets sold in India last year were priced at under
$100. The new iPhone 5, on the other hand, was sold for about $800 in India this month.
Technological: India has technological problems like low internet and PC penetration because of
which activation of Apple products online is not easy compared to that in US. Only a small
minority of Indians have iTunes in their PCs. Also Indian users tend to install software packages
that come with the product rather than downloading online. And Apple has hardly any retail outlets
here.
Legal: Mobile payments are a big problem in India because of the legal framework and cyber
security. Also virtual currencies like Bit coins are under regulatory scanners in India. Apple uses a
global payment gateway on which RBI has no jurisdiction.

Objectives
Corporate Objective: We are presuming that we are a marketing research organisation which
apple has hired. Apple would like to know whether there is an opportunity or a problem in the
Indian mobile phone market. Thus the corporate objective in this case could be How can we
increase our market share in the Indian mobile phone market?
Marketing Objective: The marketing objective in this case would be To identify market segments
that are not being serviced by Apple iPhone and to suggest a product/products that can be targeted
at this segment to increase market share of Apple
Issues
5

Segmentation and Target Market

Apple currently has three offerings In the Indian mobile market, the iPhone 4s which is the
cheapest of the lot, the IPhone 5c and the premium IPhone 5s. None of which cater to the current
demand of bigger screen phones between 5 6.99. The move of introducing an iPhone with a
bigger screen would not be a mindless gamble for apple as the figures show that apple consumers
are very brand loyal and brand switching is very low(See Exhibit ). Apple loyalists are delighted
despite having to pay higher prices compared to phones by its competitors.
The segment identified for this product comprises of consumers who want an all-in-one device, one
which provides not only the core benefit of communication to them, but also provides a media
powerhouse which stores and makes available a lot of digital information like photos, music and
videos. Apple needs to capitalize the smart phone sales in the country which grew almost three-fold
to over 44 million in 2013 (http://www.bgr.in/manufacturers/samsung/smartphone-sales-in-indiatouch-44-million-in-2013-ss214/ ). The phablet market (5 6.99) accounted for about 20%
overall market in the 4th quarter of 2013.
The way in which STP process is followed in Apple is shown in Exhibit .The various segmentation
strategies used by apple are as follows:

Geographic: This segmentation divides the market into different geographical units such as
nations, regions, states etc to fit the need of individual regions. In India mainly the urban

population is targeted with urban mobile penetration rate more than 160%.
Demographic: Apple Iphone segmentation is based on gender and age variables. Around 2/3
of the 2.3 million US Iphone users are men (Nielsen). A recent research done by Solutions
Research Group has showed that Apple was successful to attract youngsters as 63% of its

customers were under 34 years and average age of its customers is 31 years.
Behavioral :
o 1.User Status : Users and Non-users
o 2. Benefits : All in one Phone
o 3. Usage rate : Heavy Internet/Social media app users
o 4. Occasions : New Launch, Festivals
Psychographic: Psychographic segmentation is dividing a market on the basis of social class,

life style, and personality characteristics etc. Apple very carefully investigates psychology of
consumers trends and their life styles. The lifestyle of a person is linked to his or her
preferences. Lifestyle is reflected in activities, interests and opinions. Now different people
have different lifestyles. Apple identified this and provided different features for different
people in one phone like touch screen, iPod for a trendsetter youngster, or calendar and fast web
browsing for a sophisticated businessman
6

Justification for chosen target: As mentioned above the market for phablets in the sub-continent
is huge and this category of devices account for 30% of the smartphone sales today, thats close to
13 million units (Measurability). The growth for this category is phenomenal is it grew about 17
folds

in

the

2nd

quarter

of

2013.

(Substantiality)

(http://articles.economictimes.indiatimes.com/2013-09-09/news/41903526_1_phablets-dual-simphones-lenovo-india). Due to the ease in Internet access among the growing urban Class population
and wide exposure to social media (See Exhibit), effective programs can be designed to attract the
segments (both Traditional and Non traditional) and the segments can be effectively reached
and served. (Accessibility and actionability)
Target market strategy: Our target market in this case is the urban smart phone user who does not
want to spend money on two devices, namely, a Smartphone and a tablet. This consumer seeks a
device which can double up as a tablet and a primary phone. Therefore we will pursue a
concentrated strategy in the case of the phablet launch by apple.
Positioning
Positioning Statement: For people who need entertainment, take care of business, communicate
and manage their information while being mobile, the iPhone is a single multipurpose handheld
device with Internet access and a widescreen audio/video player providing a wide variety of
applications for every purpose. Unlike the competition, the iPhone provides an unmatched, userfriendly and intuitive user interface. The iPhone provides seamless integration of hardware and
software for a hassle-free user experience.
Value Proposition: An all-in-one premium media powerhouse.

We recommend that in the future perceptual map for the apple, apple should try to position itself a
little closer to being low price. This does not mean apple should reduce the price of the phablet and
therefore decrease revenue and likely dilute its brand, but, to remove the psychological barrier of
high price, apple can offer buy back and rather than reducing the price, it can offer the 32GB
variant as the entry variant, therefore people will feel that they are getting value for money.
Product
Core: The core benefit derived in this case is a multi-purpose, communication device and social
status.
Actual: The actual product in this case will be a 5 screen apple iPhone. We do not recommend
exceeding the screen size more than 5 because not everyone needs a phablet and there may be a
sizeable amount of users of iPhones who prefer it because it has a smaller screen compared to the
competition. Therefore, 5 would be a safe bet for apple. The screen size not even be too large as it
would affect ease of use with one hand and may cannibalize the sales of the iPad mini.
Augmented: The augmented product in this case is the social currency provided by using an apple
product. Apple products fulfil the esteem needs of the consumer who is willing to pay a premium to
use apple products over the competition which is generally under-priced compared to apple.
Product by Involvement: An apple iPhone qualifies as a specialty product because it has unique
characteristics and brand identification because for this buyers are willing to make a special
purchase effort. An iphone is an expensive product and is not purchased frequently. Before
purchasing this product buyers put in a significant amount of research.
Branding: Apples branding strategy should focus on emotions. The initial point should focus on
how an Apple product experience makes the consumer feel. The Apple brand personality is about
lifestyle; imagination; liberty; innovation; passion; hopes, dreams and aspirations; and power-tothe-people through technology (http://www.marketingminds.com.au/apple_branding_strategy.html)
The Apple brand personality is also about simplicity and the removal of complexity from people's
lives; people-driven product design; and about being a really humanistic company with a heartfelt
connection with its customers. Even in the case of the new phablet, apple should bank heavily on
its brand.
Packaging: Traditionally the purpose of the package has been to hold the product together safely.
But of late, packaging has become a very important aspect of the overall placement of the product.
8

The consumer today judges the product also by its packaging; but at the same time the company
should not spend too much money on packaging that the overall cost increases.

Price
In late 2013, Apple, for the first time, launched 2 iPhone models together, the iPhone 5S and iPhone
5C. The 5S was the expected replacement of the older iPhone 5 while the 5C was supposed to be a
cheaper alternative to the 5S, which remains very unaffordable in emerging markets. The 5C was
supposed to increase the companys customer base, especially in emerging markets like India. This
model was supposed to cater to the middle segment of the smartphone market, if not the lower
segment. But, as far as India is concerned, the 5C cost USD 650 (at launch) which was out of the
reach and aspirations of the low income smartphone buyers. The 5C eventually turned into a
strategic mistake by Apple. As on date, Apple continues to lose market share in the Indian
smartphone market because it does not have a product that caters to the low/middle end market,
which is the fastest growing in India (http://www.marketexpress.in/2013/12/emerging-marketsapple-iphone-5c-positioning.html).
Currently Apple does not have any offering in the Phablet category. If we refer to its major
competitor in the smartphone arena, Samsung, we will find a striking dissimilarity between the two.
Apple is generally perceived as a technological leader and innovator which make the best products
in the industry. While Samsung has been labeled a mimic of Apple and is alleged to have copied
some of its smartphone ideas from Apple it revolutionized the industry when it introduced the
Galaxy Note series of smartphones back in 2011. With the Note, Samsung introduced the first ever
Phablet to the world. This was a groundbreaking product which carved out a niche for itself. The
mobile phones market in India is under monopolistic competition where the markets consist of
many buyers and sellers who trade over a range of prices differentiating their offers to the buyers in
terms of quality, features and style for physical products or accompanying services.
Value-Based pricing: In the Indian market, Apple Inc. should follow a value-based pricing for the
iPhone by using buyers perceptions of value like the brand, innovations, mobile apps, not the
sellers cost. It is important to remember that good value is not the same as low price. In ValueBased pricing Apple Inc. follows valued-added pricing strategies to increase the pricing power by
providing value-added features and services to differentiate their offers. Apple Inc. ensures that the
iphones are superior in quality, technology and features. It doesnt compromise with the production

cost of iphones instead it sells with higher price when compared to the other competitors but still
the demand for iphones are high.
Price elasticity of Demand: When Apple Inc. goes with high pricing strategy there can be a change
in demand. Price elasticity of demand shows the change in demand due to change in price.
Normally when price increases demand decreases but when the product is unique or superior in
quality, prestige or exclusiveness then the demand is less sensitive to change in demand. Since
Apple iphones are superior in quality, even if the price is increased the demand is less sensitive.
Market- Skimming pricing: Pricing strategies usually change as the product passes through its
life cycle. New product faces the challenge of setting prices for the first time. Apple Inc. follows
the market- skimming pricing strategies. It sets high price at the launch and when the year passes it
reduces the price to attract new buyers and maximize revenue from various segments of the market.
This strategy is used only under 2 conditions:

The products quality and image must support its higher price and people should be willing

to buy at that price.

The costs of producing a smaller volume cannot be so high that they cancel the advantage of
charging more

Since Apple is a well established brand for its quality and innovation in mobile phone markets and
it has created its own segment of buyers who are ready to buy at high price, market-skimming
pricing is well suited for it. Apple also sells it old iphones like 4, 4S in the market at less price and
still these products attract new buyers. After thorough research, primary and secondary, and
formulating the current and future perceptual maps we have come to a conclusion that apple can
price this new phone between the category of 40,000 and above. At this price point it is close to the
price of iphone 5s but the phablet serves a completely different need.
Creative component: But, to be on the safer side, rather than launching a 16 GB version, apple
should introduce a 32GB version so that it can tackle the issue of it being perceived as a very pricey
brand. This would not only allow apple to capture a broader market but also ensure that its brand
does not get diluted.
Tactics for fine-tuning: To cut the price barrier even further and attract even more customers,
apple can introduce a buy-back offer when the product reaches the maturity stage. Under this offer
consumers can replace their old phone and get a discount on the phablet.

10

Also, apple can tie-up with major banks and offer cash-backs when the phablet is purchased with
the credit card of these banks. Alternatively, apple can also introduce promotional offer during
festival seasons when Indians go on buying sprees.

Placement
Type of Marketing Channel & Distribution Intensity- Apple Inc. uses multiple distribution
channels for reaching out to its customers.The first is the direct distribution in which Apple
establishes the retail stores where it displays the product and provides the information and support
to the end-user directly. In Indirect distribution, Apple used the intermediary organization for
fragmenting bulk supplies of inventory, provides the financial services to retailers and increase ease
of customer purchase and minimize the transport costs by monitoring and operating a warehouse
close to the intermediaries. Apple controls the distribution of its products through a vertical
marketing channel. The various advantages related to a vertical marketing channel are consistency
of messaging as they have their own sales force to pass the apple message straight on the
customers, removing the competition from the point of sale, ease of up selling, reinforcing the
apple community and finally controlling of prices.
The reason why Apple has such a low market share in India (1.2% compared to Samsungs 51%) is
because it doesnt like how it must do business in India, where it has to tie up with national,
regional and local distributors to get its products to consumers. Apple hasn't been able to open its
trademark stores because of requirements that foreign retailers purchase 30% of the value of India
sales from domestic suppliersunmanageable in a country with virtually no electronics
manufacturing.According to Tim Cook, Apples Chief Executive the sort of the multilayer
distribution really adds to the cost of getting products to market.
Apples distribution policy is changing since it tied up with Reddington and Ingram Micro previous
year in an attempt to achieve higher market penetration, especially Indians who live in thousands of
smaller towns. Apple sells in India through roughly 2,000 mom-and-pop stores and 65 franchiseeowned "Apple shops" in malls and other high-end spots.The companys decision to go through
distributors perhaps shows the company is looking for higher market share by sacrifice its margins
if required .In India, Apple should follow a exclusive distribution. By providing exclusive
distribution, Apple can gain stronger dealer support and more control over dealer prices, promotion
and services. It will also enhance its brand image and allow for higher mark-ups. It should also
11

follow a multi-channel distribution system in India, judging by the success of Motorola and other
brands in tie up with Flipkart and other major retailers, Apple can also tie up with online retailers
by providing them higher margins. This, combined with the usual discounting by e-commerce sites
and the broad customer base of e-retail businesses can help Apple counter competition from
Samsung and Sony who are fighting to ensure parity between online prices and brick and mortar
shops. In support to the channel partners, Apple could also provide demonstration products,
detailed specific handouts, full color photos and display featuring the product. The distribution can
be investigated through cell phone outlets and there will be special payment terms for retailers that
place volume orders.
Promotion
Promotional objectives of Apple Phablet:
Make consumers recognize their need: Through external stimulus, making consumers recognise
their need to purchase an Apple Phablet. Consumers should realize that they need a device that can
avoid the inconvenience of carrying both a tablet and a phone. A phablet will be more convenient to
read e books when compared to a phone.
To provide information and awareness to the consumer: At a stage where consumers are slowly
interested to buy a Phablet, by promotion of Phablet, Apple can help consumers in their external
information search.
Provide a comparison with competitive products: At a stage where the consumers would be
evaluating their alternatives other than Apple Phablets, the promotional strategies employed would
emphasis on the advantages of Apple Phablets over others. This would create clarity in customers
minds on Apple Phablets advantages over others.
Message: The problem of carrying both a tablet and a phone can be avoided by the Apple
Phablet.
Promotional mix:
Advertising: Advertisements range from the ones released in 1984 to introduce the original
Macintosh ,the 1990 s think different advertisement which linked Apple to famous social figures
like John Lennon and Mahatma Gandhi, the 2000s ipod people , Get a Mac campaign which
ran from 2006-2009 to the most recent ipad-Air released in 2013.Also they employ Buzz
marketing where celebrities endorse the products ,for example Popular singer-songwriter and
12

actress Zooey Deschanel advertised the Siri feature on the new iPhone

through Apples

commercial. Phablet can be extensively advertised in the same way.

Personal selling: Apple uses extensive personal selling. The sales representatives in any Apple
store are young, enthusiastic and abreast with latest technological developments. They are
thoroughly trained in customer service and product information. Phablet promotion can be done the
same way. But in India since Apple doesnt have any company owned stores, they cant employ this
technique here.
Short term incentives: In most of the Apple stores, consumers are given a hands-on experience of
the product by allowing them to listen music on IPod and to experience the IPhone and its features.
Consumers can be given a hands-on experience on the phablet as well and this will make them
understand the advantages of having a phablet before they actually purchase it.
Public relations: Apple identifies the unique feature in their upcoming product and then uses its
relation with the media to create a buzz among the target customers. They have relationships with
selected journalists and bloggers and provide them a hands-on experience of the product before the
launch, and through them they increase the buzz further. This strength of Apple to use PR
effectively should be utilized for Phablet promotion.
Promotional campaigns: One of their more popular promotional campaigns has been the "Buy a
Mac for college and get a free iPod touch" campaign, which usually runs from late May until midSeptember. Apple can promise similar free products with the purchase of Phablets.
Direct marketing: Apple uses emails marketing extensively .They provide information about their
products and encourage customers to visit their website and find out more about their products.
Online marketing: Their official website itself is a marketing tool, through which they provide
information about their latest products and video tutorials on how to use Apples gadgets. So Apple
carefully blends the mix of promotion tools and implements the Integrated marketing
Communications effectively.(See Exhibit)
Pushpull strategy: Apple understands the needs of the customers .They get a clear understanding
of their customers expectations. They research and find out the consumers perspective and then
relate product attributes to customer values. Thus they employ a market pull strategy. At the
same time they continuously innovate their existing products and release in the market and thus
employ a

technology push strategy .Apple

Phablet is one such innovation which was

developed keeping in mind the customers need to have a phone and a tablet in a single device .
13

References
http://wallstcheatsheet.com/breaking-news/apples-reputation-is-the-best-among-top-brands.html/
http://www.forbes.com/sites/tjmccue/2013/01/10/apple-1-google-2/
http://info.astd.org/innovation-stories/
http://www.apple.com/pr/library/2014/01/27Apple-Reports-First-Quarter-Results.html
http://www.todaysiphone.com/2014/07/data-shows-disillusioned-iphone-users-switchingsamsungs-larger-screens/
http://www.bgr.in/manufacturers/samsung/smartphone-sales-in-india-touch-44-million-in-2013ss214/
http://articles.economictimes.indiatimes.com/2013-09-09/news/41903526_1_phablets-dual-simphones-lenovo-india
http://www.marketingminds.com.au/apple_branding_strategy.html
http://www.marketexpress.in/2013/12/emerging-markets-apple-iphone-5c-positioning.html
ANNEXURE

Core
Actual
Augmente
d

Core benefit Premium multipurpose communication device

14

Actual Product a 5 Apple iPhone

Augmented Product Social status

15