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Marketing Essay
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In New Zealand, the original Apple Store is located in New Market. The Apple Store is
planning in open Apple stores in more key locations. This marketing plan aims to
present the objectives, strategies, tactics & marketing action plan for Apple Inc. for
promoting the new Mini iPhone product in New Zealand.
3. Area of interest
The area of interest for this assignment is a product - Smartphone/iPhone
There is an opportunity to develop a mini iPhone with more features and lower prices
for young people, such as more colours, stronger music functions and internet functions.
The reason for this opportunity is firstly that the sales of iPhone 5 are expected to drop
significantly in 2013, as can be seen from the figure below, due to changes in customer
needs and increasing competition from competitors such as Samsung.
Secondly, the newly announced iPhone 5 does not have significant improvement as
compared with the previous iPhones. Customers are complaining with the lack of
innovation of Apple and have started to seek different brand. The style and look of
iPhone 5 did not change much from the previous versions and the content, such as
software and functions, of iPhone 5 did not improve from iPhone 4 or IPone 4S
substantially.
Also, iPhone is priced in the higher range due to its popularity and unique design. The
following tables summarise the prices for iPhone5 and prices of competing products
from other brands. The prices are collected from Vodafone as of 30 October 2012. The
high price of iPhone 5 is not affordable for some customer groups, such as young people
and students. The price of iPhone 5 is almost as expensive as an average laptop in the
market. Those customer groups, however, are more likely to regularly change their
mobile and to try out new technology and products. Based on these reasons, there are
market opportunities for Mini iPhone, which are cheaper and designed to satisfy the
needs of young people.
Brands
Prices
iPhone5 32 GB
$1199
Sony Xperia U
$299
Nokia Lumia
$399
6. Objectives
6.1 Marketing objectives
The overall objective of the marketing programs aims to successfully design and
promote the new Mini iPhone to young people who purchases phones more frequently
and have less disposable income to purchase expensive iPhones.
Promotion objective is effectively increase brand awareness and promote the sales of
Mini iPhone through establishing an IMC (integrated marketing communication)
campaign called "mini but mighty" from 1 January 2013 to 31 December 2013.
7. Strategy
7.1 The product strategy
The product strategy is to reduce complicated functions for businesses and design more
colours, different material packaging, and features for young people, such as stronger
music system and internet connection programs. The product strategy is product
differentiation. Kotler and Keller (2012) claim that products can be differentiated in
different forms, including the size, shape, or physical structure of a product. The aim of
the product differentiation strategy is to be different from the products offered by the
competitors and be more attractive to customers. Currently, Apple needs to address
customers' concern that iPhone has got too many features with too high a price. Mini
iPhone is expected to get rid of the redundant features through the compact design.
Another reason for adding more colours and phone accessories is to be more appealing
to the young consumers. As discussed before, young people are an important group of
high-tech chaser who change cell phones very frequently and are easy to be attracted by
fashionable elements in cell phones. Therefore, the product strategy is expected to
resolve the current concern over complicated functions and attract more young
customers than before.
Apple should continue to use the selective distribution strategy that it currently
implements in New Zealand. Selective distribution strategy means that Apple will rely
on a number of intermediaries to carry and sell a particular product (Kotler & Keller,
2012). These intermediaries include Apple stores, electronic shops, and
telecommunication stores. The internet should also be considered as it is a relatively
cheap distribution channel to reach a large number of potential customers. Compared
with exclusive distribution, selective distribution is more flexible for Apple. It allows
Mini iPhone to gain adequate market coverage with more control and less cost than
intensive distribution (Kotler & Keller, 2012). If the initial market response for Mini
iPhone is good, Apple could also consider widening the distribution channel by selling
Mini IPhone in major shopping malls or department stores.
8. Tactics
8.1 Product tactics
3. Instead of giving traditional iPhone earphone in the package, Mini iPhone can give
customers wireless earphones that are colourful and unique. These wireless earphones
are estimated to cost less than $20 to manufacture.
4. The product size for Mini iPhone should be slightly smaller than iPhone 5. The
following picture shows the size of current iPhone5, which is 123.8 mm x 58.6 mm. The
designed size for Mini iPhone should be about 100mm x 58.6mm.
iPhone 4S
$788
$945
$998
Mini iPhone
$498
$598
$698
Since Mini iPhone keep two thirds of the functions of standard iPhone and it is made of
cheaper materials, the starting price for Mini iPhone should be lower than the current
prices for iPhone 5 and iPhone 4S. This will attract the customer because they would
value the trade-off between features and prices. Kotler and Keller (2012) point out that
many products are offered with different features that supplement their basic function.
It is important to consider how many people want the extra feature and how much it
would take to introduce additional features in the market. The features taken off are
reflected in the reduced price shown in the table. This price is very competitive as Apple
has never offered mobile phones at this affordable price. It is now more affordable for
the vast majority of consumers to own their apple product without too much financial
burden.
This price range is very attractive considering the brand equity offered by Apple and the
supplementary services (e.g. AppStore) that mobile phone users cannot get from
anywhere else. The table below is a summary of the current prices of the popular mobile
phone models offered by Apple's competitors as listed on PriceSpy (2012).
HTC One S
$535
GT -i9100 Galaxy S II
$475
Lumia 900
$525
Sony Xperia S
$465
HTC One 16 GB
$595
GT-N7100 Galaxy Note II 16 GB
$579
Lumia 610
$232.98
Sony Xperia P
$386
HTC One XL
814.95
GT-i9300 Galaxy S III 32GB
$797.99
N9 16 GB
$359
Sony Xperia Acro S
$649
HTC Desire HD
$439
GT-S5570 Galaxy Mini
$97
808 PureView
$799
Sony Xperia SL
$563
HTC Evo 3D
$529
GT-i8160 Galaxy Ace II
$361
Nokia N8
$485
Sony Xperia Go
$349
Time
Mini iPhone (16GB)
Mini iPhone (32GB)
They are always in the best position to sell Mini iPhone as long as Apple provides those
informations to them in advance so that they have time to get prepared during the
launch day of iPhone Mini.
In addition, Apple should make better use of other distribution channels to sell Mini
iPhone as well. Consumers are more willing to shop online for Mini iPhone if it is
available in their countries and regions. Apple could consider offering Mini iPhone
through its online store in New Zealand. It could also include free delivery services to
better encourage online purchase of Mini iPhone. However, this plan is subject to the
condition that Apple can negotiate good delivery terms with logistic companies or with
Post NZ. Given the influence of Apple, this should not be too difficult. What Apply
should consider is whether the cost of delivery is matched by the increase in demand
and sales for the new product, Mini iPhone.
Vistaprint can be a potential supplier to print the brochures. The cost of printing
brochures at Vistaprint is shown in the table below. The more orders to placed the more
cheaper price they got, therefore, Apple should print 100,000 brochures first, which cost
NZ$30,000.
Source: Vistaprint (2012)
The brochures will be distributed to partners, such as electronic shops (E.g. JB Hifi,
Dick Smith), Apple stores, telecommunication stores (E.g. Vodafone, Telecom), and
other retailing stores for Apple. These brochures are given freely to customers who are
interested in Mini iPhone. These customers are more likely to be potential customers
because they are interested in taking the brochure and they are customers of related
shops, such as electronic shops and telecommunication shops.
Therefore, the total cost for Apple to advertise Mini iPhone on Mai FM can be from
$13,750 to $25,750 (Mediaworks, 2012).
Apple Facebook has 1.63 million fans, as can be seen from the picture above, which is a
great source for Apple to market its new Mini iPhone product(facebook, 2012).
However, the current facebook page of Apple only presents pictures of iPhone products
and allows customers to download Apple wallpapers for their computer. There are no
updates of information on company and products and little interactions are made
between customers and the company. Apple should utilise the communication
opportunity created by facebook and collect valuable feedback from customers and
promote the new product to them effectively.
Design Department
Finance
1 January 2013 - 29 March 2013
Step 3: Add wireless earphone features
Design Department
Finance, Purchase
1 February 2013 -31 March 2013
Step 4: Reduce the size of the phone
Design Department
Finance, Marketing
1 March 2013 - 1 April 2013
Activity 2: Set prices for Mini iPhone
Marketing Manager
Finance
1 April 2013 - 1 November 2013
Step 1: Announce the starting price of Mini iPhone
Marketing Manager
Finance
1 September 2013
Step 2: First downside adjustment to price as planned
Marketing Manager
Finance
1 October 2013
Step 3: Second downside adjustment to price as planned
Marketing Manager
Finance
1 November 2013
Activity 3: Distribution arrangement
Production Manager
Marketing
1 February 2013 - 1 May 2012
Step 1: Contact major existing distributors (especially Telecom and Vodafone)
Production Manager
Marketing
1 January 2013 - 20 February 2013
Step 2: Provide product information to nationwide retailer
Production Manager
Marketing
1 March 2013 - 1 April 2013
Step 3: Construct Mini iPhone official website and add the product to online store
Production Manager
Design
20 March 2013 - 1 May 2013
Activity 4: Launch IMC marketing campaign
Marketing Manager
Finance
1 August 2013 - 1 December 2013
Step 1: Advertise using 10,000 brochure
Marketing Manager
Advertising
1 Aug 2013 - 1 Sep 2013
Step 2: Advertising via MyFM 886
Marketing Manager
Advertising
1 Sep 2013 - 1 Oct 2013
Step 3: Advertising on TV4
Marketing Manager
Advertising
20 Aug 2013 - 20 Sep 2013
Step 4: Advertising on Facebook
Marketing Manager
Advertising
1 Aug 2013 - 1 Dec 2013
Step 5: Sales promotion competition
Marketing Manager
Sales promotions
1 Oct 2013 -1 Dec 2013
Step 6: University student sponsorship
Marketing Manager
Public relations
1 Oct 2013 -1 Dec 2013
Step 7: Personal selling activities
Marketing Manager
Personal sales
1 Sep 2013 - 1 Oct 2013
10. Budget
A brief budget for Apple to design and promote Mini iPhone is presented in the table
below:
Marketing budget
1 January 2013 to 31 December 2013
Sales
$40,000,000
Less cost of goods sold (50% of sales)
$20,000,000
Gross Margin
$20,000,000
Direct expenses
8.1 product expense
$7,000,000
8.2 pricing expense
$150,000
8.3 distribution expense
$290,000
8.4.1 advertising brochure expense
$30,000
8.4.2 advertising tactics for radio
$193,750
8.4.3 advertising tactics for TV
$492,500
8.4.4 advertising tactics for the internet
$66,000
8.4.5 sales promotion tactics
$78,000 (3 employees)
8.4.6 public relations tactics
$100,000
8.4.7 personal selling tactics
$186,000
Other expenses (administration costs)
$120,000
Contribution Margin
$11,293,750