Index

Number

Particular

Pg. No.

Executive summary

Company Overview

Products Portfolio

Overview of Smartphone industry

Product Overview

Audit of marketing environment

SWOT analysis

Marketing Mix

11

Marketing approach

17

10

Recommendations

21

11

Appendix

22

12

Bibliography

23
Student id:-77090417 |

Course: - MBA

1) Executive Summary: This report will analyze and discuss the most important elements of the marketing
environment for the launch of the iPhone, that is to say the main three levels of the
marketing environment. the macro-environment through technological, economical,
social and political forces and finally the internal environment through the relation of
Apple with its employees and its marketing philosophy. The analysis for the microenvironment is based on Porters 5 forces model and the one on the macroenvironment is based on PEST analysis. The report will also give an interpretation
for each of these aspects, a recommendation with a rating of the attractiveness of
the UK current marketing environment in which the iPhone is launched.
The principal conclusions of this report show that the iPhone is a successful product
that combines interesting features: iPod, internet browser and mobile phone, which
satisfy the customers needs.

Student id:-77090417 |
Course: - MBA

2) Overview of company:Apple Inc. is an American corporation that designs and manufactures computer hardware,
software and other consumer electronics devices. The company is best known for their
Macintosh personal computer line, Mac OS X, extremely loyal user-base, iTunes media
application, the iPod personal music player and i Phones. The company headquarters is in
Cupertino, California, CEO and co-founder is Steve Jobs and the company boasts 284 retail
locations spanning 106 different countries. (apple, 2011)
Apple was established on April 1st, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne
to sell the Apple I personal computer kit. Steve Jobs was said to own 45% of the company,
Steve Wozniak with 45% and Wayne with the remaining 10%. While Jobs and Wozniak were
young with little to no assets, Ronald Wayne was older with personal assets and was scared
to put these at risk. This resulted in Wayne selling his share of the company back to Jobs
and Wozniak for a reported 800$. Today Waynes share of the company would be worth over
3 billion dollars. (Michael Dougherty, 2010)
In December 1980, Apple went public. Its offering of 4.6 million shares at $22 each sold lot
within minutes. Second offerings of 2.6 million shares quickly sold out in May 1981.
As of September 25, 2010, the Company had opened a total of 317 retail stores, including
233 stores in the United States and 84 stores internationally.(apple b,2011)
3) Product portfolio:Apple has different segment in its product portfolio: - (apple, 2011)
1)
2)
3)
4)
5)

Macintosh computers
I Phones (I Phone 3g, I Phone 3gs, I Phone 4)
I Pad
I Pod
Software (I Tunes and other application software)

4) Overview of Smartphone industry:A Smartphone is a mobile phone that offers more advanced computing ability and
connectivity then ordinary feature phone. Smartphone may refer to handheld computer
integration with a mobile. Smartphone are completely built with operating system software
which allows user to use phone instead of their laptop or computers. In 2011 Smartphone
are experiencing accelerating rates of adoption: 22% of consumers already have a
Smartphone, with this percentage rising to 31% amongst 24-35 year olds.(ismashphone,
2009)

Student id:-77090417 |
Course: - MBA

List of companies involved in manufacturing Smartphone are as follows :- (ismashphone,

2009)
1)
2)
3)
4)
5)
6)

Apple
Nokia
Blackberry (RIM)
HTC
Fujitsu
Others (includes Motorola, Sony, and everyone else)

Apple's Smartphone market share growth over 1 year has been 10 times that of any other of
its competitors. However, Apple is still only third in line when counting the number of units
sold by each major Smartphone manufacturer. Nokia is first, selling a whopping 18,441,000
in the 2nd quarter of 2009, and RIM (Blackberry) is 2nd with 7,678,900 units sold.

Source: .(ismashphone, 2009)

Student id:-77090417 |
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5) Product overview:Apple i Phone 4 is the latest i phone series phone launched by apple inc. For this report i
have chosen this product and further marketing analysis is done in following report.

Source: (apple, 2011)

Student id:-77090417 |
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6) Audit of marketing environment:1) Macro Environment

Source(learning marketing, 2005)

1) Political factor:In 2010 Emergency Budget the Chancellor announced an increase in the standard
rate of VAT from 17.5 per cent to 20 per cent effective from 4 January 2011. This
would affect the total selling price of i phone 4. (apple store, 2011)
GATT laws can interfere selling of i phone 4 in global context. (duke law,2004)
As most apple iphone is sold in terms of contract with other telecommunication
companies, sometimes customer finds problem to finish this contract and thus laws
of such contract affect the consumer buying decision.
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2) Economic factor:-

Average Weekly Earnings

Regular pay growth decreases

Source (national statistics, 2011)

As shown in graph average weekly income of people in UK is going

slightly down from February 2011, this may affect the purchasing
power of consumer in future.

Unemployment rate of UK is 7.8% which is quite high and can affect

the sells of company.

Inflation
CPI 4.0%, RPI 5.3%

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Source(national statastics b,2011)

Inflation rate was 4.0 per cent in March 2009, down from 4.4 per cent in February
2011. As inflation is decreasing but still is quite high which can affect consumer
purchasing decision.
3) Socio-cultural factor:-

Population Estimates
UK population grows to 61.8 million

Population: by gender and age, mid-2009

Source(national statastics c,2011)

The estimated resident population of the UK was 61,792,000 in mid-2009, and

Children aged under 16 represented approximately one in five of the total
population and youth population between 20-40 is also high, thus apple has
larger scope as it target the customer between this group.

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 GDP per head in Britain was 23,500 in 2008 which means standard of living in
Britain was high. As apple group is targeting the customer with high income
earning group, can get larger customer group in Britain. (David smith, 2007)
As per capita income and economy is growing after the great recession most
people want to achieve higher slandered of living by purchasing premium
product. Hence, it widened the market for apple iphone.

As compared to Asian countries the culture of UK is independent that means

individual are free to take their own decision after 18 years. Which also influenes
the buying decision of consumer.

4) Technological factor:

Apple iphone 4 is loaded with latest technology going in market. But Innovation
in technology takes place very fast thus companies has to keep updating their
product with new technology. Soon apple is going to launch apple iphone 5,
hence apple iphone 4 would be out of market.

2) Micro environment:

Michel Porter identified five forces for analysing the micro environment (Elizabeth, H. and
Terry O, 1996)

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7) SWOT ANALYSIS:

Strength: Innovative The i Phone has an innovative touch screen that is patented and
unmatched by any other mobile product today. It also has many functions of other
mobile products all in one device.
Compatibility The phone will work with iTunes and with other Mac/Apple products like
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the new Apple TV, allowing for wireless connectivity to the big screen. The i Phone is
also compatible with many Mac OS software tools. Mac OS compatibility means that the
i Phone has limitless potential for upgradeability.
Ease-of-Use The all-new touch screen interface making operations extremely
intuitive. It is radically different from those of other phones or PDAs that recognizes multi
finger gestures, just as the human hand normally behaves. The Mac OS X application
imbedded into the i Phone assures users will easily recognize what they can do
Brand awareness Apple is well known for cool essential gadgets like the iPods, ipad,
macbook and Smartphone along great technological innovations like the original
Macintosh.
Price At 418, the i Phone would be sold at a reasonable price for its value. It
outperforms any other PDA or smart phone on the market and the convenience of
having multiple features combined into one-device increases its overall value.
Quality The i Phone has one of the brightest and most scratch resistant screens in the
market. It also has a fine metallic finish that is durable and light. The software suite
included is also unsurpassed with their ease of use and resistance to computer viruses.

Weakness: Image The Apple brand is not targeted towards business people, which most smart
phones have targeted. Does not have a reputation as being compatible with the
corporate world.
Price Apple does not yet offer lower priced models for more cost conscious
consumers.
User Interface Touch screen interfaces suffer from the problem of gorilla arm, in
which long-term use of a flat, solid surface for input becomes uncomfortable.

Opportunity: Increasing demand and expansion to a new target segment Apple will continue to
target the business productivity market who wants an all in one computing solution. But
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10

as technology advances and smart phones get cheaper companies also have a great
opportunity to target people who want entertainment. Apple will attract these consumers
and get iPod users to upgrade to i Phones.
Upgradeable Since software on the i Phone can be updated, it allows new exciting
features to be brought in which take advantage of the touch screen ability. Future
versions will also be hardware upgradeable.
Partnerships Apple can collaborate with many powerful global mobile phone
companies to flood the market with iPhones, which reduces costs in marketing and
increases revenue through long-term agreement deals.

Threats: Increased competition Smart phones are easier to make now more than ever. More
companies may enter the market, given that there are few barriers to entry other than
patents. Competitors or even Apple contractors can maneuver around patents to create
similar devices.
Downward pricing pressure The i Phone is marketed as a high-end phone, but
phone prices are almost certainly going to fall when other companies undercut the price
of i Phones.

8) Marketing mix: Product

According to philip Kotler a product is anything that can be offered to a market for
attention, acquisition, or use, or something that can satisfy a need or want. Therefore,
a product can be a physical good, a service, a retail store, a person, an organisation,
a place or even an idea. Products are the means to an end wherein the end is the
satisfaction of customer needs or wants.

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11

Kotler states five product levels, the core benefit, the basic product, the expected
product, the augmented product and the potential product.

Source (Philip k 1969)

Each level adds more customer value, and the five constitute a customer value
hierarchy. The most fundamental level is the core benefit: the fundamental
service or benefit that the customer is really buying. A i phone purchaser is
buying entertainments and telecommunication.

At the second level the marketer has to turn the core benefit into a basic product.
Thus a i phone manufacturer will include touch screen, camera, other
application, speakers etc.

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At the third level, the marketer prepares an expected product, a set of attributes
and conditions buyers normally expect when they purchase this product. I Phone
buyers expect internet facility, good sound system, user friendly instrument, good
camera, good touch screen system.

At the fourth level, the marketer prepares an augmented product that exceeds
customer expectation. I phone manufacturer can include a good Wi-Fi internet
system, 10 mega pixel camera, and other advanced application.

At the fifth level stands the potential product, which encompasses all the
possible augmentations and transformations the product might undergo in the
future. Successful companies add benefits to their offering that not only satisfy
customers, but also surprise and delight them. Delighting is a matter of
exceeding expectations.

Product name :- Apple iPhone 4

Brand:- Apple INC

Product specification:- (apple 2011)

Launch date:- 27 june 2010

Size and weight

Height:4.5 inches (115.2 mm)

Width:2.31 inches (58.6 mm)

Depth:0.37 inches (9.3 mm)

Weight:4.8 ounces (137 grams)

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Location

Assisted GPD

Digital compass

Wi-Fi

Cellular
Power and battery

Built-in rechargeable lithium-ion battery

Charging via USB to computer system or power adapter

Talk time:
Up to 7 hours on 3G
Up to 14 hours on 2G

Standyby time: Up to 300 hours

Capacity

16GB or 32GB flash drive

Colour

Black

Display

Retina display

3.5-inch (diagonal) widescreen Multi-Touch display

960-by-640-pixel resolution at 326 ppi

800:1 contract ratio (typical)

500 cd/m2 max brightness (typical)

Fingerprint-resistant oleophobic coating on front and back

Support for display of multiple languages and characters simultaneously

Price:As Apple iphone is well known brand in domestic as well international market and
has covered maximum market share in Smartphone industry. Apple iphone 3 and
iphone 3gs were successful in market thus, apple at launching of iphone 4 decided
Student id:-77090417 |
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to set their prices on basis of market skimming pricing rather than premium pricing
strategy.

Market skimming pricing is setting a high price for a new product to skim
maximum layer from the segment willing to pay the high price; the company
fewer but more profit.(Philip k.and gary.a, 2006,pp.353)

Whereas premium pricing is use a high price where there is uniqueness about
the product or service. This approach is used where a substantial competitive
advantage exists. (Philip k.and gary.a, 2006,pp.353)

Apple can use any 1 of the pricing strategy as their brand value and product were
in demand in market. Because of their new technology customer were willing to
pay higher price for the iphone 4. But as product goes old and other competitors
enter the market with same technology apple has to reduce their price to be in
market. Thus, apple used market skimming pricing strategy to cover maximum
market share and revenue in beginning and then to lower their price according to
competition.

Current price of apple iphone 4 is 16GB is 510 and for 32GB 612.(apple
store 2011)

Place
Channels of distribution are set of interdependent organisations involved in the
process of making a product or service available for use or consumption (Kotler P.,
thr1999. pp. 489-496). There are two types of distribution network 1) direct
distribution channel 2) indirect distribution channel.
Indirect Channel

The indirect channel is used by companies who do not sell their goods directly to
consumers. Suppliers and manufacturers typically use indirect channels because
they exist early in the supply chain. Depending on the industry and product, direct
distribution channels have become more prevalent because of the Internet.(Osmond
Vitez, 2011)
Direct Channel

A direct distribution channel is where a company sells its products direct to

consumers. While direct channels were not popular many years ago, the Internet has
greatly increased the use of direct channels. Additionally, companies needing to cut
costs may use direct channels to avoid middlemen markups on their products. .
(Osmond Vitez, 2011)
Indirect Channel Methods
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Distributors, wholesalers and retailers are the primary indirect channels a company
may use when selling its products in the marketplace. Companies choose the indirect
channel best suited for their product to obtain the best market share; it also allows
them to focus on producing their goods. .(Osmond Vitez, 2011)
Direct Channel Methods

Selling agents and Internet sales are two types of direct distribution channels. Selling
agents work for the company and market their products directly to consumers
through mail order, storefronts or other means. The Internet is an easy distribution
channel because of the global availability to consumers. .(Osmond Vitez, 2011)

Apple uses both types of distribution channel to sell their product in UK. As apple
doesnt have any manufacturing plant in UK they have to import from USA. Apple has
their own online stores thus customer those who want to purchase iphone can order
there. Thus apple uses direct channel for such customer.
Apple also has almost 30 retail store in UK, hence they follow indirect distribution
channel to sell their final product to their customer.(apple store,2011)
As shown in the distribution Chart, Company uses both one level and two level
distribution channels to make available their product to end user.

Distribution channel of apple INC

Apple

Direct sale
force

Online
store

Retail
store

End-users

End user

Course: - MBA

Retailer

Third
party
whole

Added
value
reseller

End
Student
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user
user

Retailer

End user

 Promotion

Promotion is all about companies communicating with customers. A business' total

marketing communications programme is called the "promotional mix" and consists
of a blend of advertising, personal selling, sales promotion and public relations tools.
(tutor2u, 2004)
1) Advertising
Any paid form of non-personal communication of ideas or products in the "prime
media": i.e. television, newspapers, magazines, billboard posters, radio, cinema etc.
Advertising is intended to persuade and to inform. The two basic aspects of
advertising are the message (what you want your communication to say) and the
medium (how you get your message across) (tutor2u, 2004)
(2) Personal Selling
Oral communication with potential buyers of a product with the intention of making a
sale. The personal selling may focus initially on developing a relationship with the
potential buyer, but will always ultimately end with an attempt to "close the sale".
(tutor2u, 2004)

(3) Sales Promotion

Providing incentives to customers or to the distribution channel to stimulate demand
for a product. (tutor2u, 2004)
(4) Publicity
The communication of a product, brand or business by placing information about it
in the media without paying for the time or media space directly. otherwise known
as public relations. (tutor2u, 2004)
Apple has its own online store so they advertised their product there and costumer
easily get all information about the product from there. Mostly advertisement of
apple in UK is done by other telecommunication company such as Vodafone, o2,
virgin, and orange. These companies in order to sell their telecommunication
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services gives i phone with their services on basis of contract. This is the
advertising approach used by apple in UK. This saves lots of money for apple and
ultimate aim to communicate the message to customer is done by this
telecommunication companies. Apple also have TV ads to promote their product.
Apple also use magazine advertisement to promote their product.
Apple also uses hoardings where image of product is displayed and detailed
information is written there. By putting such hoardings people who are walking
roadside can see the information and message can be conveyed to customer.
Apple uses promotional methods using special short-term techniques to persuade
members of a target market to respond or undertake their products. Apple uses for
sales promotions are money back guarantees, lower purchase price and rebates
etc. The Apples stores are very distinct and captivating from many other electronic
stores because they display all of their products for consumers to experience
hands-on. Consumers are allowed to surf the web on any of their computers, listen
to the latest ipods, and experience the iPhone and its features. This lets consumers
get comfortable with the products and familiarize themselves with it. This is a major
consumer sales promotion that Apple has developed.(apple INC, 2009)

As most of the user of iphone are college student age group from 17 to 22,
company should promote their product mostly to this group but we not found out
any such activities carried by apple group.
As apple iphone are loaded with latest technology and its has covered most of the
market, thats why they are always there in media or news. This promote apple
product to graeter context.

9) Marketing approaches:Segmentation, targeting, and positioning together comprise a three stage

process. We first (1) determine which kinds of customers exist, then (2) select
which ones we are best off trying to serve and, finally, (3) implement our
segmentation by optimizing our products/services for that segment and
communicating that we have made the choice to distinguish ourselves that way.

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(Sources: USC marshall ,2009)

Segmentation :Type of segment

Variable

Demographic

Age, Gender, Occupation, Income

Geographic

Region, Population density, climate

Psychographic

Social class, Life style, personality

Behavioural

Degree of loyalty, Type of User

Source: Dibb and et al, (2001)

Apple i Phone 4 come under Smartphone segment and classified under unsought
goods. Thus, it requires lots of things to consider while purchasing it though it
requires more attention of Apple INC. Apples target segments consist of
professionals, students, corporate users, entrepreneurs, and health care workers.

Demographic:Age: - Apple i Phone 4 targets younger customer and with high income earning
group.
Sex: - As it is a Smartphone it can be used by both male and female. Thus apple
group concentrate on both group.
Religion: - As UK is a demographic country generally companies do not segment
their product according to religion.
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Occupation: - as i Phone 4 is a Smartphone it targets the corporate people.

Geographic: Country: - As apple INC is an American company but still it sales their product in
almost 106 countries in world. And for Europe it covers 36 countries.
Region: - In UK there 4 key markets (England, northern Ireland, Wales, Scotland )
and apple group covers all 4 markets in UK.

Psychographic: Social class: - As in UK there is basically three group low earning income, medium
earning income, high earning income group. Apple INC concentrates on high income
earning group.
Life style: - As i Phone 4 is a highly technological phone, company targets the
customer which are interested in using new technology.
Occasion:- Its a human psychology that to buy some new thing on some occasion
thus considering this apple group try to attract such customer and to have maximum
sell at this time.
Benefits: - as i Phone 4 is a latest Smartphone customer do not buy just to use it but
it also shows image and status in society.

Targeting :The decision about which market segment(s) a business decides to prioritise for its
sales and marketing efforts.(Dibb and et al, 2001)
I Phones marketing strategy is to differentiate the i Phone from other PDAs on the
market. I phones primary customer targets is the middle-upper income professional
that need one portable device to coordinate their busy schedules and communicate
with colleagues, friends and family. I phones secondary consumer targets are high
school, college and graduate students who need one portable multifunction device.
Mainly this market will be replacing their iPod and cell phone with the iPhone.
Apple group uses concentrated marketing strategy for targeting their customer.
Concentrated marketing is a market coverage strategy in which firm goes after a
large share of one or few segment or niches(Philip k. And gary a. b, 2006, pp 231).
Apple group uses this strategy to attract the customer who are interested in store
information and communicate or people who want entertainment on the go. By using
such strategy apple targets
Segments consist of professionals, students, corporate users, entrepreneurs, and
health care workers with age group between 16 to 40.

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Positioning :-

Positioning is the process of creating an image for a product in the mind of target
customer.

Source: USC marshall (2009)

Using product differentiation, Apple group positioned the iPhone 4 as the versatile,
convenient, value-added device for personal and professional use. The marketing
strategy will focus on the convenience of having one device for communication, but
also music, pictures, and video, and full Internet access. The iPhone will be promoted
as both professional and hip.

Currently Apple i Phone 4 is in maturity stage generating maximum profit for

company. But soon apple i Phone 4 is going to decline stage because apple group is
going to launch i Phone 5 in July 2011.

Current position of apple i Phone 4 in product life cycle:-

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Perpetual mapping ( kotler, p., 1999)

As apple i Phone 4 is made up of latest technology, it is positioned in high

price and high technology group.

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THAN
K
YOU
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