ROLE OF BUSINESS STRATEGY AND MARKETING PLANNING IN SUCCESSFUL

LAUNCH OF NEW PRODUCTS; A CASE STUDY OF IPHONE LAUNCH

which has brought with it an increase in competition. 1 .Abstract This report attempts to show how companies can use good business strategies and marketing plans to successfully launch new products in this era of globalization. It uses the case study of iPhone to investigate why some launches are so successful while others fail.

Hidden Costs. 2. 3.3.3. A formulated Strategy and a Marketing Plan for Europe 5.1.1. Comparing Success of iPhone in America with that of Europe 3. 4. Consumers’ level. Corporate level. Conclusion References 2 . 6. 3. Introduction 2.2. Reasons for iPhone’s Success in America 2. Price. Environmental Factors 3. Carrier Exclusivity 3. Lack of 3G capability 3.CONTENTS Abstract 1.4. Software compatibility.5. 2.2. How Apples pricing policy is helping it achieve market share and their strategy of Dropping the price.

with specific interest in iPhone’s success in the American market. The report will be compiled by studying various articles available regarding success of new products launches. the report will analyze how apple’s pricing policy is helping it to achieve market share and will try to help it in formulating a strategy and a marketing plan for Europe. 2015). 1994) as quoted by (Capatina &Draghescu. Organizations therefore need to have proper strategies and marketing plans for their new products in order to succeed. Further. the launches of new products usually end in failure. New products offer increased sales. It will therefore be following a case study methodology (Yin. 2015) many successful organizations such as Apple and JVC owe their fortune to new products that they launched. The findings could be of great help to companies planning to launch new products in the market. According to (Cooper. 3 . profits and competitive strength for most companies (Capatina &Draghescu. One such measure is the launching of new products. It will also investigate the reasons why iPhone could not take the success it recorded in the American market to the European market. Introduction In this era of globalization. competition has increased significantly thereby squeezing the customer base of many companies. This report will thus seek to find the reasons for the success of new products launched in already saturated markets. This can only mean reduced income. In order to remain in business many companies have come up with various measures to help increase their revenues. concentrating more on the ones dealing with Apple’s iPhone. Many times though. 2003).1.

How it is defined greatly influences the reasons for the success of the launch (Hart. These success criteria are. average revenue per user (ARPU) and churn rates and content/services. The term success has different definitions depending on the situation at hand. 4 . The craze for the iPhone was evident from the fact that Apple’s fans formed long queues outside Apple’s stores to ensure that they got it immediately after the launch (Faheem.2. This is because AT&T recorded an increase in the number of subscribers after the launch of iPhone. The mobile phone market was at the time already dominated by big players like. iPhone can be said to be successful. 2010). 1993). Reasons for iPhone’s Success in America When new products are launched in markets that are already saturated. with their revolutionary mobile phone. This was the case when Apple CEO Steve Jobs announced in January 2007 that they would be getting into the mobile phone market. In order to judge whether iPhone was successful a set of success criteria were developed. as well as consumer satisfaction and mobile usage (Laugesen & Yuan. share and growth rates. They are used as success indicators but mostly in the telecommunications industry. It also recorded growth in sales between the period of June 2007 and June 2008. iPhone achieved a strong market share since its launch. Nokia Corporation. b) ARPU and Churn Rates. It therefore surprised many how iPhone ended up being so successful despite being late entrants. LG Electronics and many more. a) Market size. many analysts usually predict failure. from a 4% market share in July 2007 to 30% in September 2009 (Laugesen & Yuan. 2008). Samsung Electronics. 2010). and when considered in this case. share and growth rate. market size. iPhone.

From the fact that more buyers were using the iPhone for internet surfing and calling represented a success. But what factors contributed to this success? These factors can be categorized into three major levels. b) Consumer preference. we can conclude that iPhone launch was successful. over 50% of iPhone users are below the age of 30 and are members of entertainment. After analyzing all these criteria. In the mobile phone industry.Consumers preferred mobile phones with greater capabilities (Funk. According to different studies. scientific and information profession (Rubicon. Consumers’ level. Apple did exactly this by providing a phone with both iPod and smartphone experience. to enable consumers to be entertained. In another study. 2008). 2. They may be buying it for other uses rather than the primary use. corporate level and environmental factors. Many consumers interviewed expressed their satisfaction with iPhone because the features were working properly. iPhone users are predominantly male of between 25-35 years. consumer preference and culture. buying alone does not indicate success. Apple was also targeting consumers with slightly low income. consumers’ level. By reducing the price of iPhone. What the phone is able to give the consumer determines its success. d) Content and Services. They include demographics. which is for communication. a) Demographics. college graduates and have a higher income. 2000).c) Mobile usage.1. surf the internet and 5 . Over 70% of iPhone users have also used other iPhone products before. Apple gives its customers 1 year warranty for their iPhone. This approach focuses on factors that relate to the customers. e) Consumer Satisfaction.Apple tried to target certain groups with its iPhone.

A product simply refers to goods and services. thinner size and the high memory capacity were some of the features that made iPhone unique. c) Culture. Many consumers therefore bought it to identify with this status giving it huge success. 2. like entertainment. In addition. a) Product. This greatly contributed to the success of iPhone in the American market. In this level. and product advantage helped make iPhone successful.2. Corporate level.5 inches. place and promotion. the 4GB version was priced at US$499 and the 8GB version at US$599 in addition to entering into a contract with the AT&T making it 6 . The four major decision-making areas. When iPhone was launched in June 2007. are discussed. Product uniqueness. web browsing and video recording that other smartphones could not provide all at once. b) Price. It is the monetary value attached to a product. iPhone had the advantage of being able to provide the consumer with a range of different activities. offering quality and features that the existing products lacked.iPhone purchase and usage was viewed as a sign of higher social status due to its sophistication and pricing. The multi touch screen of 3. advantages and uniqueness of a product. Price is generally assumed to represent quality. They are called marketing mix strategies. product.still be able to make calls. price. lower weight of 135grams. the focus shifts to the company strategies.

c) Place. It ends with visual of the iPhone. well to make iPhone a successful launch. AT&T in the US.3. Environmental Factors These are mainly regulatory factors. Apple used skimming and versioning strategy. This in turn led to its success. It is therefore not a surprise that iPhone got the marketer of the year award following its launch. It is the availability of the product to consumers at a convenient place.very expensive. pricing high to make high profits from early buyers then reducing the price later to increase customer base. 2008). In Academy Awards 2007. Job announced steep price cuts making the 8GB version to sell at US$399 and a new 16GB version to retail at US$499. In September 2007. It started with an old phone ringing with different actor answering. 7 . Through this regulation Apple is able to make profits even after sale through the contractual agreement with AT&T. Apple ensured that the phone was available to their growing customers at convenient places. 2. With their partners AT&T selling the iPhones in their over 1000 stores and with the establishment of the Apple stores across the US. Apple created a buzz for its iPhone by slowly releasing the details about the product mostly through the word of mouth marketing (Faheem. This simply refers to marketing and branding of a product. Apple sold their phones locked thereby tying the consumers to only one carrier. d) Promotion. Apple launched an advertisement with tagline ‘hello’.

it was available at a price of US$566 in the UK. This was something uncommon in Europe since they were used to working with any operator of their choice. When iPhone first launched in Europe. in view of all these factors. 8 . it greatly influenced its success. Germany and the UK. Comparing Success of iPhone in America with that of Europe After recording great success in America.2. we can just conclude that the main reason for iPhone’s success in America was down to their superior business strategy and marketing plan. This proved a challenge to iPhone. 3. Apple was able to combine all these factors to their advantage. Further. This was due to the following factors. Many people could not afford.1. the laws in Europe prevented such arrangements to protect consumers from being forced to use a product they do not like because they had purchased another one they liked. Apple launched iPhone in three major European markets: France. Although the high prices did not deter early customers from buying. 3. Carrier Exclusivity. Orange in France and Telefonica O2 Europe plc in the UK. Initial indicators showed some success but later sales reduced denying it the success it had enjoyed in America. 3. Like in the US with AT&T.Therefore. US$587 in Germany and US$415 in France. In November 2007. This forced Apple to reduce the price of iPhone by 100 pounds. They chose T-Mobile in Germany. iPhone decided to expand their markets and launch iPhone in Europe. Apple chose to collaborate with other carriers in Europe. Price.

This made Apple to lose millions of dollars in revenue. Apple launched 3G iPhone in August 2008. The only possibility was that the phones were unlocked.5. 2010). to supply the parts and assemble the iPhone (Mickalowski. Apple had sold over 3. 9 Proposition of How Apple should Formulate Strategy and Marketing Plan for Europe . This was not appealing since it meant remaining without a mobile phone for a long time and incurring shipping charges too. 3. This meant that around 1. many of which are speculated to be Taiwanese.7 million iPhone while AT&T had only connected 2 million. 4.4. Customers could not change the batteries of iPhone themselves and had to send them back for replacement. it reduced its appeal in the European market. Lack of 3G capability.3. To counter this. Europe mainly used 3G network and because iPhone only used EDGE and Wi-Fi. which was rather expensive. Hidden Costs.3. Existence of grey market. Software compatibility. 3. In the end they decided to offer the unlocked version but at a higher price. By February 2008. 3.T-Mobile also offered to sell the phone to consumers without any contract in view of the lawsuit filed by Vodafone Group Plc. Apple tried to solve this by allowing some overseas companies. Mickelson & Keltgen.7 million were unaccounted for. 3.

HTC. d) SWOT analysis. Apple needs to clearly identify who their target market in Europe are and work towards satisfying their needs. g) 5. 2008). From the case study. These may include. For example. opportunities and threats well. having partners to assemble iPhone in Europe or entering into partnerships with carriers. The company needs to estimate the amount of money they are going to need in order to undertake various activities in their marketing plan.Strategy and marketing plan are important factors for the success of any company. c) Major Goals and Objectives. Apple needs to make key strategic alliances with important players in telecommunications industry in Europe. Apple’s major competitors in Europe are Nokia. Samsung and BlackBerry. In order to be successful in Europe like they have been in America they need to consider various issues in their strategy and plan. Further they need to identify the source of the funding. a) Competitors. They all involve appraising the status quo as a predicate to determining planning goals and setting developmental priorities (Hansen. weaknesses. They need to learn strengths and weaknesses of these competitors to work to their advantage b) Target market. 10 . How Apples pricing policy is helping it achieve market share and their strategy of Dropping the price. f) Funding. This will reduce costs on certain activities. Apple needs to analyze their strengths. The number of phones they need to sell over a certain period and the market share they want to attain should be known. college graduates and with high income. Apple should set out clear objectives of what they want to achieve in the European market and work towards attaining them. the target market is obviously young people of between 25-35 years of age. e) Strategic Partnerships and Alliances.

Price is a very important variable of marketing mix strategies. Versioning is a pricing strategy that charges customers different prices for the same product or service. controls where prices are fixed through statutes and regulations. They include. In the case of iPhone. Apple charged their phones highly. “While pricing a product or service may seem a simple process. It directly affects the demand of a product and the profitability of a company. target market and many more. Dropping the price was therefore a good strategy since it increased sales. it is not. Good pricing strategies is usually based on sound assumptions made by marketers” (Burnett). This move made iPhone more affordable thereby increasing sales and overall income. This enables Apple to make maximum profits from the early buyers. 11 . competitors pricing. In September 2007. customers make long queues to purchase iPhone. and is in great demand (Musonera & Ndagijimana). other equally important factors affect price. Despite the high prices. Proper care should be taken in formulating a good pricing policy. The 4GB version retails at US$499 while the 8GB version retails at US$599. During the launch of iPhone in June 2007. In real sense though. customers relate the price of a product to its quality. Jobs announced steep price cuts with the 8GB version retailing at US$399 and the new 16GB version retailing at US$499. cost of production. This strategy is often used when a new product is introduced into the market. Skimming is high pricing of some products in order to make maximum gains from the initial buyers. they used the skimming and versioning strategy to determine the price. a) Skimming and Versioning strategies. In many cases. One thing that has made Apple so successful is their pricing policy.

Motorola and many more. With good business strategy and marketing plan. Apple’s ability to study what the consumers needed and providing them in one device proved to be so successful. According to different studies.6. Samsung. iPhone was able to crack the mobile phone market. to the surprise of many. Conclusion Launching new products into the market. wireless internet communication device. we see Apple entering the mobile phone industry so late. Many analysts did not give them a chance of succeeding. especially ones with big players already. LG. more than 50% of new launches fail. iPod and PDA. The mobile phone market is already filled with big players like Nokia. With a good strategy and plan. computer and camera. It grew so fast that within a few years it is now emerging as one of the leading brands in the mobile phone industry. 12 . can sometimes prove to be very difficult. iPhone was a combination of smartphone. From the case study of iPhone. This differentiated it from the other smartphones in the market at the time making consumers to identify with it despite the high price. new launches can be successful.

& Drăghescu. (2010).apple.org.appleinsider.doi." 2007-2010. International Journal of Economics and Finance. (2015. 11. Cupertino. G.5539/ijef. California. Retrieved July 27.com Burnett. Apple Inc. 13 . Canadian Center of Science and Education. (n. October 19). (2008). 6. Apple’s iPhone the No. 4 U.doi. New Products: The Factors that Drive Success.org/10. Saylor.References Apple. from http://www. F. (1994). website. Retrieved from http://dx. Apple Sells Three Million iPads in 80 Days.pdf Căpătînă. (n. Retrieved from http://globaltext. Retrieved from http://www.terry. (2007.'s iPhone: Can iPhone Maintain Its Initial Momentum? ICMR Center for Management Research. R. 7(5).). H.. G. (22). April 25).1108/02651339410057527 Faheem. Retrieved July 27. "Apple Quarterly Reports. International Marketing Review(1).d. handset during third quarter.v7n5p61 Cooper.d.). Apple Insider. J. from URL: http://dx. 2016.com/pr/library/ Apple Inc.S.uga. Success Factors of New Product Launch: The Case of iPhone Launch.edu/userfiles/pdf/Core%20Concepts%20of %20Marketing. 2016.org/10.

(n. (2008). Musonera.). & Yuan.d.. Apple's iPhone Launch: A Case Study in Effective Marketing.1080/0267257X. Proceedings E-Business Transformation Conference.1993.. 9. U. J.org/10. The Mobile Internet Market: Lessons from Japan’s i-mode System. Retrieved from http://rubiconconsulting.9964215 Info Tech. (2008). (2010)... London. J. Hansen. BusinessWeek. An Examination of Factors that Affect Pricing Decisions for Export Markets. M. & Ndagijimana.doi.41. Mickelson. R.Funk. (2010). Y.com/downloads/whitepapers/Rubiconphone_ Rubicon Consulting. (1993). Retrieved from http://dx. Dimensions of success in new product development: An exploratory investigation. Retrieved from http://www.businessweek.. 23.com/downloads/whitepapers/Rubiconphone Yin. 14 . Retrieved from http://rubiconconsulting. A Study of iphone Users. USA: Eastern New Mexico University. A Study of iphone Users. Rubicon Consulting. What factors contributed to the success of Apple’s iPhone? 2010 Ninth International Conference on Mobile Business / 2010 Ninth Global Mobility Roundtable. Hart. J. K. S. Woodhill Park Retreat. (2000). Mickalowski. The Apple iphone: Successes and Challenges for the Mobile Industry. K. E.com Laugesen.). Case Study Research: Design and Methods. J. July 9. The Apple iphone: Successes and Challenges for the Mobile Industry. A Strategic Planning Template for Dummies. (n.d. & Keltgen. Journal of Marketing Management(1). 2007. (2008). Welcome to Planet Apple. (2003)..