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ROLE OF BUSINESS STRATEGY AND MARKETING PLANNING IN SUCCESSFUL

LAUNCH OF NEW PRODUCTS; A CASE STUDY OF IPHONE LAUNCH

1 . which has brought with it an increase in competition. It uses the case study of iPhone to investigate why some launches are so successful while others fail.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.

3.CONTENTS Abstract 1.2. Software compatibility. Price. How Apples pricing policy is helping it achieve market share and their strategy of Dropping the price. Comparing Success of iPhone in America with that of Europe 3.1. 4. Environmental Factors 3. Conclusion References 2 . 2. Reasons for iPhone’s Success in America 2. Lack of 3G capability 3.1.3. Hidden Costs. Corporate level. A formulated Strategy and a Marketing Plan for Europe 5.5.2. Introduction 2. Carrier Exclusivity 3.3. 6. Consumers’ level. 3. 2.4.

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

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

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

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

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

it greatly influenced its success. Germany and the UK. When iPhone first launched in Europe. Carrier Exclusivity. iPhone decided to expand their markets and launch iPhone in Europe. in view of all these factors. Many people could not afford.Therefore. Like in the US with AT&T. 8 . In November 2007. Apple was able to combine all these factors to their advantage. 3.2. This was due to the following factors. This was something uncommon in Europe since they were used to working with any operator of their choice. This proved a challenge to iPhone. US$587 in Germany and US$415 in France. They chose T-Mobile in Germany. Apple chose to collaborate with other carriers in Europe. Apple launched iPhone in three major European markets: France. Further. This forced Apple to reduce the price of iPhone by 100 pounds. Orange in France and Telefonica O2 Europe plc in the UK. 3. 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. Price. Although the high prices did not deter early customers from buying. it was available at a price of US$566 in the UK.1. 3. we can just conclude that the main reason for iPhone’s success in America was down to their superior business strategy and marketing plan. Initial indicators showed some success but later sales reduced denying it the success it had enjoyed in America. Comparing Success of iPhone in America with that of Europe After recording great success in America.

5.4. 2010). Lack of 3G capability. By February 2008.7 million iPhone while AT&T had only connected 2 million. Existence of grey market. Hidden Costs. Customers could not change the batteries of iPhone themselves and had to send them back for replacement. 4. Apple tried to solve this by allowing some overseas companies. 3. it reduced its appeal in the European market. Mickelson & Keltgen.7 million were unaccounted for.T-Mobile also offered to sell the phone to consumers without any contract in view of the lawsuit filed by Vodafone Group Plc. 3. This was not appealing since it meant remaining without a mobile phone for a long time and incurring shipping charges too. 9 Proposition of How Apple should Formulate Strategy and Marketing Plan for Europe . 3.3. This meant that around 1. The only possibility was that the phones were unlocked. In the end they decided to offer the unlocked version but at a higher price. Apple had sold over 3. Europe mainly used 3G network and because iPhone only used EDGE and Wi-Fi. which was rather expensive. 3.3. This made Apple to lose millions of dollars in revenue. Software compatibility. To counter this. Apple launched 3G iPhone in August 2008. many of which are speculated to be Taiwanese. to supply the parts and assemble the iPhone (Mickalowski.

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

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

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

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