ROLE OF BUSINESS STRATEGY AND MARKETING PLANNING IN SUCCESSFUL

LAUNCH OF NEW PRODUCTS; A CASE STUDY OF IPHONE LAUNCH

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. which has brought with it an increase in competition.

A formulated Strategy and a Marketing Plan for Europe 5. 3.2. Software compatibility. 6.5. 2. Environmental Factors 3. Conclusion References 2 . Reasons for iPhone’s Success in America 2.CONTENTS Abstract 1.3. Carrier Exclusivity 3. 2. Comparing Success of iPhone in America with that of Europe 3. How Apples pricing policy is helping it achieve market share and their strategy of Dropping the price. Introduction 2. Hidden Costs. 3.1.4. Consumers’ level. Lack of 3G capability 3. Corporate level.2. Price. 4.1.3.

Many times though. Further. The report will be compiled by studying various articles available regarding success of new products launches. 1994) as quoted by (Capatina &Draghescu. This can only mean reduced income. 3 . This report will thus seek to find the reasons for the success of new products launched in already saturated markets. concentrating more on the ones dealing with Apple’s iPhone. One such measure is the launching of new products. 2003). In order to remain in business many companies have come up with various measures to help increase their revenues. profits and competitive strength for most companies (Capatina &Draghescu. According to (Cooper. competition has increased significantly thereby squeezing the customer base of many companies. The findings could be of great help to companies planning to launch new products in the market. with specific interest in iPhone’s success in the American market. New products offer increased sales. 2015) many successful organizations such as Apple and JVC owe their fortune to new products that they launched.1. It will therefore be following a case study methodology (Yin. Organizations therefore need to have proper strategies and marketing plans for their new products in order to succeed. 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. the launches of new products usually end in failure. 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).

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

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

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

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

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

By February 2008. Apple launched 3G iPhone in August 2008. 3. 3. Hidden Costs. Apple tried to solve this by allowing some overseas companies. 9 Proposition of How Apple should Formulate Strategy and Marketing Plan for Europe . Customers could not change the batteries of iPhone themselves and had to send them back for replacement.7 million were unaccounted for. 3. In the end they decided to offer the unlocked version but at a higher price. Europe mainly used 3G network and because iPhone only used EDGE and Wi-Fi. 2010).4.5. 4. 3.T-Mobile also offered to sell the phone to consumers without any contract in view of the lawsuit filed by Vodafone Group Plc.7 million iPhone while AT&T had only connected 2 million. Existence of grey market.3. This made Apple to lose millions of dollars in revenue. This was not appealing since it meant remaining without a mobile phone for a long time and incurring shipping charges too. Mickelson & Keltgen. to supply the parts and assemble the iPhone (Mickalowski. To counter this. which was rather expensive.3. Apple had sold over 3. Lack of 3G capability. The only possibility was that the phones were unlocked. This meant that around 1. Software compatibility. many of which are speculated to be Taiwanese. it reduced its appeal in the European market.

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

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

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

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