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. 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. 1 .

Price. 3.1.2. Software compatibility.5. 2.1. A formulated Strategy and a Marketing Plan for Europe 5. Reasons for iPhone’s Success in America 2. Comparing Success of iPhone in America with that of Europe 3.2. 6.3. Lack of 3G capability 3. 2. Hidden Costs. Introduction 2. 4.CONTENTS Abstract 1. How Apples pricing policy is helping it achieve market share and their strategy of Dropping the price. Conclusion References 2 . Environmental Factors 3.4. Corporate level. Consumers’ level.3. Carrier Exclusivity 3. 3.

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

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

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

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

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

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

Apple launched 3G iPhone in August 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. it reduced its appeal in the European market.7 million iPhone while AT&T had only connected 2 million. To counter this. Existence of grey market. Lack of 3G capability. Hidden Costs. Software compatibility. Europe mainly used 3G network and because iPhone only used EDGE and Wi-Fi. Apple tried to solve this by allowing some overseas companies.7 million were unaccounted for.3.5. Apple had sold over 3. This made Apple to lose millions of dollars in revenue. The only possibility was that the phones were unlocked. This meant that around 1. 3.4. In the end they decided to offer the unlocked version but at a higher price. 2010). This was not appealing since it meant remaining without a mobile phone for a long time and incurring shipping charges too.3. 4. which was rather expensive. Customers could not change the batteries of iPhone themselves and had to send them back for replacement. many of which are speculated to be Taiwanese. By February 2008. 3. 3. 9 Proposition of How Apple should Formulate Strategy and Marketing Plan for Europe . Mickelson & Keltgen. to supply the parts and assemble the iPhone (Mickalowski.

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

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

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

Retrieved from http://dx.d. 6.org/10. (1994). Apple Insider.S. G.terry. October 19). 2016. Apple Inc. from URL: http://dx.doi. 4 U.doi. (n. H. (2010). F. Retrieved July 27. Retrieved from http://www.org/10.v7n5p61 Cooper. Retrieved July 27. International Marketing Review(1).1108/02651339410057527 Faheem. 13 . New Products: The Factors that Drive Success.com/pr/library/ Apple Inc. & Drăghescu. website. R. (2015. handset during third quarter. 2016.5539/ijef. 7(5).uga. Retrieved from http://globaltext. J.com Burnett. G. Saylor. (2007. from http://www..d. "Apple Quarterly Reports.'s iPhone: Can iPhone Maintain Its Initial Momentum? ICMR Center for Management Research. 11.appleinsider. (22). (n.edu/userfiles/pdf/Core%20Concepts%20of %20Marketing. (2008). Cupertino." 2007-2010. Canadian Center of Science and Education. Apple’s iPhone the No. International Journal of Economics and Finance.pdf Căpătînă.References Apple.). April 25).org. California. Success Factors of New Product Launch: The Case of iPhone Launch.apple. Apple Sells Three Million iPads in 80 Days.).

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