ROLE OF BUSINESS STRATEGY AND MARKETING PLANNING IN SUCCESSFUL

LAUNCH OF NEW PRODUCTS; A CASE STUDY OF IPHONE LAUNCH

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. 1 .

3.2.CONTENTS Abstract 1. Introduction 2. Lack of 3G capability 3. Environmental Factors 3. Consumers’ level.2. 2. 6. Hidden Costs. Carrier Exclusivity 3. 4. Conclusion References 2 . Reasons for iPhone’s Success in America 2. 3.4. A formulated Strategy and a Marketing Plan for Europe 5. How Apples pricing policy is helping it achieve market share and their strategy of Dropping the price.3. Price.5.1. Software compatibility. 3.1. Corporate level. 2. Comparing Success of iPhone in America with that of Europe 3.

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

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

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

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

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

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

Software compatibility.7 million were unaccounted for. To counter this. This meant that around 1. 2010). 3. many of which are speculated to be Taiwanese. it reduced its appeal in the European market. to supply the parts and assemble the iPhone (Mickalowski. Hidden Costs. In the end they decided to offer the unlocked version but at a higher price. 9 Proposition of How Apple should Formulate Strategy and Marketing Plan for Europe .3.5. Apple had sold over 3. Lack of 3G capability. This was not appealing since it meant remaining without a mobile phone for a long time and incurring shipping charges too. Apple launched 3G iPhone in August 2008. Existence of grey market. By February 2008.7 million iPhone while AT&T had only connected 2 million. which was rather expensive. Europe mainly used 3G network and because iPhone only used EDGE and Wi-Fi. Mickelson & Keltgen. Apple tried to solve this by allowing some overseas companies. 3. 3.4.3.T-Mobile also offered to sell the phone to consumers without any contract in view of the lawsuit filed by Vodafone Group Plc. This made Apple to lose millions of dollars in revenue. 3. The only possibility was that the phones were unlocked. Customers could not change the batteries of iPhone themselves and had to send them back for replacement. 4.

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

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

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

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