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The research tools that Apple used to gather their data to help make the success of the
iPhone and other products are customer feedback surveys, online surveys, conjoint
analysis, Kano diagram, and customer relationship management software. Even though
Apple is driven to focus on the customers’ needs, it is not a victim of marketing myopia,
which is the tendency to focus very specifically on solving customers’ needs with a
current technology. The market trends have shown that by 2008, there will be more than
130 million smartphones sold annually, which shows Apple that this is a great time of the
smartphone life cycle to present the iPhone. Also, studies have shown that customers
would like to have a product that consolidates multiple devices, such as the cell phone,
iPod, digital camera, PDA, and that is what the iPhone brings to the consumers. There are
competitors in the mobile industry that make smartphones; however, there is no
manufacturer that can make a smartphone which plays iTunes. iTunes is a proprietary
product just the same as Mac OS is. With the tremendous competition in the mobile
industry it was crucial for Apple to reach out for partnerships and alliances to help its
success. The carrier for the mobile service will be provided by AT&T, which has the
greatest coverage and customer base out of all the cell phone companies. This opens
other opportunities in terms of marketing strategies that could increase exposure to the
brand.
1 Market Demographics2.1
The “i” brand is owned by Apple Inc. and consists of products such as iPod, iTunes, iTV,
iPhone, iMac, iLife, iPhoto and iWork. These products are globally marketed and geared
to all age groups. Alternatively, cell phone industry research (Lipsman, 2007)
distinguishes 18 to 24 year olds as “The Cellular Generation” who “grew up with cell
phone awareness”, 25 to 34 year olds as “Transitioners” who can be divided into “those
who grew up with cell phone knowledge and those who did not”, and those 35 and up as
“Adult Adopters” who were “not exposed to cell phones until adulthood.” Importantly,
these specific age distinctions are relevant only because of infancy of the cell phone and
handheld device market. In another twenty years – i.e., one generation – these
classifications may no longer be pertinent. While it is uncertain that our arbitrary groups
– which split these age distinctions – obscured useful feedback, future marketing should
utilize existing cell phone industry intelligence, as exemplified by Bumatay (2006).
The iPhone allows Apple management team to focus on a wide range of demographic
groups because of the features and services that the iPhone offers. One demographic is
people who listen to iTunes and need a gift. The iPhone is a great gift item that is
guaranteed to be appreciated. Another demographic sector would be the individuals who
want to consolidate their multiple products such as iPod, cellphone, digital camera, into
one multi purpose product. A third demographic that could use the iPhone would be the
teenage clientele because of the cool look, “in fad” trendy item, the ability to listen to
iTunes and use the camera at the same time. Piper Jaffrey, Katie Marsal, reported survey
results of 500 students at 11 institutions across the country and found that 74% of the
teenagers surveyed would buy a cellphone that plays iTunes.
A forth demographic that would be targeted for the iPhone product is the international
businesses niche that needs a quad band phone along with the capabilities to schedule
appointments and other vital business functions.
The tools that were used to conclude the mentioned information are: included customer
feedback surveys, online surveys, conjoint analysis, Kano diagram, and a customer
relationship management (CRM) software, which would help pinpoint a demographic
group based on their behaviors.
2.2 Market Needs
Apple will analyze market needs by using the emphatic design and the conjoint analysis.
With the detailed market research that was conducted Apple, is able to conclude that
there is a need for a product that would consolidate the multiple gadgets people use into
one. The visionary and innovative mindset that the Apple management has at Apple lends
the company to having a proven brand in a highly competitive industry.
Apple is not a victim of marketing myopia, which is a tendency to focus very specifically
on solving customers’ needs with a current technology (Mohr, 2005, p. 115). The
analysis of other competitive products that are on the market currently and utilizing third
party research companies to target various demographic regions provides Apple
management with fundamental data that led to the revolutionary iPhone. The iPhone
product has a great user interface, QWERTY technology, quad band, good quality
camera and most importantly the ability to listen to iTunes.
2.6 Collaborators
The collaboration that Apple has utilized is with Cingular/AT&T who is the exclusive
supporter of the iPhone telephone. Since Cingular/AT&T has the biggest area coverage,
Apple has a tremendous competitive advantage in terms of phone coverage and customer
base. When it ships in June, the phone will be available only through Apple's 150
company-owned stores, Apple's Web site, 2,100 Cingular-branded stores, Cingular's Web
site and the carrier's direct-mail operation.
The areas of interests for Apples’ products are throughout the world via its online stores,
its retail stores, its third-party wholesalers, resellers, and value-added resellers. The
demographic that the company sells to involve individuals in industries such as:
education, consumer, creative professional, business, and government.
3.1 Capabilities
The ability for Apple to adapt to the market trends and customer demands is a
tremendous plus in terms of their product mix innovation. The company sees the
importance of investing in the research and development department, which has proven
well in the development of products that have been in incredible demand. The CEO’s of
the company have been very good in changing their management structures to adapt to
the competitive pressures that Apple has gone through in the 1980’s and 1990’s. Apple
has revolutionized the world with their past innovations such has the iPod, and now it is
going to do the same with the iPhone. Additionally, to bringing out revolutionary
products, Apple is capable of bringing on incremental innovations. “Innovation, whether
incremental or radical, is necessary at all times during the life cycle of any industry”
(Khallil, 2000, p. 470), and that is what Apple does best.
Apple will strictly keep their Apple identity with the iPhone product. “Cingular agreed to
leave its brand off the body of the phone” (Sharma, 2006, p. A-1).
5.1.2 Quality
Apple is well known for its quality of products ranging from computers to peripherals.
Continuous innovation and development of product generations help keep the Apple
brand well respected in the high-tech industry.
5.1.4 Warranty
Apple will have a standard warranty for the product as it does for all of its products. The
warranty could be accessed via the website, directly calling the website, or visiting the
Cingular or Apple retail store.
5.1.5 Packaging
The Apple iPhone will be packaged in a well protected box that will allow the customer
to be able to see the actual phone. The clear cover of the box will show the phones’ front
and the accessories that will be included in the iPhone box.
5.2 Distribution
Apple Inc. will utilize a hybrid distribution channel with the sale of their iPhone product.
One aspect of the hybrid model will focus on the product being sent to the Cingular retail
stores and then sold to their customers. The other aspects will allow the iPhone to be
purchased at the Apple retail stores and the Cingular and Apple websites.
5.3.1 Advertising
The types of advertising that Apple will be using are TV advertising on both national and
local channels, national and local radio channels, magazine that would be trade specific
for the target audience, outdoor advertising via billboards, internet via banners, and
mobile phones. The catching phrase that could be used is: “Be smart and get the iPhone
smartphone, a product like no other”. Mobile advertising is predicted to have a huge
growth period and Apple will be using this Integrated Marketing Communication strategy
as a main source to reach its customers. Being on the Cingular network, which is the
biggest mobile network helps Apple be able to reach out to a biggest population base.
“U.S. mobile ad spending will grow to $4.8 billion in 2011 from $421 million in 2006, or
to 12% from 2.6% of overall U.S. ad dollars, according to a new study on mobile
marketing and advertising” (Walsh, January, 2007). By Apple Inc. investing in
advertising it will be able help differentiate the iPhone with competitors smartphones,
build on to the existing “i” brand, improve the already successful image that Apple Inc.
has (which was created mostly with the innovation of the iPod), and communicate its
competitive superiority over the competition.
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