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Apple iCam Marketing Plan |1

Marketing Report Contents

Executive Summary (Part 1).........................................................................................................3


Market Analysis (Part 2)...............................................................................................................5
Brand Analysis.....................................................................................................................5
Market Segmentation Approach..........................................................................................6
Market Segmentation...........................................................................................................7
Needs by Segment...............................................................................................................8
Market Survey Results.......................................................................................................10
Analysis of Current & Potential Competitors....................................................................11
Top Three Current Competitors.........................................................................................12
Top Three Potential Competitors.......................................................................................13
Environmental Analysis.....................................................................................................14
Technology........................................................................................................................14
Society...............................................................................................................................15
Industry..............................................................................................................................16
Market Analysis Conclusions............................................................................................17
Marketing Plan (Part 3)..............................................................................................................18
Description of the Market Opportunity (Part A).....................................................................18
Description of Need...........................................................................................................18
Discussion of Market Potential..........................................................................................18
Description of Product Concept.........................................................................................19
Product Strategy (Part B)...............................................................................................20
Description of Product.......................................................................................................20
Objectives for Product.......................................................................................................21
Features and Benefits.........................................................................................................22
Product Quality Strategy....................................................................................................23
Product Service Strategy....................................................................................................24
Competitive Positioning of Product...................................................................................24
Estimated Costs.................................................................................................................25
Pricing Strategy (Part C)............................................................................................................26
Basic Pricing Strategy........................................................................................................26
Distribution Strategy (Part D)....................................................................................................28

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Marketing Communication and Promotional Strategy (Part E)............................................32


Promotional Strategy.........................................................................................................32
Overall Promotional Objectives........................................................................................33
Advertising Strategies........................................................................................................33
Television Advertisements................................................................................................34
Online Advertisements......................................................................................................34
Print Advertisements.........................................................................................................35
Billboard Advertisements..................................................................................................35
Personal Selling.................................................................................................................36
Sales Promotions Strategies...............................................................................................36
Apple’s In-Store Displays..................................................................................................36
Retail Outlets In-Store Displays........................................................................................37
Word-of-Mouth Promotion................................................................................................37
Projected Initial Advertising Costs (Year 1).....................................................................38
Competitor Issues..............................................................................................................38
Technological Issue (Part 4)........................................................................................................39
Market Trends....................................................................................................................39
Impact on Product Offering...............................................................................................43
Financial Analysis (Part 5)..........................................................................................................44
Sales Volume Forecast......................................................................................................44
Marketing & Service Prevision Costs................................................................................45
Estimated Income..............................................................................................................46
Marketing Effectiveness (Part 6)................................................................................................47
References..........................................................................................................................50
Appendix............................................................................................................................54
Appendix

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Executive Summary

The basis of this report is intended to analyze the potential ramifications of Apple

introducing a new product to exploit, profit, and capitalize on the opportunities in the digital

camera market. In analyzing the digital camera market in context of its lifecycle, our analysis

shows the digital camera market is mature and highly saturated at all price levels and offers a

wide array of available substitutes differentiating on quality and price. There are also a number

of competitors with strong brands, which base their strategies on incremental innovation when

introducing new products to exploit current opportunities and meet emerging customer demands.

The market analysis indicates the opportunity present in the digital camera market is for a

radical and innovative product that revolutionizes the marketplace by introducing an array of

new product features that were not previously associated with digital cameras. An opportunity

for Apple is to explore this market through a premium-priced, revolutionary product in order to

capitalize on emerging customer demands, according the research in this report. Based on the

survey results conducted for this report, 43% of individuals surveyed would be interested in a

digital camera made by Apple if it would integrate their lives more effectively with technology

and various social networking sites, which highlights this emerging opportunity for Apple based

on their strong brand, customer loyalty, and reputation for innovative products.

To capitalize on this opportunity in the digital camera market, the proposed Apple iCam

is revolutionary digital camera that will have the capabilities to interface with Apple’s existing

line of products (iPad & iPhone) and internet based applications (iTunes & App Store). This

digital masterpiece will allow users to enjoy the similar attributes that make Apple’s products so

desirable, including touch screen, and user selected applications. Therefore, the Apple iCam will

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allow users to take high quality pictures, edit them directly on their device, and seamlessly share

their experiences directly from their digital camera. In differentiating between competing

products and based on the survey results and previous pricing strategies of other products

introduced by Apple, this report suggests the Apple iCam be priced at $274.99. This price-point

will encourage the perception of a premium-priced product as well as a value perception by

consumers because of the prior prices of other product introduced by Apple.

Likewise, in order to fulfill the new demand created in the digital camera market pending

the introduction of the Apple iCam; the most effective method of distribution will be for the

Apple iCam to be sold through the Apple Stores and online. This product distribution strategy

will expose the Apple iCam to large potential customer market while also avoiding the extra

costs associated with traditional retail. Thus, to promote the Apple iCam, the advertising

programs will include various television, print, internet, billboard, and radio advertisements;

however, the majority will focus on television advertisements to promote the product.

Therefore, based on the aforementioned marketing analysis, product design

specifications, pricing as well as promotional and distribution strategies; this report estimates the

Apple iCam to generate first year revenues of $82.9 Million and contribute positive net income

of $12.1 Million its first year, which are based on estimated unit sales of 500,000. In addition,

the forecast for the second year is for 550,000 unit sales generating revenues of $97.2 Million

and net income of $43.5 Million. Likewise, all of the above claims and facts are supported

within this report by quantifiable research and verified strategies tested in controlled research

settings.

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Market Analysis

Brand Analysis

In analyzing the market and in preparation to launch a new product, the first step is to

determine the relative strength of the given brand within the marketplace, and if it is capable of

supporting a product expansion under the firm’s main brand. In this context, Apple currently has

the 17th highest rated global brand and has steadily grown their brand image since 2001 when

Apple ranked 51st, which indicates Apple’s ability to steadily increase their brand strength over

time (Interbrand, 2010).1 After introducing several revolutionary products in the consumer

electronics market since 2001,2 Apple has been at the forefront of industry innovation employing

a dynamic combination of incremental and radical innovations creating an almost textbook

definition of an ambidextrous firm based on their current product portfolio mix and strategies.3

In addition, using the suggested criteria for a evaluating a brand presented in the article

entitled, “The Brand Report Card,” Apple scored a very respectable “97” (Keller, 2000).4 The

compiled information attempts to evaluate the strength of Apple’s current brand and does

indicate a high level of stability, strength, and capacity to support another brand, and in this case

product, under the main Apple brand. Therefore, the Apple brand is capable of supporting a new

sub-brand (the iCam) and will contribute to the credibility, brand association, imagery, and

initial customer perceptions of the product (iCam) simply because it is another Apple product

1. Please reference the graph entitled, “Apple Global Brand Improvement” in the Appendix on p. 55

2. New products since 2001 include iPod, iPhone, and iPad

3. Please reference the chart entitled, “Boston Consulting Group Product Matrix: Apple” in the Appendix on p. 56

4. Please reference the chart entitled, “Apple Inc. The Brand Report Card” in the Appendix on p. 57

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and due to Apple’s previous successful track record of introducing radical new products into the

marketplace.

Market Segmentation Approach

As an initial first step in introducing the iCam, Apple must segment the camera market,

which will help them define customer value and the most applicable methods to exploit these

market opportunities. Market segmentation will increase their marketing efficiency and will

contribute to their competitive advantage within this sector because their strategy will be (1)

measurable, (2) attainable, (3) profitable, and (4) match the capabilities of their firm with the

needs existing in the marketplace. In this context, Apple will segment its market by skill level

(“experienced” or “intermediate”) of potential customers, and then if these same users currently

own an Apple product, which is defined by owning either an iPhone, iPod, iPad, and/or Mac

(Amazon Corporation, 2010).5 Furthermore, based on the research conducted for this customer

definition; Apple’s current customer definition based on a certain experience level will expose

them to 66.2% of the total market based on product unit costs6 associated with either of these

two skill levels, and 80.2% of the overall available substitutes (other cameras) within the digital

camera market.7 In addition, when segmenting the market by major competitors (based on

available products), research indicates Apple’s main competitors based on the above criteria,

show Cannon, Nikon, and Sony may likely be the most pressing competitors when competing

for customers within this segmented market because they account for 48.4% of all available

5. Please reference the chart entitled, “Initial Customer Segmentation Strategy” shown in the Appendix on p.58

6. Please reference the graph entitled, “Digital Camera Market Segmentation by Cost” shown in the Appendix on p. 59

7. Please reference the graph entitled, “Digital Camera Market Segmentation by Quality” shown in the Appendix on p. 59

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substitutes using the defined criteria.8 Thus, this first initial stage of market segmentation gives

us an elementary understanding of Apple’s basic customer target market.

Market Segmentation

As stated the journal article Customer-Centered Brand Management, the author states

successful firms create and develop products that build the respective brand around customer

segments as opposed to fitting customer segments around a particular brand (Rust, 2004).

Therefore, in taking this approach and segmenting the digital camera market into defined

sections, Apple will then seek to fulfill these respective demographic needs through their new

product, the Apple iCam. Furthermore, the segmentation approach developed in this marketing

report identifies consumers by a five-criterion matrix model that defines the “optimal customer”

but still proceeds to identify various qualities attributable to other customers within the broader

digital camera market as well that may also benefit from the proposed Apple iCam.9 In this

context, Apple will segment the digital camera market and its potential customers in the

following order (the description of each respective segment is briefly defined as well):

1) Price: For the first level of segmentation, Apple will focus on differentiating between

consumers based on a premium pricing strategy by pricing the Apple iCam above the

median price of digital cameras currently sold on the market.

2) Digitally Integrated Products: For this second level of market segmentation, Apple

must segment the digital camera market by identifying customers with a specific

8. Please reference the graph entitled, “Digital Camera Market Segmentation by Brand” shown in the Appendix on p. 59

9. Please reference the chart entitled, “Optimal Customer Matrix Model” shown in the Appendix on p. 60

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need, and reach consumers who are seeking a digitally integrated products and

lifestyle with technology.

3) Current Apple Users: For this third market segment, Apple should identify potential

customers based on their usage and ownership of current Apple products. This would

include customers who own one or more of Apple’s flagship products; including the

iPod, iPhone, iPad, and/or Mac.

4) Experience Level: For the fourth level of segmentation, Apple should attempt to

define its potential customers based on their experience level with both digital

photography and technology in general. This will enable them to communicate the

product features associated with the iCam and determine which benefits and attributes

are most relevant to potential customers.

5) Customer Age: For this fifth level of market segmentation, Apple will identify its

primary customers by their respective age range. This is defined into four specific age

groups, which are as follows: (#1) 18-24, (#2) 25-35, (#3) 35-45, and (#4) 45+. In

this context, defining its primary customer age range, will allow Apple to market the

iCam in an effective manner that is conducive to its specific customer’s age

preferences and stereotypes.

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Needs by Segment

As stated in the journal article How Global Brands Compete, “To succeed, transnational

companies must manage brands with both hands. They must strive for superiority on basics like

the brand's price, performance, features, and imagery; at the same time, they must learn to

manage brands' global characteristics, which often separate winners from losers (Holt, 2004).”

In this context, Apple will focus on three fundamental aspects of fulfilling customer needs that

are universal among all market segmentations identified in the previous section. In addition,

certain features are described that will be present in the iCam that will enable it to “fulfill” the

indentified needs found from the market analysis and actual survey results.10

In context of the above description, the first universal “need” among potential customers

that will be fulfilled with the Apple iCam is the ability to integrate user experiences (digital

photographs) among various applications such as Facebook and Twitter but also among other

Apple hardware devices such as the iPhone, iPad, and Mac. This will also differentiate the iCam

from other competing products because it will have Wireless Connection Capability (Wi-Fi),

which other competing digital cameras currently do not have. Furthermore, the Apple iCam will

allow users to integrate their lives seamlessly without computers and straight from the camera,

which fulfills the need of integrating user experiences to popular social networking sites.

The second “need” fulfilled by the Apple iCam is a high quality picture that portrays the

most vivid and exact images of its users in the highest quality with the utmost ease. In this case,

the iCam will take vivid 14-Megapixel quality pictures highlighted by a “flash” feature, stability

control, and photo editing software. Likewise, all of these features can be used and edited on the
10. To review the findings of the survey used in this report, please reference the Appendix on p. 59 & 60

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camera, by the user, before it is shared or uploaded by the user from the camera; this eliminates

the need of a secondary device to edit and/or share pictures and more quickly connects the user

with their respective social networks.

The third “need” fulfilled by the iCam is the innovative quality, durability and virtual

integration and multimedia capabilities of the camera itself. This radical innovation by Apple,

will again, solidify their position as a industry leader in revolutionizing technological hardware

integrating user experiences into social networks via internet applications and other file sharing

mechanisms (Bluetooth, Sync, and Wi-Fi).

Market Survey Results

The strategy used for the results presented in this paper attempt to segment the digital

camera market by a consumer’s desire for a particular quality camera (picture quality) and the

willingness of the consumer to purchase that camera for a certain price. In addition, the findings

of our survey also analyzed the age demographic of potential customers as well the gender of

potential customers associated with a specific price and picture quality. In this context, the

overall survey consisted of 114 completed surveys, an average age of 25.1, and an overall 43%

response rate saying “yes” they would purchase the Apple iCam if it existed or was introduced

into the marketplace.11

Likewise, our overall survey consisted of four separate individual surveys, which allowed

us to effectively test price sensitivity (price-premium) and the importance of quality (in terms of

picture quality; i.e. megapixels). However, we also collected data regarding the ages of each

11. Please reference the chart entitled, “Apple iCam Survey Results” shown in the Appendix on p. 61 & 62

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individual surveyed and their respective gender. This in turn allowed us to see how demand

could be affected by price combined with a particular image quality. As a result, our initial

surveyed results demonstrated that a digital camera between the price range of $249.99 and

$274.99 would be most effective provided it had 14-megapixel quality, which in turn would

target consumers who are between 24.5 and 25.9 years of age. In addition, the split would

encompass a targeted gender demographic of 53% men and 47% women, according to our

survey results.12 Furthermore, should you wish to review all of the exact findings of our surveys;

please reference the Appendix on page XYZ to see each individual survey as well as the

cumulative results of all surveys combined.

Analysis of Current & Potential Competitors

In this section, the goal is to identify the top three current competitors present in the

digital camera market as well as the three most likely competitors that may emerge based on

Apple’s presumed entry into this new market. The top three competitors of the digital camera

market currently provide 48.4% of the available digital cameras, and represent the primary and

immediate threat to Apple in this market. Likewise, the top three potential competitors are

companies that currently compete with Apple in different markets but have previously

introduced new products in response to the introduction of new products by Apple, and as a

result could be expected to repeat this reaction.

12. Please reference the chart entitled, “Apple iCam Survey Results” shown in the Appendix on p. 61 & 62

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Top Three Current Competitors

1) Canon: In analyzing the digital camera market, Canon quickly emerges as a primary

and most prominent competitor in this industry offering 21.6% of the available

products in the marketplace. Likewise, Canon primary offers premium priced digital

cameras, which would directly compete with Apple’s iCam because the pricing

strategy would be identical between the two companies (Kidson, 2010, p. 15). In

addition, despite its large presence in the digital camera market, Canon is a reputable

provider of an extensive range of products for consumer, business-to-business, and

industrial digital imaging solutions. Canon is also ranked as the fourth highest patent

holder of new proprietary technology (Canon, 2010; Samadi, 2010, p. 23).

2) Nikon: Nikon is the second largest supplier of available digital cameras offering

15.7% of all available products and provides a wide-array of products catering to

consumers seeking both low-cost and premium priced products. In this context, the

primary portion of Nikon’s digital cameras are priced using a premium pricing

strategy, which would compete with the proposed pricing strategy for the Apple iCam

(Kidson, 2010, p. 15). Nikon also offers a variety of optical devices for academic

personal individual consumer use, business-to-business, and academic research

markets (Nikon, 2010; Samadi, 2010, p. 26).

3) Sony: Sony currently offers 11.1% of all available digital cameras covering both all

cost pricing levels. It has strong brand among consumer electronics as well as

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businesses and is well established in digital cameras as well as gaming and other

consumer electronic devices; including its proprietary Blue-Ray technology (Samadi,

2010, p. 25; Sony, 2010).

Top Three Potential Competitors

1) Microsoft poses the largest immediate threat to Apple pending the launch of the iCam.

Microsoft has a strategic software advantage and has previously introduced products

(albeit unsuccessfully) in response to Apple and may well again attempt to enter the

camera market when Apple introduces the iCam.

2) Research in Motion is a primary threat to Apple because they already compete head-

to-head in the smart-phone market and Research in Motion already posses many

software and hardware components necessary to easily produce a camera. It also may

help to diversify the company’s product line away from its current business

application to more consumer-leisure, which might be exacerbated pending the

introduction of a new product by Apple.

3) Hewlett-Packard emerges as a possible competitor as well because they already

distribute Canon and Samsung products along with their HP camera printers.

Likewise, the possibility of Hewlett-Packard expanding their current products from

their strong brand is a logical, next step, based on their current portfolio and as a result

of Apple introducing the iCam.

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Environmental Analysis

While the competitive landscape and environment of photography has changed

drastically since the emergence of digital cameras, the industry and market of consumers have

negated the effects of traditional distribution models, pricing strategies, and additional features.

Traditional methods of retail have particularly suffered from this change as well as the traditional

film industry resulting from digital technology and the virtual integration of technology through

computer technology devices. A particular instance of this change in the environment is Best

Buy’s recent purchases of smaller retailers as well as the introduction of Geek Squad to adjust to

the emerging trend of integration of technology into the consumer sector through digital devices.

The actions of Best Buy are not a single or singular activity as analysis shows a large trend of

large scale consolidation by major retails that is expected to continue as consumers continue to

integrate technological devices and purchase products online (Kidson, 2010, p.8). In addition,

environmental analysis indicates traditional retail channels are consolidating to locations that are

easily accessible and have high traffic along with favorable customer demographics

characteristics (Kidson, 2010, P. 21).

Technology

The current technologies available in the digital camera market are diverse and primarily

differ by the price a consumer is willing to pay for a particular camera; in addition, the features

and quality of the camera are the primary drivers that affect the price of a digital camera. As the

functionality, quality and convenience of digital cameras have improved, this has increased

customer awareness and demand for digital cameras by consumers (Kidson, 2010, p. 14).

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Likewise, premium-priced digital cameras have proven to be most successful because consumers

associate a higher priced product with superior image quality (megapixels), superior technology

(flash power and zoom capability), design (size and other features), and brand image (Kidson,

2010, p. 15).

Society

In terms of digitally technology and its effects on society, today’s consumers are

becoming increasingly conscious with integrating their lives with technology in order to share

their experiences on a consistent basis each day (Tapscott, 2008). Furthermore, multitasking and

efficiency are critical factors that influence customer perceptions of new technologies. This trend

is strengthening and new consumer devices, such as smart-phones, are expected to have

multipurpose uses in addition to that of their primary purpose in order to create value. In this

context, a digital camera can no longer simply take pictures to be successful; rather, digital

cameras must do more to provide value and fulfill the needs of today’s technologically integrated

consumers if companies expect their respective products to be successful.13

Industry

Despite the setback in digital camera sales during the 2008-2009 recession, sales of

digital cameras are expected to increase in 2010-2011; however, industry sales are expected to

struggle beyond 2012, according to industry analysts (Kidson, 2010, p.9). As the industry

13. To see these findings supported, please reference our surveys in the Appendix on p.61 & 62

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continues consolidating its primary channels of distribution to consumers, larger retail

distributers such as Best Buy, Wal-Mart, and Target will continue to capture larger segments of

the market due to competitive pricing and purchasing smaller private competitors. In addition,

growth in the digital camera market is likely to be concentrated in larger organizations and

among national chain stores due to competitive advantages (Kidson, 2010, p.10). Likewise, the

internet is expected to affect the pricing of digital cameras and drive down margins when the

features are equal among competing products (Kidson, 2010, p.11). In addition, there appears to

be an emerging trend of cameras becoming more integrated with online technologies and other

products through Wi-Fi avenues (Kidson, 2010, p. 9).

Based on the findings of the analysis presented in this report, the digital camera industry

appears to be highly fragmented and a number of opportunities for consolidation between

competitors and products to the similarity between products. The opportunity for a radical

product innovation for digital cameras with a number of new features, not typically associate

with a digital camera, would also add new value, stimulate new consumer interest, and increase

demand. While advances in digital technology have stimulated consumer demand in the past, it

is now up to the industry to combine existing technologies centralized around a revolutionary

digital camera with completely new capabilities and features (Kidson, 2010, p. 11).

Market Analysis Conclusions

In context of the information presented within this market analysis, the primary

recommendation to management is fundamentally based on the findings presented in the paper

entitled, Product-Market Strategy And The Marketing Capabilities Of The Firm: Impact On

Market Effectiveness And Cash Flow Performance, which states that while various product

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marketing strategies exist, the most effective strategy encompasses three essential elements.

These elements are essential components to any successful marketing strategy, and are (1)

product differentiation, (2) cost focus, and (3) product-market scope (Vorhies, 2009). The

market analysis for the digital camera market has shown the following competitor, industry, and

product trends:

• The Apple brand is capable of supporting a product extension

• There are clear market opportunities for radical product innovation

• The main source of competition stems from low-cost pricing strategies

• There is a need among consumers for new technology integrated products

• A premium priced, revolutionary product, would have a competitive advantage

Therefore, industry analysis of the digital camera market indicates a fragmented industry

among competitors as well as highly price-competitive market because the available products

and substitutes do not substantially differ between one another. As a result, the Apple iCam

would differentiate based on its new innovative features, its premium pricing strategy, and

ability meet the emerging needs of consumers to integrate their lifestyles because of changes in

technology.

Marketing Plan (Part 3)

Description of the Market Opportunity (Part A)

Description of Need

Broadly defined, the “need” present in the digital camera market at this time is for a

product that would deliver superior picture quality while integrating the user’s experiences

(photographs) with social networking applications and eliminating the need for a secondary

technological device. Radical product innovation in the digital camera market has become almost

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nonexistent and consisted of mainly incremental innovations primarily relating to increases in

megapixel quality and price reductions. In this context, the opportunity to exploit this “need”

would be to develop a completely new type of digital camera (radical innovation) that introduces

new product features and capabilities as well as a premium cost differentiation strategy.

Discussion of Market Potential

While the digital camera market is highly saturated at all price levels and offers a wide

array of available substitutes for quality and price; it is a mature market with slow innovation. A

new product with a new design, features, and capabilities would dramatically alter the potential

in the digital camera market and spur a new phase of industry growth and innovation as a result

of launching the Apple iCam.14 In addition, the market consists of a wide array of customers that

are currently not loyal to a particular brand in the majority of cases, which presents a large

opportunity to reach new customers in addition the general characteristics described above.

Description of Product Concept

Apple currently possesses the ability to develop not only a digital camera, but also one

that embodies the technological advances present in many of their other products. The proposed

Apple iCam will have the capabilities to interface with Apple’s existing line products, such as

the iPhone, iPod, iPad, and iTunes. This digital masterpiece will allow users to enjoy the

similar attributes and features that make Apple’s products so desirable, including a vivid touch

screen and Wi-Fi capability, as well as a variety of internet applications allowing the user to

integrate their experiences with their social networks. The key differentiation strategy for the

14. Please reference the chart entitled “Product Industry Lifecycle” in the Appendix on p. 63

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proposed Apple iCam will not only be able to incorporate the key features of the iPhone, iPod,

iPad and Mac, but it will also provide users with exceptional picture quality. Pictures are worth

a thousand words, and the Apple iCam will allow users to capture their personal experiences

with precision and top quality while simultaneously enabling users to have the ability to

seamlessly integrate their lives with their friends and family through a variety of available

applications; all directly from their Apple iCam.

With its sleek and modern design, prolonged battery life, and vivid picture and wireless

capabilities; the Apple iCam will provide what no other digital camera has been able to do

before. The Apple iCam will enable users to share their experiences strait from their camera

without the need of secondary device and will set a new standard for digital cameras and

photography; continuing the radical innovation Apple has consistently demonstrated over the

past ten years while also raising the expectations for future types and features of digital

cameras.

Product Strategy

Description of Product

The Apple iCam is a next generation digital camera that will deliver superior

performance to consumers. The Apple iCam boasts several cutting-edge features and capabilities

that will set the standard in the digital photography market for years to come. These features

coupled with a stylish design combine to create an exceptional product.

The Apple iCam amalgamates a professional quality digital camera with user-friendly

platforms and applications. The camera has sixteen mega-pixels that deliver a studio quality

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photo. The camera allows the user to zoom at two, four, eight, and sixteen times magnification.

The Apple iCam is also outfitted with a flash that will activate in low light conditions. The photo

is displayed on a 3.5” inch (diagonal) LCD touch screen. This LCD touch screen allows the user

to quickly store photos while instantly interacting with other forms of digital media.

The Apple iCam also features a high-performance battery, common in many of today’s

Apple products. This technology enables the Apple iCam to operate with an expected life of fifty

hours for each battery charge. The fifty hours extended camera time is without equal in the

digital camera market. The long lasting battery will make the product attractive to professional

photographers as well as average consumers.

The Apple iCam comes equipped with several image-processing applications. These

applications may include Hipstamatic, Photoshop Express, and other apps that will be available

through the Apple Store and chosen by the individual user. These applications make editing and

customizing possible on the camera itself. The last generation of digital camera required a user to

synchronize the camera with a desktop before any changes could be made. The Apple iCam

increases customer flexibility by bringing these features to the camera.

A WIFI card will allow users to share pictures and videos on Facebook, Flicker, and

YouTube. A wireless connection to the internet will make syncing data through a USB port a

thing of the past. A sixteen-gigabyte hard drive enables the user to organize and archive stored

data. This hard drive will allow users to store thousands of photos and movies. The Apple

iCam’s storage capacity and Wi-Fi connectivity combine to create an original and unique photo

taking experience. The Apple iCam will also have the ability to print directly at any Apple Store.

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By printing at the store, users are able to print pictures with high quality resolution. The Apple

Store direct print feature is a convenient resource for many users. The company will also feature

application support.

Objectives for Product

Apple is releasing the Apple iCam in order to reach several important objectives. Some

objectives are market-based while others are customer-oriented. Regardless of the objective’s

classification, all are aimed toward improving the company’s profitability.

Apple has many market-based objectives the company hopes to meet with the release of

the Apple iCam. Most importantly, Apple is seeking to manufacture a camera with a positive

contribution margin. A positive contribution margin means the product is profitable. A

profitable product line contributes to the company’s bottom line and brings the company closer

to its break-even point. In addition, Apple is striving to become the market leader in premium

quality digital cameras. Many comparable premium cameras have a similar asking price, on

average, than the Apple iCam. In which case, the Apple iCam will offer superior features at a

lower cost.

In regards to the customer-oriented objectives, the Apple iCam strives to be user friendly.

User friendly means that the camera is easy to use and operate. Stellar features are of little use if

the features are complicated or difficult to operate. While technology is important, it must be

incorporated in a smooth operating system if a gadget is to gain widespread appeal among

consumers. Thus, ease of use is essential if the Apple iCam is to compete in a highly

competitive digital camera market.

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Features and Benefits

Apple integrates many cutting-edge features into the Apple iCam. The features are

designed to deliver superior performance to consumers. Users can benefit from these handy

features in several ways.

Consumers will benefit from the main operating system running the Apple iCam

applications. The operating system allows users to access several image processing applications.

These applications empower users to edit, resize, or reformat photos on the Apple iCam. Users

no longer need to connect to a central computer system to alter their photos and videos. The

operating system also allows the end user to organize and store multimedia in an organized

fashion. Consumers can create storage files so that their media is instantly sorted and arranged.

This operating system will in turn allow applications to run smoothly creating an enjoyable

customer experience.

Wi-Fi and GPS technology are also beneficial to users. Wi-Fi allows users to access the

internet from the camera. The internet connection allows users to instantly update their social

media profiles. Wi-Fi connectivity also enables users to synchronize information with another

computer without having to connect through a USB port. GPS technology allows for greater

customization of online applications to the end user.

The customer will benefit greatly from the extended-life battery and a large hard drive

that are included with the Apple iCam. The battery can keep a charge for up to fifty hours. Fifty

hours of charge offers exceptional reliability for the user. The Apple iCam can eliminate the

need to take a battery charger on a family vacation. The sixteen-gigabyte hard drive allows users

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to store thousands of photos and videos without having to worry about limited storage space.

Thus, an extended-life battery and a large hard drive mean less hassles and more flexibility for

the purchaser.

Product Quality Strategy

With the launch of the Apple iCam, Apple plans to maintain its commitment to the

quality of its products. Apple has a reputation for producing high quality devices. These items

have endeared the company to millions of loyal Apple users worldwide. The Apple iCam will be

no exception. Apple recognizes that their products perform well in the market because

satisfaction drives loyalty, which drives profitability (Day, 1994). With innovative technology

and a sleek design, the Apple iCam will sit atop its class in the digital camera market.

Product Service Strategy

Apple will offer service support through its retail outlets. The Apple store as well as other

Apple authorized service providers seek to offer the highest customer satisfaction. The service

personnel are trained to quickly assess the nature of the problem and inform the customer of all

available service options. Should a customer experience a problem using the Apple iCam,

customer service personnel can quickly diagnose the problem.

Competitive Positioning of Product

Apple should be mindful of its competitive position within the digital camera market.

Apple must map the area of its competitive position in order to ensure the Apple iCam’s long-

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term profitability and sustainability. When plotting a competitive position, certain factors (price

to benefit) are often difficult to concretely position within the market. The lack of understanding

about competitive positions is clear in industries such as consumer electronics, where the number

of features makes comparisons complicated (D'Aveni, 2007). In a highly competitive electronics

market, the competitive position is likely to change often. Therefore, Apple must recognize that

the introduction of the Apple iCam will disequilibrate the competitive position of its top

competition. Companies that introduce radical product innovations into the market should be

prepared for a competitive response from other companies in the industry (Aboulnasr,

Narasimhan, Blair, & Chandy, 2008). Thus, Apple must constantly assess the competitive

positioning of the iCam in order to remain profitable in a highly dynamic digital camera market.

Therefore, the Apple iCam’s competitive position is benchmarked against Cannon,

Nikon, and Sony. The Apple iCam differentiates itself on several levels. First, the Apple iCam is

a premium quality product. The quality differential is apparent in the numerous features that the

Apple iCam offers that competitor’s cameras do not. Second, the camera distinguishes itself by

the fact that the Apple iCam is a new product that should attract a great deal of publicity. In

addition, the Apple iCam differentiates itself in terms of price. While there are several cameras

that are priced near the Apple iCam, the camera is clearly priced at a premium level.

Estimated Costs

All costs are estimated using a tear down analysis of other Apple products such as the

iPhone, iPod, and iPad. Many of the necessary components can be taken from other Apple

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products and applied to the Apple iCam. For this reason, the component costs can be estimated

rather accurately, according to our research documented in this report and in appendix.

The lens and motor are estimated to cost $40 and $10, respectively. The extended-life

battery will cost a projected $5.20. Given its high level of sophistication, the battery is a cost-

efficient feature. A Wi-Fi card is estimated to cost $1.40; GPS components cost $0.35 per

phone; a sixteen-gigabyte hard drive is estimated to cost $12 to produce. The display model

costs approximately $19.25. A touch screen is expected to cost $16.00. The main operating

system costs an estimated $70.00. The camera components will cost an estimated $9.35. Other

enclosures for the camera cost around $10.00, while the box contents cost $5.00.

Using the tear down analysis of other Apple products, direct materials account for around

ninety-seven percent of the product cost. Likewise, the Apple iCam should also expect to incur

similar costs. The Apple iCam is sold at a premium price, so the product should maintain a

strong profit margin.

Pricing Strategy

Basic Pricing Strategy

An appropriate pricing strategy is critical to the sustained success of any new product.

The pricing strategy must work in harmony with all components of the marketing strategy (Paley

2006). If you charge too much for your product, then it will not sell. Conversely, if you charge

too low of a price, then you forge potential revenue and fix your product’s market value at a low

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level (Marn 2003). Much marketing information and research must be done to correctly price

your product.

After market research showed the willingness to accept a new premium camera, Apple

will use a premium-pricing strategy along with a skim pricing strategy to introducing the Apple

iCam. Skim pricing involves setting a premium price that attracts the premium consumers. In

order to successfully implement a price skimming strategy, Apple must have a premium product

that attracts price insensitive customers (Noble 1999). This price skimming strategy for the

Apple iCam falls directly in line with the rest of Apple’s current product strategy.

In this context, the theory of price skimming is based on the premise of setting the sales

price of a product high at the beginning of the product life cycle to recover initial costs, and then

lowering the price as the product matures. If you are able to successfully skim the price along

each stage of the product life cycle, you can be highly profitable as long as you deliver high

customer satisfaction. As competition increases for your product, the selling price will decrease

which will increase the demand for your product (Noble 1999). This creates a situation where the

consumer perceives he is getting a great deal because of the new reduced price. As technology

evolves, the company will innovate and improve their product. When the company comes out

with a new and improved product, the product should be placed at a premium price to repeat the

cycle. Apple has proven this to work with the several different versions of the iPhone. The

original iPhone had a premium price that successfully skimmed the market. When a new version

enters the market, the price of the older version decreases which increases the demand for the old

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product by the majority of consumers while the early adopters transition to the new radical

product innovation.

The Apple iCam will be targeted to the premium consumers in the digital camera market.

The will be priced on the high end of the premium camera segment. The high initial price will

allow Apple to recover some of its developmental costs. Customers will be initially attracted to

the Apple iCam due to the technological innovations it provides. These customers are the early

adopters who are willing to pay the price to be the first ones to have the product (Noble 1999).

They form the base consumers of the new product. Apple already has a strong brand following

and a large number of consumers that are eager to try the new Apple product.

As an organization, Apple has successfully positioned itself as a premium brand that sells

its products at a premium price. Its consumers know and accept that Apple’s products are not

low cost options. Apple’s consumers are fiercely loyal to the Apple brand. When consumers

think of an Apple product, they think of an innovative product. The iPod, iPhone, and iPad were

all revolutionary products that called for a premium price. Apple successfully implemented a

premium pricing strategy to when they introduced these products and was highly profitable

doing so. Each product was successfully launched with a premium price, targeted to the high-end

tech savvy consumer. Apple also has been successful managing the innovation of their products

throughout the product life cycle. The Apple iCam will surely follow the same successful

pricing plan.

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Distribution Strategy

Distribution is defined as a process in which the product flows from the producer to the

consumer; this encompasses three different distribution strategies: intensive, exclusive and

selective (Perner, 2008). In this context, Apple has and will continue to use both exclusive and

selective distribution strategy when it launches the Apple iCam. It will use exclusive distribution

through its own retail store, and they could use selective distribution through its use of retailers;

Apple will also use the internet to sell the Apple iCam.

Apple can sell the Apple iCam online through its own website, which is also known as

the Apple Store, as well as other online sellers such as Amazon. Apple has also had success in

selling its products through retail stores such as Wal-Mart, Target, Best Buy, RadioShack, Toys

R’ Us and the AT & T stores. The most important retail factor, though, is Apple’s own retail

store, which provides the most effective method of distribution.

Many experts who compared Apple Stores to the former Gateway Stores, and did not

predict the retail Apple Stores to be very successful; however, the Apple Store has been a critical

component in Apple’s success since the first store opened back in 2001. In 2008, Apple’s retail

store was given the Best Vendor Award for the second consecutive year. That same year the

Apple retail store generated 6.35 billion in revenues, which was up 55.8 percent in revenues

from the previous year. That revenue total gave placed the Apple retail stores in 4th place behind

only Wal-Mart, Best Buy, and the now defunct Circuit City (Olenick, 2009). Apple now

operates over 270 retail stores including over 200 in the United States (Thormahlen, 2010).

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Apple could also choose to sell its iCam product at other retail locations in which other

Apple products are currently sold. Should Apple choose to do so, their first choice would seem

to be Best Buy. Best Buy is the primary electronics retail store in the United States and owns

over 19% of the market of consumer electronics. Best Buy’s revenue has grown at a 12.6% rate

over the past five years, and it has over 1,150 stores worldwide making it a great place to sell the

Apple iCam (Thormahlen, 2010).

Apple could also choose to sell the Apple iCam at the two largest discount retailers. Wal-

Mart is the largest retailer in the United States, and serves customers over 200 million times a

week. Wal-Mart reported over 405 billion dollars in sales in 2010 and Wal-Mart operates over

8,600 stores in 15 different countries (Wal-Mart). Another place that the Apple iCam could be

sold is at Target Stores. Target is the second largest retailer in the United States behind Wal-

Mart and operates over 1,600 stores in 49 states, excluding Vermont (Target).

Even though Apple has the option to sell the Apple iCam at these other retail locations,

we believe that its best option is to just sell the Apple iCam through the online apple store and

through the Apple retail store. Apple can then control the marketing and promote their own

product, instead of putting their product in a retail store where the store will not exclusively

promote the Apple iCam over a competitor’s product. By selling the Apple iCam exclusively,

Apple will save on distribution costs of sending the product to the retailers. Instead the

distribution costs will only occur when the send the product to the online buyer, and when the

send the product to their own Apple retail store.

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The main reason Apple should exclusively sell the Apple iCam is due to the great buying

experience that customers generally report with Apple. According to a survey by PC World, the

online Apple store rated as very good, while the Best Buy website rated as only fair. The online

store rated the same as Dell, whose primary route for its business is the direct sales generated

through their website (Kandra, 2004).

The Apple retail store also rated as a “very good” buying experience. The Apple retail

store was actually the only retail store to receive that score, and Best Buy received just a “good”

score. The two main places where Apple lost points in the survey was in the pricing and

selection categories, but that is to be expected as Apple sells a premium product, and Apple only

sells its own products limiting the selection available in the stores. With the results of this survey

and the other benefits, Apple is seemingly better off selling the Apple iCam exclusively through

its own online and retail stores (Kandra, 2004).

This strategy will be a problem for competitors as two major factors in the success of

camera stores are location and customer service (Kidson, 2010, P. 21-22). Apple has generally

located its stores in high traffic locations such as busy malls and shopping districts (Thomahlen,

2010). Apple also had the highest rating in the PC World survey. The rating also said that Apple

was the most helpful in its buying advice and knowledgeable employees tend to draw in more

sales and improve customer satisfaction (Kandra, 2004). The last major factor is that some

companies offer training in how to use the cameras. Apple retail stores offer this with the

“Genius Bar” at each store, which is a place where customers can go to ask for advice on how to

use the product, and where they can go if they have a problem with their products (Olenick,

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2009). By offering the “Genius Bar,” Apple differentiates itself from Wal-Mart and Target and

may be able to sell their product better at the Apple store as a result.

Marketing Communication and Promotional Strategy

Promotional Strategy

The marketing communication and promotional strategy for the iCam is essential in order

to create a positive brand image and to build brand awareness among consumers. The following

strategy to be implemented is thorough and consistent in order to increase success and

effectiveness throughout the target market. Through the proficient use of advertising and

promotions, Apple will strive to deliver a clear message to the Apple iCam’s target audience.

Said message will not only convey top quality, but also desirability that will ultimately fulfill

consumers everyday wants and needs.

Apple currently possesses the ability to develop not only a digital camera, but also one

that embodies the technological advances present in their other products. The Apple iCam will

have the capabilities to interface with Apple’s existing products, such as the iPhone, iPad, and

iTunes. This digital masterpiece will allow users to enjoy the similar attributes that make

Apple’s products so superior, including, but not limited to, touch screen, Wi-Fi, and

applications. Pictures are worth a thousand words, so why not capture them in top quality and

have the option to share them with friends and family?

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It is vital that the techniques described within the marketing report are executed as

described because they emphasize the Apple iCam’s unique features in order to position itself

strongly within the market thereby sparking renewed customer interest in the digital camera

marketplace and available products.

Overall Promotional Objectives

The overall promotional objectives include several critical components necessary for the

Apple iCam’s success. First, the Apple iCam must uphold consumers’ current expectations for

Apple products. It must distinguish itself from competition and effectively relay its benefits to

consumers. Furthermore, promotions for Apple iCam will: (1) build awareness (2) create

interest (3) provide information (4) stimulate demand and (5) reinforce the brand (Types of

promotion, 2010). Through the efficient use of advertising channels and promotional activities,

these objectives will be accomplished.

Advertising Strategies

The advertising efforts will focus on continuing Apple’s existing brand personality;

accentuating lifestyle, imagination, liberty regained, innovation, passion, hopes, dreams and

aspirations, and power to the people through technology (Apple’s branding strategy, 2008). The

advertisements created to represent the Apple iCam will be memorable and well placed within

the market. By developing the perfect mix of television, online and print ads, and billboards,

Apple will be able to raise the Apple iCam’s product awareness among consumers. Companies

utilize multiple channels of advertising due to the fact that each media channel promotes and

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reinforces one another, ultimately driving awareness (Tiernan, 2001, pg. 2). The major market

segments for digital cameras include ages ranging from 18 to 44 years old. This encompasses

approximately 56% of the total market (Kidson, 2010, pg. 3). The Apple iCam’s advertisements

will mainly focus on the aforementioned points and can be viewed in the Appendix, which

clearly demonstrates these ideas and claims described in the preceding paragraphs.

Television Advertisements

The Apple iCam’s television advertisements will remain in line with Apple’s

current strategy of producing simplistic, yet creative advertisements that portray the latest

technological advances while remaining congruent with popular culture. These

advertisements will run on channels such as MTV, CBS, ABC, NBC, and ESPN.

Furthermore, to enhance the Apple iCam’s launch campaign, Apple will place an

advertisement during the World Series or the Super Bowl, reaching millions of existing

and potential customers.

Online Advertisements

The emergence of the internet and the vast majority of individuals that utilize it on

a day-to-day basis encourages the use of online advertising. Research has proven that

website visitors who are exposed to display ads on news sites are more likely than

average to visit the advertiser website and are avid online buyers. Moreover, online news

publishers are also developing innovative ad formats, which are intended to create a

richer, more engaging experience for consumers (Comscore, 2010). Thus, Apple can

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effectively advertise Apple iCam on websites such as The New York Times Online and

The Wall Street Journal Online, allowing visitors to be subjected to the infamous Apple

experience online. The online newspaper statistics for May 2010 can be observed in the

Appendix (Comscore, 2010).

Print Advertisements

In order to capture the attention of those individuals that are influenced by print

media, the Apple iCam should place advertisements in magazines like that of Rolling

Stone and Wired, both which possess high target demographic circulation. The typical

Rolling Stone reader is male or female approximately 31 years old with an average

household income of $69,000 (Rolling Stone, 2009). Furthermore, characteristics of

Wired subscribers are males between the ages of 18-34 with an average annual income of

$100,000 or more (Quantcast, 2010). Refer to the Appendix for a comprehensive outline

of Wired’s demographics. Both magazines closely correspond to the target market

possessing discretionary funds to spend on luxury items, such as the Apple iCam.

Billboard Advertisements

An effective and cost efficient way for Apple to spread the word about the Apple

iCam is using billboards, especially because billboard advertising is on the rise in

America (Resources for Entrepreneurs, 2010). Moreover, billboards promote 24 hours a

day, 7 days a week to everyone and anyone. The Apple iCam’s billboards will be placed

in high traffic, urban vicinities in order to increase exposure and build brand awareness.

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Personal Selling

The personal selling strategy Apple would implement for the Apple iCam would

be a push strategy, which encourages consumers to purchase the product while creating

additional profit opportunities (Levy, Webster, & Kernin, 1983, p. 1). Through personal

selling, the sales force can provide consumers with individual, face-to-face attention and

determine their specific needs. A strong bond between employees develops over time

because Apple does not set sales goals nor are they commission based. These aspects

allow the sales associates to channel their attention and expertise on the individual

consumer, creating a positive work environment, and avoiding the stress and tension

associated with being commission oriented.

Sales Promotions Strategies

Apple’s In-Store Displays

Apple’s retail stores are an experience in themselves, allowing consumers to

undergo a stimulating, no pressure environment where they can uncover more about the

Apple family, experiment with existing products, and receive technological assistance

(Apple’s Branding Strategy, 2008). In order for the Apple iCam to uphold Apple’s

exceptional in-store displays, it will need to maintain Apple’s reputation for producing

outstanding visual presentations. Apple has won several awards for their visual

presentations from the Associations for Retail Environments. This could explain why in

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the 4th quarter (2009) alone Apple generated 45.9 million in-store visitors (Elmer-

DeWitt, 2009). Examples of award winning displays are featured in the Appendix.

Retail Outlets In-Store Displays

The Apple iCam will be included in the Apple Mini Stores located in retailers

such as Best Buy (McLean, 2007). This will allow users the opportunity to experience

the nostalgia of an Apple store through other retail outlets, further expanding the Apple

iCam’s current target segment by generating exposure to those individuals who would

have not otherwise considered an Apple product. Pictures of said Mini Store located in

Best Buy can be viewed in the Appendix. The Apple iCam would be added to this

current display, sparking consumer interest and allowing them to explore and learn about

its impeccable features.

Word-of-Mouth Promotion

Apple is notoriously known for their consumers partaking in spreading the word

of how satisfied they are with Apple’s products. Additionally, “Apple users tend to be

intensely, zealously loyal, and they do the company’s evangelical work for free” (Elmer-

DeWitt, 2009). Research has determined that the likelihood of purchasing behavior

increases due to positive product recommendations by friends and family (Leskovec,

Adamic & Huberman, 2006, p1). Thus, it is crucial that Apple continue on their path of

providing excellent customer satisfaction in order to avoid “customer terrorists” who

typically tell 8-10 other consumers about their dissatisfaction (Vorhies). The Apple Cam

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is expected to not only fulfill, but also exceed consumers’ expectations, untimely

providing them with copious benefits that outweigh the costs incurred.

Projected Initial Advertising Costs (Year 1)

For the introduction of the Apple iCam, Apple’s current advertising expenditures for this

fiscal year (2010) approximately reached $501 Million (Elmer-DeWitt, 2009). In order to

execute the preceding advertising strategies among all avenues; this paper suggests a total $47

Million dollar initial advertising strategy for the first year encompassing television, internet,

radio, print, and billboard advertisements designed to promote the Apple iCam and develop

brand image and drive product awareness.15

Competitor Issues

The low barriers to entry in the digital camera industry allow Apple easy access into the

market. However, there are extremely high competition levels present. The Apple iCam’s

major competitors are Nikon, Canon, and Sony. The industry structure can be observed in the

Appendix (Kidson, 2010, pg. 3). Based on these industry conditions, Apple must be weary of

competitor retaliation because the major competitors typically spend a considerable amount of

resources on television and newspaper advertising in order to generate consumer demand

(Kidson, 2010, pg. 21). It is highly likely that competitors will attempt to imitate the Apple

iCam’s distinctive technological features to maintain their market share.

15. Reference the chart “Apple iCam Ad Budget” in the Appendix on p. 62 for a complete cost breakdown

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Technological Issue

Market Trends

To launch any kind of new product it is always beneficial to understand the current

market trends and understand what the end user or the consumer needs, rather than launching

some product off track, which consumers will have hard time figuring out and accepting it.

Speaking about the Digital Camera’s it has come a long way since the time it was introduced,

cameras now are small, sleek and equipped with high quality mechanics to take better and

precise pictures, and it is not limited only to take pictures, it is also equipped to take high quality

videos. Cameras now come in lot of genres to attract specific set of consumers right from basic

Point and Shoot for amateurs to SLR’s for professionals.

The popular current trends that have come up in the Digital camera segment that

companies are trying follow and capitalize on, are described below:

1) Increasing megapixels: Pixels are dots in a digital image, which stores data. A digital

picture is made up of several pixels. Larger the number of pixels, more information it

will store in a file and result into better picture quality for large prints. At present, point

and shoot digital cameras are available in 10 – 12 megapixels (1 megapixel = 106 pixels),

and as per Photo Marketing Association, this number is going to increase only and it is

expected that by late 2011, point and shoot digital cameras will have image resolution in

the range of 15 – 18 megapixels.

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2) Camera Equipped with HD Video Recording: This is the one of the latest trend that has

come up in the recent times, after the introduction of the HD Televisions, people wanted

to take and record their own HD Videos. Therefore, in the recent times, digital camera

market is offering cameras that are equipped with this feature. Introduced two years ago,

HD (1,280 x 720-pixel) video recording is now fast becoming a staple in point-and-

shoots, with the compacts having such a function. However, cameras announced recently

are touting a boost in video resolution, capturing movie clips in full-HD (1,920 x 1,080-

pixel) quality (Goh, 2010). Since then, camera makers have been steadily rolling out

improvements to movie recording. The main thing they have gone after is resolution and

video quality. As per Goldman (2009), “slapping "HD" on a camera is the video

equivalent of megapixels. Put "full HD" on a model and you will really grab some

attention. Squeeze an HDMI jack on the camera and you're in even better shape to sell

some units to consumers interested in getting one product that takes good photos and

videos and can play them back instantly on an HDTV”.

3) 3D Cameras: After High Definition, it is the 3D that has attracted masses, so this trend

has not stopped following even in the digital camera segment. Since now everyone wants

to say Cheese in 3D, this is one of the latest and most recent trend that more and more

companies are trying to capitalize on. Sony is constantly working on 3D cameras and is

expected to reveal its first prototype in Photokina 2012 (Photokina is the world's biggest

trade fair for the photographic and imaging industries). Sweep Panorama mode, which is

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a technology that is available in Sony’s Cyber-Shot compact cameras, has been

improved: you can now take a sweeping panorama shot in full resolution, rather than a

cut-down resolution, as was the case with Cyber-shot cameras. Furthermore, 3D Sweep

Panorama mode will be able to shoot 3D images, which can then be played back on

Sony’s 3D televisions (Plastiras, 2010). If 3D TV becomes a big hit, everyone will want

to shoot their own 3D videos and photos. Fujifilm’s FinePix Real 3D W1, first digital

camera with 3D shooting feature, is now available in market and costs $600 for the

camera and $500 for a special display that shows video and photos in 3D; you don't need

to wear glasses, as long as you view the display from certain angles. However, it not an

actual 3D, still it is considered as major shift in digital camera market. Samsung is also

reportedly working on a 3D still camera with a two-lens design similar to that of the

Fujifilm model (Moynihan, 2010).

4) Rough and Tough Cameras: Apart from the high technological breakthroughs like HD’s

and 3D’s there’s another trend that has come up in the recent times, that is Shock Proof

and Water Proof Cameras. These sorts of cameras are not targeted for camera enthusiasts,

but to sports enthusiasts, swimmers, divers who want to take pictures under water and in

extreme weather conditions. Because of this kind of features it has able to attract lot of

other set of consumers who do not want to take proper care of their cameras, and because

of this reason, shock proof and water proof cameras are gaining high popularity very fast

. According to Saltzman, “Waterproof” is the buzzword this year, and for good reason, as
there are plenty of options available for those who want either a compact point-and-shoot

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digital camera or high-definition video camera or both in one device. Moreover, these

cameras take great “dry” shots on land, too. In fact, if you accidentally get sand on these

cameras, simply wash them off in a sink (Saltzman, 2010).” Underwater housing units

for DSLR bodies can cost upwards of $1499 at most distributors. Waterproof cases for

point-and-shoots already average $150. However, this year, a major trend in most camera

companies is the point-and-shoot designed for underwater use and toss-around durability

at a competitive cost. Around the show at PMA 2010, almost every major point-and-

shoot manufacturer had an array of cameras ready for any environments (Lum, 2010).

5) Inbuilt storage: Usually digital cameras use storage cards for storing images but it is

always tough to carry multiple storage cards as with increasing megapixels, file size is

also increasing. Hence, camera companies are focusing more and more on providing

large inbuilt storage. Sony's new DSC-T700 lets you store 1,000 high-resolution pictures

without a card. There is a big 3.5-inch monitor to view them on, too. It is kind of a cross

between a camera and a portable photo album.

6) Internet connectivity and GPS: Internet connectivity in digital cameras is getting

important day by day. Every other camera manufacturer is trying to come up with some

kind of internet connectivity on the camera by which users can directly email the photos

without having them transfer to the computer, and can upload to multiple websites with

one click. In addition, integrated GPS is playing a big role as it allows the user to geo-

tag their photos.

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Impact on Product Offering

While developing iCam, current market trends have been considered and out of the six

popular trends listed earlier, four have been carefully covered in the Apple iCam.

1) Increasing megapixels: Apple iCam will be available in two models, one with 12

megapixels and other with 15 megapixels. As it is expected that by 2011, digital camera

market will have cameras with 15 megapixels, having 15 megapixels at this time is going

to be advantageous for Apple iCam.

2) HD video recording: Apple’s iPhone 4 has HD video recording but it does not have full

HD video recording, as it is difficult for a phone lens to capture videos in full HD format

with good video quality. With its high quality HD recoding, Apple iCam is going to fill

this gap.

3) Inbuilt storage: The iCam will be having 16 GB of inbuilt storage, which can store more

than 6000 photographs. The technology is being adapted from iPhone 3GS and iPhone 4.

With this distinguishing feature, iCam will be the camera with largest onboard storage in

digital camera market.

4) Internet connectivity and GPS: The iCam will be having Wi-Fi and onboard micro-GPS

chip. The presence of Wi-Fi will provide users to connect to Wi-Fi networks and users

will be able to directly upload pictures from their camera to websites such as Facebook,

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Flickr, Picasa; to blogs, and users will be able to email the photographs without using any

communicating device. Presence of micro-GPS chip will allow users to geo-tag their

photographs.

Financial Analysis

Sales Volume Forecast

In attempt to forecast the anticipated demand for the Apple iCam in order to arrive at a

given sales volume, the analysis considered the previous launches of the Apple iPad and iPhone

as potential indicators of potential sales. In this context, the iPad sold an estimated 1.9 Million

units its first and the iPhone over 2.39 Million units, which indicates the potential of a new

product in terms of unit sales (Hughes, 2010; Krazit, 2008). This marketing report as a result has

estimated first year unit sales of 500,000 (Year 1) and 550,000 (Year 2) based on the

aforementioned data regarding previous Apple product launches. Similarly, at a per unit selling

price of $274.99, this report estimates year one sales volume as $137,495,000 (500,000 Units

Sold) and $151,244,500 (500,000 Units Sold) for the second year.16

Furthermore, based on the public financial information available regarding Apple, these

estimated results would translate into an additional $0.48 per share in additional revenue for the

first year and $0.53 per share for the second year. In addition, these calculations are based on

very conservative unit sales estimates that are fifty-percent lower than the previous unit sales of

other products that Apple has introduced in the past. Likewise, sales in the second year are

16 . To review our calculations and respective cost estimates, refer to the statement entitled, “Pro Forma Per Unit Cost Analysis” in the
Appendix on p. 65

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expected to only increase by ten percent, which again, is far below the historical growth rate of

Apple products during the second year as well. Therefore, it is important to note that the

estimated unit sales and revenues were conservative estimates that attempted to analyze the

benefit of the Apple iCam at below average historical demand for other Apple products.

Marketing & Service Prevision Costs

The marketing prevision costs are the largest incurred expense other than the direct costs

(Cost of Goods Sold) associated with manufacturing the Apple iCam; the estimated first year

costs amount to $47 Million dollars. However, after the initial “sticker shock,” this estimated

marketing budget employs a rigorous and focus advertising strategy to reach consumers.

Furthermore, in year two, the associated marketing budget is assumed to decrease by twenty

percent thereby going to $37.6 Million. In addition, the servicing costs normally associated with

a product would be negligible based on the quality standards currently in place at Apple but also

because Apple would not be distributing (selling) the Apple iCam through traditional retail

outlets other than through its Apple Stores. As a result, the normal servicing costs associated

with traditional can be eliminated which dramatically reduces costs while still exposing Apple to

a large number of potential consumers through their Apple Stores.

Estimated Income

In the previous sections, we have discussed the potential revenues related to the Apple

iCam based on a specific estimated level of demand (unit sales); likewise, based on these

predictions and research documenting the associated cost structure with producing the Apple

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A p p l e i C a m M a r k e t i n g P l a n | 45

iCam this section will estimate the respective income generated by the given product for the first

two years. In this context, the Apple iCam is estimated to generate total revenues of $33,395,000

in the first year and $57,090,500 in the second year based on the aforementioned number of unit

sales. These net income estimates translate into an increase in earnings per share of $0.12 for the

first year (20X1) and $0.20 for the second year (20X2) as well.17

Furthermore, on a gross margin basis, the Apple iCam is estimated to have a gross

margin of 60.3% for the first year and 64.3% for the second year; in turn, this translates, after

other costs, to a projected net income (before tax) return of 40.4% for the first year and 58.7%

for the second. In relation to other products supplied by Apple, the proposed Apple iCam would

fall into the middle category of profitable products generating a strong return in excess of 40% in

its first year but below other “star” products such as the iPhone.18 However, increased demand as

well as other operating efficiencies may translate into even stronger income should Apple see

stronger than anticipated demand or find even larger saving in its manufacturing process.

Marketing Effectiveness

According to the article published at the London School of Business entitled, Experience

and the Brand, today’s consumers are continually studied and targeted by marketing

communications from various corporations; as a variety of companies attempt to differentiate

17 . To review these claims and see the supporting calculations, reference the two statements entitled, “Pro Forma Per Unit Cost Analysis” and
“Pro Forma Per Share Analysis” both of which are shown in the Appendix on p. and p.64 & 65

18 . To review these claims, reference the statement entitled, “Pro Forma Per Unit Cost Analysis” in the Appendix on p. 65

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their brands and respective product(s). Furthermore, marketing communication success relies

identifying the correct target demographics of potential customers (i.e. target market) as well as

the effectiveness of the actual brand message itself (i.e. advertisement effectiveness) that are

used to achieve a certain objective and influence customer perceptions, purchasing behaviors,

and wants/needs in the marketplace (Voss, Valencia, Westberg, 2005). In this context, Apple

has several targets it hopes to reach with the release of the Apple iCam that will be used to

evaluate its performance. These metrics used to evaluate the performance of the Apple iCam are

quantifiable while others are also qualitative in nature. However, all of the described goals are

designed to attempt to improve Apple’s long-term profitability and sustainability of its new

product (i.e. the Apple iCam). The market benchmarks include the following: sales growth,

retention, profitability, awareness, positioning, and cost reduction. All of these goals must be

met in order to reach the stated company benchmarks.

Sales growth is of vital importance to the Apple iCam. If early sales falter, then the

product will surely fail. The company projects sales of 500,000 units in year one. Sales in year

two are estimated to be 550,000 units. These projections represent a 10% increase in sales from

year one to year two.

Apple is also concerned about customer retention. Mostly, the Apple iCam will try to

attract current Apple customers. Apple users have proved to be fiercely loyal to the Apple brand.

Thus, current Apple consumers are natural target customers. Apple will also attempt to attract

and retain other tech-savvy consumers with the introduction of the Apple iCam.

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A p p l e i C a m M a r k e t i n g P l a n | 47

Apple’s paramount concern is reaching the benchmarks it has set for profitability. Other

Apple product-lines have profit margins ranging from 35-40%, while the estimated profit margin

for the iCam are 8.8% and 28.7% respectively in each of the first two years. In addition,

management has a projected gross margin of 60.3% in the first year and 64.3% in the second

year. Thus, the profit margin and gross margin projections illustrate a product with a strong

financial standing. Likewise, Product awareness is also an important aspect to the launch of the

Apple iCam. Surveys relating to the Apple iCam found that 43% of respondents would buy the

iCam, based solely on the Apple brand name. Since the brand name is such an important

component for all of Apple’s products, the Apple iCam will benefit from the positive

associations consumers have with the brand name. Hence, it is important that the Apple iCam be

marketed toward current Apple customers as well as other tech-savvy consumers.

The Apple iCam is well positioned in the digital camera market based on several areas of

differentiation. First, the Apple iCam will differentiate based on product quality. The quality

differential is apparent in the numerous features that the Apple iCam offers that competitor’s

cameras do not. Furthermore, Apple differentiates the camera based on the fact that the Apple

iCam is a premium priced product. While there are several cameras that are priced near the

Apple iCam, the camera is clearly priced at a premium level. Likewise, Apple does not plan to

use cost reduction as a way to increase the Apple iCam’s marketing effectiveness. The product

will mainly rely on components whose price will not be reduced through a larger economy of

scale. Therefore, cost reduction is not emphasized as a way to increase marketing effectiveness

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in this particular case based on the aforementioned data and research contained within this

report.

References

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Amazon Corporation (2010). Digital cameras. Amazon Corporation. Retrieved on October 28,
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Kandra, A. (2004) Places to Buy. PC World. (November). Retrieved from EBSCOHost on


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Appendix

Apple iCam Analysis

S W O T
Strengths Weaknesses Opportunities Threats

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Strong Parent Product Expansion


Pricing Strategy Economic Situations
Company Brand (New Markets)

Requires Advanced
Low Industry Growth
High Gross Margins Technological Skill Loyal Customer Base
Rate Expected
Level

Lacking Short Lifecycle Due


Wi-Fi Technology &
Complementary Distribution Channels To Rapid Changes In
Internet Access
Models Technology

Basic HD Low Industry Growth


Flash & Stabilizer Low Barrier To Entry
(No Full HD) Rate Expected

Radical Product High Gross Margins Competitors Response


Design & Large 3D Picture Quality
(Pricing Flexibility) To New Product
Viewing Screen

Incremental
Strong Market Technology Value Emergence of New
3D Picture Quality
Position Decreases Technologies
(With Picture Quality)

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Apple Global Brand Improvement


(Among Top 100 Brands)

90
80 83
80
76
70
67
60 61
57 59
50 51 50 50
40
B
randS

30
coe

20
10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year of Score
Composite Score*

Apple® Apple®

Year Rank Composite Score*


90
2001 49 51 80
2002 50 50
70
2003 50 50
60
2004 43 57
50
2005 41 59
40
2006 39 61
S
o
d
nB

30
e
c
ra

2007 33 67
2008 24 76 20
2009 20 80 10
2010 17 83 0
* Using Data Provided by Interbrand, Our Team
* Data Provided by Interbrand® Created A Composite Score to Grade Apple® Using
A Typical "100" Scale

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Boston Consulting Product Positioning Matrix: Apple

STAR QUESTION MARK


(High) - - - - - - - - - - - - Relative Market Growth Rate - - - - - - - - - - - - (Low)

Apple iPad Apple iCam

Apple iPhone

CASH COW DOG

Apple Mac

Apple iPod

(High) - - - - - - - - - - - - - - Relative Market Share - - - - - - - - - - - - - - (Low)

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Apple Inc.
The Brand Report Card

The Brand Report Card: Rating Your Brand Rank

01). The Brand Excels At Delivering The Benefits Consumers Truly Desire 10

02). The Brand Stays Relevant 10

03). The Pricing Strategy is Based On Consumers’ Perception of Value 9

04). The Brand is Properly Positioned 10

05). The Brand is Consistent 10

06). The Brand Portfolio And Hierarchy Make Sense 10

07). How The Brand Makes Use of And Coordinates A Full Repertoire of
10
Marketing Activities to Build Equity

08). The Brand’s Managers Understand What The Brand Means To Consumers 10

09). The Brand is Given Proper Support, And That Support is Sustained Over The
9
Long Run (Assumed To Be 10 Years)

10). The Company Monitors Sources of Brand Equity 9

The Brand Report Card Total Score 97

Scale: 10 = Excellent & 1 = Failure

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Digital Camera Market Segmentation by Cost


P r e m iu m C o st E x p e r ie n c e d
In itiaCl u sto m er S eg m en ta tio n S tra teg y C u r r e n t A p p le U se r
($ 2 0 0 & A b o v e ) P h o to g r a p h e r (iP h o ne , iP o d, iP a d , M a c )

222
613
397 A v e r a g e C o st In te r m e d ia te C u r r e n t A p p le U se r
($ 1 0 0- $ 2 0 0 ) P h o to g r a p h e r (iP h o ne , iP o d, iP a d , M a c )

D ig ita l C a m e r a s

L o w C600 o st B e g in n e r &
T o ta l C a m e r a M a r k e t In te r m e d ia te
($ 5 0- 1 0 0 ) P h o to g r a p h e r

F ilm C a m e r a s

U ltr a L o w C o st
B e g in n e r P h o to g r a p h e r
($ 2 5- $ 5 0 )
Premium Cost ($200 & Above) Average Cost ($100 - $200)

Low Cost ($50 - $100) Ultra Low Cost ($25 - $50)

Digital Camera Market Segmentation by Brand

26.4% 21.6%

6.0%
8.6% 4.6%

11.1% 15.7%
6.0%

Canon Panasonic Fuji Nikon

Kodak Sony Olympus Other

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Digital Camera Market Segmentation by Quality

505
536

3,077 1,189

6.0 - 7.9 Megapixels 8.0 - 9.9 Megapixels

10.0 - 11.9 Megapixels 12.0+ Megapixels

Optimal Customer Matrix Model

Age

Experience Level

Apple Product Usage

Digitally Integrated Products

Price

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Marketing Report Survey


The Apple iCam

Number Question Response

1 Do you currently own a digital camera? Yes / No

If Apple developed a digital camera, would you be


2 Yes / Maybe / No
interest?

Would you purchase the iCam for $---.99* if it


included the following features:

– Touch-screen
– Interface capability w/ iPhone, iBook, iPad,
iPod, Mac, iTunes
3 – WiFi Yes / Maybe / No
– Applications (Facebook, Twitter, and Hipster
Matic)
– Optical Zoom
– Photo Editing Software
– Flash
– Defined Megapixel Quality**

4 What is your age Enter

5 Are you: Male or Female

* There were four surveys testing price sensitivity at: (1) $224.99 (2) $249.99 (3) $274.99, (4) $299.99

** There were two megapixel quality levels tested among the surveys at: (1) 12 MPX & (2) 14 MPX
Apple iCam Survey Results

Sample Ave rage


Surve y Price Quality Ye s Maybe No Male Female
Size Age
Survey 1 $224.99 12mpz 38 23.8 34% 58% 8% 58% 42%
Survey 2 $249.99 12mpx 20 26.1 35% 60% 5% 55% 45%
Survey 3 $274.99 14mpx 24 25.9 42% 50% 8% 50% 50%
Survey 4 $299.99 14mpx 32 24.5 59% 41% 0% 56% 44%
114 25.1 43% 52% 5% 55% 45%

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Would You Purchase an iCam?


70%

60%
59%
50%

40%
42%
30% 34% 35%

20%

10%

0%
$224.99 $249.99 $274.99 $299.99

Interested in an Apple iCam?

Yes No Maybe

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Apple iCam Advertising Budget

Advertising Channel Advertisement Costs Total

Television ($100,000 (30sec Commercial )) * (3


Netowrks) * (15 Times Per Month)
$54,000,000
(gaebler.com)

Online ($3,500 Per Month (Per Ad Banner)) * (12


Months) * (50 Websites)
$2,100,000
(bmcommunications.com)
Apple iCam
Print ($175,000 Per Month (One Page Ad)) * (12
Months)
$2,100,000
(srds.com)

Billboard ($1,600 Cost Per Billboard) *(525 Locations)


* (12 Months)
$10,080,000
(gaebler.com)

Total: $68,280,000

Pro Forma Per Share Analysis


Apple Inc

20X1 20X2
Apple iCam

mber of Shares 284,356,436 284,356,436


Revenue $137,495,000 $151,244,500
ome $12,115,000 $43,480,500

ue Per Share $0.48 $0.53


gs Per Share $0.04 $0.15

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ProFormaPerUnit Cost Analysis


Apple Inc

Company: Apple
EstimatedCosts ProForma
Year: (20X1) (20X2)*

ost PerUnit Analysis

UnitSellingPrice $274.99 $274.99


ost ofGoods Sold(COG S)
MainPCB $7.00 $6.30
DisplayModule $19.25 $17.33
Touchscreen $16.00 $14.40
OtherEnclosures $10.00 $9.00
Battery $5.20 $4.68
GPS $0.35 $0.32
Wi-FiCard $1.40 $1.26
Cam eraLens $40.00 $36.00
Motor $10.00 $9.00
Total CostofProduct $109.20 $98.28

Gross ProfitPerUnit $165.79 $176.71


PercentageGross Profit PerUnit 60.3% 64.3%

otal RevenueAnalysis
stimatedRevenues** $137,495,000 $151,244,500
EstimatedCOG S $54,600,000 $54,054,000
EstimatedG ross Profit $82,895,000 $97,190,500
OtherCosts
AdvertisingExpenses*** $68,280,000 $51,210,000.00
Adm inistrativeExpenses**** $2,000,000 $2,000,000
OtherExpenses**** $500,000 $500,000
Estim atedTotal OtherCosts $70,780,000 $53,710,000

EstimatedNetIncom e $12,115,000 $43,480,500


PercentageofRevenues 165.9% 28.7%

ssumptions
Assumed10%ReductionInCost ofG oods SoldAfterY ear1
* AssumedUnit Sales of500,000Y ear1&550,000Y ear2
** Assumed$47Mil. InitialAdvertisingCost inYear1&$37.6Mil. inYear2
*** AssumedAdm inistrative&OtherExpenses WouldRem ainTheSame

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Print

Advertisement Example

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In-

Store Display Advertisement Example

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Billboard Advertisement Example

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