Executive Summary

The focus of this report is on the Apple iPod that has created increasing demands in various outlets.
The iPod allows consumers to download their favourite music but also books, movies and now even
allows one to surf the internet.

In this reports you find an extensive analysis on how Apple has became such a huge company within
its market and will show us how the popularity of the iPod has seemingly helped Apple to be
become one of the most well known brands worldwide.

In order to do this, the main areas of discussion I am going to focus upon are the company itself. I
will look at the firms’ internal and external Marketing environment in order to provide an insight in
what position the firm is in. Furthermore, I will look at the competition they are facing and what
affect this have upon their marketing strategy. I will also provide recommendations will be provided
on how Apple can strengthen their position in the market.

Introduction

Established in April 1976, Apple, develops, sells, and supports a series of personal computers,
portable media players, mobile phones, computer software, and computer hardware and hardware
accessories. Rather than releasing multiples of little products to try and win over consumers through
market saturation, Apple releases higher end, high quality, and user friendly products. They believe
in bringing in simplicity and innovation to the mass market and for that reason have been extremely
successful.

As of September 2007, the company operates about 200 retail stores in five countries and an online
store where hardware and software products are sold. Its products include the Macintosh line of
desktop and notebook computers, the Mac OS X operating system, the iPod music player and a
portfolio of software and peripheral products for education, creative, consumer and business
customers. [1]

Apple introduced its first iPod portable digital music player. The product has proven unbelievably
successful; over 100 million units have been sold in the six years since its introduction. In 2003,
Apple's iTunes Store was introduced, offering online music downloads in integration with the iPod.
The service quickly became the market leader in online music services, with over 3 billion downloads
by August 2007. Steve Jobs announced that iTunes had reached 4 billion downloads during his
keynote address at the 2008 Macworld Conference & Expo. [2]

Apple is recognized as an unparallel in computer designing and compatibility. The sleek and state of
the art design of the Apple’s products snatch away the consumers mind quite easily than the rest.

The Apple iPod

The iPod is the fastest selling music player in history. Apple has sold over 100 million iPods since the
player’s introduction in October 2001, [2] although sales have said to have started slowing; the
company currently enjoys a Microsoft-like domination of the MP3 player market. From the early
iPods to the new iPod touch, it has gone through a significant change and has opened the user’s
world from the palm of their hands.

In January Apple reported the best quarter revenue and earnings in Apple's history so far. Apple
posted record revenue of $9.6 billion and record net quarterly profit of $1.58 billion. 42% of Apple's
revenue for the First fiscal quarter of 2008 came from iPod sales.[3] Another interesting statistic for
this is that 40% of last quarter's iPod sales went to first-time buyers, and just shows that the music
player market is far from saturated as some have stated. [4]

This iconic product is considered by many to be a must have item.

“The iPod is to music players what Kleenex is to tissue or Xerox is to copiers.”[5]

The Marketing Environment

Apple operate on a global level with 200 stores in 5 countries. Nowadays Apple is more commonly
know for the iPod. The iPod has dominated digital music player sales in the United States and United
Kingdom with many companies struggling to find a product to challenge the iPod.

Due to the ever-changing market, businesses like Apple need to monitor the ever-changing business
environment and make sure they are going in the right direction. A business can then only plan
where it is going if it knows where it is starting from.
Finding out where a business is at the moment involves looking at its micro and macro environment.

Micro-Environment Porter’s Five Forces

The microenvironment consists of those factors that affect the firm directly. This model helps to
contrast the micro environment of a firm. (Refer to Appendix A)

What we know is that competition in the market is very intense A wrong move could have a harmful
affect with your competitors moving ahead of you due to the intensity of the competition in the
market. In relation to that, customers are in a strong position as they have more bargaining power
and due to the fact there are many substitutes. With the Microsoft Zune 8 it makes it really difficult
for new consumers to make a decision between the two. Often customers will pay due to the iPod
reputation and its important Apple keep this high.

Macro-environment Pest analysis

To further analyse the external marketing environment, the macro environment we conduct a PEST
analysis. Such external factors usually are beyond the firm's control and sometimes present
themselves as threats. PEST is the abbreviation for political, economic, social and technological.
(Refer to Appendix B for full PEST analysis)

The Competition

In the PC market Apple face intense competition form the likes of Dell, Toshiba and HP. Whilst in
operating system, Microsoft are the biggest rivals. In both these Apple do not have a great hold.
However in the Mp3 market, which is more relevant, Apple have dominated the Market since the
release of the iPod. With the competition current coming from SanDisk and Samsung.[12]

Its safe to say that although Apple is diversified more than most of its competitors, their
differentiation is a biggest strength because they spend so much on R&D, which is what seperates
them from their competition.

SWOT Analysis
A summary of Apples SWOT analysis is that Apple are in a very strong position because it has a
powerful brand name and is recognised globally, coupled with its huge fan base of consumers gives
them many strengths within the market. The fact that they are so popular in the mp3 market gets
them a lot of attention within the media. Only Microsoft due to being Apples biggest competitor will
get a large amount of media coverage. The iPod itself in terms of ease of use and innovative
technology means that it is very difficult to match. Only the Microsoft Zune 8 can compare to the
design and usability. Although may have been released to late in order to make real challenge
against the iPod.

For Apple to overcome the potential threats, they must continue to be inventive and explore
opportunities globally. R + D and product innovation are of the utmost importance. Apple must
continue to improve and be innovative to remain market leaders, otherwise other companies may
capitalise on any kind of drop in standards. Although one of the largest digital music sellers in the
world, iTunes face a bit of competition from Amazon as well as Myspace, Apple have a target on
their backs and only takes a company with good resources to challenge them.(for full SWOT analysis
refer to Appendix C)

Marketing Objectives

Due to Apples secretive attitude, finding real evidence of real goals is difficult. What we can deduce
however is that although iPod sales are starting to slow they still want to maintain high turnover and
profit. That’s the major objective of any of its competitors. Also from research over various sources
Apple are aiming hoping to:

• Improve brand awareness

• Improve sales with the iPod touch.

• Improve position in the mobile phone market, with the help of the SDK for the i-phone

(Aiming to sell 10 million iphones this year

Improving sales of the iPhone and the touch, as they are the ‘in’ products which everybody wants,
would help them gain a enormous amount of revenue and help spread the brand.

Marketing stratergy
I think Apples main stratergy is there appeal to their customers. What you find in general with many
of their products more btter looking than the competitions. One thing we can see is Apple building
on the popularity of the iPod. It appeals to the Mass market. Now appeal less as a computer
company and more of a electronics company and seem more user-friendly.

Apple have a differentiation stratergy. Apple products are known to have a unique appeal, with its
sleek designs a userbility. Due to this it gets a lot of attention from consumers and the media.
Without much advertising or marketing on their part. They give something new and unique to talk
about which everybody gets pulled in to.

With the iPod there not only selling a mp3 player, there selling a social chic. Everybody has one and
everybody wants one.

Target Market

Target market

• Apple Ipod focused particularly at those between the age of 12-25, consistent with their
advertising. Bright colours and and a man dancing.

• It will appeal to both males and females

• People who have a passion or interest in music and/or literature

• Technology enthusiasts

The iPod appeals to the mass market, everyone is a potential customer. Young or old. They have
music, literature and podcasts all avaiable for the iPod owners. The simplicity and sleek design is
what attracts people. Although the latest ones (the touch) are expensive, and may be aimed at
higher and older earners.

Marketing mix

The marketing mix consists of four elements: Products, Price, Place and Promotion, better known as
the 4p’s. The marketing mix can only be made when the target customer is known, which I have
done above.
|Product |Price |

| | |

|This product allows consumer’s to download not only their |When initially launched into the mp3
market, Apple utilised pricing |

|favourite music but also books and photos. Nowadays with the|strategies in the form of
psychological and skimming prices. Most of |

|latest versions of the iPod you can watch videos and surf on|the websites have the iPod touch at
‘£199.00.’ This makes consumers |

|the internet with one small device. Apple have introduced |think it is much cheaper than
‘£200.00’ but in reality it is only a |

|updated versions of the iPod starting from the first iPod in|pound less. The high price is on the
basis of the companies |

|2001 to the iPod touch (refer to appendix D). These are |popularity, and the unique design of the
‘touch’. It will also attract|

|extension stratergies to increase the product life cycle of |an image of quality with their products.
|

|the iPod. | |

| |[pic] |

|The fact that the is product differentiated making it unique|

|

|will make product both functional and desirable to potential|

|

|consumers. | |

| | |

|Promotion |Place |

| | |

|By promoting the iPod it will satisfy the needs of the |Apple has many distribution channels,
from their online Apple Store, |

|customers. Consumers will gain better understanding of the |to their retail stores and many
resellers around the world. Indirect |

|product and how it works. All in all advertising and |distribution where third parties are
involved in the sales process are|
|promotions will bring more awareness to their products and |also used. These resellers will sell to
the smaller firms who cannot |

|potentially more sales. |aford to buy directly from Apple. |

|Apple's promotion strategy, was the surprise element that it|

|

|attached just before they released the iPod. There was a |The iPod is available to purchase at
most major stores within the UK. |

|heavy speculation and curiosity regarding the product and |From specialist electronic stores to
supermarkets. Stores from Apple |

|everyone was watching out for it. It allowed fans and |retailers to Tesco sell the iPod. They are
also available all over the|

|enthusiastic tech and entertainment media to spread the word|internet from places like Amazon to
ebay. A countless amount of |

|of the gadget even before its release. Just when iPod was |retailers will stock the iPod such is its
popularity |

|launched Apple advertised extensively for the iPod, this is | |

|where the infamous commercial showing a man listening to the|

|

|songs on his iPod and dancing. A similar stratergy has been |

|

|used throught the release as with increasing the popularity |

|

|of iTunes. | |

Evaluation of the Apple Strategies

The overall position of Apple is profitable as sales have increased over the last years. Sales of the
iPod have been increasing since it had been released. Although sales for this quarter have been said
to be slow.

[pic]
Source: wikipedia[2]

This has been reflected in their strategies to expand through the introduction of newer more
innovative designs and this is why they are market leaders in the mp3 market.

Apple has a lot of few different range ranges of iPod products, like the shuffle, the nano, the video
and touch. All of which have different prices. This is a good strategy as it appeals to a wide mass
market. The fact that Apple append very little on Advertising on their products compared to many of
its firms, is down to the general buzz and interest of their products. There teasing with products
entices the media and technology enthusiast tin wanting more. However this may not always be the
case, for apple to consider more advertising may be important. The differentiation approach sets
Apple apart from its competitors however Microsoft is challenging Apple. They have the money and
resources to match. It would be fairly foolish to think that Apple is too strong in the market. They
need to continue to invest a lot of money in R+D. With products like the iPhone and the Touch it can
be said they are going in the right direction, in achieving innovative, unique designs.

I also think Apple have a huge opportunity in supporting the whole education system. It has the
money and resources to do this. Possibly negotiating contracts with schools and universities, for pod
casts even computers could put Apple in a challenging position in the computer market. Having
agreements with universities, and schools can increase there popularity and awareness.

Conclusion

“Apple has nearly 250 stores worldwide and now derives 20 per cent of its revenue from them. And
those numbers are growing. In the quarter to the end of September 2007, for example, Apple
reported that its retail stores accounted for $1.25bn of the company's $6.2bn revenues - a 42 per
cent increase over 2006.”[14]

Since the release of the iPod, about half of Apple's revenues come from music and iPods. Interest in
the iPod and iPhone has made other apples products popular, like the Mac whose sales have
increased. Apple has demonstrated how to create real, breathtaking growth by dreaming up
products so original and imaginative that they have taken industries by storm. To maintain control in
the mp3 player market, they need to maintain their quality and strategic marketing plans if they
want to keep ahead. Apple leads the industry in innovation and many other things like design
features. Sony, Microsoft, Creative are all right behind Apple. The battle of the MP3 players will
surely be an excellent example of competition that breeds better products, with Apple taking the
first step with the iPod Touch and iPhone.
The iPod was ground-breaking technology that was absorbed by mainstream culture, and now has
become the epitome of portable audio. Companies such as Apple will need to be self-motivated if
they are to stay ahead of the game. Differentiation and innovation is the key in maintaining their
dominance.

Apple has a high competitive advantage because of its excellent product image. They use simplicity
and lustrous designs to appeal to customers. The electronic market gets connected more and more
with the entertainment market. With already the market leader in the digital sales market, it would
not be surprising to see Apple move in to TV.

Appendices

Appendix A

[pic]

Source: Corporate Stratergy finntrack.com[8]

(Rivalry

Calling the level competiton in the mp3 industry as intense is an understatement. The this case
we have the like of Sony, Samsung and Creative, with many more in the whole market. Apple
commands 70 percent of the MP3 player market.[10] However with concerns of the MP3 market
being saturated, its puts more pressure on businesses to succeed. With the innovative designs like
the iPod touch and the iPhone it shows why apple are leading the market.

(Threat of Substitutes

Countless substitute products are available for the iPod whether they are actually better or even
appeal more is a different matter, but the threat is still very high. The more differentiation th less like
a switch to a substitute will occur. To date no company have come close to meet the popularity of
the Apple products. Reason being the innovative designs and ease of use have convinced most
customers to stick with Apple. Higher prices need to be justified by the differentiation of the
product. Substitutes such as the Sony NW-(A806), Microsoft Zune 8 and many others, can still attract
many customers but with imaginative designs like the iPod Touch leaves many companies playing
catch up.

(Threats of new entrants

Although it is possible, its unlikely. Start up costs would be very high so little chance new entrants
would enter a very competitive market unless they have a very differentiated and innovative
product. Existing firms have established themselves in the market and have created strong brand
awareness.

(Bargaining Power of Customers

The bargaining power of customers is high due to the fact it is easy to switch to a substitute
where quality or price, even both is better elsewhere. With so many substitutes of similar quality, its
down to the business to make their products more appealing. Apple have done this with their strong
vision to build innovative, unique products and have made their products easy to use.

(Bargaining Power of suppliers

Suppliers don’t have much power over larger corporations like Apple. With the booming chinese
economy, Apple can change suppliers without any major consequences, if they are in disagreement
over price and quality. However Apple have built a strong relationship with their suppliers, with
strict procedures and this in turn helps Apple achieve it targets.

“Our business environment is competitive and fast-paced. Our suppliers must understand this
dynamic and be agile and flexible in responding to changing business conditions.”[11]

Appendix B

|Political: |

|Governments with stricter laws on copyright |

|An anti-american agenda may be brought against them. Some people may choose not to use
american products |

|Economical: |

|Inflation currently has increased in UK and the US and may affect current sales of ipods which have
already slowed. |
|Global economy in a down turn |

|The exchange rate will also affect Apple as they are importing or exporting goods within the
international market. |

|Social: |

|Again Anti-american agenda may cause potential customers to but from another company.
|

|A generally aging british population, so many may be put off by the technology
|

|As much as it is a iPod culture, it can go away as quickly as it came. People may find something else
which is better and|

|more value for money. |

|Technological: |

|Many substitutes available from iRiver, Samsung and sony |

|Competition moving away from copy protection on songs. Such as amazon.

|

|Peer-to-peer file sharing applications like Limewire and Kazaa are still extremely popular. Although
this is a problem |

|with the music industry on a whole. This still however affects iTunes. |

Appendix C

Strengths:

• The products itself appeals to both males and females

• All the iPods starting from the very first have a great reputation amongst it customers for its
userability.

• Great technology underpinnings that allow the creation of powerful products. Allows them to
attract a huge customer base due to their innovation and technology

• Very user focused and always committed to a superb user experience, in all their products

• Limited edition ranges, increases product life cycle. Limited editions ranging from U2 to BMW

Weaknesses:
 • High prices may push potential customers to competitors with substitutes at a better price.

• Technology is changing at a faster rate than ever. For Apple to remain profitable, they must
invest huge amount of money in their R&D to remain competitive.

• Questions over reliability of the iPod [2]

Oppurtunities:

• iPod was is revolutionary technology that has become part of mainstream culture, Apple can
capitalize on that

• To develop themselves in to other markets due to the reputation they earned from the iPod.

• New designs may be available to boost sales and extend the product life cycle e.g. the iPod
touch.

• iPods have also gained popularity for use in education. Apple offers more information on
educational uses for iPods on their website. [13]

Threats:

• Very high level of competition, a lot of substitutes, possibly offering cheaper prices i.e. iRiver

• Cheap fakes being made of the iPod and the iPod shuffle

• Concerns of market being extremely saturated.

• Competition, with the like of Amazon in digital sales [7]

Appendix D

[pic]

Sources: Wikipedia [2] and Mactracker Apple Inc. Model database

References:

1. http://en.wikipedia.org/wiki/Apple_Computer

2. http://en.wikipedia.org/wiki/Ipod
 3. Apple Reports First Quarter Results(January 2008), [Accessed date: 14th March 2008]-
http://www.apple.com/pr/library/2008/01/22results.html

4. Tim Conneally, (February 2008) Nearly 3% of America became iPod converts over the holiday,
[Accessed date: 14th March 2008]-
http://www.betanews.com/article/Nearly_3_of_America_became_iPod_converts_over_the_holiday
/1204309531

5. Betsy Morris, (March 2008 ) What makes Apple golden, [Accessed date: 9th March 2008] -
http://money.cnn.com/2008/02/29/news/companies/amac_apple.fortune/

6. Q/A with apple employees and analysts(January 2008): Reading the runes for Apple [Accessed
date: 5th March 2008]-http://www.guardian.co.uk/technology/2008/jan/10/apple.steve.jobs#swot

7. Jefferson Graham, (March 2008), Amazon takes on Apple with copy-protection-free music
[Accessed date: 20th March 2008]- http://www.usatoday.com/money/media/2008-03-25-sony-
music service_N.htm

8. Corporate strategy [Accessed date: 25th March 2008] -www.finntrack.com/corporate_strat.htm-

9. http://www.tutor2u.net/business/strategy/porter_five_forces.htm [Accessed date: 25th March

2008]-

10. Leander Kahney, (March 2008)How Apple Got Everything Right By Doing Everything Wrong
[Accessed date: 27th March 2008]-http://www.wired.com/techbiz/it/magazine/16-04/bz_apple

11. Apple and Procurement [Accessed date: 29th March 2008]-

http://www.apple.com/procurement/

12. Jeremy Horwitz(August 2006) iPod maintains 75.6% share of U.S. MP3 player market [Accessed
date: 31st March 2008] http://www.ilounge.com/index.php/news/comments/ipod-maintains-756-
share-of-us-digital-music-player-market

13. iTunes U and mobile learning[Accessed date: 2nd April 2008]

http://www.apple.com/education/itunesu_mobilelearning/ipod.html

14. John Naughton(March 2008) Core values that turned Apple into the best store in town
[Accessed date: 4th April 2008]
http://www.guardian.co.uk/media/2008/mar/30/marketingandpr.apple

Bibliography

David Jobber (5th Edition), Principles of Marketing

www.apple.co.uk

www.guardian.co.uk
AN ANALYSIS OF SEGMENTATION, TARGETTING AND POSITIONING STRATEGY OF IPOD – APPLE

Contents

Executive Summary_____________________________________________3

Situation Analysis

-Market Analysis_______________________________________________3

-Product Analysis_______________________________________________4

-SWOT Analysis_______________________________________________ 4

-Competitor Analysis ___________________________________________ 5

Marketing Objectives____________________________________________6

Identifying Target Market

-Selecting Target Market_________________________________________7

-Target Market_________________________________________________7

Developing Marketing Strategies

Marketing Mix:

-Product_____________________________________________________

___7

-Price_______________________________________________________

___8

-Promotion___________________________________________________

___8

-Place_______________________________________________________
___8

Implementing the Marketing Plan____________________________________9

Monitoring and Controlling

-Developing a Financial Forecast____________________________________10

-Comparing actual and planned results________________________________11

-Revising the marketing strategies____________________________________11

Appendix A_____________________________________________________12

References__________________________________________________

____14

Executive Summary

The focus of this report is on new Apple Ipod product that has created increasing demands in various
outlets.

This product allows consumers to download not only their favourite music but also books and other
literature which can be read and listened to. Additionally this Ipod can be used in your car and in
other mobile settings.

This report is for Apple to give a brief description of this product. Within this marketing report there
is an insight of the situation analysis of this product, marketing objectives, the target market,
marketing strategies that have been used and the forecasted strategies, monitoring and controlling.

Situation Analysis

Market Analysis

Internal Influences

• Management: Effective management is required for the training and development of employees
for the continue innovation of Apple Ipod and for retraining sufficient funds during competitor
introducing new product.
• Capital Availability: Competition may cause mishap in the cash flow. Sufficient funds must be
available when competitors unpredictably put forward their product in the market.

• Technological Adoption: Technology must be adopted to improve overall efficiency. It must be

integrated directly into operations (to increase productivity), as well stay on date with the amounts
of Ipod's ordered, made and delivered.

External Influences:

• Competitors: Competitors will regulate what, when, how and why strategies will be adopted. The
introduction of new products will greatly influence Apple Ipod.

• Overseas Influences: The breaking down of barriers between countries can increase the sales of
the new Apple Ipod, as more people are made aware of the product.

• Demographic Patterns: Males and females from the age of 12years and over will be in favour of
this product because of its new innovation to be able to not only play music but also books and
other literature which would in fact appeal to them.

Product Analysis

Product Lifecycle

X- The stage that Apple Ipod is currently in.

Apple Ipod is currently in the growth stage, where more and more people are aware and purchasing
the product, increasing product demand. Sales are growing rapidly and profits are rising quickly,
however competition is increasing as competitors are more cognisant of the tactics of Apple Ipod i.e.
using new features to market their product. During this stage there are also opportunities for wider
distribution, which will result in higher sales.

SWOT Analysis

Strengths: Weaknesses:

• There are enough financial resources that are allocated for the operation of this product.

• Appealing to both males and females

• Good competitive skills

• Past products have had a good reputation

• Advanced key technology

• Product innovation skills • The product has a narrow product line therefore unable to expand
into other markets

• High prices may push potential customers to competitors with affordable prices

• Introducing a new product, when the niche market is already controlled by other competitor's

• Poor use of promotional strategy, as consumers were not properly introduced on the products
significant use.

Opportunities: Threats:

• Opportunity to capitalise financially

• Develop an admirable/exceptional goodwill that can have monetary value in future

• Opportunity for fast market growth as parents may see this as an educational device as

it is able to read books.

• Growing market trend

• New competitors continually enter the market.

• The threat of not appealing to target market at all therefore generating a loss as opposed

to profit

• Entry of imitators

• Vulnerable to the business cycle

• Tough laws being placed on internet MP3 downloads

Competitor Analysis

Competitor Name Rio Carbon (5GB) iriver H10

What are the product objectives? Increase sales of this product by 10% by the next year. To be the
leading supplier of MP3 players in all markets in which the company operates
What is the products current strategy? Sell off the products at competitive and profitable prices and
maintain customer satisfaction To top competitors product technology by innovating the current
product

What are its strengths? Rio Carbon offer their product at affordable prices which appeal to
consumer's while maintaining strong quality The iriver H10 out classes the competition in the
features that they offer to consumer's

What are its weaknesses? The Rio Carbon is a new competitor in the competition and therefore it
may be difficult for them to gain market share because of the unknown brand loyalty The iriver H10
comes at a very costly price which may lead customer's to purchase competitor's products at an
affordable price

How does the Apple Ipod match up against the other products? The Apple ipod is much more
popular because the market is aware of their product giving them an advantage over Rio Carbon
although Rio Carbon is a new competitor which may intimidate Apple Ipod with their associated low
costs. The Apple ipod is much more popular because the market is aware of their product giving
them an advantage over iriver H10 although iriver H10 has been receiving outstanding reviews on
their excellent use of new technology which may be a threat to Apple Ipod's sales.

Marketing Objectives

The various marketing objectives that will assist in the achievement in the overall product goal are:

• To be the leading supplier of MP3 players in all markets in which the company operates

• Increase in sales by 20%

• Increase in revenue by 20%

• Progressively increase market share by at least 15% within the year.

• Expanding distribution to department stores by 10%

• Increasing brand awareness to 60% of potential customers

• To expand existing markets by 10% in the next quarter. A promotion campaign will be introduced
to encourage present buyer to increase the use of the product.

Identify Target Market

Selecting target market

• Apple Ipod is aimed at young adults particularly those between the age of 12-25

• It will appeal to both males and females

• Targeted at the niche market creating product desirability

• Middle/high class

• People who have a passion or interest in music and/or literature

• This is large enough to engender revenues and profits

Target Market Strategies

Apple Ipod has adopted the differentiated market for their products as its products are characterised
in age, gender and desire for image. Apple ipod is used by young adults and teenagers and for both
male and female.

Develop Marketing Strategies

Marketing Mix

Product

This product allows consumer's to download not only their favourite music but also books and other
literature which can be read and listened to. Additionally this Ipod can be used in your car and in
other mobile settings (refer to appendix A for product).

Positioning – aimed at the middle to high class, therefore product will be positioned in department
stores associated with prestige products. This will create a strong, clear and consistent image of the
product in the consumer's mind which is essential.

Branding – Apple Ipod will give consumer's one year warranty to assure consumers of the quality of
the product. This will associate a level of quality with the brand and will not only increase brand
loyalty and repeat services, but also sell products at a premium to competitors.

Packaging – Apple Ipod's packaging will:

- Have product identification so easily separated from its competitors

- Product differentiation so it is unique

- using the most cost efficient method of packaging

This will make the product both functional and desirable to possible consumers.

Price

Apple Ipod will use cost base method to derive its prices. They will add a 65% profit margin to the
cost of the product to gain efficient revenue.

Price and quality interactions –

- In this way, price creates perception of quality.

- High price attract an image of quality

- This will allow Apple Ipod to increase its market share

Promotion

By promoting the Apple Ipod this will satisfy the needs of the customer's and business. Consumers
will gain better understanding of the product and how it can satisfy their needs, but on the other
hand will help Apple Ipod increase their profits and market shares.

Advertising - Apple Ipod will spotlight on a successful advertising campaign comprising of magazine
and television advertisements focusing on (refer to appendix B for magazine advertisement):

- The target market (teenagers and young adults)

- How often they want the target market to be exposed to the advertisement

- When they want to reach their target market

- Most cost efficient methods to fulfil the above

By doing this Apple Ipod will add value to their product by altering consumer perceptions

Below-the-line promotions – Apple Ipod will use a direct method to induce customers to purchase
their product by offering any Ipod accessory (refer to appendix C for accessories) per customer for
half the value price with every purchase of a new Apple Ipod. This will allow the business to directly
measure the success of the campaign by observing the sales rate of the promotional tool.

Place
Distribution channels – Apple Ipod will use indirect distribution where an intermediary organisation
will be involved in the process. The intermediaries will provide functions such as:

- Fragmenting bulk supplies of inventory

- Give financial services to retailers

- Increase ease of customer purchase

This will assist Apple Ipod as they can concentrate on other areas of the business

Transportation – Apple Ipod will lease trucks in order to transport the inventory to intermediaries.
By leasing the trucks Apple Ipod will accumulate extra funds to utilize else were.

Warehousing – inventory will be kept in a warehouse close to the intermediaries which will minimise
transport costs.

Implementing, Monitoring and Controlling

Apple Ipod Company will change because of the new added features to the product range. For its
success, Apple Ipod Company must impose several key changes. Production needs to be on time and
meet the quota demanded from wholesalers. It must also be efficient so as not to build inventory
stocks and inventory prices. The marketing needs to be motivated and knowledgeable about the
product. The forms of promotion such as advertising must be attracting and enticing to the target
market to get the greatest amount of exposure possible for the product. This will ensure the success
of the product in the stores. Distribution of the product must be efficient. This problem has already
been taken care of with convenient transport routes to commercial areas and transport already
being arranged.

Developing a Financial Forecast

• To achieve a healthy and continuous growth in profit.

• To attain a 15% increase in market shares within the annual and achieve positive growth

in the sales of the PRODUCT!

• Minimising distribution cost

Financial forecast- marketing 2005 2006 :

Revenue $16,800 $16,800

Costs

Fixed costs $9,350 $0

Variable cost $6,670 $6,670

Total costs $16,020 $6,670

Net profit from marketing $780 $10,130

activities

return on marketing investments 5% 152%

Comparing actual and planned results

Financial forecasting - Apple Ipod predicted that there would be a 20% increase in their level of
sales, but sales figures were lower than expected and showed a 10% increase in sales. It is suggested
that Apple Ipod change their strategies to motivate further sales.

Market share – Apple Ipod predicted that there would be a 15% increase in market share, but this
was due to external factors were there has been a large boost of competitors in the Mp3 industry
threatening Apple Ipod's market share.

Profitability - Apple Ipod predicted that there would be a 20% increase in revenue, but sales figures
were lower than expected and showed a 10% increase in revenue. It is suggested that Apple Ipod
change their strategies to motivate further sales.

Revising the marketing strategies

After 6 months have elapsed we have found that you need to change your marketing mix strategies
to fix the above problems.

As mentioned above Apple Ipod received a decrease in sales, it is suggested that Apple Ipod
change one of your marketing strategies to solve this problem. Apple Ipod should introduce a public
relations scheme to improve the relationship between the company and their markets. Rather than
advertising which is aimed at improving the public image of Apple Ipod, public relations is aimed at
increasing a business's sales.

In order for Apple Ipod to gain competitive advantage and increase market share you must
readjust your marketing strategies. It is advised that Apple Ipod add an extra feature to their current
product. A new innovative feature you may consider is cordless earphones that send the sound via
Bluetooth technology. This will differentiate your product from current competitors and will result in
an increase in market share.

Appendix A

Optional Ipod Accessories

iPod Dock, iPod mini Dock or iPod photo Dock Kit

iPod Camera Connector

iPod Power Adapter

iPod Dock Connector to FireWire Cable

Sony Car Cassette Adapter

Belkin Auto Charger

Griffin iTrip FM Transmitter

Monster iCase Travel Pack

Belkin TuneDok Car Holder

inMotion iM3

Belkin Media Reader

In-Ear Headphones

Griffin iTalk Voice Recorder

iPod Remote and Earbuds

Monster iCarPlay Wireless Plus

iPod Socks

Bang & Olufsen A8 Headphones

Incase Travel Kit

Belkin Battery Pack

20GB/30GB or 40GB/60GB iPod Carrying Case

World Travel Adapter Kit

Bose SoundDock

iPod Stereo Connection Kit

USB 2.0 + FireWire Cable

References:

1. www.apple.com

2. www.apple.com.sg/ipod/

3. http://en.wikipedia.org/wiki/IPod

4. www.appleinsider.com/article.php?id=1413

5. reviews.cnet.com/4520-6450_7-5067456-1.html

6. www.marketingprofs.com/ea/qst_question.asp?qstid=6530