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The Marketing Mix in Global Market and Proposed Strategy to Succeed in India
May 1, 2007
Abstract
iPod is the mp3 player marketed by Apple Inc. Since it was released in the USA market in 2001, it
has been the market leader enjoying the share of about 70 percent. iPod has also been the virtual refuge
for the other fading Apple products like the Mac which are now banking on the humongous sales of the
iPod. In this paper, we first study the existing marketing mix of iPod where we analyse mainly the
Product, Promotion and the Price. Developing economies like India which present a huge potential for
sales of mp3 players are still devoid of this product which is currently established only in the developed
countries. We look at possible changes in the marketing mix of the iPod to market it successfully in
India as well. These changes include major changes in the technology and promotion campaign to adapt
it to the Indian market. We also propose a possible pricing strategy to penetrate the market as well as
to generate good profits.
Contents
1 Introduction 1
5 Conclusion 19
4 Sales of Songs through iTunes and iPods over the years (source: [21]) . . . . . . . . . . . . . 3
9 Growth of Digital Music in India (source: Soundbuzz, Pricewaterhouse Coopers, IFPI [25]) 13
11 India - Internet Usage Patterns (source: Internet and Mobile Association of India [26]) . . . 14
1 Introduction
Digital music has penetrated the human life to a large extent today. Audio CDs and DVDs have taken over
the areas where the audio casettes and gramophones once held their forte. This growth has been enhanced
by the human desires to pass their idle time with music. And this desire is being fulfilled by an upsurge of
portable devices which can play music. These include mainly the mp3 players and the cellular phones.
Till about 2000, companies like Sony were producing their Walkmans and were the market leaders
but only till Apple intervened. Apple Inc, then Apple Computers Inc, used to deal only with computer
hardware and software stuff. But their products like iMac and MacOS were completely overshadowed by
the brilliant marketing and technology of companies like HP, Dell and Microsoft. Hence Apple started
to follow a digital hub strategy, whereby the company began creating software for the growing market
of digital devices being purchased by consumers. Digital cameras, camcorders and organizers had well-
established mainstream markets, but the company found existing digital music players “big and clunky
or small and useless” with user interfaces that were “unbelievably awful”, so Apple decided to develop its
own. The product was developed in less than a year and unveiled on 23 October 2001.
Figure 1(a) shows the volume of the iPod sales over the time 2001-2006. The sales have been rising
continuously. Among the hard drive based players in US market, iPod’s market share rose from 33 percent
in 2002 to 82 percent in 2004. This clearly demonstrates the invincibility of the iPod in the market. Not
only this, the impact can also be seen on the dipping fortunes of Apple. Figure 1(b) shows the shares
of various Apple’s products in the company’s revenue for the first quarter, 2007. A whopping 48 percent
came from the iPods. It was just recently that Apple Computers Inc changed its name to Apple Inc clearly
declaring that no longer was the company relying solely on the personal computers.
Thus iPod has clearly had a huge impact both on the market as well on the company itself. This
motivated us to study the marketing mix of the product and understand the reasons behind its tremendous
success. This is discussed in Section 2 of this paper. Also, this product is currently only established in
the developed economies like USA, Canada and other European countries. The iPod is still to be officially
marketed and launched in huge economies like India. In Section 3, we study any changes that are required
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(a) Then (b) Now (c) ipod dimensions
in the marketing mix of iPod to compete successfully in India. We conclude the paper in Section 4.
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Figure 4: Sales of Songs through iTunes and iPods over the years (source: [21])
Compared to the push buttons interface in the Walkmans, Apple came up with a revolutionary user
interface in the iPod. With a touch sensitive scroll wheel and 4 touch buttons accompanying it (Figure 3),
it was never easier for the common man to operate a device. This supported by a cool operating system
and sound quality gave music listeners an unprecedented experience.
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Figure 5: iPod - Evolution (source: [1])
• Camera connector
It provides an extra attraction to the user enabling him/her to transfer the digital photographs on
the iPod. This can in turn be used as a photograph sharing device too. Though it doesn’t necessarily
broadens the market niche, but it definitely gives an additional reasons to the consumers to buy the
iPod.
• Radio Addon
This is one of the most popular accessories and caters mainly to the markets where radio channels
have their dominance. Radio in itself provides users much more than music - news, chat sessions etc.
Thus it gives an extra option to the users in terms what they want to listen.
The list of accessories is growing endless today and it’s not possible to list them all down here. But in
essence, the aim of the accessories is not just to satisfy the customer by the iPod experience but to delight
him by providing more options and flexibilities in the ways of entertainment.
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Figure 6: iPod Variants - Comparative Features (source: [1])
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2.2 Promotion
The iPod has become the phenomenon that it is today because of intelligent marketing. According to US
magazine Advertising Age, the Apple publicity machine has secured 6,000 iPod and iTunes stories in major
publications worldwide in a short span of 6 years.
Apple follows the Integrated Marketing Communications (IMC) approach for promoting the
iPod. IMC essentially means that all the communications and marketing associated with the product have
a common consistent message. In the case of the iPod, Apple has, right from Day 1, emphasized on three
aspects of the iPod and built all its promotion around them: Cool Factor, Design and Simplicity. The cool
factor being that such a small gadget can take care of all your music needs; in fact, the very first tagline
for the first iPod was “1000 songs in your pocket”. Apple realized that it had a great looking product
with an interface that was simple and easy to use and hence it leveraged its marketing campaign on these
points so as to build a competitive advantage centered on them.
Apple’s various modes of promotion are now identified and explained under the following headings.
2.2.2 Advertising
Apple has used a variety of distinctive advertising campaigns to promote its iPod portable digital music
player. The campaigns include television commercials, print ads, posters in public places, and wrap
advertising campaigns.
• Ad Campaigns
The more famous commercials and print advertising featured dark silhouetted characters against
bright-coloured backgrounds [16] . The silhouettes are usually dancing, and in television commercials
are backed by up-beat music. The silhouettes are also usually holding iPods and listening to them
with Apple’s supplied earphones. These distinctively appear in white, so that they stand out against
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Figure 7: The Basic Image of an iPod
the colored background and black silhouettes. Again, as mentioned earlier, the iPod appears as its
2-D rendering shown above.
Since then, the television campaigns have evolved and the newer advertisements emphasize on the
latest features added to the new models introduced, in addition to its eternal underlying message of
being the coolest music player. (For instance, the video iPod ad showed its additional capability of
video output, the second-generation version of shuffle emphasized on the reduced size and variation
in colours.)
• Signage
Apple follows a marked Guerilla marketing policy when it comes to signage, meaning employment
of huge banners, posters and billboards which are extremely hard to miss. Buzz marketing rules the
day, meaning that the product is seen at the right places, in the right hands. iPod advertisements
spring up at street corners, on major roadways, music stores and just about anywhere where there is
a crowd. It has also launched elaborate rail station iPod campaigns at the Mc Gill subway terminal in
Montreal, the Leidsestraat station in Amsterdam, the London Underground et al [18]. Here, colored
iPod silhouettes ads consume the ticket stands, the waiting platforms, and even appear to be painted
onto the turnstiles. Stairways leading out of the station have also been converted into colored iPod
murals, with the front of each step making up the canvas.
Apple has also undertaken massive wrap advertising campaigns in the past, with entire buses, trains
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and trams being used as 3-D billboards to promote the iPod.
• The Apple.com Product Page
With the Apple home page being visited by approx. 1 percent of the population using the Internet, it
serves as an immensely viable option of advertising. Here too, it leverages on the attractive looks of
the iPod and hence the pages are uncluttered with high-resolution images of the product in different
orientations and minimal text on a bright background. This approach is visually appealing to the
customer, raises his/her interest about the product and leads him/her to click on the appropriate
links to learn more about it.
2.2.3 Retailing
“Apple’s investment in its retail operations is paying off. Before opening its first store five years ago, the
company sought out experienced retailers from Target and the Gap. Then it built entire mock-ups in a
warehouse near its headquarters. Today, the 174 stores earn an average of $4,032 per square foot.” [15]
The figures speak for themselves. Apple has revolutionised the retail market with its attractive and
inviting retail stores, each one of them being a visual treat in itself. The design of all its flagship retails
outlets, called the Apple Stores, are consistent with Apples personality.
Through its retail outlets, Apple creates an experience in the customers mind. Its first priority
has been to make the customers want the products. And that desire it implants with the experience of
the products in the store. The stores are organized by the context in which people use the products.
By acknowledging this context in the design of the store, Apple encourages its customers to dream about
possibilities.
Cashiers put time and care into the transaction, which makes clear Apples philosophy that the purchase
is not the end of the customers relationship with them - its the beginning. The sales staff is enthusiastic
and helpful , and they carry iPods on their belts, indicating to the customer that they themselves live
the lifestyle that theyre trying to sell. The messages are prioritized. Product-specific messages are
placed and sized such that they are noticeable only after youve already narrowed your focus to a particular
product.
As a result, Apple stores have now become the benchmark for quality in the retail sector. It is not
surprising, hence, that these stores account for a major chunk of its iPod sales. Apples latest venture
for iPod retailing has been iPod vending machines with digital signage. They have cropped up at major
departmental stores and railway stations, and allow customers to check out the features of the iPod on a
digital screen and buy them using credit cards.
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Some major partnerships:
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away free iPods and iTunes vouchers redeemable for free songs from its online store. In addition, live
performances were held at the Apple Stores by local popular bands to attract crowds [2].
Apple has also tied up with major record companies and bands to promote their iPod. Its most notable
collaboration has been with U2, one of the most iconic bands of this century, wherein for two weeks before
MTV debuted U2’s video for the new single “Vertigo”, fans had a chance to see the band perform the song
on TV - in an iPod commercial. This deal was remarkable because in their twenty-five-year history, U2
have never licensed their music for commercial use or even accepted tour sponsorship. Special edition U2
iPods were released with a unique red click wheel and band members autographs engraved into its back
casing.
It was, perhaps, to honour this association that Apple came out with iPod (PRODUCT) RED Special
edition, in which $10 from the sale of each unit was donated to the RED foundation (set up by U2 lead
vocalist Bono) directed towards treating AIDS victims in Africa.
2.3 Price
mp3 Player market in the US market is oligopolistic. That is, there are millions of consumers and few
major players. These include Sony, Sandisk, Creative, Toshiba, Apple and the latest entry being Microsoft
in Nov 2006. At present, the prices are very competitive with most companies’ product within breathing
space of each other. In such a market, any changes in the price by one company will affect the sales
drastically i.e. Sales are highly sensitive to the prices. The list of major players in the mp3 player market
in Appendix B gives an idea of the competition.
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Figure 8: iPod - Costs and Pricing (source - [6])
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management. Thus, Apple needs to find a source of investment for iTunes also. This source is iPod.
Apple does not see iPod solely as a product. For it, (iPod + iTunes) is a single product. And
hence the charge for the iPod also includes the charges for development and maintenance of iTunes
in addition to iPod.
• Economic Factors
An important reason for different prices could be the different import and custom duties in different
countries. This could be a major factor behind the observations.
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Figure 9: Growth of Digital Music in India (source: Soundbuzz, Pricewaterhouse Coopers, IFPI [25])
4. Sharing of Songs
This is another mode where songs could actually be shared between mp3 players through wireless.
Currently, Apple relies on the first two means of getting the songs on your iPod. This means that
having an iPod leads to a lot of dependence on the personal computer as well as on the internet. But this
could actually be the limitation of the product when we talk about the Indian market. Figure 10 shows
the number of internet users as well as the internet penetration in various countries. In India, though the
number of internet users is rising, but still internet penetration is very low. It’s only around 5 % compared
to around 60 % in countries like USA where iPod has clearly established its market lead. Zooming into
this picture, Figure 11 shows the main activities where most of the internet users actually spend their
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Figure 10: Internet Users and Penetration (source: [24])
Figure 11: India - Internet Usage Patterns (source: Internet and Mobile Association of India [26])
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time on internet. It’s mainly email, internet chatting and education purposes that internet is mainly used
for. Using the network for eCommerce and entertainment is still in an embryonic stage.
Inferring from above, we cannot actually expect iPod to do well in the whole of the Indian music lovers
market. We cannot bank on the piracy to make songs available for the iPods. There is a need to come
up with something new on the technology front which can provide a smooth channel for song distribution
within the present constraints.
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(a) Current - iTunes as central server (b) Proposed - every iPod a server
removes the dependence of the iPod on the computer and internet to get songs.
We propose a technology change in the iPod itself to overcome this barrier - allow sharing of songs
among iPods. This would require every iPod to have wireless networking functionality where it can identify
the iPods within a certain radius around itself and then the user can download the songs which have been
shared by other users on their iPods. We cannot have totally free unlimited sharing of songs hence some
price has to be paid by somebody somewhere along the pipeline. We propose to follow a cellular phone
model where each iPod will have a certain money balance on it which will be charged with every download
from a nearby iPod. Also, to encourage users to start sharing stuff on their iPods, each upload from an
iPod will fetch a balance increase of certain amount. These amounts will have to be fixed very carefully
after performing a full financial analysis of the model. Also, the iPods can be recharged again and again
as we recharge our mobile phones today.
In essence, what we are proposing, is that instead of a centralized music store like iTunes, every iPod
in operation becomes a music store. Thus increasing sales of iPods will itself mean a better connected ad
hoc network where stuff can be shared readily. (Figure 12). Thus what we now have is a rechargeable chip
inside our iPod. The recharging process will require a big infrastructure to be setup. We also propose that
such a scheme be started in collaboration with a mobile phone service provider like Hutch or Airtel. Using
these chips in the iPod we will also be able to keep record of what downloads and uploads have occurred
which will help in the digital rights management also.
In this whole scheme, there is a possibility that we unknowingly might be promoting piracy. Consider
I have access to a huge set of pirated songs. Then if I put all of them on my iPod then I can earn lots and
lots of money with people downloading the stuff from me. This situation can be averted if we restrict the
sharing to only those songs which have been officially bought from Apple stores (online or offline).
Thus this model has the potential to break the internet barrier but a lot of security issues need to be
handled with new protocols which will then be embedded into the iPod.
Currently, there is one more limitation. Since Apple assumes the omni presence of internet, only
the basic software are provided on the CD that’s distributed in the product package. But now since we
are removing the internet from the pipeline, Apple must provide a more comprehensive set of softwares
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including all file converters etc so as to minimise the hassles faced by the users while updating the firmware
on the device.
As seen in the Pricing section in US market, Apple has very low manufacturing costs for the iPod.
It’s only the extra import duties etc which make an iPod expensive in so many countries like India. Thus
if Apple sees a huge market here, it may decide to open its manufacturing plants here in India or even
outsource it to some company here as it has done to Foxconn in China. Apple is already in collaboration
with TransWorks and HCL Infosystems for distribution and after sales support and such team ups will
only help considering that Apple is considering to release its iPhone in Asia next year.
Thus, Apple with this policy of marketing the different iPod variants for different consumers and “made
for each other” pricing can be successful on this front.
4.3 Promotion
The promotion and publicity for the iPod has been negligible in India, with only two iPod advertisements
having appeared till date, and that too in the print media. Still, we see that a significant part of the youth
and teen population is aware about and use the iPod, and this has been mainly through word of mouth
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Figure 13: An ad for the iPod designed by us for Promotion in India
promotion through friends and relatives abroad. Hence, if Apple promotes the iPod even with a simple
promotion strategy, it will be able to make inroads into the huge potential market in India.
4.3.1 Advertising
The most popular form of advertising in India is through television advertisements. Apple needs to develop
ads specifically catering to the Indian market, possibly by showcasing the iPod as the ultimate music player,
which can serve the music needs of every single person in the family, young or old, owing to its ease of use.
Radio commercials will also serve as a viable option.
The publicity through print media and signage should be done, much in the same way as it does
elsewhere. Though wrap advertising is not really seen here, Apple could pioneer this form in India. This
would also be in sync with the companys image of revolutionizing the fields it generally enters. Figure
13 shows a potential advertisement developed by us for promoting iPod. It tries to identify iPod with the
Indian culture and festivals.
Since the iPod aims to make itself synonymous with music, the company should aim to associate the
iPod (in its ads) with the most popular form of music in India - film songs. Simultaneously, keeping in mind
the variations in music preferences according to the age of the population, it should also incorporate the
other popular genres of music in its ads, like classical, devotional, Punjabi, folk, rock etc (in a way similar
to the strategy of Worldspace satellite radio ads doing the rounds of TV nowadays). Simultaneously, it
should make all these genres available on iTunes as well.
An Apple India website should be set up as well containing all the details about the product, prices
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and resellers in India. Presently, finding an iPod reseller in your area is an arduous task, since even the
apple.com homepage does not display any information about stores in India. To dissuade people from
taking recourse to other mp3 players, the company has to make the process of iPod purchase simple and
for that, it has to make the details of its resellers and customer service centers easily accessible.
4.3.3 Retailing
The number of Apple stores and resellers needs to increase too so that the visibility of the product increases
at places where people are inclined to spend their money on consumer electronics. Presently, India has
only one Apple store in India and that is in Bangalore. More stores need to be set up so as to cover all the
major metropolitan cities. Apple could also tie up with countrywide electronic items retail chains such as
Subhiksha Mobile, The Mobile Store etc.
5 Conclusion
Even now, after so many years since its appearance, iPod still manages to rule the MP3 Player world
and this is even more remarkable if we think about the technologies short life cycles. Despite fierce
competition, users are still buying iPods like there is no tomorrow. And not only that, but it also acts
as a locomotive for the entire Apple train and for other companies specialized in iPod accessories which
have become millionaires overnight. An attractive design, a simple interface which can be operated by
anyone, efficient marketing, competitive prices, all these factors have turned iPod into an unstoppable
money making machine.
We have proposed few changes in the marketing mix strategy which will help iPod adapt to the Indian
market. In brief one is to add a full fledged song sharing feature to the iPod so as to move from a
centralized network model to an ad hoc network one. Second is to position the iPod variants correctly so
that they cater to the right market segment and also complement each other with their revenues. Thirdly
the promotion strategies have to be modified to adapt to the Indian culture.
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A iPod Currency Index
More information about the iPod index can be found in [10]. Data Source: [10]
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B Major mp3 Market Players
The following are the major mp3 players in the global market. More details can be found here [11].
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References
[1] Apple Inc, Official website.
http://www.apple.com
[9] “New ’iPod Index’ currency measure is based on Apples 2GB iPod nano cost”.
http://macdailynews.com/index.php/weblog/comments/12383/
[14] Duke University iPod First Year Experience Final Evaluation Report, June 2005.
http://www.ecs.org/html/Document.asp?chouseid=6210
[15] “Apple Stores earn over $4000 per square foot” MacNews, The Mac Insider.
http://www.macnewsworld.com/story/56199.html
1
All the web links were last retrieved on April 29, 2007
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[16] iPod Advertising - Wikipedia.
http://en.wikipedia.org/wiki/IPod advertising
[21] “Do the math: iTunes sales aren’t collapsing”, Blackfriars marketing.
http://blackfriarsinc.com/blog/2006/12/do-math-itunes-sales-arent-collapsing.html
[22] “iPod may define new era of open strategy”, CNET News.com.
http://news.com.com/Apples+diplomatic+core/2009-1041 3-5144714.html
[23] “Trademarks, Not Patents: The real competitive advantage of the Apple iPod” by James Conley.
http://www.core77.com/reactor/12.05 ipod trademark.asp
[25] “Indian Digital Music Sales To Surpass Physical Format This Year”.
http://www.contentsutra.com/entry/indian-digital-music-sales-to-surpass-physical-format-this-year-
study/
[26] “Mumbai tops the Internet users list with 2.6 million active users”.
http://www.iamai.in/section.php3?secid=15&press id=1357&mon=11
1
All the web links were last retrieved on April 29, 2007
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