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Apple iPod's Promotional and Positioning Strategies Abstract: The case discusses the promotional and positioning strategies

of iPod by the US based Apple Inc. In January 2001, Apple introduced its 'Digital Hub' strategy where it decided to make its computers, a hub for commonly used digital commodities like digital cameras; camcorders etc. iPod was a product of this strategy. Since iPod was launched just a month after the 9/11 terrorist attacks, the launch was kept a low key affair. However, just to launch it as a surprise product, it was not pre-announced. This strategy was used by Apple for launching all the generations of iPod. Extensive advertising and marketing was undertaken for the iPod. A series of innovative advertising campaigns via television commercials, print ads, posters in public places, wrap advertising etc were used. The case also describes how Apple created an iconic image for iPod that attracted the young and the old alike. It was positioned as a 'cool' product for the present generation.

Issues: Understand how iPod was promoted by Apple using partnership, podcasting and co-branding strategies. Study various forms of advertising used by Apple including wrap advertising, lifestyle advertising and other traditional advertising methods. Critically examine how iPod was positioned as a 'cool' product.

Introduction:
Company Profile:
In April 2007, US based Apple Inc. (Apple) was adjudged the world's most innovative company from among 50 companies, according to Business Week-Boston Consulting Group study. Apple occupied this position for the third consecutive year. Business Week wrote, "The iPod creator is a master of superb product, store, and experience design." It also named iPod the "Omnipresent Icon of Design". Commending Apple on iPod's marketing strategy, TII Innovation Journal said, "Today, innovation is about much more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most important, as the Internet and globalization widen the pool of new ideas, it's about selecting and executing the right ideas and bringing them to market in record time." Apple had launched iPod, a portable digital music player, in October 2001. Since then, Apple had designed and sold different generations of iPod. iPod had created a market for almost 4000 iPod accessories. This market was also known as iPod ecosystem.

Product Profile:
iPod was launched as a part of Apple's digital hub strategy (Refer Exhibit I for details on Apple's Digital Hub Strategy). iPod was user-friendly and simple to use - features that people adored. The marketing and advertising exposure given to iPod was unprecedented. By the year 2004, Apple gained a clear market leadership status in the global digital music player industry. Apple undertook incessant advertising for iPod. The advertisements featuring silhouettes dancing to the beats of their iPods were seen everywhere -print, television, and billboards. In a very short time, Apple created an iconic image for iPod that attracted the young and the old alike. It was placed as a product of the present generation and presented a picture of "coolness". Commenting on the fad that iPod had created, John Zhang, Professor, Wharton University said, "All MP3 players do the same thing, but nobody else has the 'cool' factor of iPod. It's a status symbol: You're young, cool, vigorous if you have one."

Background Note:
Steve Jobs, Steve Wozniak and Ronald Wayne founded Apple Computers on April 01, 1976. At that time, Steve Jobs worked for Atari, Steve Wozniak worked for HP and Ronald Wayne was Jobs' colleague at Atari. They assembled the first personal computer (PC) in Jobs' father's garage, custom-made for a local computer store. They assembled fifty such PCs exclusively for this store and sold them for US$ 666.66 per system. This system was called Apple I. Later, they built another 200 PCs before the next version was worked upon. Apple was incorporated on January 03, 1977. In April 1977, Apple II was launched which was a much improved version of its predecessor. The differences lay in the display, which used graphics and color. However, when the system was designed, it was realized that the company would need a lot of financing to market this product. It was at this time that Mike Markkula, a venture capitalist, invested US$ 92,000 in the company. In May 1980, Apple III was released to compete with IBM's first PC named the IBM-PC. By then, Apple was employing several thousand workers. Apple III was priced at US$ 1,395. However, due to a design fault, this product failed and thousands of Apple III computers were recalled. Apple made losses of over US$ 60 million due to this recall. Apple came out with its initial public offering (IPO) in December 1980. Around 4.6 million shares were sold for US$ 22 each in this IPO. In January 1983, Apple launched LISA. It was Apple's first GUI computer, which introduced the words 'mouse', 'icon', and 'desktop' to the world. LISA was priced at US$ 10,000. Apple introduced Apple Macintosh in 1984. It was built inside a beige case and came with a black and white monitor, a mouse and a keyboard. It was the first personal computer with a floppy drive.

Promotion: Apple's promotion strategy which was widely appreciated was the surprise element that it attached just before it rolled out its iPod. There was a heavy speculation and curiosity regarding the product and everyone was watching out for it. Apple did this with every other model of iPod which it launched subsequently.

Advertising: Apple advertised extensively for iPod. Just when iPod was launched, an introductory campaign which would explain an unfamiliar product was needed. For this, Jobs thought a traditional campaign was preferable. Hence, the first iPod's commercial showed a man listening to the songs on his iPod and dancing. The commercial illustrated iPod's portability and ability to easily play songs downloaded from one's computer. All media channels including television, print, hoardings, posters and wrap advertising were used to advertise.

Positioning: The advertisements and commercials of iPod focused on the 'coolness' aspect as it made the viewers believe that having one would make them accepted among their peers. Analysts commented that the hype surrounding iPod was created due to its unique advertising, word of mouth publicity by the users and the look and design of the product.

The Road Ahead: Apple sold 9.8 million units of iPod in the third quarter ending June 2007, 21 percent higher than the 8.1 million iPods it sold during the same period, the previous year. The first quarter (October -December 2006) saw record sales of 21 million iPods. The previous year sales for the same quarter was 14 million units. The third quarter profits were a record US$ 818 million, up 73 percent from the third quarter profits of the previous year, driven mainly due to the high sales of the iPod. For the fourth quarter of 2007,Apple has forcasted revenues of US$5.7 billion.

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