iPhone 3G Marketing Plan

Presented by Anum Ali May 04, 2011

Subject Code: MRKT310 Section: 7983 Professor: Thomas Tanner

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iPhone 3G
Apples 2nd iPhone: New and Improved!

2- Product Description
THREE LEVELS OF THE PRODUCT CORE CUSTOMER VALUE (Diaz, 2009) iPhone customers will be buying on-the-go connectivity, technology savvy style and trendiness ACTUAL PRODUCT Brand name: Apple Quality level: Excellent quality product Features: 3G Internet connectivity, fast processor, 3 megapixel digital camera, touchscreen, 3D graphics support, GPS navigation, Voice Control, multimedia (mp3) player, Personal Digital Assistant (PDA), powerful battery Design: 4.5x2.4x0.48 slim and lightweight body, glossy finish, 2 colors (black & white) Packaging: Apples branded package with Apple logo stickers included AUGMENTED PRODUCT After-sale service: Warranty: 1 year limited warranty replacement within 90 days for hardware/software defects (Apple, n.d.) Product Support: Free activation service at purchase, hundreds of 3rd party applications (entertainment, educational, networking/communication) from Apples App Store, unlimited music downloads from iTunes store
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2- Product Description
PRODUCT TYPE: Specialty Product Customer buying behavior: Strong brand preference for Apple Price: Expensive product category $199 (8GB memory model) $299 (16GB memory model) Additional monthly mobile service charge INTRODUCTION STAGE Exclusive distribution: Apple and AT&T stores Low sales and negative profits at Carefully targeted promotion by Apple launch. First customers are the innovators No competitors of 3G technology MORE FOR LESS VALUE (Kotler & Armstrong, 2010, p.279) PROPOSITION A high quality smartphone with revolutionary features for a price lesser than high-end smartphone competitors. (Kotler & Armstrong, 2010, p.215)
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3- Current Marketing Situation

TARGET MARKETS DESCRIPTION
(Kotler & Armstrong, 2010, p.193) (Apple, n.d.)

GEOGRAPHIC MARKET USA, UK, Canada, Australia, and selected countries in Europe and Asia (22 in total)

PSYCHOGRAPHIC MARKET Social class: Upper middle, Lower Upper, Upper upper Personality: Trendy, Technology savvy, Curious, Elitist
DEMOGRAPHIC MARKET Ages 20+, 30+, 40s High Income group Occupation: Students, technical/corporate, Craftspeople (actors, models, designers)

CONCENTRATED (Niche) MARKETING Few major market segments are targeted for a focused marketing strategy. (Baker, 1998)

BEHAVIORAL MARKET Benefits Sought: Quality, Speed, Style, Innovation, Service User status: Potential users, Regular users (iPhone; previous model or other smartphone) Loyalty Status: Apple loyal Usage: Medium - Heavy
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3- Current Marketing Situation

CONSUMER BEHAVIORS
(Kotler & Armstrong, 2010, p.152)

Complex Buying Behavior : Potential Smartphone Users High involvement and significant perceived differences between smartphone brands: Apple, Blackberry, Nokia, etc. Dissonance Reducing : Regular Smartphone Users and Apple Loyal Customers High involvement and few perceived differences between smartphone brands. Apple Loyal customers would buy Apple readily Other smartphone users would know existing brands well

4- Current Marketing Situation: Product Review

MAIN FEATURES (STRENGTHS) Improvements to the old iPhone (Diaz, 2009) 3G Internet connectivity: 4x faster, on-the-go Internet old iPhone, unmatched among competitors 3 megapixel camera: higher quality photos/videos GPS Navigation: geographic location, navigation control Increased battery life: more Internet and call time Customized applications: computer software customized for usage on the smartphone. Reinstating the old strengths Glamorous design: the iconic, ever-popular, stylish design to preserve the look and feel Integrated music player, PDA, & Internet features Touchscreen: wide LCD with multi-touch sensors

WEAKNESSES Restricted to one cellular carrier AT&T limited coverage Camera placed at the back of phone, difficulty in video conversation No Cut & Paste function (CGullWorld, 2008)

5- Current Marketing Situation

Target Market Needs & Corresponding Features/Benefits of iPhone 3G
Target Segment Students
Technical & Corporate people

Customer Need Express style Communication/Social networking Share multimedia experiences e.g. photos, videos, chats Entertainment: games, etc. Ease of use and tracking the phone
All-day communication On-the-go connectivity Hands-free communication Creating documents & presentations Planning and scheduling Express elitism Express style Communication Social networking with fans

Corresponding Feature/Benefit

Glamorous design features Calling, 3G Internet connectivity 3 megapixel camera, multimedia messaging (MMS), mp3 player Fast processor, 3D graphics support Touchscreen, GPS functionality
Increased battery life 3G Internet connectivity Voice Control feature Touchscreen, Customized software applications High price value Glamorous design features Calling, 3G Internet 3G Internet, social networking apps. 8

Craftspeople (actors, designers, models)

(Kotler & Armstrong, 2008, p.A3) (Diaz, 2009)

6- Current Marketing Situation: Competitive Review

iPhone 3G Competitive Analysis
Phones launched as competitors to old iPhone are strongest competitors Competitor Nokia RIM Model N-series Blackberry Storm Features Internet-enabled, 5 megapixel camera, multimedia support Copycat touchscreen, 3.2 megapixel camera, Wireless technology, PDA, GPS navigation, good battery life, 2GB memory Copycat touchscreen, 2 megapixel camera, wireless technology, GPS, 32MB memory Copycat touchscreen, additional keyboard, wireless technology, digital camera Price $250 - $400 $199 - $299 with contract

Samsung

Instinct

$250

Motorola

Android

$250+

(PhoneScoop, n.d.)

6- Current Marketing Situation: Competitive Review

Competitive Position: MARKET CHALLENGER iPhone 3G is directly challenging the smartphone giant, Nokia, and attacking the followers, RIM, Samsung and Motorola. Its striving to capture market share! CURRENT PRICING Target Costing: Cost of iPhone 3G based of the target price that customers are willing to pay. In consideration of competitors prices, and to achieve high sales volume, an initial low price of $199 (with AT&T contract) is targeted AT&Ts subsidies allow the price cut Without contract the price is $599 Segmented Pricing (product-form pricing) 8 GB model: $199 (with AT&T contract) 16 GB model: $299 (with AT&T contract)
(Welch-Abernathy, 2008) (Geller, 2008) 10

7- Current Marketing Situation: Distribution Review

EXCLUSIVE DISTRIBUTION STRATEGY iPhone 3G will be exclusively available at: Apple stores AT&T stores Apple website
VERTICAL MARKETING SYSTEM Apples contract with AT&T a cellular service provider AT&T as iPhone 3Gs authorized distributor Subsidized costs per iPhone would be provided to Apple, by AT&T. Cell phone monthly packages designed for economy Apple would reserve creative rights of marketing and promotion AT&T professional sales force would be trained to communicate iPhones value proposition AT&T dealership stores would offer iPhone unlocking and activation services for free
(AT&T, n.d.) 11

8- Current Marketing Situation: Strengths/Weaknesses

STRENGTHS Loyal Apple and iPhone customer base secures large, profitable customers and a reputation for innovation, high quality, and style International Manufacturing Partners for low-cost manufacturing and assembly Electronic components, physical design elements, computerized chips and circuits manufactured in various countries: Korea, China, Japan, Germany, Taiwan, and UK. In-house Manufacturing Partners: Apple Inc.s Mac software developing houses to build the operating system and application software Authorized Distribution and Services Network of Apple Stores Contract with AT&T wireless service provider provides access to AT&T consumer base 3G Technology is a unique competitive edge to win consumers with high Internet speed WEAKNESSES Strict Hardware/Software Control: Only Apple devices can work with an Apple gadget, software needs to be custom-built; incrementing price and complexity Network & Coverage Limits: Single cellular service provider contracted
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(Brubaker, 2007.) (AT&T, n.d.) (Mueller, 2010)

9- Current Marketing Situation: Opportunities/Threats

OPPORTUNITIES Demographic: Carefully targeted demographic segments (slide 4) present high potential demand Economic: Mediocre and affluent income groups (slide 4), immune to inflation, will buy readily Technological: Advanced communication and computer technologies e.g. 3G, GPS, etc. contribute to successful development and functioning of iPhone 3G Cultural: Members of the smartphone culture would readily welcome a new phone. Style conscious, and elitist consumers would be attracted. THREATS Competitors copycat models and low-priced phones Wider network coverage on other smartphones: work with multiple service providers Cheaper mobile service rates: smartphones with other service providers enjoy cheaper service rates
(Mueller, 2010) 13

10- Objectives and Issues

FIRST-YEAR OBJECTIVES To capture 10% market share for iPhone 3G in the US smartphone market. To encourage old iPhone users to switch to 3G To satisfy the needs and wants of smartphone customers and guarantee satisfaction through value delivery. To manage a successful, focused launch without budgetary wastages

ISSUES: Old iPhone users may not perceive anything new about iPhone 3G Customers loyal to other brands such as Nokia, or RIM Blackberry may not buy an Apple product Customers may not switch their cellular service to AT&T to use an iPhone 3G

(Brubaker, 2007.) (AT&T, n.d.) (Mueller, 2010) 14

11- Overall Marketing Strategy: Positioning

Overall Positioning Strategy: Product Differentiation strategy has been used with 3G technology as the main USP. POSITIONING STATEMENT To the trendy youth and sophisticated professionals; who need on-the-go connectivity and a stylish expressionism, Apples iPhone is a stylish, high-speed (3G) wireless smartphone that combines the Internet, a music player, and a personal digital assistant (PDA) in one device.

COMPETITIVE ADVANTAGES The most distinctive, superior, and profitable product features are selected as a competitive advantage: Apple image and brand name Stylish look and feel High speed wireless Internet (new 3G technology) Unique touchscreen Third party apps Integrated music player, Internet, and PDA Lower price $199 on AT&T (Kotler & Armstrong, 2010, p.213-215) contract

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11- Overall Marketing Strategy: Positioning

WHY THE POSITIONING STRATEGY IS IDEAL? The chosen competitive advantages justify the More for Less Value Proposition. They are: Important: Apples brand name and image of a technology innovator is a highly valued benefit for customers Distinctive: Competitors do not provide an LCD touchscreen Superior: Competitor Internet enabled phones are not fast. 3G technology is superior speed Communicable: Stylish look and feel Affordable: $199 contracted price is affordable to the mediocre market Profitable: Integrated music player, Internet and PDA. Customers would buy an integrated device rather than individual ones

(Kotler & Armstrong, 2010, p.213-215) 16

12- Marketing Mix Strategy: Product

PRODUCT RECOMMENDATIONS FOR iPHONE 3G Features & Benefits (Eliminating weaknesses identified in Slide 6, and adding more value) Contracting with at least one more cellular service provider for wider coverage Integrating a camera in the frontal body for videoconferencing ease Improving the camera resolution for higher photo/video quality Improvement in touchscreen: cut & paste function for working with documents Continuously improving processor and Internet speed to offset copycats (e.g. developing 4G and a better processor) Suggested Line Extension Suggested Brand More colors; other than black and Extension white, to provide more choices for Introduce a new trendy customers product category of iPhone accessories i.e. New iPhone models with improved skins, phone cases, features and technology charms, and etc.
(Kotler & Armstrong, 2010, p.213-215) 17

13- Marketing Mix Strategy: Price

PRICING RECOMMENDATIONS FOR iPHONE 3G Value Added Pricing Strategy Recommendation Product improvements (mentioned in previous slide) can add value to iPhone 3G iPhone 3G with value added features can be priced higher Apple, iPhone fans, and other high income group users would willingly pay a premium Sales would remain stable, might even grow
Price Skimming Strategy for $599 iPhone 3G without AT&T contract iPhone 3G is currently for $599 without AT&T contract and needs to be activated for a fee The premium price can be lowered in future i.e. in an year Revenue can be generated from mediocre income groups, and lower

(Kotler & Armstrong, 2010, p.213-215) 18

14- Marketing Mix Strategy: Distribution (Place)

DISTRIBUTION STRATEGY RECOMMENDATIONS FOR iPHONE 3G Recommended strategy: Selective Distribution Selling through other selective electronics stores e.g. Best Buy Selling through possible one more cellular services providers e.g. Verizon
Advantages: More cellular network coverage through Verizon Access to Verizons customer base Growth of delivery and sales network More sales force and services

(Kotler & Armstrong, 2010, p.213-215)

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15- Marketing Mix Strategy: Marketing Communications (Promotion)

COMMUNICATION OBJECTIVES Designed for target markets in various buyer-readiness stages, following the AIDA Model (Attention/Awareness, Interest, Desire, Action) To grab Attention of Potential users at the Awareness stage To provoke Action; of buying iPhone 3G, in Existing iPhone users who are already at a stage of Conviction i.e. they believe iPhone is the best cellphone. They need to be pushed towards the Action stage through attractive offerings To develop Interest of Other smartphone users to develop their Liking towards iPhone 3G; theyre already at the Knowledge stage

(Kotler & Armstrong, 2010, p.213-215)

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15- Marketing Mix Strategy: Marketing Communications (Promotion)

PROMOTION TOOLS ADVERTISING TV Advertisements: TV ads Display media: Billboards, banners Online media: podcasts on Apple website

PUBLIC RELATIONS Pre-launch introductory conference: an public address to fans by CEO, Steve Jobs Launch ceremony at Apple stores

SALES PROMOTION Promoting the low cost advantage Low-cost mobile packages with AT&T Early buyers discount
(Kotler & Armstrong, 2010, p.213-215) 21

16 The Big Creative Idea

THE 3G REVOLUTION Creative Social Networking iPhone 3G applications can be used to connect creative social heads Celebrity testimonials can be recorded regarding iPhone and social connectivity Celebrities like actors, designers, singers, etc. can connect to fans via applications built for the purpose

Businesses like Starbucks Coffee Company can connect to customers and share experiences, allow purchases through iPhone Apps Applications can connect creative writers, artists, designers, and etc. based on common interests
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17 - Footnotes

Diaz, J. (2009). iPhone 3GS Complete Feature Guide. Retrieved from: http://gizmodo.com/#!5283099/iphone-3gs-complete-feature-guide Apple. (n.d.). iPhone 3G Warranty. Retrieved from http://www.apple.com/legal/warranty/iphone/3g.html Kotler, P. & Armstrong, G. (2010). Principles of Marketing. Upper Saddle River: NJ: Prentice Hall, p.215 Kotler, P. & Armstrong, G. (2010). Principles of Marketing. Upper Saddle River: NJ: Prentice Hall, p.279 PriceRunner. (n.d.). Blackberry Mobile Phones. Retrieved from http://www.pricerunner.co.uk/cl/1/Mobile-Phones?man_id=6145 Kotler, P. & Armstrong, G. (2010). Principles of Marketing. Upper Saddle River: NJ: Prentice Hall, p.193 Apple. (n.d.). Apple Introduces the new iPhone 3G. Retrieved from http://www.apple.com/pr/library/2008/06/09iphone.html Baker, M.J. (1998). Concentrated Marketing Strategy. Retrieved from http://www.westburnpublishers.com/marketing-dictionary/c/concentrated-marketing-strategy.aspx CGullWorld. (2008). The 3G iPhone: Strengths and Weaknesses. Retrieved from http://cgullworld.blogspot.com/2008/06/3g-iphone-strengths-and-weaknesses.html Kotler, P. & Armstrong, G. (2010). Principles of Marketing. Upper Saddle River: NJ: Prentice Hall, p.A3 23

17 - Footnotes

AT&T. (n.d.). AT&T Company Information. Retrieved from http://www.att.com/gen/investorrelations?pid=5711 Brukbaker, R. (2007). iPhone: Made in Shenzhen, Assembled by Foxconn. Retrieved from http://www.allroadsleadtochina.com/2007/08/15/iphone-made-in-shenzhen/ Mueller, J. (2010). Apple: Strengths, Weaknesses, Opportunities, Threats. Retrieved from http://www.fool.com/investing/general/2010/06/07/apple-strengths-weaknesses-opportunitiesthreats.aspx Kotler, P. & Armstrong, G. (2010). Principles of Marketing. Upper Saddle River: NJ: Prentice Hall, p.213-215 Welch-Abernathy, D.D. (2008). My Take of iPhone 3G versus Nokia Nseries. Retrieved from http://phoneboy.com/2453/my-take-on-iphone-3g-versus-nokia-nseries Geller, J. S. (2008). BlackBerry Bold vs. iPhone 3G. Retrieved from http://www.bgr.com/2008/07/16/blackberry-bold-vs-iphone-3g-yeah-we-definitely-went-there/ PhoneScoop. (n.d.) Cell phone reviews, info, news, community, and deals. Retrieved from http://www.phonescoop.com/

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18 - Bibliography
Books Kotler, P. & Armstrong, G. (2010). Principles of Marketing. Upper Saddle River: NJ: Prentice Hall. Certo, S. & Certo, T. (2011). Modern Management Concepts and Skills (Cust. Ed.). Upper Saddle River: NJ: Prentice Hall. Websites, Web articles & Blogs Diaz, J. (2009). iPhone 3GS Complete Feature Guide. Retrieved from: http://gizmodo.com/#!5283099/iphone-3gs-complete-feature-guide Apple. (n.d.). iPhone 3G Warranty. Retrieved from http://www.apple.com/legal/warranty/iphone/3g.html PriceRunner. (n.d.). Blackberry Mobile Phones. Retrieved from http://www.pricerunner.co.uk/cl/1/Mobile-Phones?man_id=6145 Apple. (n.d.). Apple Introduces the new iPhone 3G Baker, M.J. (1998). Concentrated Marketing Strategy. Retrieved from http://www.westburnpublishers.com/marketing-dictionary/c/concentrated-marketing-strategy.aspx CGullWorld. (2008). The 3G iPhone: Strengths and Weaknesses. Retrieved from http://cgullworld.blogspot.com/2008/06/3g-iphone-strengths-and-weaknesses.html AT&T. (n.d.). AT&T Company Information. Retrieved from http://www.att.com/gen/investorrelations?pid=5711 Brukbaker, R. (2007). iPhone: Made in Shenzhen, Assembled by Foxconn. Retrieved from http://www.allroadsleadtochina.com/2007/08/15/iphone-made-in-shenzhen/ 25

18 - Bibliography
Mueller, J. (2010). Apple: Strengths, Weaknesses, Opportunities, Threats. Retrieved from http://www.fool.com/investing/general/2010/06/07/apple-strengths-weaknesses-opportunitiesthreats.aspx Kharif & Wildstrom. (n.d.). iPhone Competitors. Retrieved from http://images.businessweek.com/ss/09/10/1028_iphone_latest_challengers/

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