Apple iPhone Marketing Plan

Arab Academy for Science, Technology and Maritime Transportation

MBA Group H

Apple iPhone Marketing Plan Group Assignment

Ahmadullah El-Hadidy Basem Gaber Hany Abdulwahab Kareem Raslan Moustafa Hanafy Tamer Yousif

Apple iPhone Marketing Plan • • • • • • • •

Executive Summery Situational Analysis SWOT Analysis Marketing Objectives Marketing Strategy Implementation Budget Control

Apple iPhone Marketing Plan

Executive Summery The Past – Steve Jobs, Steve Wozniak and Ronald Wayne established Apple on April 1, 1976 in order to sell the Apple 1 Computer Kit that was hand built by Steve Wozniak. The Apple 1 was sold as a motherboard (with CPU, RAM and basic textual video chips) – less than what is considered a personal computer today. Apple was responsible for creating the desktop publishing market due to their innovative programmes, PageMaker and LaserWriter. Between 1983 and 1996 Apple experimented with a number of failed consumer target products including digital cameras, portable CD players, speakers, video consoles and TV appliances. Market share and stock prices decreased. In 2001, Apple introduced the iPod portable digital audio player. The product was phenomenally successful – over 100 million units were sold within 6 years.

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Executive Summery Situational Analysis SWOT Analysis Marketing Objectives Marketing Strategy Marketing Research Implementation Budget Control


Executive Summery The Present – January 2007, Steve Jobs, the CEO and Co-Founder of Apple, announces that Apple Computer Incorporated would now be known as Apple Inc. He also reveals the long anticipated iPhone, a combination of an Internet-enabled smartphone and the iPod. In June 2008, he announces that the iPhone 3G would be released in July 2008, this newer version added support for 3G Networking and assisted GPS navigation, among other things.

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The Future – Apple plans on focusing on satisfying personal consumer demands rather than merely fulfilling a demographic requirement as well as, improving performance and stability rather than introducing new features when releasing new versions of any product.

Think Different


Executive Summery The iPhone targets consumers who need to store information and communicate or people who want entertainment on the go. Apples target segments consist of professionals, students, corporate users, entrepreneurs, and health care workers. Currently, the market for high-end phones like the Apple iPhone is small. Few people want Internet, video, and PDA features in one device because of the high price. The smart phone market is still relatively small compared with general phone market. The market will rapidly increase in coming years due to lower prices and greater power.

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Situational Analysis Political Situation

•Taxation is something that governments put and Apple should be study this as country by country case to anticipate profitability, and pricing strategy. •Importing laws in the world with GATT are in favor of trading. •Countries are very variable in stability of, so we should study each country case by case.

Economical Situation •Economical growth world wide is in a big recession which need careful manipulation •Potentiality of the market is decreasing but it is higher than any others in the Telecom sector.

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Situational Analysis Socio-Cultural Situation •Population growth leading to expansion of the sector needs for cell phones. •People depend more an more on mobile communication everywhere. •There is educational growth in the world. •Culture’s perception of the technological devices is positive worldwide. •Literacy & illiteracy level is not affecting using cell phones but affecting high technological cell phones, this fact needs to be considered. • Acceptance of imported products in some countries are less if there is local provider •There are different social views that may affect product should be considered (e.g.: Boycotting American products in the Islamic world)

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Situational Analysis Technological Situation •Level of technology in the world is increasing. •Internet level of awareness & usage for individuals & industrial aspect are increasing worldwide •Fixed phone lines capacity and development attempts. •New technologies in the cell phones are increasing. •Future plans for technological linkage between cities, universities, colleges, hospitals and other institutes are increasing and can be connected to cell phones •Level of usage of the E- Technology (online bidding, billing, complaints, blogging etc) are high and trendy.

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Situational Analysis Competition Situation

•There are 19260 cell phone producer in the world, but there are more than 15 big companies competing at the world level Market.

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Situational Analysis Environmental Situation

•The global concern of the Global Warming issue & other pollution effects concerning the packaging material and radiation of the cell phones •The demand of the international environmental approvals is a must (if there is any)

Sales Situation Cell phones industries are one of the most profitable industries everywhere and the Market is increasing

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S/O Analysis Strengths Innovative – The iPhone has an innovative touch screen. It also has many functions of other mobile products all in one device Compatibility –The phone will work with iTunes and with other Mac/Apple products and OS software tools which means limitless potential for upgradeability. Ease-of-Use – The all-new touch screen interface recognizes multi . finger gestures, just as the human hand normally behaves

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S/O Analysis Strengths Brand awareness – Apple is well known for cool essential gadgets like the iPods along great technological innovations like the original Macintosh.

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S/O Analysis Strengths Price – iPhone would be sold at a reasonable price for its value. Quality – Scratch resistant screen – durable and light metallic finish - software suite resistance to computer viruses.

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S/O Analysis Opportunities Increasing demand and expansion to a new target segment – As technology advances and smart phones get cheaper Apple will attract consumers and get iPod users to upgrade to iPhones. Upgradeable – iPhone software allows new exciting features to be brought in which take advantage of the touch screen ability. Future versions will also be hardware upgradeable.

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S/O Analysis Opportunities Partnerships – Apple can collaborate with many powerful global mobile phone companies to flood the market with iPhones, which reduces costs in marketing and increases revenue through long-term agreement deals.

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W/T Analysis Weaknesses Image – The Apple brand is not targeted towards business people and does not have a reputation as being compatible with the corporate world. Price – Apple does not yet offer lower priced models for more cost conscious consumers. User Interface – Touch screen interfaces suffer from the problem of “gorilla arm”* * Gorilla arm is a side-effect that humans face when using touch screens for long times as humans are not built

to hold their arms at waist or head-height, making small and precise motions. After a short period of time, cramp may begin to set in, and arm movement becomes painful and clumsy. This is now considered a classic cautionary tale to human-factors designers.

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W/T Analysis Threats Increased competition – Smart phones are easier to make now more than ever. More companies may enter the market, and competitors or even Apple contractors can maneuver around patents to create similar devices. Downward pricing pressure – The iPhone is marketed as a highend phone, but phone prices are almost certainly going to fall when other companies undercut the price of iPhones. Difficulty expanding into Asian market – There is less hype and interest in Asia since smart phones are better known and already widely used.

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W/T Analysis Threats Competition (Palm) - Palm has the longest history in PDA market and has experience-developing software for mobile devices. It is also a well-known brand for businesspeople. Existing software is well established and compatible with many products for this market. The market is familiar with Palm products; significant switching costs are involved in going to an iPhone. Palm can add many similar capabilities to their products that match the iPhone and expand to a wider market through lower cost and higher-power products.

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Marketing Objectives •

Set an aggressive buy achievable objective for the first and second years of market : 1. First-year Objectives - We are aiming for a 2 percent share of the U.S and U.K. PDA/Phone market through unit sales volume of 445,000. 2. Second-year Objectives - are to achieve a 10 percent share based on sales.

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Extend on the Apple brand name and link to the established meaningful positioning.

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Extend on Apples image of innovation, quality, and value.

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Measure the awareness and response in order to make adjustments to the marketing campaigns as necessary.

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Marketing Objectives Target Market •

Differentiate the iPhone from other PDA’s on the market.

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Primary customer targets is the middle-upper income professional to coordinate their busy schedules and communicate with colleagues, friends and family.

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Secondary consumer targets are high school, college and graduate students who need one portable multifunction device.

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Primary business target is to partner with : • large cell phone service providers, AT&T, Verizon, Sprint and Cellular One • large enterprise software firms where information is critical to the end user.

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Marketing Objectives Target Market (cont.) •

Secondary business target is mid-to mid-size corporations that want to help managers and employees stay in communication or access critical data on the go.

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Market segment will consist of companies with $10-$50 million in annual sales.

Positioning •

Using product differentiation, positioning the iPhone as the versatile, convenient, value-added device for personal and professional use.

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Focus on the convenience of having one device for communication, but also music, pictures, and video, and full Internet access.

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The iPhone will be promoted as both professional and hip. .

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Marketing Mix Strategy Product •Full year warranty along with an optional three-year Apple Care warranty •Same taste as all other Apple products •Special edition version to be launched (including the iPhone Beatles edition celebrating their 40th anniversary) •Launching a cheaper version in 2008 with less advanced features along with a more advanced version for professional use •Adding the following features to the iphone (large disk storage capacity, lower weight, thinner device, long battery life, 4G wireless, GPS and improved camera)

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Executive Summary Situational Analysis SWOT Analysis Marketing Objectives Marketing Strategy Marketing Research Implementation Budget Control


Marketing Mix Strategy Price •Set the base model at a cheap price of $349 •A more advanced model for $399 •Special limited edition Beatles iPhone for special prices •Generally lower our prices to ensure we establish market dominance in as short of time as possible

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Marketing Mix Strategy Place •Massive rollout worldwide at all reputable major retailers •Massive rollout Online, Showrooms and in all cell phone providers •All Apple Stores the Apple website will dedicate themselves to the iPhone •Eye catching displays will be found at all physical stores featuring the iPhone to make the product stand out from the pack •Apple Stores will have the iPhone on display a full month before its worldwide release

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Marketing Mix Strategy Promotion •Integrate Apple message of revolutionary communications and audio/visual experience together in all media advertisements •Differentiate the iPhone against others is the touch screen functionality •Emphasize Apple brand prominently and associate the iPhone with the iPod’s groundbreaking lineage •Original but tasteful advertisements at the same time •A massive TV campaign is planned before launching the iPhone featuring a soon to be legendary ad to be the talk of the country •Advertising will be appearing on a regular basis to maintain general public awareness

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Marketing Research •Four age groups will be targeted: 15-20 years, 20-25 years, 25-45 years, and 45 years and up •High School and College aged people will demonstrate social uses •The 25-45 years group will be used to determine business application and social/personal use •The 45 years and above will give us a plan to market to more senior well-refined group

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Marketing Research •This research will be done through surveys (via email campaign through portals such as, iTunes and other on-line application developed for the iPhone) and interviews (in Apple stores) with the same age groups listed before •To bring the iPhone to the front of the business world it is important to research different ways to grow the 15-25 year old group into business uses of the product •Brand awareness will be an important tool in taking the Apple brand from "social cool" to "business cool".

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Marketing Research •We will ask for feedback on iPhone features, and implement those changes most important to the end user in the next generation iPhone •We will allow users themselves to design their own ideal iPhone online and use any useful ideas to further refine future iPhone models •We will continuously scour the Apple fan websites to understand what the Mac faithful are saying, as they are our best customers.

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Implementation Compensation system •workers $5 incentive pay for every non reject phone they produce •$10 per phone six sigma quality program •each worker $5000 each year for best practice training

use control measures to closely monitor quality and customer service satisfaction consumers can contact the main headquarters about any possible technical problems – by using Apple Customer Service Bar and a customer service phone number stored in the phone book

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Implementation In case of slow sales •Offer iPhone to customers who have purchased other Apple products $10 per phone six sigma quality program, which will lead to: •demonstrate the product for consumers, it will promote synergy and lure buyers. •develop deep relationships with two very different segments: those who have it and those who aspire

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Budget •Our break-even analysis assumes wholesale revenue of $500 per unit variable cost of $250 per unit and est. fixed cost of $50 million. Based on these assumptions the break-even calculation is $50 million divided by $500 minus $250 equals 200,000 units sold. •Break-even calculations indicate that Apple will become profitable after the sales volume exceeds 200k. After the first year Apple will make a profit of 1.25 billion minus 50 million in fixed costs. •Recommended price is $350. The markup is 40 percent. •It is predicted that sales volume will increase at least 60 percent from this change; this will decrease the impact of fixed costs and improve opportunities to increase our production scale, which will further improve profits in the long run

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Control To plan our strategy we will meet monthly with the board of Apple, present our information, and make a proposal for continued marketing efforts. Before each meeting our team will meet in private, with each person presenting their own proposal based on the information they have learned. After the initial proposals, we will vote on the best one or come to a compromise. The final proposal sent before Apple is the result of that meeting.

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Apple iPhone Marketing Plan

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