Product 3.1
The iPhone in general offers a wide range of benefits to the consumer
such as web browsing, access to your emails or even taking photos or recording
moments of your life to share the experience with others. In addition, the iPhone provides entertainment
from listening to music or downloading apps (games, restaurant finders,
productivity apps). The iPhone 6 would
be classified as a consumer specialty product, bought to satisfy an
individual’s personal needs or wants. The iPhone 6 having covered the personal need
for social networking, personal and work organization make it convenient for
the consumer. It also provides
simplicity and customization used to reflect the particular individual which
makes it cater to all ages, ethnicities and occupations. The quality has improved tremendously, from previous
iPhone’s being created from plastics and infusing metal and glass, apple has
deviated from that and shifted to a design that is pure of metal, (anodised
aluminum and stainless steel), providing that smooth and premium feel.
The
iPhone offers consistency in its features, but what makes it differ from other
smart phones is its exclusive IOS operating system and apps only accessible on
the iPhone (iTunes and apple store). The
packing of the IPhone 6 is simplistic indicative of a Smartphone which has yet
be customized according to the personality and lifestyle of that customer who
purchases the item. Apple’s product line
consists of the iPhone’s, iPad’s and Mac books. The product line is narrow to ensure
exclusivity thus lower risk of alternatives. Apple intends to only introduce the iPhone and
its variants (modifications) in the Smartphone market to ensure that
cannibalism does not occur. Apple is the
iPhone company, generating 53% of its revenue and 70% of its profits from the
iPhone thus only focusing on the iPhone line due to its established reputation
and potential for maintaining profits. Therefore, apple seeks to expand in other
markets thus the creation of the apple watch.
Currently
the iPhone life cycle has fallen between the growth stage and maturity stage. In terms of its growth stage, the demand of
the iPhone series is growing significantly therefore producing greater profits
(See Appendix Table 3.2 for figures on sales for iPhone’s). It led to greater global market share and net
profit. However it can also be said that
the iPhone series has reached the maturity stage due to the annual product
changes the iPhone undergoes which is more towards cosmetic changes than
substantial. With the IPhone series, the diffusion of innovations is widely
consisted of the late majority. Consumers being influenced through word of
mouth and social influence of friends or family who already own the iPhone. Apple
had never intended to sell their iPhone’s at a low price. The primary objective was to sell a phone
which provided a great experience through differentiation and uniqueness. Initially from a profit oriented pricing
objective through selling a small number of products which were designed with
innovation shifted to a more sales oriented pricing objective. This allowed apple to focus on gaining market
share regionally and globally.
Price 3.2
Apple
uses a skimming pricing strategy. Selling the iPhone 6 at a high price attracts
premium customers where they seek to be unique by purchasing products with the
highest price and therefore gaining a status symbol. Apple selling their iPhone 6 at a high initial
price attracts first those who are willing to pay at a high price (innovators
group). Once the first set of customers
are satisfied, the price is gradually lowered in order to making it more
affordable and thus catering to a larger consumer base. The disadvantages of the skimming pricing
strategy, that if price were lowered abruptly, the innovators group will feel
ripped off and therefore generate negative publicity hovering around Apple’s
skimming pricing strategy; it may spark a pricing discrimination. The objective of lowering prices of their
iPhone’s after the first round purchases usually from the innovator groups may
be seen as price discriminating. Although the practice isn’t illegal, it may
trigger a PR backlash. As mentioned
above, the first wave of buyers may feel rip off thus reflecting badly on Apple.
There’s a possibility that it may result
in a negative image for apple (See Appendix Table 3. 3 for figures on capacity
vs. price).
Place 3. 3
Apple Inc
uses a number of suppliers and logistical components to get their final product
to the consumer. However, Apple uses a
slightly different route than most companies. Supply Chain Planning at Apple Inc is the
classic example of New Product Development Process (NPD). It's the integration of R&D, Marketing and
various functions under supply chain management (Suplychainopz, 2015). Apple uses a five stage model from the start
of a product to completion. The first is
research and development, which Apple takes very seriously spending more than 2
Billion yearly. Next is conceptual
training which takes some time to get right, Apple focuses heavily on the
design of the product to make it look its best. The channel structure for Apple consists of two parts
direct and indirect. The direct channel
is part of the online web store that Apple provides which customers can access
and buy straight from their home and get the product delivered to their door (Supply Chain Picture See Appendix 3. 4).
Whilst the indirect channel consists of sourcing, manufacturing,
warehousing, distribution and retail where customers can go to their nearest
store and buy it from there. More than
50 percent of their workers exceeded these rather low limits. In fact, working conditions at Foxconn,
Apple’s partner for final assembly and some core components, have been bad
enough that Apple has gotten a bit of a black eye from press reports of
accidents, suicides, and labour
strife (Banker, 2012). The
distribution intensity for Apple is very high as their products have a huge
hype before they are lunched therefore Apple needs to produce the new product
in large quantities before shipping so as not to run out in retail stores or
online delays in shipping (See Appendix Table 3. 5 for sales figures for first
quarter). Apple has 93 suppliers;
dealing with all of these is not an easy task however Apple manages to keep
track of every stage of the process through to completion. Some of Apple’s channel relationships are
Foxconn who handle final assembly of the products and Elpida who create flash
memory for iPhone’s (Banker, 2012).
Promotion 3. 4
Promotions
and advertisement for the majority of Apple’s products, including each
generation of the iPhone tend to follow a similar pattern that focuses on
endorsing the latest Apple product as being ahead of the game, at the fore
front of any brand new technology and the most streamlined, efficient and
modern product on the current market place. Apple’s leading objective in regards to
promotion and advertising of the latest Apple product, such as the iPhone 6 and
6 Plus, is set it apart from other Smartphone’s,
tablets or personal computers on the market by suggesting it’s superiority over
competitive brands and products as “the next evolution of… phone” (Sloane 2014). Under the
umbrella of ‘Promotions’, there are 5 elements that are used including
Advertising, Direct Marketing, Public Relations, Personal Selling and Sales
Promotion. Advertising, in regards to
the iPhone 6 and 6 Plus focused on how the iPhone can be used for all types of
activities, such as photography, and not strictly as a mobile phone device, as
seen in the “Shot On iPhone 6” advertising campaign, where billboards all over
the world revealed stunning images that were taken by those who own an iPhone 6 (Apple Insider 2015).
This advertising campaign concentrated on the idea that the iPhone 6 is
a Smartphone for everybody, with unlimited options for your own interests. Direct
Marketing when it was first introduced focused on sending brochures in the mail
so individuals could send order forms in the mail, or later order products over
the phone instead of visiting a physical store to purchase them. Over the years this has naturally adapted to
Direct Digital Marketing where individuals get emailed offers in place of
traditional mail and purchase products over the internet instead of over the
phone or via mail order (The
Free Dictionary, 2015). Apple
has taken advantage of the online buyer/consumer culture by launching an online
store where you can buy all of their products, including the iPhone 6 and 6
Plus (Apple Store 2015). The
third element of Promotions is Public Relations. As Apple is already a globally recognized
brand, almost any new product they produce is guaranteed to be newsworthy,
however Apple’s Public Relations team still ensure that what they want to be
known about the product will be, for example the iPhone 6 and 6 Plus’ larger
screens and different shape to the previous generations of iPhone’s.
Apple’s
outstanding use of the media, whether it be print (magazines, newspapers),
electronic (TV, radio) or social media (Facebook, Twitter) helps attach the
audience to the product almost immediately, communicating what they need and
how the iPhone 6 and 6 Plus cater to those needs. By connecting directly to the consumer,
Apple’s Public Relations team promote all of the goals that are wanted within
advertisings, such as portraying it as top of the range software and creating a
hype for the product to be launched around the world (CP Communications, 2012). Personal
Selling, also known as face to face selling (Business
Dictionary, 2015) is used by
Apple, particularly in their Apple Stores when an employee doesn’t have brand
competitor’s products within the store to contend with for the customers
purchase. The last element of Promotions is Sales Promotion, one element that
is not particularly used by Apple. Sales
Promotion refers to any deals, sales or discounts on products. Apple uses a “no-discount pricing strategy” (Farfan, 2015), which means
Apple products, tend to be the same price online, in an Apple Store or in a
store with various brands no matter what. Deals are generally only given to products
when an updated version of the product is being released, for example the
iPhone 5 going down in price slightly with the release of the iPhone 6 and 6
Plus. The higher the price of a product
generally exhibits an idea of sturdiness in regards to the product, and Apple
has the backing power to use the no-discount pricing policy as it is their
customer service after the initial purchase of the product that validates the
hefty price tag to consumers (Brindha,
2014). Integrated Marketing Communications (IMC) is an approach to
promotions where different forms of marketing are used separately, but support
the goals and objectives of the other marketing campaigns (Business Dictionary, 2015). Apple uses IMC exceptionally due to
their attention to detail shown within their products, and advertisement
campaigns. Apple focuses on things
becoming simpler, not more complicated, which is seen in their minimalistic
product design and marketing campaigns (Brindha,
2014). All aspects of
marketing the product are seen as individual strategies, however all work
together to support one another, for example the App Store supports the iPod
app, which in turn supports the iTunes store. Integrated Marketing Communications adds
another level to Apple’s promotions and marketing, which is what they aim to
show within their campaigns for their many products including the iPhone 6 and
6 Plus.
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