Apple's iPhone marketing strategy and target market analysis

Marketing Management and Analysis

Marketing and management analysis: Apple's iPhone

Description/identification of company/product/service

Apple's innovative, much-anticipated iPhone is a multimedia device, possessing a seemingly infinite array of technological capabilities. The iPhone is a cellphone that enables the user to surf the Internet and send email, take pictures, listen to music and other downloaded media (much like an iPod), text message friends and business associates, and access voicemail as well as make use of any local Wi-Fi connections that might exist in the area. Recently, Apple introduced the latest version of the iPhone, the revolutionary iPhone 3G. This device combines GPS technology with the other features of the iPhone. "With fast 3G wireless technology, GPS mapping, support for enterprise features like Microsoft Exchange, and the new App Store, iPhone 3G puts even more features at your fingertips. And like the original iPhone, it combines three products in one -- a revolutionary phone, a widescreen iPod, and a breakthrough Internet device with rich HTML email and a desktop-class web browser. iPhone 3G. It redefines what a mobile phone can do -- again" ("Phone, iPod, Internet, and More," 2008, Apple Official Website).

The Apple Company defines itself as a renegade, youthful, and forward-thinking company -- providing the latest, sleekest, and most innovative designs available, in contrast to more traditional companies like Microsoft. Although many of its products, such as its Macintoshes, are more expensive than those of competitors, because of the innovative look and, in the case of the iPhone, the services of Apple products, many people are willing to spend more to buy from Apple. The marketing of the iPhone is clear in its message: buy an iPhone, Apple suggests, and the world is at your fingertips.

Identification, description and analysis of target market

Apple's target market is clearly that of young consumers in search of the 'next new thing.' The ideal iPod purchaser is busy, on the go, and willing to part with his or her hard-earned cash for style and convenience. Apple consumers are likely to be reasonably affluent, and social and extroverted enough to embrace the iPods offered features of cellphone, email, and photograph as necessities. At a recent press conference introducing the newest version of the iPhone, Apple's CEO and founder Steve Jobs gave equal attention to the sleekness and 'zippiness' of the new model's appearance as he did to its expanded technological capabilities and lower price (Markoff 2008).

But Apple also has another target market in mind for the iPhone: business users. When announcing the 'birth' of its newest model of the phone, the company stressed that the updated iPhone "will have new business-friendly capabilities, including allowing access to corporate e-mail and intranets. It will also be easier for developers to create applications to suit the needs of health care, real estate and financial services companies" (Holson 2008).

Identification, description and analysis of industry competitors

At that same press conference where he announced the birth of the new incarnation of the iPhone, Jobs openly challenged Nokia, widely judged one of Apple's main competitors because of its recent release of its popular Nokia N95 and Palm Treo 750 (Markoff 2008). Nokia's greatest strength is its international scope, and it advertises itself on its website as "the world's leading mobile phone supplier and a leading supplier of mobile and fixed telecom networks including related customer services" (Nokia, 2008, Official Website). Nokia even keeps track of its revenue for investors in Euros, not in dollars, even on the U.S. section of its website, a testimony to its international focus. Even the consumer section of the website provides information, not on the beauty of the product, but upon Nokia's environmentally-friendly nature as a company, its affordability, and the general high quality of its cell phones and service. Its stated company focus is upon wireless Internet products that are affordable for consumers, rather than upon merging entertainment and communications technology together like Apple -- although that is likely to change in the near future.

Identification, assessment and analysis of environmental factors affecting your selected example

SWOT

Strengths:

Apple's name brand and customer loyalty has been built up through its creation of sleek, multimedia devices such as the iMac and the iPod to ensure a strong, youthful consumer base. The appearance of the product is also a draw, and garners equal description on the Apple website, almost as much as the product itself. The convenience provided to the user because of the combined capabilities of the single product, according to one reviewer, are particularly strong: "The Apple iPhone has a stunning display, a sleek design, and an innovative multitouch user interface. Its Safari browser makes for a superb Web surfing experience, and it offers easy-to-use apps" ("Apple iPhone," 2008, CNET). Its innovative merging of seemingly every capability a technologically-minded individual could desire and more has been described as staggering.

Weaknesses:

On its deployment of its specific technological capabilities, the iPhone is lacking. The phone's actual quality in terms of hearing or talking to the opposite party has been described as variable and it currently lacks some basic features found in many cell phones, including stereo Bluetooth support and 3G compatibility. Compared with other iPods, its integrated memory is "stingy," and you "have to sync the iPhone to manage music content" observed one user ("Apple iPhone," 2008, CNET). In short one could say that the iPod is 'all forest' but 'no trees' -- good holistically, but falling short on specifics in term of quality.

Threats:

With the U.S. economy contracting, and jobs at a premium for the type of young, hip college graduates that Apple desires to attract, the iPhone could suffer. If jobs seem in jeopardy, one of the first things people are likely to cut back upon is the purchase of new technological luxuries like the iPhone, if they already have a cellphone, MP3 player, and access to a computer to send email and surf the web. If people are working less, they may also have less of a need to be connected through a device such as an iPod to home or work.

Opportunities:

Facing the downturn in the U.S., and perhaps the world economy, CEO Steve Jobs stressed how the new iPhone model was less expensive than his predecessor. He also announced Apple's expansion overseas, a direct threat to competitors such as Nokia. He noted the quality of the new device was an improvement on the old iPhone. The new iPhone "navigates the Internet more quickly" and boasts a new "range of new applications and services in order to establish Apple as a major player in the cellphone industry" including the new model's ability to run on 3G wireless networks that allow for much faster Internet connections than the original iPhone, responding to criticisms of the iPhone's ability to access downloads. (Markoff 2008). Not only will the new model boast GPS (Global Positioning System) capability: it will also have a longer battery life, up to five hours for talking on the 3G network (Markoff 2008).

Furthermore, as the European economy, because of the strength of the Euro against the dollar, seems better able to weather the likely downturn in the world economy because of the global spike in the price of oil, reaching out to a greater number of countries as Jobs intends to do seems essential for Apple. As well as Europe, Apple can expand its outreach into the burgeoning Asian market, given that in many Asian countries the use of landlines has become almost completely antiquated. "Apple announced that it would begin selling the iPhone in 70 countries this summer; the current phone is being sold in six countries" (Markoff 2008).

This strategy of international marketing clearly threatens Nokia, whose greatest strength is not its image, but the sheer breadth of its outreach around the world.

Identification and analysis of strategies used in marketing:

Analysis of the selected product/service/company life cycle -- implications for the company

Apple would seem to be heading into its maturity phase as a company in the United States, but internationally it is still growing. Also if it introduces new, desirable technology, demand will spike and reduce any potential 'saturation effect,' especially if the new technology has global potential. This is why expanding into new nations and capitalizing upon increased demand, especially in areas with booming populations and technological literacy like India, is so essential.

Overall review of each competitor's marketing efforts

Nokia's current domination and financial success may seem testimony to the idea that 'if it isn't broke, don't fix it.' However, Nokia cannot afford to discount all of Apple's future plans for international expansion in the luxury mobile phone market, especially if Apple enables its phones to become more affordable in the future with subsidy agreements with providers. Apple is a larger company, and offers more services and products to consumers. This enables Apple to take an initial loss financially to create a loyal consumer base through offering deep discounts, although Nokia currently has the stronger foothold in the wireless market internationally.

If one could sum up in a word what Nokia lacks in relation to Apple it is this -- 'sexiness.' Apple's name instantly calls to mind a particular style and approach, a youthful, technologically-forward image. Nokia, for all of its ubiquity abroad does not have an image. It has a variety of options, of course for its branding -- it could market itself as the 'anti-Apple' in terms of its affordability, but this might prove problematic, given that Apple's large size as a company and its ability to subsidize carriers could make a price war dangerous. Its main advantage is in terms of the high quality of its cell phone service, in comparison to almost all other providers abroad.

Clearly, Nokia wants to establish itself as a media and entertainment company, as well as a wireless Internet provider: Recently, it purchased a media-sharing website called Twango and has been pursuing new research and development ventures, but it still lags behind Apple as a media source (Balan 2007). Tailoring its services, cost, or other aspects of service to local needs to take advantage of its greater knowledge of international markets in comparison to Apple might be one way to capitalize upon its current strong international consumer base. Nokia dominates India and other major developing world markets, and to provide services that are of particular interest to that region would give it a competitive advantage in the developing world. Of course, it would be ideal if Nokia could offer a similar device as the iPhone, only with better capabilities, speed, and at a lower cost. Then customers would likely question their loyalty to Apple even in America and current Nokia users would continue to champion Nokia abroad -- but until then Nokia's future, although currently strong cannot be described as 'music to one's (iPod-wearing) ears.'