Marketing Mix Strategy Analysis of Apple iPod

by deepakjainsmile (student)

University Degree Business and Administrative studies

Contents

Executive summary

IPod has been one of the most iconic products in consumer electronics by Apple Inc. From the year it was introduced in American Market, they are having a market share of 70 percent which is pretty high from its consumers. IPod virtually saved apple Inc. whose stock price crashed to 10$ from 30$ after dot com bubble burst. It paved way to the trust that Apple brand enjoys and has been carried to other apple products like iPhone and iPad. This report dwells into the marketing strategy of Apple iPod and tries to understand it. It also applies different product marketing frameworks to understand it fully.

Introduction

Music has become essence of our lives since our inception. It has started from the likes of Audio Tapes, CDs; DVD’s and now has become a way of life. Music has always been a partner in our leisure time and helped us to become our partner to relieve our stress. Music players used to be very bulky in start and after the introduction of Walkman’s, music industry was still full of opportunities for products. The advent of mp3 format gave way to more music storage and gave portable audio devices more market space. IPod was the introduced by Apple Inc. which has conquered the market and has become synonymous with the meaning of portable music player. Apple Inc. was previously into software and hardware markets for PCs but was only a niche player. There products were known for design and coolness and players like Windows and Dell were eating away them and they were running into losses. Move into music market just gave them boost to get into consumer markets and have now become one of the most valued players in the respective markets (Apple Inc, 2011).

Apple Inc

Apple Inc. which was formerly known as Apple Computers and has now changed its name to show that they are into digital products. They are an American company which is into designing and marketing of consumer products, software and hardware of personal computers. Some of their famous products are known as Macintosh line of computers, iPod, iPhone and the latest is iPad. iPod has a software component which is iTunes which has a music store by which people can download music, podcasts, videos , movies etc. after paying a premium which has helped them to increase their earnings beyond . They are the largest valued company in the world based out of Cupertino, California and also the most attractive for talent. They have a philosophy of delivering aesthetic deigns complemented by serious products which just blow of the markets and become industry standards for coming products (Fisher A, 2008).

iPod

As said by Jordan selburn of iSuppli, who is a principal analyst of consumer electronics, ipod has made its mark in portable digital music players combined with the power of iTunes store. The same effect was generated by Sony Walkman’s. Today, it’s only 10 years since the launch of iPod, but it has become a sort of rage and an industry admired product. It has dominated the product market in such a way that no one is close to it. It wasn’t the first mover but ousted its competitors with awesome design and aesthetics. It just capitalized on the short coming of earlier products and improved drastically on them. It has a seventy percent market share with several products trying to come to compete and die off like Zune of Microsoft. The major power of iPod comes from being connected to a sustainable ecosystem of ITunes which has content and provide a huge set of online services. The start was given to iPod by it being the first to use mp3 format which gave the edge of having higher number of songs as well as faster transfer speeds. Consumers have carried to feeling of brand loyalty towards apple starting from iPod and carrying over to their other products like iPhone and iPad ( Wired, 2011).

Marketing Mix

Marketing Mix is the basic principle of marketing which has helped us to understand the strategy of any product or brand in 4 perspectives called 4P’s

1) Product

2) Place

3) Promotion

4) Price

This is a preview of the whole essay

Marketing Mix

Marketing Mix is the basic principle of marketing which has helped us to understand the strategy of any product or brand in 4 perspectives called 4P’s

1) Product

2) Place

3) Promotion

4) Price

Marketing mix concept has long been a core concept of Marketing and it was more refined by McCarthy to generate the principles which we now know as 4Ps. Although, the dot com crash just turned marketing managers regarding the capabilities of 4Ps, but they still believe that 4Ps gives them basic understanding of the product strategy. Evolution of internet has given a new dimension to all the 4Ps giving a different kind of online product, a new place for selling, and a new promotion medium and also charge a different price to audience from Internet channel. The usage of marketing mix depends on how are the needs of consumers, the available market conditions and the available market. Any one element can be more important than the other but the importance changes over time. We can’t take decisions by ignoring one of them or by ignoring the interconnection between them. Using the Marketing mix, the number of strategies which can be made for any product can be infinite but there also has been huge criticism regarding the current relevance of 4Ps. Still, we find that there is no other framework which is more apt than 4P’s to describe Marketing mix of any product due to its time tested appropriateness( Kotler P, Armstrong G 2009)..

Marketing Segmentation

Marketing segmentation has helped Apple in building products relevant for target markets. It has also helped them to eye opportunities and attack new ones. It is a process in which they divined the existing market into different chunks using demographic, occupational or income based levels. Apple has successfully used market segmentation to put a complete iPod offering with same message to different customer segments. They don’t just stuff a product with multiple features so that it can be useful for every segment. They have built different offerings of iPod for different customers by thinking about different user experiences of different category of customers. They rolled multiple types of iPods like Nano, shuffle and touch for low, medium and high segment customers with different price points so that it can be easily affordable yet have the esteem of a premium product. They have been never confused in their product segmentation. It covers global markets and is present all across the globe. The have products which appeal to all segments based on income, age or any other classification(Fisher A, 2008)..

Talking about their coverage strategy, they operate in all segments and have used DIFFRIENTIATED market coverage strategy by designing separate products like nano, shuffle and touch for different income group people. So, that they can cover the whole market, yet people try to move up the product chai due to their premium image. Apple iPod has positioned itself as a premium product which comes at a premium price. Although they have cheaper range available in market, but people usually want to move up in the product chain. Still their positioning is a premium player in the market and they target less price sensitive customers. They usually focus more on their higher prices products to encourage customers to buy them. Segmentation strategy used by apple is dividing its customer based on purchasing power. They try to design products for lesser price sensitive customer by combing ultimate branding and user experience which helps them to change premium as there are no substitutes available (Wired, 2011).

Product

Apple iPod as a product has been a revolution in itself and has been ruling the portable music instrument market with a market share of approx. 70% from a long time. The Core product is still the portable music player which has given its user an ultimate functionality to it users and a freedom to access their music from wherever they need. The actual product that they are selling, therefore, is the freedom and feel of music experience and the coolness factor of carrying an iPod. The augmented products are various features which re given by iTunes store in terms of music, podcasts and video downloads. IPod comes under a specialty product due to its premium brand personality but since it is targeted to customers which are less price sensitive, it’s becoming sort of a necessary product to have(ZDnet, 2010).

Branding

Apple iPod boasts of a branding strategy which uses emotional push. They carry the attributes of Style, creativity, imagination, power, passion, fashion and inspiration. They push iPod as giving power to its customers by the use of technology. IT also talks about simplicity in lives with a passionate design done by Apple only to make their customers happier. IPod is just a good product, it’s loved by its owners and apple has developed a community feeling around it. Due to its premium brand personality, people just love to carry apple iPods with them. On terms of attitude, they think that it’s a kind of addition of “coolness” to carry an Apple IPod with them. Benefits are not only limited to functionality of iPod but also adding to style quotient of end customer. They value their iPods as being their best friends which adds to the premium personality of iPod brand. In Terms of branding strategy, they use corporate brand strategy where all products have shared brand awareness. This helps as customers already know Apple brand and trust it( Kotler P, Armstrong G 2009)..

Price

Apple follows an aggressive pricing strategy in which they try to lock on to every possible segment of portable music market. They have offerings in every segment from low to top end. They still command premium over their higher end products and still have products which are present in seven cells except cheap goods and unhappy customers. The quality remains same with prices as apple has promised to deliver the best quality it can. They actually earn higher than their competitors by music downloads via iTunes and also via lower costs by using efficient supply chain practices. When talking about effective product mix pricing strategy, they are following a mix of Product line pricing and captive product pricing. This is due to step by step pricing of iPod shuffle, Nano and touch and also music downloads only available through iTunes store which makes the customers captive to Apple. They use various Price adjustment strategies like segmented pricing for different segments of markets earning higher premium for higher products and internationally charging higher for their products than their domestic markets (ZDnet, 2010)

Place

Apple delivers its products via multiple channels like online, retail shops as well as own Apple stores. They have key apple stores at key locations in the world where apple retail staff let people free to experiment with apple products. It has also entered into strategic alliances with other distributers like hp for selling their products using their outlets. These apple stores give a chance of their sales prospects to directly look into Apple world. They have an environment inside their stores where users are stimulated to use apple products, get help on them and fell in love with them. They have also given retail chains like best buy and Wal-Mart contracts to sell apple iPods but they only sell lower end of product line as they are only meant to be affordable and goes together with the target market of those products ( Kotler P, Armstrong G 2009).

Promotion

Apple introduced iPods in 2001 and started to promote them differently taking in mind their premium positioning. They promoted iPod based on their design and ease of usage as well as transfer of music and touted its competitors of being gaudy. They never focused their promotions on technology which was inside iPod. They bring out signature versions of iPods where customers can have signatures of Madonna and tony hawk by just paying few bucks extra. They promoted iPods with clubs and most people had iPods in their hands. Multiple designers had their hands on iPod and said that they were also overwhelmed by its designs. They promoted it by their “Think Different “campaign by using different channels like TV, Radio as well as outdoors. In 2002, they had U2 signature version and a pink iPod for Madonna version. They gave away iPods to Grammy performers. They started running TV ads with people singing U2 songs with iPod in hands which helped in adoption of iPod with music lovers. The intent of messages has been to promote iPod as a premium product yet necessary to any music lover. It has been executed in style by associating it to huge music personalities and at grand stages like Grammies to grab attention of their target audiences (ZDnet, 2010).

Conclusion

Apple IPod has been a revolution in itself. It not only defined portable music devices but has also defined music industry itself. It was the start of advent of digital music era which has now taken over the complete music industry. When we combine this with premium brand image of apple, iPod has become one of the most iconic product successes in the history of consumer electronics and paved the way for apple to become most valued and most admired companies of this world. By this report, we have tried to understand the importance of marketing mix analysis as well as try and apply the theoretical principle to Apple IPod and understand its marketing strategy.

References

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Fisher, Anne, 2008, America's Most Admired Companies, Fortune 157 (5): 65–67.

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